What is the 7 Evolution or Development of ERP Enterprise Resource Planning Systems? The construction industry is one of the major industries contributing to the economy, even though it is measured to be one of the most highly fragmented, inefficient, and geographically detached industries in the world. Thousands of major construction firms and increasing numbers from other sectors as well, either have just completed their first ERP implementations or are in the middle of this major undertaking. 7 Evolution and Development below are; Pre material requirement planning, Material requirement planning (MRP), MRP- II, ERP, Extended ERP, ERP Planning–II, ERP-A manufacturing perspective.
Here is the article to explain, 7 Evolution and Development of ERP Enterprise Resource Planning with their history!
The history of ERP can trace back to the 1960s when the system focuses mainly on inventory control. During the 1970s, a shift of focus towards MRP (Material Requirement Planning) did observe. This system helped in translating the master production schedule into requirements for individual units like sub-assemblies, components, and other raw material planning and procurement. This system did involve mainly in planning the raw material requirements.
Then, in the 1980s came the concept of MRP-II (Manufacturing Resource Planning) which involved optimizing the entire plant production process. In the beginning, MRP-II was an extension of MRP to include shop floor and distribution management activities. Afterward, it did further extended to include areas like Finance, Human resources, Engineering, Project Management, etc. This gave birth to ERP (Enterprise Resource Planning) which covered the cross-functional coordination and integration in support of the production process.
Role of ERP;
The role of enterprise resource planning (ERP) does not match its name, we talk about their Evolution and Development. It is no longer related to planning and resources but is rather related to the enterprise aspect of the name. ERP attempts to unify all systems of departments together into a single, integrated software program based on a single database so that various departments can more easily share information and communicate with each other. The ERP includes the entire range of a company’s activities. It addresses both system requirements and technical aspects including client/server distributed architecture, RDBMS, object-oriented programming, etc.
ERP systems are designed as an integrated set of software modules, all linked to a common database, handling a host of corporate functions such as finance, human resources, material management, sales, etc. Russell and Taylor (1995) suggested that the ERP of today differ from traditional MRP II system in the areas of relational database management, graphical user interface (GUI), fourth-generation languages (4GL), client-server architecture, and open system capabilities.
In addition, Kapp et al. (2001), stated that the difference between ERP and MRP II is the inclusion of a variety of manufacturing processes within ERP, in which modern ERP software can handle both discrete work orders and flow orders, JIT and MRP, EDI, and hand-entered orders. Wainewright (2002) also stated that MRP was used for tracking suppliers, work-in-progress, and the output of finished goods, while ERP was used for all types of business with additional functions including financials, payroll, and human resources management.
Furthermore, Kremzar and Wallace (2001) also stated that ERP is far better than MRP II for three reasons:
- ERP applies a single set of resource planning tools across the entire enterprise;
- ERP provides real-time integration of sales, operating, and financial data, and;
- Also, ERP connects resource planning approaches to the extended supply chain of customers and suppliers.
According to Koch(2002) the main reasons that companies take ERP to summarize below:
- Because of its Integrated Financial Information i.e. to create a single version of the information which cannot question because all the members of the company use the same system.
- The information integrates into one system rather than scattered on many different systems that cannot communicate which each other, so that the company can track orders and can coordinate with different related departments across many different locations at the same time.
- It standardized and speed up the process using a single integrated system which can save time and increase productivity.
- Reduces inventory by improving the observation ability of the order process inside the company.
The popularity of ERP systems started to soar in 1994 when SAP, a German-based company, released its next-generation software known as R/3. In the following years, companies began to pour billions into ERP systems offered by SAP and its major competitors such as Oracle, Baan, J.D. Edwards, etc. Recently, ERP vendors add more modules and functions as “add-ons” to the core modules giving birth to the new term i.e. extended ERPs or ERP II. It is the enterprise system for the 21st century.
ERP extensions include advanced plan;
These ERP extensions include advanced planning and scheduling (APS), e-business solutions such as customer relationship management (CRM), and supply chain management (SCM). ERP II systems are about optimizing the supply chain through collaboration with trading partners. It crosses all sectors and segments of business, including service industries, government, and asset-based industries like mining. According to Zrimsek (2003), ERP II systems are web-based, open to integrate and interoperate with other systems, and built around modules or components that allow users to choose just the functionality they need.
Difference between MRP and ERP;
Here are a few differences between MRP and ERP.
- MRP method material requirement making plans ERP means employer useful resource planning.
- MRP is a solo software program, but ERP software can combine with different systems or software programs easily.
- You can integrate the MRP software program with another software program, however, it’s miles tough. ERP systems combine with other software programs or modules without any problem.
- MRP fits production industries, whereas ERP fits all kinds of industries, specifically huge companies due to the fact it could fulfill the requirements of all the departments of huge industries with its modules.
- Types of MRP users are minimal because only one branch, this is, the manufacturing branch makes use of it. But types of ERP customers are most with prolonged customers in special departments.
- ERP is extra steeply-price, while MRP is much less high-priced.
Difference between open supply ERP and cloud ERP;
What is the considerable difference between open source ERP and cloud ERP? The great distinction between open source ERP and cloud ERP is source code. In an open-supply ERP system, the supply code is publicly accessible. But in a cloud system, you have to pay to get the license of supply code.
- In open source ERP, you could personalize the code, rewrite the code, and generate a new code version. But in cloud ERP, you cannot edit the code.
- Open supply ERP suites industries with less required functionalities. Cloud ERP suits massive industries that require a huge style of features.
- Open source ERP is entirely loose, and for cloud ERP, subscription prices are there.
Future evolution or development of ERP systems;
In evaluation with the history of ERP enterprise resource planning, its future is greater dynamic due to the development in a generation.
- Due to the reduction of computation fee and statistics garage cost, gathering each minute element of business events are viable. In addition, it opens up the possibility of giant information analysis and superior reporting.
- Based on previous statistics and industry benchmarks, gadget learning can assist in suggesting better business selections.
- Automation of data-driven decision-making will take the front seat with the help of artificial intelligence.
- For business transactions between multiple events, they may be organizing information integrity with the blockchain era.
- To avoid frictions due to physical proximity, the virtual fact for better interactions.
- Jobsite controls the use of five G-enabled smartphones.
- Internet of Things or Factors (IoT) for higher facts alternate among human-to-machine and gadget-to-gadget.
- The evolution and development in the era has constantly accompanied the records of ERP. It keeps boosting the commercial enterprise boom.
With SaaS-based cloud ERP systems, increasingly companies can start using corporation aid planning answers of their commercial enterprise operations.
References; Enterprise resource planning. Retrieved from https://www.ukessays.com/essays/construction/enterprise-resource-planning.php?vref=1