Glossary Definition: Enterprise Resource Planning (ERP)

What is enterprise resource planning?

Enterprise resource planning (ERP) is a software solution spread across multiple business functional units and subunits such as warehouse, procurement, human resources, capacity planning, predictive trends, 3P logistics, production planning, asset management, program management, risk assessment, supply chain operations, manufacturing processes, compliance, accounting and many more business operations.

Manufacturing-centric industries such as pharmaceuticals, food and beverage, automotive, and semiconductor benefit from using ERP systems. Major companies rely on enterprise resource planning tools to manage costs, streamline cross-functional operations, ensure a consistent supply chain, and minimize disruptions.

What are other names for enterprise resource planning?

There are various synonyms that describe ERP, including: 

  • Enterprise resource planning system
  • ERP systems
  • ERP tools
  • Business planning software
  • Financial suite
  • Supply Chain Management Software

In some cases, these terms are interchangeable — such as ERP systems or ERP tools. However, this isn’t always the case; usage may depend on the specific industry.

What is enterprise resource planning in pharma?

In pharma, enterprise resource planning is a solution that consolidates many sources of business data in an integrated fashion to allow for more informed, data-driven business decisions. ERP helps pharma organizations with a number of tasks, such as:

  • Monitoring, planning, and scheduling batch production(s)
  • Meeting QA standards
  • Managing inventory and distribution
  • Standardizing business processes
  • Capturing supply chain and operational data

ERP systems can be cloud-based or on-premise, although cloud-based adoption is skyrocketing. Currently, 16 of the top 20 US pharma companies are leveraging cloud technology to reduce costs and increase productivity.

ERP vs MES: What's the difference?

Pharma companies leverage both ERP solutions and manufacturing execution systems (MES) throughout the drug development lifecycle. ERP and MES solutions can work cohesively as an integrated unit, and can also function independently.

Both ERP and MES solutions digitize processes, aid in quality management and streamline manufacturing. However, these two tools serve different purposes:

  • ERP solutions support a full suite of multi-business process orchestration across an organization. ERP enables functions such as predictive market analytics, demand generation, raw material inventory management, resource planning, and many more.
  • In contrast, MES solutions focus on manufacturing systems, and support a number of tasks such as process order management, inventory utilization and management, work order management and resource utilization, product genealogy, and batch financial cost from time and labor calculations.

If you’re currently in the market for an ERP or MES solution and want your systems to work together, review these 8 questions before making a decision.

Why is enterprise resource planning important for pharma?

Enterprise resource planning is important in pharma because it enables organizations to closely monitor raw materials from receipt through delivery. As a result, pharma companies can make informed decisions about when to order more ingredients and what quantities are needed.

It can also help to drive schedule efficiencies by standardizing batch production and automating data capture, allowing pharma companies to identify and address potential supply chain bottlenecks.