How Can Artificial Intelligence Help Improving ERP System?

Updated on Apr 15th, 2024

Enterprise Resource Planning Systems or ERP systems have been helping businesses from various industries in transforming their business processes. From inventory management to customer resource management, an ERP system can make every aspect of running your business smoother and much more efficient. 

Now couple that with the intuitive and predictive capabilities of an AI system and what you get is a modern day panacea for solving every business debacle and need. Artificial Intelligence has been on a steady rise since the turn of the century. And while it has only now started to get market attention, it has come a long way since its infancy. Nowadays, AIs are sophisticated enough to work as the line between life and certain deaths in many dangerous human endeavors- deep sea exploration, nuclear power plant monitoring and maintenance, space exploration, etc. 

At the same time, AI has been effectively used in the past five years in healthcare and defense. And while there is still a lot of work to be done, the global AI market has become big enough to project $ 60 billion in revenues by 2025! Furthermore, in 2020, at the time of writing this article, about 77% of devices we use feature one form of AI or another and 81% companies think that AI will give them competitive advantage over their competitors.

AI has, with great suave and ease, slipped into every layer of your lives, including business. Studying and analyzing data to make intelligent business and marketing decisions is the only way to stay ahead in the market these days. Furthermore, we are living in an age of proactive measures, meaning we need to anticipate a dip in  sales or economy before it actually comes and prepare for it. Trend research, market evaluation, customer satisfaction, all of it is possible by taking ERP systems and injecting the shot of adrenaline that is AI into their bloodstreams. And today, we will see what ERP systems are and how they can benefit from AI.


What is an ERP system?

Pinning down a single definition of an ERP system is tough. A quick search on the internet will tell you that every blog and site has a different understanding of what these systems are and what they are supposed to be doing. While this makes giving a short and simple definition of an ERP system hard, it is, however, a good thing because this tells us how flexible these systems can be.

To really understand what ERP systems are all about, you have to take a look at your business model. Now think of all the individual and interlinked processes that you have to carry out in order to get a product from the production line to the market. Think of all the processes that are involved in marketing your business, from coming up with age-centric marketing strategies to thinking of witty one-liners. Now think of all the processes that are carried out by your customer service and product maintenance team. 

All of this can be encapsulated inside a neat little egg called ERP. The prime task of an ERP system is to integrate all the business processes together into one complete system that can help you in streamlining various business functions and sharing the same data with people on different tiers. 

The central piece of an ERP system is a shared database that is accessible by different business units in your organization. This makes sure that every team has the same data and everytime a change is made to it, everyone knows about it. 

On the other hand, an ERP system also brings a good level of automation to an enterprise. Instead of having to make separate databases and spreadsheets, teams can download data from a single source which will, at all times, show the most current version of the dataset.

Finally, an ERP system is equipped with a dashboard that shows all the key business metrics to the employees in number, chart, and graphical format to enhance their understanding.

How Can AI Help in Improving ERP systems?

ERP alone is powerful. But as we said earlier, couple it with AI and it’s formidable. Let’s see how AI can help an enterprise resource planning system:


Artificial Intelligence works on historical data. It analyzes what has already happened and predicts what is going to happen. So if your data pool is large enough and diverse enough, your AI can pretty much predict everything just by reading it and training itself.

For an ERP this is extremely beneficial.

Whenever a shut-down occurs due to a system or device failure, you lose money. And if the fault is big enough, it can take days to fix it during which time you bleed money by- a) not being able to get the production rolling, b) by having to pay your man-power to just sit about, c) getting the actual fault fixed, d) by not making and selling the product. So it suffices to say that this is not a very promising situation and any sane businessman would want to avoid it. And the fusion of AI and ERP lets you do just that. 

AI can study the load on your machines, any fault, any dips in efficiency and productivity and raise an alarm when the fault is about to happen or is in its early stages. At that point, you can get it fixed without having to shut down production, thus saving yourself money and time. At the same time, AI can be used to study customer and market data to predict future trends. This knowledge can then be used to make better marketing decisions.

Advanced Analytics

Think of this point as an extension of the previous one. As we said in the previous point, AI’s efficiency hinges on data. Using its advanced analytical capabilities, an AI can harness different types of analytics to serve your needs.

For instance, using AI to mine out the data about the shopping behavior of a certain age group of people, let’s say tweens. Now what your AI will do is work on your data pool and see what your customers in that age-bracket are buying. And by using that data, you can adjust and concoct your marketing strategies that will be targeted at that age group. 

In a similar way, you can get the analysis about how long people stayed on a certain page of your website, how many people just put things in their carts and didn’t proceed to checkout, you can see how many people abandoned the checkout because it was too complicated, etc. All of this will help you in improving your business model, streamlining your checkout process and making your business more efficient. 

Improving Interdepartmental Processes

In any business, there are different units, working independently, but sometimes collaborating too, and at the same time working towards one common goal- earning more profits. So it is easy to think of a business as a singular entity but in fact it is a union of different, smaller entities that come together to achieve the goal. When you look at your business as not a singularity but instead as a bundle of many smaller singularities, you realise that there is a need for these singularities to communicate with each other. Different departments depend on each other for data, stats, and even their own goal which can not be achieved till the other department achieves its goal. For instance, a marketing team cannot market anything till the production team finishes the production.

An AI-fueled ERP system can make interdepartmental communication and data sharing streamlined. When they share the same database, it means that the data will always be up to date whenever you need it. This ERP system is a centralized tool for CRM, marketing, accounting, production, R&D, and accounting that bridges the gap between these departments thus making the business much smoother.

Intelligent Marketing

Better data leads to a better trained AI. And a better AI leads to better analytics that can help you in tailoring the perfect marketing strategy for every demographic. The key is making it feel personal. Customers nowadays are looking for connection with the brands that they associate with. And according to your product and its target user base, you need to make a marketing strategy that will appeal to that age or user group. 

Furthermore, the AI in your ERP system might be able to suggest some areas where you are lacking. It can also suggest some target markets that you might be missing where you can introduce your product. Intelligent marketing will not only allow you to make better marketing schemes but at the same time it will help you in making lasting relationships with your customers.

Customer Service

In the end, it is all about customers. How you treat them before and after the sale has been made decides if you will keep getting their business or you will lose them to someone who listens to them and provides them proper customer care. Having customer service representatives in place to answer client and customer queries is both wasteful and complex. A more cutting-edge and efficient option is to have virtual agents deal with customers. Virtual agents, like AI chatbots, interact with customers on your behalf and take down their complaints or answer their queries the best they can. 

This helps in- a) providing your customer with an immediate response and solution to his problem, b) analyzing your client query or response to improve your business process. If the same type of query is being made by multiple customers then that means that there is something wrong with either your product or the way you are marketing it.

Fixing Production Processes

When you are running an enterprise and have multiple cogs turning at the same time, it becomes imperative that you become extra vigilant of any type of waste. Efficiency is the name of the game. And using AI and ERP systems together, you can find out which business and production processes are not working up to their full potential and how you can change that. 

As we discussed in the first point, AI in an ERP system will allow you to avoid disasters by taking early action. At the same time, they will also tell you which production lines or machines are taking too much energy, which machines require a tune-up and when it is time for an upgrade. Also, they can help you in spreading out your human resources evenly. They can break down the exact number of man-hours that are needed to complete a task so you plan ahead as well.

Top five use-cases of AI in ERP

The top five use-cases of AI in ERP systems have been stated below:

  1. Sales Management

AI’s algorithm can help businesses in tailoring more targeted marketing schemes that will drive in the most number of sales. AI can analyze a data set to find out customer behavior and their shopping habits which can be used by the marketers to bring more sales to their company.

  2. Human Resources

With the help of AI, HRs are hiring employees more smartly than ever before. AI’s algorithm does a pass of all the applicants and only forwards you a list of the applicants who best fit your requirements. This way, an HR is saving a lot of time by not having to take hundreds of interviews just to fill one position in the company. Also, AI can help HRs in keeping an eye on employee performance to generate better retention rates. Also, employee onboarding and training can also be taken care of by an AI-based ERP system.

  3. Financial Management

Accounting is becoming smarter with the help of AI. AI, first and foremost, can take care of the repetitive tasks like feeding in the data manually. At the same time, it can create invoices, earning reports, tell you trends, etc. It can also get accustomed to different finance personalities in the company and cater to their needs separately. 

  4. Inventory Management

You always have to get ahead of your demand. The production should never stop and you must not ever run out of stock. But if you are selling hundreds of things, you need a smart system to keep a log of your stock and tell you when to up the production and when to slow it down a bit.

  5. Customer Service

AI chatbots and virtual agents can help your customers in getting immediate answers to their queries. The better you train your AIs, the more useful they will be to your customers. Also, AI can be used to study client problems and you can work on fixing them in the background.

Also Read- How to Develop AI Customer Service Software?

AI based erp


Enterprise Resource Planning systems not only help you in managing your business more efficiently, but they turn your company into a well oiled machine in which every cog is moving smoothly. The communication between different departments is perfect, there is no loss of information and everybody has the latest data. 

At the same time, ERP systems, when coupled with AI, can help you in making smarter business decisions and generate more profits. 

That is why, it is time for you to start thinking about getting an AI involved in your ERP system. If you are looking for a top-notch AI-based ERP system, then Matellio has years of experience in developing top of the class AI-based business tools that guarantee great returns and higher profits. 

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