Last edited 14 Apr 2021

Enterprise resource planning ERP

Contents

[edit] Introduction

Enterprise resource planning (ERP) software is used to integrate different aspects of business operations into a single technology offering. This means the same technology and data is used and accessed across a range of different parts of an organisation, making it possible to tie together information and operations in an automated, end to end approach.

Early ERP was intended to assist with the automation of back office functions. A robust ERP can handle essential business activities such as finance, human resources, inventory management, procurement, project management, risk management and compliance and supply chain operations. A comprehensive offering may help organisations plan, budget, predict and report on enterprise performance.

[edit] History

ERP first appeared in the manufacturing industry as an automated advancement of the Economic Order Quantity EOQ. Developed in 1913, EOQ was a paper-based inventory management technique that described the minimum amount of inventory an organisation must have to optimise the size of orders and their associated costs. It was used in operations, logistics and supply chain management.

Next came material resource planning (MRP) in the 1960s, which eventually paved the way initially for advanced MRP II tools and then ERP. The term ERP was first used by The Gartner Group in the 1990s to describe this evolution of MRP and MRP II. In 2000, Gartner introduced the term ERP II, but this has not been widely adopted.

[edit] Specialisation

Since the 1990s, ERP has moved from manufacturing to other business sectors which have ERP solutions designed to address their specific needs. These include apparel, automotive, construction, higher education and so on.

No longer solely a local software solution, ERP is now available as a cloud-based platform and as hybrid ERP, which combines desk and cloud-based offerings. It is also available as open source software which can be tailored by the user.

[edit] Using ERP

Adopting an ERP system can be expensive and complex, since they are designed to integrate all supply chain processes - both internal and external. This complexity can create a challenge for small- to medium-sized enterprises (SMEs) that may struggle to justify the investment.

However, the integration may produce positive results for organisations of all sizes in several areas, including innovation, efficiency, standardisation and IT cost savings.

In a global economy, some multinational clients require that their partners not only to use ERP, but use the same ERP as the client.

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