Enterprise Resources Planning (ERP) is the latest phase in over 40 years of evolution of business management techniques and information technology. Up through the 1960's, business had to rely on traditional inventory management concepts, Reorder Point (ROP) and Economic Order Quantity (EOQ) being the most commonly known. The next evolutionary phase, Material Requirements Planning (MRP), developed in the 1970's. It uses bills of material, inventory data, and the master production scheduled (MPS) to proactively calculate time-phased materials requirements and make recommendations to release or reschedule replenishment orders for materials.

In the 1980s, the concept of Manufacturing Resources Planning (MRP-II) evolved as an enhancement to MRP by integrating other manufacturing company's resources, particularly shop floor, accounting and distribution management. In the early 1990s, MRP-II was further extended to cover areas like engineering, finance, human resources, project management, etc. namely, the comprehensive breadth of activities within any (not only manufacturing) business enterprise. Therefore, the new acronym ERP was coined to reflect the fact that these computerized systems had evolved well beyond their origins as inventory transaction and cost accounting systems.

ERP is the current generation of resource planning systems, which replaces "islands of information" (MRP-II being one) with a single, packaged software solution that integrates all traditional enterprise management functions. In simplest terms, ERP systems use database technology and a single interface to control the all-encompassing information related to a company's business. Along with functionality for enterprise and supply chain management, ERP is typically associated with the use of client/server (recently with Internet Computing Architecture (ICA) as well), relational database technology, and UNIX, Windows NT, AS/400 or mainframe operating systems.

Enterprise Resources Planning (ERP) is the latest phase in over 40 years of evolution of business management techniques and information technology. Up through the 1960's, business had to rely on traditional inventory management concepts, Reorder Point (ROP) and Economic Order Quantity (EOQ) being the most commonly known. The next evolutionary phase, Material Requirements Planning (MRP), developed in the 1970's. It uses bills of material, inventory data, and the master production scheduled (MPS) to proactively calculate time-phased materials requirements and make recommendations to release or reschedule replenishment orders for materials.

In the 1980s, the concept of Manufacturing Resources Planning (MRP-II) evolved as an enhancement to MRP by integrating other manufacturing company's resources, particularly shop floor, accounting and distribution management. In the early 1990s, MRP-II was further extended to cover areas like engineering, finance, human resources, project management, etc. namely, the comprehensive breadth of activities within any (not only manufacturing) business enterprise. Therefore, the new acronym ERP was coined to reflect the fact that these computerized systems had evolved well beyond their origins as inventory transaction and cost accounting systems.

ERP is the current generation of resource planning systems, which replaces "islands of information" (MRP-II being one) with a single, packaged software solution that integrates all traditional enterprise management functions. In simplest terms, ERP systems use database technology and a single interface to control the all-encompassing information related to a company's business. Along with functionality for enterprise and supply chain management, ERP is typically associated with the use of client/server (recently with Internet Computing Architecture (ICA) as well), relational database technology, and UNIX, Windows NT, AS/400 or mainframe operating systems.