The history of Enterprise Resource Planning (ERP) systems is a fascinating journey through the evolution of technology and its integration into business operations. From its early beginnings to the sophisticated ERP software systems we use today, the development of ERP has been pivotal in transforming how companies organize and manage their resources.
These systems have revolutionized the landscape of business operations, offering an integrated approach to managing all facets of a business from product planning to payment processing.
As we explore the evolution of ERP systems, we'll see how they have become essential tools for businesses looking to streamline processes and boost efficiency across various departments.
Enterprise resource planning (ERP) is an integral component of today’s complex global marketplace. ERP software helps companies streamline business processes, including:
- Product planning, cost and development
- Manufacturing or service delivery
- Marketing and sales
- Inventory management
- Shipping and payment
ERP resource planning systems can track, connect, and improve business functions. Their major benefits include automating tedious tasks and increasing transparency.
They also provide a complete, real-time view of operations, creating a common database and single source of truth. This makes data visualization and reporting significantly easier.
However, ERP solutions weren’t always this advanced. How did enterprise resource planning evolve? Check out the infographic above for a timeline of the ERP history and evolution.
You can also read the highlights of ERP evolution below.
The History ERP and How it's Evolved
The 1960s: – Growth of Enterprise Information Systems (EIS)
Early systems were based on automation for individual functions, like financial accounting or inventory management.
EIS systems were a major improvement. However, they were also very limited in scope. Additionally, their high costs prevented most businesses from using them.
The 1970s: – Shift to Material Requirements Planning (MRP)
MRP systems tapped into the master production schedule, allowing businesses to plan the parts and product requirements.
This is the start of the continuous development seen in ERP solutions up through the present day. However, the same problems with EIS software — cost and accessibility — remained
The 1980s: – Manufacturing Resource Planning (MRP II) Introduced
MRP II software emphasized an optimized manufacturing process that coordinated materials and production requirements, extending services to:
- The shop floor
- Finance
- Human resources
- Engineering
- Project management
- Distribution management
Connecting different teams and departments across a business is a foundational concept in today’s ERP. These wider-reaching benefits also began to build more interest in ERP (or MRP II, at the time). It started to become an option outside of the manufacturing industry.
The 1990s – Birth of Enterprise Resource Planning
By the early ‘90s, MRP-II had been extended to include enterprise-wide functions and integration.
Extended MRP II systems were renamed enterprise resource planning systems. This is the same concept that applies to modern ERP solutions.
ERP uses a single database containing all the data that keeps the processes running smoothly, ensuring visibility, accessibility, and consistency.
2000s and Beyond: – Extended Enterprise Resource Planning
Extended ERP systems include:
- Customer relationship management
- Supply chain management
- Advanced planning and scheduling
Continuing ERP trends include capabilities for:
- Cloud
- Mobile devices, including Internet of Things (IOT)
- Analytics
- Artificial Intelligence (AI)
ERP continues to develop, expand, and improve. The cloud, along with mobile access, has made ERP far more accessible. The addition of analytics offers even more insight into your company’s operations.
As we reflect on the ERP evolution and look deeper into its rich history, it's clear that these systems have become indispensable in the modern business landscape. From humble beginnings to powerful, integrated solutions that drive enterprise efficiency, the journey of ERP is one of continuous innovation and adaptation.
Ready to transform your organization with an ERP solution designed for A&D manufacturers, general manufacturers, and machine shops? Get in touch with the experts at CTND today!
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Sources:
- https://faculty.biu.ac.il/~shnaidh/zooloo/nihul/evolution.pdf
- http://www.slideshare.net/Monojit.Banerjee/evolution-of-erp-10579857
- http://acumaticaclouderp.blogspot.com/2013/09/evolution-of-erp-software-for-small-and.html