The theory of database management is based on the enterprise resource management system created back in the 1960s called Material Requirements Planning (MRP). This system was designed to plan and allocate materials for the manufacture of complex products. To be honest, some experts even bring us back to 1910-s, when the theory of Economic Order Quantities (EOQ) was used.
These were rather large, inconvenient, and yet expensive software products. To maintain such a system, it was necessary to hire a whole staff of specialists.
Nevertheless, MRP was the standard means of management in enterprises until 1983, when a fundamentally new modular system was released. It was called Manufacturing Resource Planning and was already referred to as MRP II. With the help of this system, the main production processes, from planning to contracting, were controlled.
It became possible to manage all processes within a single software system. For the first time the unified system allowed the management of enterprises to understand how to manage information and increase the efficiency of daily activities. Competent planning of production operations, reduction of raw material stocks in warehouses, reduction of waste – these are the positive results of MRP II implementation, another stage of ERP history on the way to development of ERP systems.
Similar systems were later introduced to manage finances, HR-related processes and customer relations. The general concept was to accumulate and consolidate all data within a single repository.
In 1990, Lee Wiley (an analyst of the famous Gartner publication) proposed to separate these systems into a separate class and call them Enterprise Resource Planning (ERP). Around the same time SAP and Oracle companies presented new solutions in the field of resource management, which allowed to give all ERP systems a wide distribution. As a result, by the mid-90s of the last century, a market for the provision of relevant services had already formed.
The main ERP systems at that period were provided by such industry leaders as Oracle, Bann, SAP, Peoplesoft, Edwards (the company was later acquired by Oracle). Among them the German SAP held the undoubted leadership. Such systems were developed not only for enterprises, but also for the service sector – electricity suppliers, government and non-profit organizations.
As a result, ERP turned into universal program complexes that could cover all business processes. Over time, however, it became necessary to separate separate separate product solutions from ERP – CRM (company interaction) and PLM (product lifecycle management). ERP-systems are used mainly for automation of back-office operations and for management of company resources, including human resources, manufacturing processes, business functions, project management, inventory control, day business activities, and so on.
During the past decade, many experts noted the problems of flexibility and adaptability to new business processes in the systems that existed at that time. This had a negative impact on the development of companies, in particular on the speed of all processes. As a result, managers began to look for more convenient and modern means of resource management. This is how the new concept of “postmodern ERP” emerged in the 2010s.
This global principle is the search for the optimal combination of advanced technologies for the business processes of a particular enterprise. For obvious reasons, there can be no universal solution here. Therefore, ERP elements are selected strictly individually.
And neither the type of system nor its manufacturer are determining factors in the selection. Today, there is an increasing shift away from monolithic ERP towards modular ERP. It is important that all systems are compatible with each other and provide a perfect balance, resulting in a positive synergistic effect.
What are the key features of choosing a reliable ERP system?
Cloud-based solution
Your ERP software has to be cloud-based, and let us leave alone such wrong prejudices as security concerns. Cloud-based platforms are now the 80% of the market for almost any essential business software – CRM software, call center software,and surely, the ERP. Cloud solutions provide cost-effective set up, free maintenance, and wide range of advanced features – leave alone the simplified scalability.
Integration capabilities
As modern business require numerous business tools and systems to streamline business operations and internal business processes, it is important to make sure that you can set up stable data synchronization and syncing between these solutions, and ideally, set them all up into an all-in-one environment where workers won’t be made to switch between different solutions again and again. Thus, look for an ERP system with powerful integration capabilities.
Capabilities and functionality
The more processes can be automated with the use of certain cloud ERP solutions, the better it is for your business. Try to cover as many business processes with a solution as possible, including processes that don’t have direct connection to supply chain management or inventory management – such as workforce planning, scheduling, CRM features, and so on. The more capable is your software, the lower is the chance that at some point you will have to replace it with another, more advanced version, which can save you a lot of time and upfront costs.
Conclusion
ERP system history began long ago, yet it is still one of the most important business solutions to ever exist, and especially for manufacturing industries where proper management of resources defines the overall success of the business. ERP solutions are now much different from what they were back then, anyhow, they are still focusing on the same purpose – guaranteeing stable business functioning and effective use of resources. ERP system history isn’t over as we are looking forward to developing new, more advanced solutions. This can include cloud-based ERPs, artificial intelligence use, and other advancement in technology.
Your goal is to find as advanced solution as possible, which will be ready to cover your business needs and requirements totally without spending too much on it – in other words, it has to cloud solution as it is a cost-effective solution in terms of setup and maintenance, and also it has to be able to integrate with other business tools you use or you are going to use. Different business models can require different business applications, so to get competitive advantage, you have to operate business intelligence.