ERP takes on new challenges

Johannesburg, 14 Nov 2000
Read time 2min 10sec

There seems to be extensive debate regarding the role of ERP in an Internet world. Is there still a need for ERP systems, and what if any is the role of ERP in this New World? To address this issue, it is perhaps worthwhile to review the world of business applications prior to the introduction of ERP systems:

In the early 70's most corporations had point solutions to manage the different areas of the business i.e. inventory control systems and financial control systems. These systems were followed by the introduction of MRP1 and then MRP11 systems which integrated the inventory systems with planning and provided organisations a means to calculate, through a bill of material explosion time phased purchasing, capacity and inventory plans to meet the demand. These systems were therefore a runner to ERP systems, which in essence were an extension of these systems as they attempted to extend the integration across the organisation in an attempt to optimise all the resources within the business i.e. transportation and distribution. Although there are many horror stories in the industry regarding the complexity of these systems as businesses wrestle with the challenge of integrating the business processes to take advantage of this technology there are many more organisations that have reaped significant rewards from the successful implementation of ERP.

The advent of the Internet provides the possibility of extending this integration across the supply chain to suppliers and customers to further optimise the resources within the value chain. This allows a value chain to minimise inventory holding across the chain as opposed to each organisation within the chain keeping stock in case of fluctuation in demand or unreliable suppliers.

As organisations begin to take advantage of the Internet and enter the world of the extended enterprise and e-business, it is apparent that ERP is the foundation, which makes all this possible. Without an ERP system, businesses will be unable to satisfy the demand originating through their Web sites, they will be unable to play a role in an effective value chain. So if an organisation is considering customer relationship management (CRM) supply chain management (SCM) or e-commerce, the crucial building block to link these technologies and processes together is ERP.

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