Increasing Functional Specificity over Increasingly Commoditized Hardware - Guide to Cloud Computing for Business and Technology Managers - page 19

cross-functional systems were designed to bring about improved operational
efficiency and effectiveness through integrating, streamlining, and improv-
ing fundamental back-office business processes.
Traditional ESs (like ERP systems) were called back-office systems because
they involved activities and processes in which the customer and general
public were not typically involved, at least not directly. Functions supported
by ES typically included accounting, manufacturing, human resource
management, purchasing, inventory management, inbound and outbound
logistics, marketing, finance, and to some extent engineering. The objective
of traditional ESs in general was greater efficiency and to a lesser extent
effectiveness. Contemporary ESs have been designed to streamline and
integrate operation processes and information flows within a company to
promote synergy and greater organizational effectiveness and innovation.
These newer ESs have moved beyond the back-office to support front-office
processes and activities like those fundamental to customer relationship
management.
1.5.1 Evolution of ES
ESs have evolved from simple Materials Requirement Planning (MRP) to
ERP, Extended Enterprise Systems (EES), and beyond. Table 1.1 gives a snap-
shot of the various stages of Enterprise Systems (ES).
1.5.1.1 Materials Requirement Planning (MRP)
The first practical efforts in the ES field occurred at the beginning of the
1970s, when computerized applications based on MRP methods were devel-
oped to support purchasing and production scheduling activities. MRP is a
heuristic based on three main inputs: the master production schedule , which
specifies how many products are going to be produced during a period of
time; the bill of materials , which describes how those products are going
to be built and what materials are going to be required; and the inventory
record file, , which reports how many products, components, and materials
are held in-house. The method can easily be programmed in any basic com-
puterized application, as it follows deterministic assumptions and a well-
defined algorithm.
MRP employed a type of backward scheduling wherein lead times were
used to work backward from a due date to an order release date. While
the primary objective of MRP was to compute material requirements, the
MRP system proved also to be a useful scheduling tool. Order placement
and order delivery were planned by the MRP system. Not only were orders
for materials and components generated by an MRP system but also pro-
duction orders for manufacturing operations that used those materials and
components to make higher-level items like subassemblies and finished
products.