The evolution of Enterprise Resource Planning (ERP)

The evolution of Enterprise Resource Planning (ERP)

In an attempt to maintain a competitive edge in the manufacturing sector, an ever-increasing number of companies now strategically employ Enterprise Resource Planning (ERP) to enable them to supply their products on time and to the standards that today's discerning customers expect.

What is Enterprise Resource Planning (ERP)?

Enterprise Resource Planning is the section of Information Technology that provides a software solution to meet the goals of an organization

Enterprise Resource Planning is the section of Information Technology (IT) that provides a software solution to meet the goals of an organization. It aims to tightly integrate all the functions of the organization. It achieves this by focusing on the organization's enterprise needs, while taking account of its entire production and business process.

The origins of ERP

There were several stages in the forty-year development that lead to ERP as it operates today. In the 1960s, when computing power was severely limited and computers were expensive and unreliable, industrial computing was confined mainly to the area of stock control.

By the 1970s, computing power had increased and manufacturing companies were using computers to schedule the quantities and delivery dates of raw materials necessary to ensure the manufacture of their end-product on schedule. This process is known as Manufacturing Resource Planning (MRP).

By the early 1990s, MRP had evolved to encompass the complete range of business activities

By the early 1990s, however, MRP had evolved to encompass the complete range of business activities, including areas as diverse as finance and human resources. This more advanced software package was called Enterprise Resource Planning (ERP).

ERP - more than just a pretty interface

ERP does much more than provide a complete solution to your business software needs. It provides solutions to the software architecture aspects of implementing this solution. For example, it provides information on where you should use such systems as relational database management systems (RDBMS), object-oriented programming (OOP), and N-tier distributed architecture.

When looking for an ERP system to suit your business needs, you should ensure that it is

• seamless

• versatile

• flexible

• complete

• efficient

• rich in functionality

When your ERP system is seamless, it means that it is visible, yet it presents a consistent environment across the entire gamut of your business operation.

The versatility of your ERP system is a property that enables you to change its functionality to meet the regularly changing requirements of your business practices. For example, you may change from a regular mass-production schedule to the manufacture of a once-off purpose-made article. Your ERP system must be able to support this kind of change. A flexible ERP system is one in which the customer order decoupling point (CODP) is such that it allows this level of versatility.

To say that your ERP system is complete is to say that it can support discrete and process areas of your manufacturing environment.

Your manufacturing facility can be envisioned as a three-pointed entity - it has raw material suppliers, it manufactures goods, and it supplies the finished products to your customers. The efficiency of your ERP system is a measure of how quickly it can relay data across this entity.

In order for your ERP system to be efficient, it must first be rich in functionality through each and every one of the diverse, discrete departments that, working together, comprise your business. Not only that, but your ERP system must support Electronic Data Interchange (EDI) to enable you to communicate efficiently with companies you do business with.

If your company has an international dimension, or if you intend it to become global in the near future, you must install an ERP system that has multisite management capabilities.

When you decide on a particular ERP system, you must of course consider its cost and balance this against the financial gains that will accrue to your business by virtue of your having implemented this system. You can measure the success of your ERP system by how quickly you can benefit from having implemented it. The costs that you must consider include the cost of your license to use the system, staff training costs (taking account of unproductive time away from work), the cost of new hardware and hardware upgrades, and the costs of both software maintenance and upgrades to new software versions.

The future of ERP

The phrase at the cutting edge of ERP technology is "Internet Enabled". If your ERP system is Internet Enabled, it means that your customers can access your supply system. Constant advances in IT will continue to impinge on all aspects of business practices. The Internet has made the world a smaller place from the point of view of instant worldwide access. So, when considering which ERP system you should implement, you should ensure that it is Internet Enabled. If it is, this will provide your business with immediate access to the international market.