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.

  • L

    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

    maker movement

    The maker movement is a cultural trend that places value on an individual's ability to be a creator of things as well as a consumer of things.  

  • makerspace

    A makerspace is a community center that provides technology, manufacturing equipment and educational opportunities to the public.

  • Manufacturing 2.0

    Manufacturing 2.0 is the integration of Web 2.0 communication and collaboration applications into traditional manufacturing practices and processes.

  • 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 intelligence software

    Enterprise manufacturing intelligence software is a suite of software applications that integrates a company's manufacturing data from multiple sources to aid in reporting, analysis, visual summaries and passing data between enterprise-level and plant-floor systems.

  • Manufacturing operation management (MOM)

    Manufacturing operation management (MOM) is an approach of overseeing all aspects of the manufacturing process with a particular focus to increase efficiency.

  • 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. It consists of three primary steps: taking inventory of the materials and components on hand, identifying which additional ones are needed and then scheduling their production or purchase.

  • mobile application vetting

    Mobile application vetting is a process that app developers take to verify the compliance of mobile applications with a specified security requirement or standard.

  • 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.

  • open source ERP

    Open source ERP refers to an enterprise resource planning (ERP) software model in which the public has access to the source code of the system.

  • 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.

  • overall equipment effectiveness (OEE)

    Overall equipment effectiveness is a measure of manufacturing operations performance and productivity, expressed in a percentage.

  • 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. The purpose of a poka-yoke is to inhibit, correct or highlight an error as it occurs.

  • process manufacturing

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

  • procure to pay (P2P)

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

  • procurement software

    Procurement software is a computer program or suite that allows an organization to automate the processes of purchasing materials and maintaining an inventory of goods.

  • 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) involves capturing and managing the electronic information related to a product so it can be used in various business processes, including production and marketing. It usually requires a dedicated software application and centralized database.

  • 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.

  • product lifecycle management (PLM)

    Product lifecycle management (PLM) is a systematic approach to managing the series of changes a product goes through, from its design and development to its ultimate retirement or disposal. PLM software can be used to automate the management of product-related data and integrate the data with other business processes.

  • 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.

  • profitability analysis

    Profitability analysis is a component of enterprise resource planning (ERP) that allows administrators to forecast the profitability of a proposal or optimize the profitability of an existing project.

  • prototype

    In software development, a prototype is a rudimentary working model of a product or information system, usually built for demonstration purposes or as part of the development process.

  • PTC ThingWorx

    PTC ThingWorx is a model-based rapid application development (RAD) platform for the Internet of Things. The platform provides design, networking, data management and analytics tools for building business software that integrates with and manages IoT devices.

  • Q

    quality function deployment

    Quality function deployment (QFD) is the translation of user requirements or requests into designs. The goal of QFD is to build a product that does exactly what the customer wants instead of delivering a product that emphasizes expertise the builder already has.

  • R

    rapid prototyping

    Rapid prototyping is the speedy creation of a full-scale model.  The word prototype comes from the Latin words proto (original) and typus (model).

  • replenishment

    Replenishment refers to the movement of inventory from upstream -- or reserve -- product storage locations to downstream -- or primary – storage, picking and shipment locations.

  • revenue recognition

    Revenue recognition is a tenet of corporate financial management that defines when a company officially accounts for revenue.

  • reverse logistics

    Reverse logistics is the set of activities that is conducted after the sale of a product, such as servicing, refurbishment and recycling, for the purpose of recapturing value or proper disposal.

  • RFI (request for information)

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

  • right to repair (electronics)

    Right to repair is the legal concept that allows consumers to repair the products they buy, or choose their own service providers instead of going through the manufacturer.

  • S

    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.

  • 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.

  • Sage Group plc

    Sage Group plc is a global enterprise software vendor. Its portfolio of business software includes accounting, ERP, payroll, customer relationship management (CRM) and human capital management (HCM).

  • 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.

  • SC sustainability

    Supply chain sustainability is a holistic perspective of supply chain processes and technologies that goes beyond the focus of delivery, inventory and traditional views of cost.

  • SCEM (supply chain event management)

    Supply chain event management (SCEM) refers to software that is used to manage events that occur within and between organizations or supply chain partners.

  • 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.

  • SKU (stockkeeping unit)

    SKU (stockkeeping unit, sometimes spelled "Sku") is an identification, usually alphanumeric, of a particular product that allows it to be tracked for inventory purposes.

  • smart factory

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

  • software robotics

    Software robotics is the use of bot programs to automate computer tasks normally performed by people. Software robotics is synonymous with robotic process automation (RPA) and is the less widely used term, except in the financial services industry.

  • spreadsheet controls

    Spreadsheet controls are a set of steps that an organization's accounting personnel can take to ensure accuracy and integrity of financial records and bookkeeping procedures.

  • SQL-ledger

    SQL-Ledger (SL) is a Web-based open source double-entry accounting system that is used primarily in the retail and manufacturing sectors.

  • 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 performance management (SPM)

    Supplier performance management (SPM) is a blanket term for any business practice that is designed to manage, measure and analyze the performance of a supplier or suppliers in a network.

  • supplier relationship management (SRM)

    Supplier relationship management (SRM) is the systematic approach of assessing suppliers' contributions and influence on success, determining tactics to maximize suppliers' performance and developing the strategic approach for executing on these determinations.

  • 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 is the application of mathematics, statistics, predictive modeling and machine-learning techniques to find meaningful patterns and knowledge in order, shipment and transactional and sensor data.

  • 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 (such as a manufacturer) and one of their suppliers (for example, a raw materials supplier), typically through the services of a financial institution at lower financing costs.

  • 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 (SCM) that focuses on minimizing risk for supply chain, logistics and transportation management systems (TMS).

  • 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. Typically, sustainability initiatives include identifying the source of raw materials, ensuring good conditions for workers and reducing the carbon footprint.

  • supply chain visibility (SCV)

    Supply chain visibility (SCV) is the ability of parts, components or products in transit to be tracked from the manufacturer to their final destination.

  • SWIFT FIN message

    SWIFT FIN is a message type (MT) that transmits financial information from one financial institution to another.

  • SYSPRO

    SYSPRO is a vendor that specializes in providing ERP and other integrated business software to midsize manufacturers and distributors.

  • What is supply chain management (SCM) and why is it important?

    Supply chain management (SCM) is the broad range of activities required to plan, control and execute a product's flow from materials to production to distribution in the most economical way possible.

  • T

    Tagetik

    Tagetik is a software vendor of cloud-based and on-premises applications on a single platform for enterprise performance management.

  • tooling

    Tooling, also known as machine tooling, is the process of acquiring the manufacturing components and machines needed for production. 

  • traceability

    Traceability, in supply chain management, is the ability to identify, track and trace elements of a product or substance as it moves along the supply chain from raw goods to finished products. The concept applies to both the discrete manufacturing industry, which produces products such as automobiles, and to the process manufacturing industry, which includes products such as chemicals.

  • Transportation Management System (TMS)

    A transportation management system (TMS) is specialized software for planning, executing and optimizing the shipment of goods.

  • treasury management

    Treasury management is the administration of a company’s cash flow as well as the creation and governance of policies and procedures that ensure the company manages risk successfully.

  • two-tier ERP

    Two-tier ERP is a technology strategy taken by large, multinational enterprises that uses tier 1 ERP for financials and other core common processes at the corporate level and tier 2 ERP for divisions, subsidiaries and smaller locations of the company to address specific needs.

  • U

    upcharge

    An upcharge is an additional fee that is added to a bill after a contract has already been negotiated.

  • V

    value driver

    A value driver is an activity or capability that adds worth to a product, service or brand. One of the key ideas in defining value drivers is determining which factors provide the organization in question with a competitive edge.

  • value stream mapping

    Value stream mapping is a Toyota lean manufacturing visualization tool for documenting all the processes that are required to bring a product to market.

  • vendor-managed inventory (VMI)

    Vendor-managed inventory (VMI) is an inventory management technique in which a supplier of goods, usually the manufacturer, is responsible for optimizing the inventory held by a distributor.

  • virtual commissioning

    Virtual commissioning is the practice of using 3D technology to create a simulation model of a manufacturing plant so that proposed changes and upgrades can be tested before they are implemented to the actual plant.

  • virtual manufacturing

    Virtual manufacturing (VM) is the use of computers to model, simulate and optimize the critical operations and entities in a factory plant.

  • voice design

    Voice design is the process of planning and mapping all the possible interactions that might occur between a voice assistant and an end user.

  • voice user interface (VUI)

    Voice user interface (VUI) is speech recognition technology that allows people to interact with a computer, smartphone or other device through voice commands. Apple's Siri, Amazon's Alexa, Google's Assistant and Microsoft's Cortana are prime examples of VUIs.

  • W

    Warehouse control system (WCS)

    Warehouse control system (WCS) is a software application for orchestrating activity flow within a warehouses and distribution center.

  • warehouse management system (WMS)

    A warehouse management system (WMS) is software and processes that allow organizations to control and administer warehouse operations from the time goods or materials enter a warehouse until they move out.

  • work in progress (WIP)

    Work in progress (WIP), also called work in process, is inventory that has begun the manufacturing process and is no longer included in raw materials inventory but is not yet a completed product.

  • working capital

    Working capital is the difference between a business's current assets and current liabilities.

  • X

    X9 (ASC X9)

    ASC X9, Inc. (X9) is the American National Standards Institute (ANSI) organization responsible for the development of all financial services standards in the United States.

  • Y

    yard management system (YMS)

    A yard management system (YMS) is a software system designed to oversee the movement of trucks and trailers in the yard of a manufacturing facility, warehouse, or distribution center.

  • Z

    Zuora

    Zuora sells software that helps companies manage their cloud subscriptions, including sales, pricing, billing, collection and renewal. Zuora also offers analytics software that tracks information on subscribers and offers ways to boost services or react to problems.

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