ERP philosophy has evolved from MRPII philosophy. MRPII philosophy evolved from MRP philosophy. It is important to understand the difference between each term. Effective ERP requires that integrated management processes extend horizontally across the company, including product development, sales, marketing, manufacturing, and finance. It must extend vertically throughout the company's supply chain to include the acquisition of raw materials, suppliers, customers, and consumers. The fundamental purpose of ERP is to establish a process that links projected demand plans to supply plans, so that the resources of manufacturers, their suppliers, and especially their customers are utilized in the most efficient and cost effective way. To do so requires a process for anticipating demand and planning and scheduling resources in a manner that supports a company's strategic and financial goals. There are five major elements in this: 1. An integrated business operating process that links strategic plans and business plans to sales plans and operations plans. 2. A people-driven process that is supported by a computer system. 3. A formal resource planning process that involves all functions within a company. 4. Defined responsibilities and performance measurements for all functions in a company. 5. Communications among all functions in a company as well as communications among all divisions and sister companies. | Strategies must be tied to tactics, supply is resolved with demand, the financial system is tied to the operating system, aggregate planning is translated into detailed planning, and planning and execution are linked together via a two-way flow of information and a spirit of cooperation among all functions. ERP is a people process supported by the computer, rather than the other way around. People -- and their behavior and discipline in utilizing the ERP process -- is vital. When people understand how to utilize the ERP process, tools, and techniques, the data and information will be highly accurate, and they will make sound decisions. ERP philosophy has evolved from MRPII philosophy. MRPII philosophy evolved from MRP philosophy. It is important to understand the difference between each term:
MRP: Material Requirements Planning
MRP: (From the 60's& 70’s) includes only Material Planning Projections Based on Bill of Material Explosions
Typical Functions:Bills of Material
Work Order Management
Shop Floor Scheduling
Production Activity Control
Material Shortage Management| Fundamental Process Questions:1. What do you want to make? 2. What materials does it take?
3. What materials do you have?
4. What materials do you need to get?|
MRPII: Manufacturing Resource Planning
MRPII (From the 80's& 90’s) includes ALL Manufacturing Resources for "What If" Pro-Active Process Simulations
Typical Functions:Financial Modules
Sales and Operations Plan
EDI and Customer Orders
Master Production Schedule
Rough-Cut Capacity Planning
Detailed Capacity Planning
Product Costing Modules
Engineering Change Management
MRP: Material Requirements Planning| Fundamental Process Questions:1. What do you want to make?
2. What materials does it take?
3. What materials do you have?
4. What materials do you need to get?
5. What constraints must be met now or in the future?|
ERP: Enterprise Resource Planning
ERP (From the 80's& 90’s) includes ALL Business Management Systems, Philosophies and Performance Evaluation at All Levels Typical Functions:Financial Planning Simulations
Business Planning Simulations
Sales/Marketing Planning Simulations
Distribution Requirements Planning
Resource Management Simulations
Production Management Simulations
Supply Chain Management Simulations
Continual Improvement Strategies
R&D Management Simulations