Concept of ERP – An Overview

Concept of ERP – An Overview

In early 1950-70, the industrial world realized that the organization’s growth and country’s prosperity is possible, only if production and productivity is improved, as a result of that JIT – Just In Time concept comes into existence, which helped to a greater extent to reduce the delay, wastage of resources such as men, material and money at the manufacturing level. Over a period of time lot of software applications have come into existence to manage the individual business processes, i.e., Manufacturing, Supply Chain, Projects, Maintenance, Human Resources, Financial etc., but they all work as stand alone systems, they do not talk each other.

It is essential to know the three important concepts of productivity terms.

1. Basic Business Management Cycle – i.e., Planning, Organizing, Performance and Control.

2. Hoshin Kanri – The strategy policy management emerged from Japan which assures higher productivity levels.

3. ERP is the hybrid of the above two points.

In early 70s, a shift in thinking comes in, to optimize the whole business process through integrating the processes by integrating the systems and applications. It started with MRP I – Manufacturing Resource Planning I; integrated the material planning processes, which paved the way to MRP II – Manufacturing Resource Planning II, which covered all the resources in a manufacturing company with the additional ability to manage the hypothetical situations. ERP – Enterprise Resource Planning systems are the largest stage of this evolution and integrate all other functions of the business too, such as planning, manufacturing, materials, distribution, shipping, commercial, human resources and accounting. ERP is a system that integrates all of these functions into a single system, designed to serve the needs of each different department within the enterprise. It is not just a software, it goes far beyond that.

Since all systems in an organization are integrated, all departments can more easily share information, the workflow among departments becomes much more automated and ultimately the performance and productivity of the Enterprise is improved significantly.

Thus, ERP gives an end to end solution and ensures better customer management, supplier management, manufacturing process management, inventory management, human resource management project management and financial management etc.,.