The Core Modules of an ERP System
An ERP is not one large application but a set of modules sharing a single database. Understanding the split explains why one transaction moves numbers across many reports.
Before ERP, each department ran its own system: the warehouse kept stock records, sales kept orders, finance kept the ledger. The numbers rarely agreed because each was updated at a different moment. The idea behind ERP is simple: one shared database, so a single transaction is felt automatically by every module that cares.
Modules you will nearly always find
| Module | Handles | Key documents |
|---|---|---|
| Finance & Accounting | Ledger, journals, financial statements | Journal Entry, Trial Balance |
| Accounts Receivable | Billing and collection from customers | Invoice, Customer Payment |
| Accounts Payable | Obligations and payments to suppliers | Vendor Bill, Bill Payment |
| Procurement | Buying goods and services | Purchase Requisition, Purchase Order |
| Inventory & Warehouse | Stock, locations and movements | Item Receipt, Item Fulfillment |
| Sales & Distribution | Quote through to delivery | Sales Order, Delivery Order |
| Manufacturing | Production planning and execution | Work Order, Bill of Materials |
| Human Capital | Employee data, attendance, payroll | Employee Record, Payroll |
Master data and transactions
An ERP's contents divide in two. Master data is relatively stable and referenced repeatedly: Item, Customer, Vendor, Chart of Accounts. Transactions are dated events that reference master data: Sales Order, Invoice, Item Receipt. Dirty master data corrupts every transaction pointing at it — which is why a migration always cleans master data first.