Enterprise Resource Planning systems automate and integrate the core functionality of an organization. ERP facilitates the flow of information among the different functions of an enterprise, while also permitting information sharing across organizational units and geographical locations. According to Kalakota and Robinson (2001) the evolution of ERP systems can be divided into 4 phases: Manufacturing Integration, Enterprise Integration, Customer-centric Integration and Inter-enterprise Integration.
Phase 1: Manufacturing Integration (MRP) In the 1970s, production oriented information systems were known as manufacturing resource planning (MRP) systems. The aim of the MRP was to schedule and release manufacturing work orders and purchase orders. In the 1980s the extended version of MRP, called MRP II, was developed to focus on other business functions, including order processing, manufacturing and distribution. Since its data and processes were not integrated with those in the rest of the enterprise, MRP II was improved and renamed ERP.
Phase 2: Enterprise Integration (ERP) In the mid-1990s, ERP became the latest enhancement of MRP II, with added “back-office” functions such as finance, warehousing, distribution, quality control and human resource management, integrated to handle the global business needs of a networked enterprise. The main goal of the ERP was to facilitate information sharing and integration across these varying functions and to provide automated solutions to a wide range of business processes. The goal of integration was to use technology to develop process standardization across multiple business units in order to improve efficiency and generate greater return on capital.
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