The History of ERP

What is ERP?

HistoryOfERPBefore we begin to pull apart the ERP timeline, we need to first define it. ERP stands for Enterprise Resource Planning. It is an integrated system that brings together important information about an organisation’s supporting functions involved in the phases from conception to delivery of consumer products and services and increases efficient and effective information flow between these functions.

ERP is a software used to manage business processes where all data can be found in a single central database. Information such as sales and distribution, service application, human resource management, financial applications, manufacturing applications, inventory management and cooperate reporting are all stored in this central database to provide timely, easily accessible information to assist members of an organisation with decision-making.

When did it start?

Without organisation, there would be no need for ERP. During the industrial revolution, humankind made use of machinery to automate processes for mass production, replaced human and animal labour and adopted factory systems – where labour was divided into logical processes.

Once technological advances started occurring they were thrown into this industrialisation mix. The development of simple software and pieces of hardware was set into motion, providing functions with systems they could use to increase the efficiency of their respective departments. Tasks such as using a mechanical calculator from the mid 1920’s during operational processes were small steps taken to minimize the difficulty of tasks – leading to the development of enterprise resource planning systems.

ERP can be traced back to the 1960’s where mass production required inventory control. Inventory control organised and allocated resources required for different stages of production. Retailers also needed inventory control to keep their overheads as low as possible. Inventory control is a system that functions by itself, when all these systems integrate – we get ERP.

The ERP timeline

ERP today has evolved through different phases. The reason for this evolution is simple – advances in technology which have caused organisations to adapt to remain competitive.

The ERP timeline looks something like this:

  1. 1960: Inventory Control Systems
  2. 1970: Materials Requirements Planning
    • This is an inventory control and production planning system. It calculates what materials are needed during production by integrating data from production schedules, the parts and elements needed to build a product (the bill of materials) and current inventory to determine what components are needed and by when.
    • This system has 3 functions.
      1. Avoiding shortages and ensuring correct quantities and materials for production are available
      2. Maintaining optimal stock levels to reduce waste
      3. Assists in scheduling deliveries and purchasing as well as plan manufacturing functions.
  1. 1980: Manufacturing Resources Planning
    • Based on Materials Requirements Planning, this development enabled manufacturers to forecast inventory requirements as well as link inventory and purchasing directly to an accounting system.
  2. 1990: Enterprise Resource Planning
    • Moving from Manufacturing Resources Planning, integration and coordination needed to move past a simple accounting link. These systems integrate various business processes such as accounting, manufacturing, distribution, finance, HR, project management, service and maintenance and transportation. These systems aim to achieve cohesion, transparency and synergy in an organisation amongst various functions
  3. 2000: Extended ERP
    • ERP providers started adding on additional functions to their core modules, providing a more holistic, customer-driven approach – factoring in customer relationship management and supply chain management.

Where are we now?

ERP systems have been designed to be compatible with many operating systems such as Microsoft® Word, Excel, Access, Exchange, Outlook, and other Windows® packages. New vendors are always emerging to keep up with changing business needs and the technological environment.

There is much talk about ERP in the cloud but the uptake seems to be slow.

At Qualitas, we have years of experience with the SYSPRO ERP offering and have used the product to help many of our customers grow their businesses.

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