Enterprise resource planning (ERP)

Enterprise resource planning (ERP) is a category of integrated business software that runs a company's core processes in one system. Instead of separate, disconnected applications for accounting, purchasing, inventory, human resources, and sales, an ERP system provides modules for each function that all read and write to a single shared database.

That shared database is the defining feature. When a sales order is entered once, the inventory module reserves stock, the manufacturing module schedules production, the purchasing module sees the material requirement, and the general ledger reflects the transaction — all in real time, without duplicate data entry. Well-known ERP vendors include SAP and Oracle.

The payoff is a single source of truth: consistent data across departments, faster closing and reporting, stronger internal controls, and tighter coordination across the supply chain from procurement through production to fulfillment. The costs are equally real — ERP implementations are expensive, lengthy, and organizationally disruptive, and heavy customization or poor change management is a common cause of failure.

The CMA Part 1 exam tests ERP in two places: the technology and analytics section covers what ERP systems are and how their integrated data supports reporting and control, while the cost management section covers ERP's role in supply chain management.