ERP Basic Concepts

ERP Basic Concepts

ERP is the abbreviation for Enterprise Resource Planning which was brought up by Gartner Group. Inc (GGI) in the early 90s of the 20th century.GGI addressed the concepts and contents of the ERP which faced the supply-demand chain management while its content gets beyond MRPII and the scope of information is more extensive. ERP system is capable in multi-business, multi-district, multi-mode or combined mode. ERP is the informative management for manufacturing in future with great system functions, flexible application environment and immediate control ability. ERP is a very popular form of enterprise information control system in present. Most of the ERP systems function in solving the core problems in purchase/sales/inventory, finance, planning, quality control, production, etc. ERP meant to make enterprise resource control the best, conform the production flow and enhance the effectiveness of the enterprise operation.

In the development of ERP concepts, the enterprise first pay close attention to material, followed by MRP which later extend to production plan and MRPII. As the enterprise and products are both growing, a more comprehensive manufacturing ERP should include MRP and MRPII. However, the ERP concepts nowadays should be more widespread which almost become the code word for enterprise information revolution.


Development of ERP

Different Stages of ERP Development

First Stage: Order Point (40s in 20th Century)

To solve the problem of inventory control, people addressed the idea of order point before the use of computer system.

Second Stage: Basic MRP (60s in 20th Century)

The development of computer system make complicated calculation of large-scale-data within a short period of time possible. To settle the deficiencies of "order point", people brought up Material Requirements Planning (MRP) which was said to be the stage of material requiring planning or basic MRP stage.

Third Stage: Closed-loop MRP (70s in 20th Century)

Following the accumulation of knowledge and popularize of computer system, functions of MRP became more extensive. To solve the problems in controlling Purcahse, Inventory, Production, and Sales, Production Capacity Requirements Planning, Shop Floor Control Planning and Purchase Plan Theory are developed as a production planning and control system -- Closed - loop MRP. In these two stages, Toyota production style (Kanban Management), TQC (Total Quality Control) , JIT (Just In Time) and Direct numerical control machine tools appear as support technology.

Fourth Stage: MRPII (80s in 20th Century)

Sharing of internal information and unify of all subsystems due to the internet development created a subsystem combined with purchase, inventory, production, sales, account, and techniques, which finally became MRPII. CIMS (Computer Intergrated Manufacturing System).

Fifth Stage: ERP (90s in 20th Century)

The competition space of enterprise is widening while the market competition is intensifying. The MRPII in 80s mianly focus on comprehensive planning of internal resources which later developed into the ERP in 90s. It is designed to effectively use and manage the entire resources. ERP is first introducedin 90s by the Gartner Group Inc. of the States. The explanation for the development and revolution of management information system in the information generation is based on the development of computer technology and deman-supply-chain management in different manufactures. On account of people's understanding, ERP was given more content which emphasize on demand-supply-chain. Apart from the functions of production, finance, sales, etc. provided by the traditional MRPII, functions of distribution, human resouce management, logistic control, inventory control, quality control, fixed assets control and decision making support, etc. are also included. The system supports grouping, multi-district and multi-national operation which goal is make resources in all aspects in an enterprise distributed in balance which at last enhance the competitiveness and economic advantage for the enterprise.

From the development history of ERP, the combination of modern management idea and computer software technology is produced over the time of changes in management demands of the enterprise. Moreover, the ERP system is playing more and more important role in management interface. The application of ERP can effectively promote the modernization of enterprise management so as to accomodate the increasingly demanding market; which means, intergration of ERP system for an enterprise is an irresisble general trend.

 


Back to Home

 

 

replace with your keywords replace with your keywords replace with your keywords replace with your keywords replace with your keywords replace with your keywords replace with your keywords replace with your keywords