What is Enterprise Resource Planning?

Enterprise Resource Planning (or ERP) is a revolutionary system for automating the back office for manufacturers and other businesses. ERP has its origins in MRP II for ensuring that manufacturing floors operated at full efficiency by making sure the right raw materials were available to the right people at the right time. Originally, all work was driven by a Master Production Schedule which documented exactly how many "widgets" needed to be manufactured at any given time. This schedule, which was driven by the sales forecast, allowed manufacturers to plan their purchasing and sub-assembly processes to meet the plan.

From there, MRP II morphed into ERP by assuming responsibility for other areas of the so-called back office.

Enterprise Resource Planning systems can encompass some or all of the following functional areas:

  • Order Processing
  • Manufacturing
  • Supply Chain Management
  • Finance & Accounting
  • Management Accounting
  • Human Resources
  • Project Management
  • Customer Relationship Management

Ultimately, ERP allows a business owner to view the top-level "dashboard" for their business, and also to drill down into the nitty gritty detail.