Glossary Item

ERP – Enterprise Requirements Planning


Manufacturing Production Control systems have evolved as they have grown in capability and complexity, chronologically from the advent of electronic accounting systems in the 1960s:

* PPI – Bill Post and Inventory – systems from the early days of manufacturing accounting systems providing finished product inventory control, customer accounts receivable, invoicing and sale reporting. Theses systems were designed to reduce accounting and inventory carrying costs.  These were relatively straightforward systems that were easy to implement as they emulated existing processes and focused on simply automating repetitive processes and some financial ratio calculation.

* PCS – Production Control Systems – extended the accounting function to include work in process and raw materials inventory.  This was the first use of the Bill of materials.

* MRP – Materials Requirements Planning :#8211; extended the PCS to include forecasting methodologies so that inventory usage could be planned at all levels to respond to anticipated demand.  At this point the systems became complex enough in the inherent relationships between elements that database design became critical to performance, and user training was a significant aspect of system success. Initial implementations of MRP systems failed far more frequently than they succeeded.

* MRP II – Manufacturing Resource Planning. Materials Requirements Planning systems were enhanced with scheduling modules allowing more finite planning of capacity issues, and allowing planning of more than just material resources – such as manpower and equipment. At this point the concept of JIT (Just In Time) became viable.

* ERP or Enterprise Requirements Planning extended the MRP II capabilities to encompass all aspects of the manufacturing environment. Conceptually, an ERP is a completely integrated system encompassing all aspects of manufacturing. Whereas MRPII was typically applicable to a single plant, ERP cuts across the enterprise and can allow interplant and co-packing planning. To an extent it allows supply chain management. The acronym ERP has become much more broadly used, and from a purely technical perspective any enterprise accounting system can be called an ERP as it is now used for any software system that covers multiple systems that would usually require multiple software packages.By this definition, virtually all of the software that QIC provides could be called an ERP system.

In reality the line between MRPII and ERP systems is somewhat blurred and is more of a marketing line than a pure functional line.

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This page last updated: 08/30/2011