Software called ERP is used for business management. ERP is the descendent of Manufacturing resource planning software as its extended version based on the same concept that assists in automated management of incoming orders through administering the manufacturing line and industrial go downs. ERP is launched as a set of different software utilities having management for financial, human resource, manufacturing and industrial utilities which compile the background product supply functionality of a business (Sharma, 2004).
Different companies are involved in development of ERP software like Oracle, SAP, JD Edwards and People Soft. ERP strategizes to extend and integrate Software management into main IT mechanism of the business with the purpose of data organization and flow in and outside the company in a brisk and managed way; making record of every instance of important steps of the business; eradicating room for errors; administrating processes; providing flexibility to the system; diffuses internal boundaries of different departments; gives easy access to relevant shared groups of customers and partners; and boosts up the response rate of the company with the market place (Sharma, 2004).
IT innovation has bestowed business administration an outstanding solution in the form ERP. These software solutions are designed to manage and assemble operational processes and flow of information in the structural orientation of a company, assisting resourceful elements of the company including employees, materials, money and machinery. In the early stages of the introduction, ERP solutions were limited in context of affordability, to Multinational vendors and infrastructure organizations (Sharma, 2004).
Timeline of ERP evolution
System Developed: IMC
A brief Description of the System: Management of inventory control, a core enterprise of maintaining a supply chain management administering the warehouse and stock status, is done through combinational mechanism of IT and industrial processes. These business processes managed under the IT framework consist of establishing requirements of inventory, setting limits, setting replacement mechanisms and response, directing usage of materials, creating inventory balance, and inspecting status of inventory (Sharma, 2004).
System Developed: MRP
A brief Description of the System: Material requirements planning (MRP), is used for assembling schedule of industrial manufacturing processes employing software utilities. MRP designs time frame for purchasing and operational processes determined by the requirements of production of manufactured products, structure of manufacturing department, inventory status and material handling for each operation (Hanson, 2004).
System Developed: MRP II
A brief Description of the System: MRP or manufacturing requirements planning (II) employs use of software solutions for administering processes of production, including product plan, purchasing process, inventory control and distribution (Hanson, 2004).
Timeline: 1990s and 2000s
System Developed: ERP
A brief Description of the System: ERP or enterprise resource planning utilizes integrated software solutions to enhance the background industrial operations of the business. ERP mechanism is such that departmental limits become softer and diffused in the operational departments assisting business activities such as product plan, purchasing process, supply management, inventory control, replacement and response and order tracking. Apart from the process management, financial management tools such as marketing management, finance management and human resource management solutions may also be integrated in the software (Hanson, 2004).
Description of the ERP evolution
With the advent of calculating machines in 1940s, its industrial application in form of ERP gained interest. In the commencing years of 1960s, with joint collaboration of IBM and J.I. Case, a manufacturing company of agricultural and construction equipment, ERP was officially invented. This software ideology was supposed to serve as a virtual administrator for operational and management functionalities of a business such as planning and scheduling for manufacturing industry. Disoriented and inefficient solutions for MRP were introduced in the 1970s which were also unaffordable. They required large maintenance staff to carry out the tasks on mainframe computers for which they were built (Hanson, 2004).
Five engineers from Mannhein, Germany started the company known as SAP in the year 1972. Its aim was to develop and market typical software that could be used for the purpose of business solutions. In the year 2975, Bill Lawson, Richard Lawson and their business partner named John Cerullo started the Lawson Software. In the year 1976, the concept of MRP (Material Requirement Planning) gets essential in manufacturing industry. This concept was used in the production control and the management. The founder of this software felt the necessity for a solution, thus, giving way to pre-packaged enterprise technology (Hanson, 2004).
In the year 1977, ED Mc Vaney, Dan Gregory and Jack Thompson formed a JD Edwards. A part of each name of the founder was taken and joined to make the name of the company. The Oracle Corporation also began by Larry Ellison. In the next year i.e. 1978, Baan Corporation was started by Jan Baan. He provided administrative and financial services (Millman, 2004).
In the year 1979, the first commercial system of SQL relational database management was offered by Oracle. After this in the initial period of 1980s, IBM System became a center of focus for JD Edward. MRP (Manufacturing Resources Planning) later changed into MRP II. This was more easily accessible for the activities of distribution management and shop floor. In the next year which was 1981, Unix began to be used as a major operating system by Baan. Baan presented the first product of the software in 1982 while Edward was concentrating on IBM System/38. The year after that was 1983 in which a record written in C (so that it could be portable) along with a database in the VAX mode was offered by Oracle (Millman, 2004).
Manufacturing was being more focused compared for development by Baan in the year 1984. In 1985 JD Edward became to be known as a leading supplier in the application software. The IBM AS/400 computer became a great success. It was System/38's direct descendant. In the year 1987, Ken Morris and Dave Duffield founded PeopleSoft and in the next year i.e. 1988 the Human Resource Management System (HRMS) of PeopleSoft was developed (Millman, 2004).
Using the channels of indirect sales, in 1990 the Baan software reached 35 countries. In the initial period of 1990s, term ERP was coined. It was the time when the MRP-II was extended. After these areas of Project Management, Human Resource, Finance and Engineering were also included. In 1991, PeopleSoft extended to Canada. This made them to be available at Pacific Rim, South and Central America, Africa, Asia and Europe. In the next year, Baan grew so much that it had to employ 1000 workers had had over 1,800 customers (Millman, 2004).
Few years later, in 1999, JD Edward had over 4700 customers from more than 100 countries while Oracle was having 41,000 customers from all over the world (16,000 U.S.). More than half of the market of human resource use PeopleSoft software. The largest company of inter-enterprise software is SAP and has the fourth biggest independent supplier of software. There are 20,500 workers of SAP in over 50 countries. There are almost 4,800 sites of 2,800 Baan enterprise systems worldwide (Millman, 2004).
The demand of ERP systems declined after the event of 9/11 in the year 2001. In the year after that the ERP systems were enhanced so that they are "Internet Enabled." In this way the customers would get a direct access with the suppliers of ERP system. In 2004 SOA (Service Oriented Architecture) gets standard allowing communication between different systems (Millman, 2004).
2003-2004 is the time when Industry consolidation took place. The Oracle was Seibel, PeopleSoft, JD Edwards and E-business Suite and sage being the most appropriate system attained. Mapics, Baan and a veer of different products were the infors. Solomon, Great Plains, Axapta and Navision could be categorized as Microsoft (Millman, 2004).
ERP's history goes back to 1960 which were initially produced so that they can help in the process of manufacturing. MRP (Material Resource Planning), in 1975, was the first software which was developed during this process. Succeeding MRP was its advanced version known as MRP2. MRP2 was a short form of Manufacturing Resource Planning. However, either MRP or MRP2 provided benefits that ERP does (Millman, 2004).
Limitations of MRP Systems and the birth of ERP
Software like, MRP and its advance version MRP2 were helpful making manufacturing process easier. However, benefits of this software were restricted to manufacturing sector only. In this regard, ERP can it to existence as software of multi-dimensions. ERP takes its limits beyond manufacturing and into other field like finance, marketing, human resource etc. In comparison to previous software, it offers large cost reduction and operational convenience along with other advantages (Millman, 2004).
MRP software was popular and attained lot of fame. It was considers as a hallmark when developing a manufacturing setups. However, the benefits which were expected through this software were not rendering due to different technical problems and its exorbitant costs. Additionally, it also required high expertise technical machineries as well as manpower (Millman, 2004).
Existence of ERP could be found in 1990, but few people…