The term “ERP” was first used in the 1990s by the Gartner Group, but enterprise resource planning software and systems have been used in the manufacturing industry for over 100 years and continue to evolve as industry needs change and grow.
The concept of Enterprise Resource Planning (ERP) has a rich history that spans over a century, constantly evolving to meet the changing needs of industries. While the term “ERP” was coined by the Gartner Group in the 1990s, the utilization of software and systems to manage enterprise resources dates back much further.
In 1913, an engineer named Ford Whitman Harris introduced the Economic Order Quantity (EOQ) model, a paper-based manufacturing system that enabled production scheduling. This marked an early milestone in resource planning for manufacturing.
The 1960s witnessed significant advancements as computer technologies emerged. Black and Decker, a toolmaker, adopted the first Material Requirements Planning (MRP) solution, which combined EOQ with mainframe computers, revolutionizing production planning.
As the 1970s and 1980s unfolded, computer technologies continued to evolve, and software expanded its capabilities beyond manufacturing. Business activities such as finance, human resources data, and customer relationship management (CRM) were incorporated into comprehensive systems.
In 1983, the development of Manufacturing Resource Planning II (MRP II) introduced integrated modules that optimized core manufacturing components, merging various tasks into a unified shared-data system.
With the onset of the 1990s and 2000s, the Gartner Group introduced the term “ERP” to distinguish these systems from their MRP predecessors. ERP systems expanded beyond manufacturing to include business intelligence, sales force automation (SFA), marketing automation, and eCommerce.
The early 2000s witnessed the advent of cloud-based ERP solutions, as software makers embraced the Internet and developed “Internet Enabled” products. This innovation presented an alternative to traditional on-premise client-server models, providing greater flexibility and accessibility.
Today, ERP has further evolved with the emergence of Software-as-a-Service (SaaS) and Anything-as-a-Service (XaaS) delivery models. Cloud-based ERP solutions offer remote web-based access, enabling mobile solutions, enhanced security measures, and seamless integration with emerging technologies such as the Internet of Things (IoT), Internet of Everything (IoE), and even social media. This adaptability ensures that ERP systems provide comprehensive solutions tailored to the requirements of diverse industries in the modern era.