What is ERP?

Enterprise Resources Planning is the use of methodologies and resource planning systems primarility utilized in manufacturing and distribution environments. The term "enterprise resources planning" reflects the evolution of earlier systems that originally only provided inventory transaction and cost accounting management. ERP has evolved to support and optimize the entire order-fulfillment process and to automate and integrate both business and production process management. By recording transactions, i.e., the computerized record of events such as the receipt of inventory or the issue of a work order, the ERP system tracks resources—such as materials and labor—used in financial, manufacturing, and distribution management.

In simplest terms, enterprise systems use database technology and a single interface to control all the information related to a company’s business—including customer, product, employee, and financial data.

The systems’ planning methodology uses material requirements planning (MRP) and master production schedule (MPS) to calculate requirements for materials, make recommendations to release replenishment orders, and reschedule open orders when due dates and need dates are not in phase.  Considerations for operational capacity constraints are also utilized in production planning. 

In addition, functionality has more recently been introduced to support the specific needs of vertical industry segments, such as consumer packaged goods or automotive manufacturers, as well as special operations such as demand management, an essential feature for better management of supply chains. ERP systems have begun to incorporate functionality for customer interaction (CRM) and managing relationships with suppliers and vendors, making the system less inward-looking. Additional functionality includes product configurators, eCommerce, EDI integration, field service modules, and web portal accessability to leverage systems to the entire enterprise.