ERP system: Meaning, types and business integration

An ERP system is a key tool in today’s business environment. In a market where customers are increasingly demanding, it helps centralise the management of various operational areas to streamline processes, boost efficiency and respond more quickly to changing demands.

In this article, we take a close look at what an ERP system is, how it works and why it’s become essential for modern businesses. We explore its main applications, the types available on the market and the benefits it brings when implemented. We also examine its role in the warehouse and how it can integrate with other specialised solutions, such as warehouse management systems (WMSs).

What is an ERP system?

An ERP system — short for enterprise resource planning — is a software application that oversees all information flows within a company. This digital solution centralises and automates routine tasks in areas such as finance, human resources, logistics and procurement.

An ERP system is made up of interconnected modules that share a common database, ensuring consistent information flow across different business functions. These modules are designed to support internal administrative processes (e.g. accounting and finance) as well as non-financial functions such as HR and customer management.

ERP systems are also scalable: companies can implement only the modules they currently need, expanding capabilities as their requirements evolve. Many ERP solutions offer industry-specific features, either built-in or available through additional integrations.

What does an ERP system do?

ERP systems integrate information across all areas of a company to promote more efficient management aligned with strategic goals. Here are some of its main applications:

• Finance. One of the most popular ERP modules is accounting, which records transactions, manages budgets, makes financial forecasting and generates reports. This feature helps companies better organise and oversee their financial resources.
• Procurement. This module enables the purchasing team to carry out their tasks anytime and from anywhere. Thanks to automatic synchronisation, commercial activity is recorded in real time, facilitating coordination with suppliers, order tracking and data-driven decision-making.
• Human resources. An ERP system manages employee information such as contracts, work history, attendance tracking, payroll and training and development plans. Centralising these processes improves internal organisation and supports strategic decision-making based on human talent.
• Customer relationship. These systems also incorporate CRM (customer relationship management) functions to record, organise and track all customer interactions. This tool is designed to enhance service quality and more effectively manage sales opportunities and customer loyalty.
• Production. In manufacturing companies, the ERP system helps plan production capacity and provides product traceability. This ensures manufacturing is completed on schedule, resources are used efficiently and required standards are met.
• Supply chain. The software coordinates some supply chain activities in a basic way, from goods receipt at the warehouse to order distribution. For faster, more efficient management, it’s best to use dedicated warehouse software designed to optimise logistics operations.

What are the advantages of an ERP system?

Using an ERP system has numerous benefits:

• Process automation. ERP systems handle routine tasks such as generating invoices and recording transactions automatically.
• Higher productivity. By streamlining and automating business operations, ERP software saves time, reduces errors and boosts operational efficiency.
• Control and traceability. ERP platforms provide clear, detailed oversight of daily operations, tracking every step in production, logistics and financial processes.
• Better decision-making. Real-time access to information enables faster, more informed decisions throughout the organisation.
• Improved internal communication. By centralising data from different departments in a single platform, ERP systems enhance interdepartmental coordination and eliminate data duplication.
• Integration. ERP software can connect seamlessly with specialised solutions, such as warehouse management systems, to allow real-time inventory control.

Types of ERP systems

ERP systems can be classified based on several criteria:

By deployment model:

• On-premise. Installed on the company’s own servers, this model requires a significant upfront investment in infrastructure and ongoing maintenance.
• Cloud-based. Hosted on external servers and accessed via the internet, cloud ERP systems offer flexibility, scalability and automatic backups.
• Hybrid. This model combines on-premise and cloud features. Some data and processes remain on-site, while others are managed in the cloud.

By design:

• Standard (off-the-shelf). Covers common business processes and can be implemented with basic configuration. This type supports limited customisation.
• Custom-built. Tailored to meet a company’s specific needs. It can either be developed from scratch or heavily customised from an existing solution.

By business scope:

• Horizontal. Suitable for companies across different industries. These ERP systems include general modules that meet the core needs of most businesses.
• Vertical. Designed for specific industries like hospitality, education, healthcare or construction. These solutions feature capabilities tailored to each sector’s unique requirements.

By company size (No. of employees):

• Small business or microenterprise (1–20 employees). These ERP systems offer basic functions at a lower cost. They’re ideal for automating essential tasks with minimal IT infrastructure.
• Mid-sized business (21–200 employees). Scalable systems that can integrate multiple departments and grow alongside the organisation.
• Large enterprise (200+ employees). Highly configurable platforms built to manage complex operations and large volumes of data.

ERP system integration in a warehouse

An ERP system can incorporate basic warehouse management functions, such as logging goods in and out. However, its capabilities are limited; this software is usually designed to provide an overall view rather than handle day-to-day operations exhaustively.

To manage their daily intralogistics tasks effectively, many companies choose to integrate their ERP with a warehouse management system (WMS). It’s important to understand the differences between an ERP and a WMS, as each system serves a distinct yet complementary role within the supply chain.

A WMS, such as Mecalux’s Easy WMS, coordinates and optimises in-house processes. It assigns strategic storage locations, streamlines pick paths and monitors inventory levels in real time. Both systems work together. While the ERP consolidates overall business information, the WMS acts as the warehouse mastermind, orchestrating all operations.

WMS and ERP integration is crucial to avoid data duplication errors and improve decision-making. This connection allows information to flow automatically between the two systems so that companies can automate processes and pivot more efficiently to market demands. Mecalux’s WMS, for example, is compatible with leading ERP software such as SAP, Oracle and Microsoft Dynamics.

An ERP system integrated with specialised solutions

Not only does an ERP system centralise information and boost operational efficiency — it also enables businesses to adapt to market changes and respond swiftly to customer requests. But its true potential can only be reached when integrated with dedicated solutions that enhance overall business management, such as a WMS.

Integrating your ERP system with Mecalux’s Easy WMS helps optimise logistics operations, improve inventory control and automate key warehouse tasks. Want to know how Easy WMS can interface with your ERP system and transform your logistics processes? Contact us — we specialise in intelligent warehouse management solutions.