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Early MRP Systems at Royal Philips Electronics in the 1960s and 1970s
April-June 2009 (vol. 31 no. 2)
pp. 56-69
Jos Peeters, History of Technology Foundation

1. M. Campbell-Kelly, From Airline Reservations to Sonic the Hedgehog, MIT Press, 2004.
2. J. Cortada, The Digital Hand: How Computers Changed the Work of American Manufacturing, Transportation, and Retail Industries, Oxford Univ. Press, 2004.
3. When I performed this research in 2005, it was expected that the number would grow to $30 billion per year worldwide by 2006 and that it would continue to grow at a rate of 10% per year for the next five years. (source: AMR)
4. Philips first agreed with IBM to "stay out of computers" and become a major component supplier to IBM. It subsequently decided to develop its own computer line anyway, which it later gave up, in the mean time standardizing on IBM application packages for their manufacturing sites.
5. A.D. Chandler Jr. called it "the modern, multi-unit enterprise" in The Visible Hand, Harvard Univ. Press, 1977.
6. This translates to Produktionsplanung und –Steurung (PPS) in German, the equivalent of MRP in German literature.
7. The term "business process" is used here, but it was not commonly used at the time.
8. "Letter of Executive Committee (Raad van Bestuur) of N.V. Philips' Gloeilampenfabrieken," Philips Corporate Archives (PCA), sub-archive ELA 194252 ISA, 15 Aug. 1967.
9. C. Botter, "Verkenning van de Industriële Logistiek" [Exploring Industrial Logistics], Philips Gloeilampenfabrieken, Dept. Technical Efficiency and Organization (TEO), June 1967 (in Dutch).
10. The full quote is "in our last meeting, Dr. Tromp stated that 90% of all deliveries require 32 weeks, with at the same time excessive stocks," from "Memorandum to the Executive Committee by Ir. Schellekens, manager Central Service Department," PCA, 832 Stock Policies ("Voorraadpolitiek"), 6 Sept. 1965.
11. The only mass-memory technology that compared with disks, in terms of capacity and access time, was drum storage, but with increasing capacity requirements, this technology reached its capacity limits (at least at comparable cost).
12. "Manufacturing Control at American Bosch Division on the IBM 305 RAMAC," application manual form E20-2053, IBM, 1960.
13. Both of these systems were net-change systems; they calculated the difference in requirements between subsequent versions of the production plan. There may have been early regenerative MRP systems (that always recomputed the full plan), but if so, they have left no trace. Orlicky compares "net-change" to "regenerative" but does not provide instances of the latter.
14. The IBM salesman for JI Case, Gene Thomas, also played an important role. On the Internet, he is credited with having invented the bill-of-material processor (published October 1961). J. Orlicky wrote that the JI Case team had to write a bill-of-material processor themselves during 1961. In a later discussion on the Internet, Gene Thomas refers to these as parallel developments.
15. J. Orlicky, "Net Change Material Requirements Planning," IBM Systems J., vol. 1, 1973, p. 28.
16. W.G. Traub, "RAMPS: RAMAC Planning System for Production Control," tech. report, IBM General Products Division, 15 July 1961.
17. Although attempts to define MRP are bound to lead to discussion, the elements I describe here define MRP. Without these, it would be inappropriate to call a system an "MRP" system.
18. The use of the phrase "requirements planning" predates the use of computers in this area. The use of the acronym MRP, however, referring to the new computer systems, dates from around 1969. G. Plossl and O. Wight did not use it in their 1967 book , Production and Inventory Control, but by 1970, the acronym had been firmly established (e.g. it was used at the APICS conference that year). At Philips in Eindhoven, the Dutch equivalents of these terms were used—for example, Materiaalbehoefteberekening literally meaning material requirements calculation. The use of the word "planning" in US English often refers to anything that has been put in tabular form, whereas the UK English word is "schedule." It is interesting to observe that in Europe there were regular arguments about the fact that MRP systems don't "plan," but only calculate.
19. J. Orlicky, "Net Change Material Requirements Planning," IBM Systems J., vol. 1, 1973, p. 3.
20. "Integration" was also used in the context of "total systems" or "management information systems." However, in the case of MRP systems, the term refers to what might be called "vertical" integration, referring to the fact that data from the operational level was integrated with data from the strategic or tactical level (the plan). In MIS or total systems, the term refers to "horizontal" integration—that is, integrating data from different areas of the company. Of course, "operations" and "planning" are not just "different areas of a company" but are also on different levels. For example, human resources and accounting are not on different levels. See T. Haigh, "Inventing Information Systems," Business History Rev., vol. 75, Spring 2001, pp. 15-61.
21. By the way, this involves a rather interesting feature: If an LLC of a part would get updated twice during a bill-of-material update transaction, a component would have occurred in itself, which is an obvious impossibility. The update transaction then needed to be rolled back to avoid the update transaction from running indefinitely.
22. For an early description of bill-of-material processing and the need for a low-level code, see F.L. Church, "Requirements Generation, Explosions, and Bills of Material," IBM Systems J., Sept.–Dec. 1963, pp. 268-287.
23. "Communications Oriented Production Information and Control System," tech. memos G320-1974 and G320-1981, IBM Technical Publications Dept., Mar. 1972.
24. The suggested difference with PICS was that it was communications oriented (i.e. using on-line CRT terminals). In fact, the differences were much more in the scope and amount of the functionality provided.
25. R.L. Daubenmire, Automatic Data Processing Handbook, Chapt. 4, Section 7, McGraw-Hill, 1977.
26. Interview with Don Ralston in Croydon, UK, on 13 Oct. 2004.
27. T. Haigh, "Software in the 1960s as Concept, Service, and Product," IEEE Annals of the History of Computing, vol. 24, no. 1, 2002, pp. 5-13.
28. At that time it would have been called the MRP industry, obviously. The acronym ERP was coined much later by the Gartner Group in 1990.
29. This is one of the three instances where an IBM decision likely gave rise to a new industry. One is the publication of the 360 architecture, which together with unbundling gave rise to the plug-compatible mainframe industry. The other is the publication of the PC standard, giving rise to the PC hardware industry.
30. The central departments included accounting, commercial planning (CV&P), central purchasing, and technical efficiency and organization (TEO).
31. All three departments had large sections devoted to what was called "systems and procedures" in the US or "organisation and methods" in the UK. These sections employed the systems men, as described in T. Haigh, "Inventing Information Systems: The Systems Men and the Computer, 1950–1968," Business History Review, vol. 75, Spring 2001, pp 15-61. These men were to be combined in the new department, not the other sections of the three staff departments.
32. F. Philips, "Memorandum 1/67," PCA, 723.13 ISA, 9 Jan. 1967.
33. "Information supply in Philips from yesterday to tomorrow" (PCA 723.13: ISA 181) was published anonymously in 1977 to commemorate the first 10 years of ISA.
34. Communication and Information Control System (CICS) was a teleprocessing monitor, and DL/1 was the database component of IMS. CICS/DL1 therefore was an alternative to IMS, which did not require a teleprocessing monitor.
35. "Reorganization of Corporate ISA," PCA, 723.13 ISA, 2 May 1979.
36. The quote appeared in an internal memo by A. Penning manager of Corporate ISA to executive board members C. van der Klugt, and M. Kuilman (PCA 723.13 ISA, 24 Aug. 1979 ).
37. The quote appeared in an internal memo by A. Penning manager of Corporate ISA to executive board members C. van der Klugt, and M. Kuilman (PCA 723.13 ISA, 21 Dec. 1979 ).
38. , With hindsight, these reasons for buying standard software may seem obvious. But just one year before, in December 1978, the management of corporate ISA had expressed as their opinion that "buying software is hoping for a miracle." See I.A. de Schepper, "Gewenning aan Logistieke planning" [Getting used to logistics planning], NIVE/NEVEM, Order no. 207 (in Dutch).
39. W. Dirne, "Production Control at Video," master's thesis, TH Eindhoven, 1982.
40. Although the IBM 305 RAMAC was introduced in 1956, its first use in Philips (and in the Netherlands, for that matter), dates from early 1960, for an invoicing application at the Dutch NO. These disks were linked to an IBM 650, however. See "Omschakeling naar Automatie" [Change-over to Automation], N.V. Philips' Gloeilampenfabrieken, 1960 (in Dutch), and A. Meeuwis, "Hulpmiddelen der Administratieve Techniek" [Administrative Equipment] 3rd. ed., Delwel Publishers, p. 275 (in Dutch).
41. Hans Knall of IBM Austria and N. Zwaneveld of DAF Automotive Works in Eindhoven, interview by J. Peeters, 1971.
42. J. Peeters, "Description of the Material Requirements System ELA," PCA, 729 ELA Parts Supply, 1 Aug. 1970 (in Dutch).
43. J. v.d. Ende, N. Wijnberg, and QA. Meijer, "Public Policy and Innovative Capabilities: The Case of Philips' IT Activities," Technology Analysis &Strategic Management, vol. 13, no. 3, 2001, p. 398.
44. W.E. Steinmüller, "The US Software Industry: An Analysis and Interpretive History," The International Computer Software Industry: A Comparative Study of Industry Evolution and Structure, D.C. Mowery ed., Oxford Univ. Press, 1996, p. 30.
45. Examples include McKinsey, Coopers &, Lybrand, Peat Marwick, Ernst &Young, Arthur Andersen, Deloitte, and Touche Ross.
46. T. Leimbach, The SAP Story: Evolution of SAP within the German Software Industry," IEEE Annals of the History of Computing, vol. 30, no. 4, 2008, pp. 60-76.
47. The Copics books included cost planning and control, but not accounting or bookkeeping modules.
48. For years, the Baan system was not able to perform a level-by-level material requirements calculation (quoted from an interview with Jan Hasselaar, one of the earliest Baan developers). The inspiration to develop a proper MRP kernel came when they learned of Mapics at one of their customers sites.
49. D. Ralston, "A Brief History of Manufacturing Control Systems: A Personal View of Where We Went Wrong," Control, June–Oct. 1996, p. 21 ff.
50. Compiled from R. Bourke, "Surveying the Software," Datamation, Oct. 1980, pp. 101-106, and "International Directory of Software 1980–1981," CUYB Publications.

Citation:
Jos Peeters, "Early MRP Systems at Royal Philips Electronics in the 1960s and 1970s," IEEE Annals of the History of Computing, vol. 31, no. 2, pp. 56-69, April-June 2009, doi:10.1109/MAHC.2009.23
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