What Is Erp

ERP PROJECT

Introduction

In today's fiercely competitive business environment, there has to be much greater interaction between the customers and manufacturers. This means that, in order to produce goods tailored to customer requirements and provide faster deliveries, the enterprise must be closely linked to both suppliers and customers. In order to achieve this improved delivery performance, decreased lead times within the enterprise and improved efficiency and effectiveness, manufacturers need to have efficient planning and control systems that enable very good synchronization and planning in all the processes of the organization. Today, however, the challenge is intense and requires a strong integration across the value chain. Enterprise Resource Planning (ERP) is such a strategic tool, which helps the company to gain competitive edge by integrating all business processes and optimizing the resources available. This paper throws light on how ERP evolved, what makes up an ERP system and what it has to offer to the industries.

History

In 1960s, a new technique of Material Requirements Planning, popularly known as MRP, evolved. This was a proactive manner of inventory management. This technique fundamentally explodes the end product demand obtained from the Master Production Schedule (MPS) for a specified product structure (which is taken from Bill of Material) into a detailed schedule of purchase orders or production orders taking into account the inventory on hand. MRP is a simple logic but the magnitude of data involved in a realistic situation makes it computationally cumbersome. If undertaken manually, the entire process is highly time consuming. It therefore becomes essential to use a computer to carry out the exercise.

MRP successfully demonstrated its effectiveness in:

• Reduction of inventory

• Reduction in production and delivery lead times by improving

• Co-ordination and avoiding delays

• Making commitments more realistic

• Increased efficiency

MRP proved to be a very good technique for managing inventory, but it did not take into account other resources of an organization. In 1970s, this gave birth to a modified MRP logic, popularly known as Closed Loop MRP. In this technique, the capacity of the organization to produce a particular product is also taken into account by incorporating a module called Capacity Requirements Planning (CRP). Hence, a feedback loop is provided from the CRP module to MPS if there is not enough capacity available to produce.

In 1980s, the need was felt to integrate the other resources of a manufacturing organization. Hence, evolved an integrated manufacturing management system called Manufacturing Resources