The Enterprise Resource Planning (ERP) system has come a long way since its initial development in the manufacturing industry. Originating from the Material Requirements Planning (MRP) concept in the 1960s, ERP has continued to evolve, integrating advanced technologies such as cloud, AI, and IoT.
In this article, I will attempt to discuss the history, development, and future trends of ERP systems, which are becoming increasingly relevant for businesses across various sectors.
History and Development of ERP Systems
Origins: Manufacturing Resource Planning (MRP)
ERP systems have strong roots in the manufacturing industry. In the early 1960s, large companies began to feel the need for a system to plan and manage raw material requirements more efficiently.
From this need, the MRP (Material Requirements Planning) concept was born. MRP helped companies ensure that the right raw materials were available at the right time to support production. The system focused on inventory management, production scheduling, and purchase orders.
Evolution to MRP II (Manufacturing Resource Planning II)
In the 1980s, MRP II emerged as an advanced version of MRP. MRP II expanded the scope of production planning by including elements such as capacity management, labor requirements planning, and finance.
This system allowed for integration between production processes and broader business management, paving the way for a more integrated system.
The First ERP (1990s)
In the 1990s, the term ERP (Enterprise Resource Planning) was first introduced by Gartner Group. ERP became a further evolution of MRP II, aiming to integrate not only manufacturing management but also other core business processes, so that ERP has functions for the regulation and management of finance, accounting, human resource management, procurement, and supply chain management (supply chain management).
ERP provided an integrated solution for companies to run all their operations on a single integrated platform.
Modern ERP and the Cloud Era (2000s)
With the rapid development of technology, ERP underwent significant transformation. In the early 2000s, ERP providers began to shift to cloud-based solutions, which allowed companies to use ERP systems without the need for expensive IT infrastructure.
Companies like SAP, Oracle, and Microsoft led the way in providing flexible ERP solutions that could be customized to specific industry needs and easily accessed from anywhere.
The development of internet technology and cloud computing made ERP more easily implemented by businesses of various scales, including small and medium-sized enterprises. This made ERP a solution not only limited to large companies but also accessible to culinary businesses, retail, and various other types of enterprises.
Current ERP: Mobile and AI
Today, ERP has become more sophisticated with the integration of AI technology (Artificial Intelligence), machine learning, and business process automation.
Modern ERP systems not only integrate business processes but also provide real-time data analysis, AI-based recommendations, and automation that help make business decisions faster and more accurate.
In addition, the use of mobile applications and integration with communication platforms such as WhatsApp further facilitates access and use of ERP systems.
Development and Trends of ERP Systems in the Future
The development of ERP systems in the future is expected to be greatly influenced by new technology trends and increasingly dynamic business needs.
Here are some predictions and trends that may dominate the world of ERP in the coming years:
Increased Use of AI and Machine Learning
AI and machine learning will be increasingly integrated into ERP systems, allowing ERP to become smarter and more proactive in providing recommendations.
For example, AI could analyze sales data and market trends to provide more accurate stock requirement predictions or offer automatic solutions to operational problems.
AI-based ERP systems will also help automate more complex processes, such as supply chain management, dynamic pricing, and customer experience personalization.
Cloud-based ERP Will Become More Dominant
Cloud ERP is already a trend today and will become even more dominant in the future due to its ease of implementation and scalability. With cloud ERP, businesses can be more flexible in accessing the system from anywhere, especially in the era of remote work.
In addition, cloud ERP offers more affordable costs for small and medium-sized businesses because it does not require a large and expensive IT infrastructure.
Integration of IoT (Internet of Things)
IoT will become an important part of ERP systems in the future, especially in sectors such as manufacturing, retail, and logistics. IoT devices connected to ERP will enable real-time tracking of goods, inventory, and shipments.
In the culinary industry, IoT could be used to monitor the temperature of raw materials or track the use of kitchen equipment, all connected to ERP to facilitate management and decision-making.
More Customizable ERP
Future ERP will be easier to customize to the specific needs of each business. ERP vendors will increasingly focus on modularity, where companies can choose modules or features relevant to their needs without having to purchase the entire system.
This will allow ERP to be lighter and more cost-efficient in terms of cost and usage, suitable for small businesses to large corporations.
Wider Use of Mobile ERP
The trend of using mobile ERP will continue to increase. With improved accessibility through mobile apps, operational management can be done from anywhere, at any time. This is highly relevant for business owners who need to manage various aspects of the business without always being in the office or business location.
Mobile applications will also become more intuitive, easy to use, and equipped with real-time features such as report dashboards, notifications, and approvals.
Increased Focus on Data Security
With more and more business data integrated into ERP systems, the focus on data security will become increasingly important. Upcoming trends include enhanced encryption, multi-factor authentication, and the use of blockchain to secure transactions and audit logs.
Future ERP will be designed to face increasingly complex cyber threats, especially to protect sensitive data such as financial and inventory.
ERP Integrated with Collaboration and Communication Platforms
ERP systems will be increasingly integrated with collaboration and communication platforms such as WhatsApp Business, Slack, Microsoft Teams, and others. This integration allows teams to work together more efficiently through a single platform directly connected to ERP, facilitating real-time business process monitoring.
For culinary businesses, this can be applied in terms of raw material stock notifications sent directly through WhatsApp or purchase approvals that can be done through collaboration apps.
ERP for More Specific Vertical Industries
Future ERP will be more tailored to specific vertical industries. For example, ERP systems specifically for culinary businesses, retail, manufacturing, healthcare, or logistics that are designed with features that are specific and suitable for the unique needs of each sector.
Businesses will look for ERP solutions that are already designed according to their needs, reducing customization costs and speeding up implementation.
Deeper ERP and Automation
Automation will not only be limited to purchasing or inventory but will also cover the entire operational process, including workforce management, payroll, finance, and project management.
The system will become more automated so that managers only need to perform minimal supervision and checking.
This will reduce the burden of manual work, increase efficiency, and allow businesses to grow faster.