Over the years, MRP has evolved to include not only the materials required in production but also the labor hours, material cost, and other resources related to production. When approached in this fashion, the term MRP II is often used, and the word resource replaces the word requirements. As this concept evolved and sophisticated computer software programs were developed, these systems were called enterprise resource planning (ERP) systems.

The objective of an ERP system is to reduce costs by integrating all of the operations of a firm. This starts with the supplier of the materials needed and flows through the organization to include invoicing the customer for the final product. Data are entered once into a database, and then these data can be quickly and easily accessed by anyone in the organization. This benefits not only the functions related to planning and managing inventory but also other business processes such as accounting, finance, and human resources.

The benefits of a well-developed ERP system are reduced transaction costs and increased speed and accuracy of information. However, there are drawbacks as well. The software is expensive to buy and costly to customize. The implementation of an ERP system may require a company to change its normal operations, and employees are often resistant to change. Also, training employees on the use of the new software can be expensive.

There are many ERP systems available. The most common ones include SAP, Oracle, and PeopleSoft. Even small systems can cost hundreds of thousands of dollars. The larger systems can cost hundreds of millions of dollars.