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Evolution of ERP

Inventory Management & Control (the 1960s)

• The history of ERP begins with inventory management and control.
• In the 1960s, manufacturing industries found that they required a
system that should manage, monitor, and control their inventory.
• Inventory Management and control combine information technology
and business processes to maintain the appropriate stock level in a
warehouse.

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Inventory Management & Control (the 1960s)

The activities of inventory management include
• Identifying inventory requirements
• Setting targets
• Providing replenishment techniques and options
• Monitoring item usages
• Reconciling the inventory balances
• Reporting inventory status

Material Requirement Planning (MRP – 1970s)

• In the 1970s, material requirements planning evolved to meet the
manufacturing industries’ needs.
• Material requirements planning (MRP) utilizes software applications for
scheduling production processes. MRP generates schedules for operations
and raw material purchases.
• Scheduling is based on,
• Production requirements for finished goods
• Structure of the production system
• Current inventory levels
• Lot-sizing procedure for each operation

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Material
Requirement
Planning
(MRP)

Manufacturing Resource
Planning (MRP II – 1980s)
• Developed in 1980s, Manufacturing Resource
Planning is an expansion of closed loop MRP for
managing an entire manufacturing company.
• This system provides an information that is
useful to all functional areas and encourages
cross-functional interactions.
• It supports sales and marketing by providing and
orders promising capability.
• It is a broad-based resource co-ordination system
involving other areas of a firm in planning
processes, such as marketing, finance and HR.

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Enterprise Resource Planning (ERP – 1990s)

• Developed in 1990s, Enterprise Resource Planning is foundation system for
domestic and global operations, supporting most or all functional areas in
their daily operations. is one of more common categories of business
software, especially with large-scale businesses.
• It is a business strategy and a set of industry-domain-specific applications
that build customer and shareholder communities value network system by
enabling and optimizing enterprise and inter-enterprise collaborative
operational and financial processes.
• ERP at its core is an effective way of centralizing information and workflow
processes through data management. Because ERP keeps all of your
workflow data in one place.

Enterprise
Resource
Planning
(ERP)

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ERP term coined by Gartner

MRP vs ERP

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MRP ERP
It means material requirement planning It means enterprise resource planning

It is a solo software It can integrate with other systems or software easily

You can integrate it with other software, but that is It combines with other software or modules without
challenging. any difficulty.

It suits all industries and huge enterprises because it

It suits manufacturing industries. can fulfill the requirements of all the departments of
large industries with its modules.

Types of its users are minimum because only the Types of its users are maximum with extended users in
manufacturing department uses it. different departments.
It is less expensive It is more expensive

MRP vs ERP

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Web Functionalities with Internet (ERP II) (the

2000s)
• Developed in 2000s, ERP II is name now use to describe ERP. Basically,
it is successor of ERP.
• It is a business strategy and set of collaborative operational and
financial processes internally and beyond enterprise.
• These new business models reflect an increased business focus on
internal integration. It’s domain is in all sectors and segments.
• Data in this is internally and externally published and subscribed. It
includes departmental modules, CRM, SCM and other stakeholders
modules. It emphasis on intangible assists.

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Enterprise
Resource
Planning
(ERP-II)

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Cloud-based ERP (the 2010s)

• Business applications are delivered as a Software as a Service
(SaaS) model. Servers are deployed on the cloud and accessed
with the rest APIs.
• Android, iOS, and browser applications are developed for
delivering ERP software in the SaaS model.
• It is helping businesses of all scales start using ERP systems since
the upfront cost of cloud ERP systems is relatively minor.
• Most of the prominent top ERP vendors are delivering services
over the cloud.

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Evolution of Open Source ERP solutions

• Along with commercial vendors, open-source ERP systems
are also evolved. These systems are mainly catering to the
requirements of small and medium-scale businesses.
• Since there is less upfront cost involved while implementing
these systems, businesses with less budget could also afford
it.
• There is a surge in service providers who help implement and
customize open source ERP solutions.

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Open Source ERP and Commercial ERP

Open Source ERP Commercial ERP

You can customize the code, rewrite the

You can not edit the code.
code, and generate a new code version.

It suites industries with less required It suits big sectors that need a wide
functionalities variety of features.
It is entirely free. You need to pay only Upfront costs and subscription charges
for services. are included.

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Where do you think ERP is

heading?

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The future
of ERP
With exponential progress
in systems’ data storage and
computing capacity
per Moore’s law, we witness
advancements in enterprise
software systems.

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Components of ERP

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ERP Modules
Integrated ERP includes several different
components based upon specific features adapted
to the various aspects of the organization, including
front-office tasks. This quick overview shows the
most common modules.
• Accounting and Controlling
• HR Management
• Production and Materials Management
• Project Management
• Quality Management and Plant Maintenance
• Sales and Distribution

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Components of ERP….
Central Components
• Enterprise Resource Planning (ERP)

Corporate Components
• Supply Chain Management (SCM)
• Customer Relationship Management (CRM)
• Supplier Relationship Management (SRM)
• Product Lifecycle Management (PLM)
• Employee Lifecycle Management (ELM)
• Corporate Performance Management (CPM)

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Components of ERP….
Collaborative Components
• Business-to-consumer (B2C)
• Business-to-business (B2B)
• Business-to-employee (B2E)
• Enterprise Application Integration (EAI)

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Typical ERP
Modules

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