Maximizing Return on Investment Using ERP Applications

THE MOVE TO IT-RELATED APPLICATIONS SOLUTIONS

Now, let’s move forward a decade or more and follow the natural progression of how tools create knowledge of logical relationships, thereby allowing for improvement opportunities. MRP I, developed by James Orlicky and others in the late 1950s, was a parts planning system where knowledge of time-phased demand and materials used to build sales items could be utilized to predict demand from suppliers.5 MRP II took these concepts and incorporated them into a “closed loop planning system” that included planning relationships from sales forecasting through parts ordering.6 Actually, starting in the early 1970s, but really becoming viable in the late 1980s, MRP II became a component of ERP, where financial planning was an integral part of the logistics and resources planning processes. In doing so, the relationships between diverse functions become entangled into cross-functional business process designs. The push for the evolution of ERP from MRP and financial planning tools became part of the drive from business applications developers to capture, dissect, and analyze massive amounts of data, requiring more understanding of the relationships between functions.

As time passed, more and more components were developed. IT technology, MRP II, audit protocols, and others were starting to converge. To deal with cross-functional relationships, concepts of business process reengineering were developed in the early 1990s, led by Michael Hammer and ...