History and Evolution of ERP System

Enterprise Resource Planning has evolved from Manufacturing Requirement Planning that was used to assist the manufacturing process. Manufacturing Requirement Planning or MRP was upgraded to MRP II and then came ERP. ERP offers more benefits than both MRP and MRP II. The history and evolution of ERP came from the fact that the MRP software were not able to extend to other sectors. ERP was developed to cover areas like Marketing, Finance, Human Resource, etc. The MRP software had very high costs and required a lot of technical expertise. Thus ERP came into practice and could coordinate between the various departments of an organization other than only marketing. Many companies started their association with ERP like SAP, Oracle and Baan Corporation.

The history and evolution of ERP has increased its efficiency with the latest technologies. It has evolved from coordination of manufacturing processes to integration of enterprise wide back end processes. It has evolved from legacy implementation to more flexible tiered client server architecture. During the 1960s Inventory Management and Control system was used to maintain the level of stock in the warehouse by identifying inventory requirements, providing replenishment options and monitoring the usage.

During 1970s, Material Requirement Planning was used to generate operation schedules, structuring of production system and raw materials purchasing. Then came Manufacturing Requirement Planning II in the 1980s which was used for coordinating manufacturing processes. Enterprise Resource Planning or ERP came into usage in the 1990s which used the multi module application for enhancing the business' performance. It integrates different functional departments like product distribution, product planning, inventory control, etc in an organization.

The ERP system now provides customized services according to the requirement of the customer. It has gone through a lot of evolution through the years and has been modified to fit into the current market trends. The popularity of ERP systems grew when the big companies implemented the system and realized benefits. With the web based software now in the market, small and medium sized enterprises can also gain the benefits of the ERP system. It is cheaper now and more flexible than before allowing many small companies to approach the ERP system. Also the time taken for implementing ERP has reduced and the implementation process has become easier than before.

The organizations are looking for need based applications and the latest trend of ERP is to be more flexible. The evolution of ERP can be seen from the fact that it is using the latest technologies in the market. Web enabled technology aids the operations to be online for accessing from anywhere in the world. Wireless ERP has made it possible to share the data through the net. Open source ERP greatly decreases the costs of the heavy initial license fees and medication fees. The evolution of ERP has increased its scope from only big sized companies to small and medium sized companies too. It is more user friendly now and are looking to provide a complete solution to the company to achieve their goals.