Evolution of ERP

Evolution History:

•      ERP has evolved from the system known as MRPII (Manufacturing Requirement planning) .

•      ERP = MRPII + Integration of information between Vendor, Customer and Manufacturer using networks such as LAN, WAN and INTERNET etc.

•      MRPII system was evolved from MRP (Material Requirement Planning) .

•      MRP =Master Production Schedule (MPS) + end product demands

•      MPS = Bill of Material (BOM) + schedule of planned orders considering the inventory in hand.

During early phases of development, integrated solutions were designed for particular process areas such as −

–     Material Management − The integrated system was known as Material Requirement Planning (MRP)

–     Manufacturing − The integrated system was known as Manufacturing Resource Planning

However none of the integrated systems came with a complete solution for an organization covering major business process areas. In early 1990's, the Gartner Group first used the acronym ERP. By mid–1990's, ERP systems addressed all the core enterprise functions.  In the early stages, most of the ERP solutions were focused on automating back office functions that were not directly affecting customers or general public. Later, front office functions such as customer relationship management and e–business systems were integrated.

Timeline	System	Description
1960s	Inventory Management & Control	Inventory Management and control is the combination of information technology and business processes of maintaining the appropriate level of stock in a warehouse. The activities of inventory management include identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, and reporting inventory status.
1970s	Material Requirement Planning (MRP)	Materials Requirement Planning (MRP) utilizes software applications for scheduling production processes. MRP generates schedules for the operations and raw material purchases based on the production requirements of finished goods, the structure of the production system, the current inventories levels and the lot sizing procedure for each operation.
1980's	Manufacturing Requirements Planning (MRP II)	Manufacturing Requirements Planning or MRP utilizes software applications for coordinating manufacturing processes, from product planning, parts purchasing, inventory control to product distribution.
1990's	Enterprise Resource Planning (ERP)	Enterprise Resource Planning or ERP uses multi-module application software for improving the performance of the internal business processes. ERP systems often integrate business activities across functional departments, from product planning, parts purchasing, inventory control, product distribution, fulfillment, to order tracking. ERP software systems may include application modules for supporting marketing, finance, accounting and human resources. ERP systems are now ubiquitous in large businesses and the current move by vendors is to repackage them for small to medium enterprises

ERP System after Evolution: