Glossary of ERP Definitions

Below are links to articles covering ERP Definitions. Can’t find what you’re looking for? Then contact us! We’re always adding to our definitions and we appreciate suggestions from our readers.

  • Advanced Planning and Scheduling - Functionality that provides additional tools to manage production orders and job scheduling. The ERP system analyzes sales order and production […]
  • Backflushing - When moving large amounts of smaller raw materials to the work area, sometimes the entries into the ERP system regarding […]
  • Bank Reconciliation - Matching actual bank balances to what the ERP system reports as current data. This ensures the ERP financial data matches […]
  • Budgeting - Utilizing ERP system tools to generate budgets for departments / divisions and the entire organization. Financial reporting tools assist with […]
  • Business Intelligence (BI) - Software application used for analysis and visualization of data from multiple sources, including ERP and CRM systems. Data sources can […]
  • Capacity Planning - Analysis of items, work centers, labor, bills of materials (BOMs) and routings to estimate manufacturing capacity / output. In-depth comparison […]
  • Configure-to-Order - Finished goods are configured with multiple options specified by the customer. Production does not begin until a configuration is specified […]
  • Cost Center - A cost center is a department within a business to which costs can be allocated. This includes departments which do […]
  • Customer Relationship Management (CRM) - Business application that provides functionality to keep track of contacts, communications, appointments, leads and opportunities related to sales and marketing. […]
  • Customer Service - Tools and platforms that assist with the management and deployment of customer service operators. This includes case management, ticketing, ordering […]
  • Cycle Count - Periodic short-scope inventory checks prioritized by value to keep inventory accuracy high. This takes less time than a full physical […]
  • Direct Labor - Labor time that is directly related to the manufacture of finished goods.
  • Discovery and Analysis - Initial assessment of ERP environment, related IT assets, complimentary business applications, in-depth review of project requirements and development of project […]
  • Discrete Manufacturing - Manufacture of pre-defined finished goods items, including simple assembly.
  • Economic Order Quantity (EOQ) - Ideal quantity of items in an order to optimize costs. Placing multiple orders for a small number of items on […]
  • Electronic Data Interchange (EDI) - Sales order, purchase order and shipment data are electronically transmitted between manufacturer and distributor. This automates processes that would normally […]
  • Engineer-to-Order - Finished goods are designed to specifications provided by the customer in order to meet requirements for their application. Design, engineering […]
  • Enterprise Resource Planning (ERP) - Enterprise Resource Planning (ERP) systems are complex business applications companies utilize to manage operations and business processes. Common functionality includes […]
  • ERP Systems Migration - Implementation and configuration of an entirely new ERP system, including importing data from the existing ERP system. All data and […]
  • ERP Systems Upgrade - Installation a new version of the same ERP software. Upgraded versions typically include new or improved functionality and fixes. Any […]
  • Field Service - Tools and platforms that assist with the management, dispatching and billing of service requests. This often includes repair and maintenance […]
  • Floor Stock - Inventory regarded as low value / cost items (bolts, nuts, screws, etc.) that you wouldn’t keep track of individually. Items […]
  • Forecasting - ERP system analyzes historical sales data to predict future production demand for product families and finished goods.
  • Indirect Labor - Labor time that is expended (overhead) and must be accounted for in costing but is not directly part of manufacturing […]
  • Indirect Manufacturing Expense - Expenses that are attributed to manufacturing but are not directly related to production operations. Examples include: Management overhead PTO Training […]
  • Kanban - Best practices for simple inventory replenishment with origins from the Japanese word for “signboard” or “billboard”. The term Kanban, refers […]
  • Labor Tracking - Utilizing the ERP system to track direct labor by analyzing data from production orders, routings, number of finished goods completed […]
  • Lot Number - Number that is individually assigned to each group of finished goods that were manufactured in the same production cycle.
  • Lot Tracking - Each lot of products are individually numbered so that they can be tracked in case of compliance or recall issues. […]
  • Low-code - A low-code application can be developed primarily with a “drag and drop” interface. It may also require some software development […]
  • Make-to-Order - Production is driven by sales orders and manufacturing does not start until there is a completed sale. This reduces the […]
  • Make-to-Stock - Simple manufacturing methodology where production is driven by creating finished goods, receiving them into inventory and selling them to a […]
  • Marketing Automation - Platform that allows the management of customer lists and deployment of scheduled email marketing. Marketing automation systems are often integrated […]
  • Master Services Agreement - MSA - General terms and conditions governing SSG / Client relationship. It contains language to identify the parties and the effective date. […]
  • Material Planning - – MRP – Materials Requirements Planning – Top down process – What to make and when – Using sales orders […]
  • Maximum Inventory Level - Amount of raw materials or inventory not to be exceeded in order to avoid excess inventory carrying costs.
  • Minimum Inventory Level - Point at which purchasing department reorders raw materials or inventory. Keeping a minimum amount of materials or inventory on hand […]
  • No-code - No-code is a software development methodology that employs a visual development environment to allow business users to create applications, using […]
  • Non-Disclosure Agreement - NDA - The non-disclosure agreement (also referred to as a mutual non-disclosure agreement) specifies rules for the sharing of confidential information between […]
  • Pilot Testing - End-to-end testing of accounting / business processes using manually entered data to ensure users can manage corporate operations using the […]
  • Process Manufacturing - Manufacturing methodology involving of batches of products, including liquids, gases, CPG, food and beverage.
  • Product Order Form - Agreement for client to be billed for products that are not services, such as software licensing. The product order form […]
  • Production Order Closure - Closing a production order after finished goods have been completed affects accounting transactions after the products have been received into […]
  • Project Accounting - Module / functionality in ERP applications that allows for the management of billing and accounting on a project basis. Materials […]
  • Project Service Automation - Tools integrated into the ERP system that assist with project accounting and project management. Project accounting functionality includes: billing, budgeting, […]
  • Quality Assurance - Systematic business processes to detect and remedy defective materials, parts, assemblies, and finished goods. ERP systems with manufacturing tools have […]
  • Request for Information (RFI) - Standardized questionnaire / document that is usually a precursor to a RFP. A RFP generally contains cursory level information and […]
  • Request for Proposal (RFP) - Standardized questionnaire / document outlining project requirements that is provided to prospective vendors. Vendors respond to the RFP in a […]
  • Request for Quote (RFQ) - Standardized questionnaire / document that outlines project and pricing requirements that is provided to prospective vendors. Vendors respond to the […]
  • Requisition - A purchase requisition is traditionally a document or request for parts, material, or services. An ERP system can help purchasing […]
  • Robotic Process Automation (RPA) - Robotic Process Automation is a business process automation technology employing software robots (bots) and Artificial Intelligence (AI). RPA platforms allows […]
  • Safety Stock - Emergency stock of raw materials or inventory calculated based on time / production volume. When inventory falls below the safety […]
  • Serial Number Tracking - Each finished good is serialized and tracked in the ERP system. This is useful in the case of tracking manufacturing […]
  • Service Level Agreement - SLA - A Service Level Agreement (SLA), is primarily used to outline the time allowed to respond to an issue. The response […]
  • Shop Floor Data Collection - The Shop Floor is an area where manufacturing and assembly operations take place. ERP system functionality can be used to […]
  • Statement of Work – SOW - Description of project services provided by SSG to meet client business requirements. This includes a description of services, a project […]
  • Task Order Agreement – TOA - Legal terms and contractual obligations that precede the Statement of Work.
  • Third Party Logistics - Third-Party Logistics company that brokers shipments between client and shipping company. Client inventory is held in a third-party warehouse until […]
  • User Acceptance Testing - Phase of a project or implementation where line-of-business users test new functionality to ensure it meets specific client business requirements. […]
  • User Adoption - Line-of-business users learn and adopt the new system / functionality. Users who are used to following obsolete processes in performing […]
  • Work Center - Physical location where certain groups of machines or specific processes are completed in the manufacturing process. The work center typically […]