Evolution of Enterprise Resource Planning

In early 1950s, when the industrial revolution took place, production units were concentrating on
improving production and productivity.

In late 1970s, they found that “Elimination of waste” will also aid this process.

Raw Material waiting to be consumed, idle machine and man power are considered as “Industrial
waste”

This analysis resulted in evolution of “Just-In-Time [JIT]” concept.

JIT has optimized stocking at RM and FG yards, and brought Industrial Engg. concepts of time
study and motion study.

Many concepts like 5S, Six Sigma,TQM,etc were evolved, which were aiming at better JIT.

Till then, optimization of resources were concentrated.

Projects

Production Planning
Maintenance and Control
Owner

Finance

A shift in thinking took place in early 80s.

Optimisation of Resources Optimisation of Business Processes

This has resulted in the evolution of Enterprise Resource Planning.

A Business Process is triggered by a demand. An action is taken on the demand, and it gets
fulfilled.
Action

Demand Business Fulfillment

Process

A sample Business Process

A Typical nested Work Flow of multiple Business processes

Business
Demand Action Fulfillment
Processes

Picture Tube –
Create a Pur. Requisition Approved by his Manager
BP1 50 Nos

Create a Purchase order after

Purchase order Approved by his Manager
obtaining quotes from sup.
BP2

Supply of Sup. manufactures or buy from

Material supplied at Stores
Picture Tubes Distributor
BP3

Inspection Performs Quality inspection Passed QA Check.

BP4

Invoice Inventory In-Charge examines

Certified Invoice
verification qty billed and qty accepted
BP5

Payment of Creation of Cheque after audit

Cheque sent to Supplier
invoice verification
BP6
 Stocking Strategies

Engineer to
Order

Make to
Order
Lead Time

Assemble to
Order

Pick to Order

Make to
Stock

Product Complexity