ERP- Enterprise Resource Planning

Enterprise resource planning can be said to be a term used in industry to describe application software packages that are integrated and multi modular. These software packages have the sole purpose of serving and supporting a multitude of business functions. A typical software package may include capacity to handle order entry, manufacturing, purchasing, general ledger, transportation, warehousing, human resources and accounts receivable and payables. These business management software packages have their origins in the manufacturing industry. They are packaged software as opposed to being proprietary software which makes them ideal for use by any organization. These modules also have the capacity to accommodate changes using proprietary tools of the vendor or any standard programming languages.

During the 1960’s, most manufacturing systems focused on inventory control. Software packages that were in existence then were customized and they mainly concentrated on handling inventory. Material requirement planning or MRP systems characterized the 1970’s. This development transformed the master schedule that focused on the end products into a time conscious process which encompassed the entire manufacturing process of raw materials procurement, sub assembly to the end product. The 1980’s saw the introduction of Material Resources Planning (MRP-II) which was largely a MRP extension. This extended efficiency to activities on the shop floor and the whole distribution chain. The 1990’s saw the MRP-II encompass project management, finance, human resources and engineering. This basically involved all areas within a business enterprise.

ERP was therefore coined from this development of the 1990’s and currently offers an all inclusive information solution throughout the entire business enterprise. With these software packages, businesses can now ratify best practices. This leads to corporations that are able to maximize profits by serving their clients efficiently through the use of efficient processes. Some of the market leaders of these software packages that account for 64% of the entire market include Oracle Corporation, JD Edwards & Company, Baan International and SAP. These organizations are constantly striving to expand the product functionality and enhance their penetration rates.

The future of these software packages is great as industry analysts predict that almost all major manufacturing companies will at some point yield in and purchase them. The cost of these software packages vary from several hundred thousand for a small company to millions for large enterprises. The cost includes training and maintenance. ERP-II has become a new must have for corporate entities out there as it has been found to increase the businesses competitive edge.

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