ERP Definitions

This glossary explains the meaning of key words and phrases that information technology (IT) and business professionals use when discussing ERP and related software products. You can find additional definitions by visiting WhatIs.com or using the search box below.

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3PL (third-party logistics)

A 3PL (third-party logistics) provider offers outsourced logistics services, which encompass anything that involves management of one or more facets of procurement and fulfillment activities.
A
ABC classification

ABC classification is a ranking system for identifying and grouping items in terms of how useful they are for achieving business goals.
accounts receivable (AR)

Accounts receivable (AR) is an item in the general ledger (GL) that shows money owed to a business by customers who have purchased goods or services on credit.
Adaptive Insights (formerly called Adaptive Planning)

Adaptive Insights (formerly called Adaptive Planning) is a cloud-based corporate performance management software (CPM) vendor headquartered in Mountain View, California.
advanced planning and scheduling (APS)

Advanced planning and scheduling (APS) is a type of system that tracks costs based on the activities that are responsible for driving costs in the production of manufactured goods. (Continued)

advanced shipping notice (ASN)

Advanced shipping notice (ASN) is a document that provides detailed information about a pending delivery. The purpose of an ASN is to notify the customer when shipping will occur and provide physical characteristics about the shipment so the customer can be prepared to accept delivery.
Anaplan

Anaplan is a web-based enterprise platform for business planning.
ANSI/ISA-95

ANSI/ISA-95, more commonly referred to as ISA-95, is an international standard for enterprise and control systems integration developed for manufacturers.
asset performance management (APM)

Asset performance management (APM) is both a strategy and a set of software tools for tracking and managing the health of an organization's physical assets.
Automatic Identification and Data Capture (AIDC)

Automatic Identification and Data Capture (AIDC) is a broad set of technologies used to collect information from an object, image or sound without manual data entry. The actual technologies involved, the information obtained and the purpose of collection vary widely. AIDC systems are used to manage inventory, delivery, assets, security and documents.
B
BAI2 file format

BAI2 file format is a specialized and standardized set of codes used for cash management by the Bank Administration Institute (BAI).
barcode (or bar code)

A barcode (sometimes seen as two words, bar code) is the small image of lines (bars) and spaces that is affixed to retail store items, identification cards and postal mail to identify a particular product number, person or location.
BIC (bank identifier code)

A bank identifier code (BIC) is a unique identifier for a specific financial institution.
bill of materials (BOM)

A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies, subassemblies, parts and components, as well as the quantities of each, needed to manufacture a product.
budgeting, planning and forecasting (BP&F)

Budgeting, planning and forecasting (BP&F) is a three-step strategic planning process for determining and detailing an organization's long- and short-term financial goals.
Bullwhip Effect

The bullwhip effect is a supply chain phenomenon describing how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer and raw material supplier levels.
C
chart of accounts (COA)

A chart of accounts (COA) is a financial, organizational tool that provides an index of every account in an accounting system.
cloud ERP

Cloud ERP is a type of enterprise resource planning (ERP) software that runs on a provider's cloud computing platform, rather than on premises in an enterprise's own data center.
computer numerical control (CNC)

Computer numerical control (CNC) is a manufacturing method that automates the control, movement and precision of machine tools through the use of preprogrammed computer software, which is embedded inside the tools.
computer-aided software engineering (CASE)

Computer-aided software engineering (CASE) describes a broad set of labor-saving tools used in software development.
cost of goods sold (COGS)

Cost of goods sold (COGS) is the total of the costs directly attributable to producing things that can be sold.
cross-docking

Cross-docking is the practice of unloading goods from inbound delivery vehicles and loading them directly onto outbound vehicles.
D
demand planning

Demand planning is the process of forecasting the demand for a product or service so it can be produced and delivered more efficiently and to the satisfaction of customers.
demand signal repository (DSR)

A demand signal repository (DSR) is a database that aggregates sales and demand data at the merchant's point of sale (POS).
demand-driven manufacturing (DDM)

Demand-driven manufacturing (DDM) is an approach to manufacturing where production is based on actual orders rather than forecasts.
digital core

Digital core is the technology platforms and applications that allow organizations to transform into digital businesses and meet the new needs of the digital economy.
digital manufacturing

Digital manufacturing is a technology-based approach to production that links different data silos and processes in the manufacturing lifecycle so that stakeholders can make better business decisions both comprehensively and at each step.
digital supply chain

A digital supply chain is a supply chain whose foundation is built on Web-enabled capabilities to fully capitalize on connectivity, system integration and the information-producing capabilities of "smart" connected products.
digital thread

Digital thread is a communication framework that connects traditionally siloed elements in manufacturing processes and provides an integrated view of an asset throughout the manufacturing lifecycle.
digital twin

A digital twin is a virtual representation of a real-world entity or process.
discrete manufacturing

Discrete manufacturing is an industry term for the manufacturing of finished products that are distinct items capable of being easily counted, touched or seen.
distribution requirements planning (DRP)

Distribution requirements planning (DRP) is a time-based systematic process to make the delivery of goods more efficient by determining which goods, in what quantities, and at what location are required to meet anticipated demand.
dual sourcing

Dual sourcing is the supply chain management practice of using two suppliers for a given component, raw material, product or service.
E
engineering bill of materials (EBOM)

An engineering bill of materials (EBOM) is a product recipe structured from the design standpoint, rather than the manufacturing standpoint.
enterprise accounting software

Enterprise accounting software is technology that keeps track of an organization's financial transactions and data.
enterprise asset management (EAM)

Enterprise asset management (EAM) is the process of managing the lifecycle of physical assets to maximize their use; save money; improve quality and efficiency; and safeguard health, safety and the environment.
Epicor Software Corp.

Epicor Software Corp. is a global business software vendor that sells ERP and other software to small and medium-sized businesses (SMBs) and large enterprises.
ERP (enterprise resource planning)

ERP, or enterprise resource planning, is software designed to manage and integrate the functions of core business processes like finance, HR, supply chain and inventory management in a single system.
ERP finance module

The ERP finance module is the software component that handles the main accounting and financial management functions of an enterprise resource planning system.
F
Fast Guide to acronyms used in manufacturing

The following glossary or acronyms are those most used in internal communications within the manufacturing industry.
financial analytics

Financial analytics is the creation of ad hoc analysis to answer specific business questions and forecast possible future financial scenarios.
G
GDSN (Global Data Synchronization Network)

GDSN (Global Data Synchronization Network) is an internet-based network that enables trading partners to exchange product-identification data in a standardized way in real time.
general ledger (GL)

A general ledger (GL) is a set of numbered accounts a business uses to keep track of its financial transactions and to prepare financial reports.
go-live (go live)

Go-live is the time at which something becomes available for use.
GR/IR clearing accounts

A GR/IR (goods-receipt/invoice-receipt) clearing account is a bookkeeping device that can be used when goods arrive before the invoice is generated, or when an invoice arrives before the goods are delivered.
GS1

GS1 is a global, not-for-profit association that maintains standards for barcodes and RFID tags and for supply chain messaging such as Electronic Data Interchange (EDI).
H
hybrid manufacturing

Hybrid manufacturing is a term that describes combining additive manufacturing and subtractive manufacturing in a single machine system.
I
IFS AB

IFS AB (Industrial and Financial Systems) is an ERP software vendor that specializes in asset-intensive, project-centric industries, such as manufacturing and distribution.
Industry 4.0

Industry 4.0, which refers to the fourth industrial revolution, is the cyber-physical transformation of manufacturing.
Infor

Infor is a New York-based vendor of ERP and other enterprise business software.
integrated accounting system

An integrated accounting system is a type of software that combines major financial accounting functions into one application.
integrated business planning (IBP)

Integrated business planning (IBP) is a strategy for connecting the planning functions of each department in an organization to align operations and strategy with the organization's financial performance.
inventory management

Inventory management is the supervision of noncapitalized assets -- or inventory -- and stock items.
inventory optimization

Inventory optimization (IO) is a strategy for balancing the amount of working capital that's tied up in inventory with service-level goals across multiple stock-keeping units (SKUs).
inventory turns (inventory turnover)

Inventory turns, also referred to as inventory turnover and inventory turnover ratio, are a popular measurement used in inventory management to assess operational and supply chain efficiency.
IQMS

IQMS introduced one of its newest services, WebIQ, in August 2016. WebIQ runs on HTML5 and JavaScript and essentially recreates EnterpriseIQ's user interface, allowing users to access EnterpriseIQ anywhere on any device, the vendor claims.
J
JDA Software

JDA Software is a software and consultancy company that specializes in selling supply chain management products and services to businesses.
K
Kaizen (continuous improvement)

Kaizen is an approach to creating continuous improvement based on the idea that small, ongoing positive changes can reap significant improvements.
L
lean manufacturing (lean production)

Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing systems while simultaneously maximizing productivity.
lean water spider

Lean water spider, or water spider, is a term used in manufacturing that refers to a position in a production environment or warehouse.
logistics

Logistics is the process of planning and executing the efficient transportation and storage of goods from the point of origin to the point of consumption.
logistics management

Logistics management is the governance of supply chain management functions that helps organizations plan, manage and implement processes to move and store goods.
M
manufacturing execution system (MES)

A manufacturing execution system (MES) is an information system that connects, monitors and controls complex manufacturing systems and data flows on the factory floor.
manufacturing process management (MPM)

Manufacturing process management (MPM) is the discipline of defining how products are manufactured so production processes can be made more efficient and responsive.
material requirements planning (MRP)

Material requirements planning (MRP) is a system for calculating the materials and components needed to manufacture a product.
model-based enterprise

Model-based enterprise (MBE) is an engineering strategy that aims to clarify design intent during the manufacturing process, resulting in better quality of the products, reduced costs and more efficiency.
O
Open Platform Communications (OPC)

Open Platform Communications (OPC) is an interoperability standard for the secure exchange of industrial automation data.
operational performance management (OPM)

Operational performance management (OPM) is the alignment of all business units within an organization to ensure that they are working together to achieve core business goals.
order management

Order management is the administration of business processes related to orders for goods or services.
order to cash (OTC or O2C)

Order to cash (OTC or O2C) is a set of business processes that involve receiving and fulfilling customer requests for goods or services.
P
pick to light

Pick to light is order-fulfillment technology that employs alphanumeric displays and buttons at storage locations to guide the manual "picking" and recording of items for shipment.
poka-yoke

A poka-yoke is a mechanism that is put in place to prevent human error.
process manufacturing

Process manufacturing is a production method that creates goods by combining supplies, ingredients or raw materials using a formula or recipe.
process mining software

Process mining software is a type of programming that analyzes data in enterprise application event logs in order to learn how business processes are actually working. The goal of process mining software is to identify bottlenecks and other areas of inefficiency so they can be improved.
procure to pay (P2P)

Procure to pay is the process of requisitioning, purchasing, receiving, paying for and accounting for goods and services.
product as a service

Product as a service is the concept of selling the services and outcomes a product can provide rather than the product itself.
product data management (PDM)

Product data management (PDM) is the process of capturing and managing the electronic information related to a product so it can be reused in business processes such as design, production, distribution and marketing.
product information management (PIM)

Product information management (PIM) is a classification of software products that support the global identification, linking and synchronization of product information across heterogeneous data sources.
production planning

Production planning is the act of developing a guide for the design and production of a given product or service.
profit and loss statement (P&L)

A profit and loss statement (P&L), also known as an income statement, is a financial report that shows a company's revenues and expenses over a given period of time, usually a fiscal quarter or year.
prototype

A prototype is an early version of a product from which future versions are developed.
R
replenishment

Replenishment is the controlled and regular movement of inventory from an upstream point on the supply chain to a downstream location that requires sufficient stock to cover demand.
reverse logistics

Reverse logistics is the set of activities that is conducted after the sale of a product to recapture value and end the product's lifecycle.
RFI (request for information)

An RFI (request for information) is a formal process for gathering information from potential suppliers of a good or service.
S
SaaS ERP

SaaS ERP is a type of cloud-based enterprise resource planning (ERP) software that runs on the vendor's or cloud provider's servers, is sold through subscription and delivered as a service over the internet.
sales and operations planning (S&OP)

Sales and operations planning (S&OP) is a process for better matching a manufacturer's supply with demand by having the sales department collaborate with operations to create a single production plan.
service lifecycle management (SLM)

Service lifecycle management (SLM) describes the strategy and software for managing the maintenance and repair of products and maximizing the profit opportunities from these activities.
service supply chain

The service supply chain is the part of the supply chain dedicated to providing service on products.
smart factory

A smart factory is a highly digitized and connected production facility that relies on smart manufacturing.
strategic sourcing

Strategic sourcing is an approach to supply chain management that formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace.
supplier relationship management (SRM)

Supplier relationship management (SRM) is the systematic approach to evaluating vendors that supply goods, materials and services to an organization, determining each supplier's contribution to success and developing strategies to improve their performance.
supplier risk management

Supplier risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings that are caused by the organization's supply chain.
supply chain analytics

Supply chain analytics refers to the processes organizations use to gain insight and extract value from the large amounts of data associated with the procurement, processing and distribution of goods.
supply chain execution (SCE)

Supply chain execution (SCE) is the flow of tasks involved in the supply chain, such as order fulfilment, procurement, warehousing and transporting.
supply chain finance

Supply chain finance is a set of technology-enabled business and financial processes that provides flexible payment options for a buyer and one of their suppliers at lower financing costs.
supply chain management (SCM)

Supply chain management (SCM) is the optimization of a product's creation and flow from raw material sourcing to production, logistics and delivery to the final customer.
Supply Chain Operations Reference (SCOR)

Supply Chain Operations Reference (SCOR) is the process reference model used across industries as a supply chain management diagnostic tool.
Supply Chain Planning (SCP)

Supply chain planning (SCP) is the process of anticipating the demand for products and planning their materials and components, production, marketing, distribution and sale.
supply chain security

Supply chain security is the part of supply chain management that focuses on the risk management of external suppliers, vendors, logistics and transportation.
supply chain sustainability (SCS)

Supply chain sustainability (SCS) is a holistic view of supply chain processes, logistics and technologies that affect the environmental, social, economic and legal aspects of a supply chain's components.