Increasing Functional Specificity over Increasingly Commoditized Hardware - Guide to Cloud Computing for Business and Technology Managers - page 22

1.5.1.3 Manufacturing Resource Planning II (MRP II)
The MRP in MRP II stands for Manufacturing Resource Planning rather
than materials requirements planning. The MRP system had evolved from
a material requirements planning system into a planning and control sys-
tem for resources in manufacturing operations—an enterprise information
system for manufacturing. As time passed, MRP II systems became more
widespread, and more sophisticated, particularly when used in manufactur-
ing to support and complement computer-integrated manufacturing (CIM).
Databases started replacing traditional file systems, allowing for better sys-
tems integration and greater query capabilities to support decision makers,
and the telecommunications network became an integral part of these sys-
tems in order to support communications between and coordination among
system components that were sometimes geographically distributed but still
within the company.
1.5.1.4 Enterprise Resource Planning (ERP)
During the late 1970s and early 1980s, new advances in IT, such as local area
networks, personal computers, object-orientated programming, and more
accurate operations management heuristics, allowed some of MRP's deter-
ministic assumptions to be relaxed, particularly the assumption of infinite
capacity. MRP II was developed based on MRP principles but incorporated
some important operational restrictions, such as available capacity, mainte-
nance turnaround time, and financial considerations. MRP II also introduced
simulation options to enable the exploration and evaluation of different sce-
narios. MRP II is defined as business planning, sales and operations plan-
ning, production scheduling, MRP, capacity requirement planning, and the
execution support systems for capacity and material. Output from these sys-
tems is integrated with financial reports such as the business plan, purchase
commitment report, shipping budget, and inventory projections in dollars.
An important contribution of the MRP II approach was the integration of
financial considerations, improving management control and performance
of operations and making different manufacturing approaches comparable.
However, while MRP II allowed the integration of sales, engineering, manu-
facturing, storage, and finance, these areas continued to be managed as iso-
lated systems. In other words, there was no real online integration, and the
system did not provide integration with other critical support areas, such as
accounting, human resource management, quality control, and distribution.
The need for greater efficiency and effectiveness in back-office operations
was not unique to manufacturing but was also common to nonmanufac-
turing operations. Companies in nonmanufacturing sectors such as health
care, financial services, air transportation, and consumer goods started to
use MRP II-like systems to manage critical resources. Early ERP systems
typically ran on mainframes like their predecessors, MRP, and MRP II, but