The term ERP is originally derived from Manufacturing Resource Planning (MRP II) and Material Requirements Planning (MRP). MRP evolves into ERP when capacity planning activity and routing become a part of the standard software activity.

Here is the general concept of MRP and MRP II.

MRP and MRPII are both incremental information integration business process strategies that are implemented using hardware and modular software applications linked to a central database that stores and delivers business data and information.

MRP is concerned mainly with materials of manufacturing while MRPII is concerned with the whole manufacturing production coordination, including materials, human relations and finance. The objective of MRPII is to provide consistent data to all players in the process of manufacturing as the product moves through the production line.

MRPII systems start with MRP, MRP allows for the input sales and marketing forecasts. These forecasts will determine demand of the raw materials. Then MRP and also MRPII systems draw on a schedule of master production, the breakdown of specific plans for each product on a lline. While MRP allows for the coordination of raw materials purchasing, MRPII facilitates the development of a detailed production schedule that accounts for labour and machine capacity, production schedule runs according to the arrival of materials. An MRPII output is a final labour and machine schedule. Data regarding with production cost, including labour time machine, time and materials used, as well as final production numbers, is provided from the MRPII system to finance and accounting (Monk and Wagner).

ERP system typically handles company's logistic, distribution, shipping, Manufacturing, procurement and sales order.

ERP software can aid in the control of many business activities such as sales, marketing, finance management, inventory management, delivery, production, quality management and so on.

Today the most ERP software provide Business Intelligence feature for leveraging ERP database into Decision Support System because the decision makers need to analyse company's performance to prepare appropriate actions.

In many cases, this feature prompts the executives, including your boss, to implement ERP system