In 1990, ERP (Enterprise Resource Planning) term was coined by Gartner Group. Today, ERP is not only implemented in manufacturing companies but in any company who want to be competitive advantage. It integrates all the software modules that support the internal business processes and gives a real time view of the entire organization. This helps in taking effective decision making to get high rate of returns on the investment. In this post, you will see the evolution of the ERP.
| Time-line | System | Description |
| 1960s | Inventory Management & Control | In 1960s, manufacturing systems focus was on inventory control. They use to keep lots of inventory on hand to meet up the customer demand. Later, they focused on the techniques which has the most efficient way to manage large volumes of inventory.
Most organizations have designed, developed and implemented centralized computing system, mostly automating their inventory control systems (COBOL, ALGOL and FORTRAN) using traditional inventory concepts like Reorder Point (ROP) and Economic Order Quantity (EOQ). The inventory management activities includes identifies inventory requirements, setting targets, monitoring the products usages, reporting inventory status. |
| 1970s | Material Requirement Planning (MRP) | In 1970s, it was clear that the organizations are no longer willing to afford the luxury of maintaining large quantities of inventory. This led to the introduction of material planning systems. It used master production schedule with the support of
Bills of material files to identify specific material needed to produce a finished product. Computer was used to calculate the gross material requirement. Inventory record files to know the available quantity on-hand or scheduled to arrive materials to determine net materials requirements. Then they place the order, cancel an existing order or change the timings of the existing orders based on based on the production requirement of finished goods, current inventory levels, the products in production line. |
| 1980s | Manufacturing Requirements Planning (MRP II) | Manufacturing resource planning was the enhancement of material requirement planning. Companies integrated MRP with other manufacturing resources like shop floor, distribution management and financial accounting and management. |
| 1990s | Enterprise Resource Planning (ERP) | In early 1990s, MRP II was further expanded to cover other resources in the organization like product design, information warehousing, material planning, capacity planning, finance, human resources and project management. Hence, the term ERP was coined. |
Therefore, ERP is robust application that improves decision making, return on investment, communication among the departments, reporting, security, customer relationship, supplier relationship etc. This enables the business owner to run his business smoothly and effectively.
