Here’s an article covering 50 essential terms commonly used in Enterprise Resource Planning (ERP) systems:
3rd Party Application:
Software that hasn’t been developed by the ERP vendor but can be integrated with the ERP system.
ABC Analysis:
Classifies part IDs based on value and usage. “A” items are high-value and frequently used, “B” items are moderate, and “C” items are low-value and infrequently used.
Accounting Period:
A time span (usually 12 months) containing all financial transactions for an entity.
Accounts Payable:
Unpaid balances owed by your company to vendors.
Accounts Receivable:
Outstanding balances owed to your company by customers.
Actual Cost:
Valuing transactions at the actual cost paid to vendors or employees, rather than standard cost.
Advanced Planning and Scheduling (APS):
Balances capacity and materials to optimize manufacturing schedules.
Aging:
The number of days between invoice creation and today.
Allocation:
Reserving materials for specific customer orders or work orders.
API (Application Programming Interface):
Functionality exposed to developers for interfacing ERP with other solutions.
Assemble-to-Order (ATO):
Rapid production of customized products by combining subassemblies.
ATP (Available-to-Promise):
Date when product will be available to ship based on material and capacity availability.
B2B (Business-to-Business):
Transactions between businesses.
B2C (Business-to-Consumer):
Transactions between businesses and end consumers.
Backflush:
Automatic issuing of raw materials from inventory to a work order.
Backorder:
Insufficient stock to fill a customer order immediately, but it will be filled when stock arrives.
Bar Code:
Converts text and numbers into lines for scanner readability.
BI (Business Intelligence):
Tools and processes for analyzing data to make informed business decisions.
Bill of Lading (BOL):
Detailed listing of shipped items provided to the carrier.
Bill of Material (BOM):
Raw materials used to build finished goods or subassemblies.
Bottleneck:
Resource with limited capacity that affects the entire production chain.
BPR (Business Process Review):
Evaluating and improving existing business processes.
Build to Stock:
Strategy for building items based on demand assumptions.
Business Process Automation (BPA):
Automating repetitive tasks and workflows.
Business Process Management (BPM):
Managing and optimizing business processes.
Business Rules Engine (BRE):
Executes predefined rules within the ERP system.
Capacity Planning:
Determining resource availability for production.
Cloud ERP:
ERP software hosted on cloud servers.
COGS (Cost of Goods Sold):
Direct costs associated with producing goods.
CRM:
Customer Relationship Management): Managing customer interactions and relationships.
Customization:
Tailoring ERP software to specific business needs.
Data Migration:
Moving data from legacy systems to the ERP system.
Dashboard:
Visual representation of key performance indicators (KPIs).
EDI (Electronic Data Interchange):
Standardized electronic communication between trading partners.
ERP Implementation:
Deploying and configuring ERP software for an organization.
Financial Module:
Handles financial transactions, accounting, and reporting.
Forecasting:
Predicting future demand based on historical data.
Inventory Control:
Managing stock levels and replenishment.
KPI (Key Performance Indicator):
Metrics used to evaluate business performance.
Lead Time:
Time between placing an order and receiving the product.
Master Data:
Core data shared across the organization (e.g., customer, product, vendor data).
MRP (Material Requirements Planning):
Determines material needs for production.
Multi-Tenancy:
Hosting multiple organizations on a single ERP instance.
P2P (Procure-to-Pay):
Entire procurement process from requisition to payment.
Quality Management:
Ensures product quality meets standards.
RFID (Radio Frequency Identification):
Uses radio waves to track and identify items.
SCM (Supply Chain Management):
Coordinates production, distribution, and logistics.
SLA (Service Level Agreement):
Defines service expectations and performance metrics.
Workflow:
Automated sequence of tasks or approvals within the ERP system.
User Interface (UI):
How users interact with the ERP software1.
Feel free to explore these terms further to enhance your understanding of ERP systems!
Navigating the ERP Landscape: 50 Essential Terms Explained