Glossary of ERP Software Terms | ERP Glossary

Whether you are an expert or a naive ERP user, there are so many technical terms that your mind will surely start to spin. Here, we see making a humble attempt to put all the popular technical terms related to ERP Software on one page.

ERP Software Terms & Definitions

3rd Party Application – Application that is developed by an outside professional/company but is sold via a vendor.

Accounts Payable & Receivable – Account payable is an unpaid balance that your business owes to the vendors. An account receivable is any balance amount that your customers owe you.

Aging – When assets are categorized based on their duration of existence.

Allocation – Cost distribution in manufacturing.

Assemble To Order (ATO) – It is a manufacturing level strategy that lets users assemble limited sub-assemblies into a bigger finished item. This lowers the inventory risk.

Business To Business (B2B) – When the transaction is taking place between two businesses.

Bill of Material – A list of all the materials or the components (type and quantity-wise) needed to manufacture a part.

Bottleneck – When a machine or workstation gets overloaded and the production process gets delayed or slow.

Build To Stock – A strategy where items are built in advance based on the sales forecasts or past demand records.

Capacity requirements planning (CRP) – Calculating a business production capacity that is required to fulfill all the demands.

Electronic Data Interchange (EDI) – EDI helps in the electronic exchange of orders among trading partners.

Engineer To Order – a production approach where products are designed and built as per the specifications of the order.

Fixed Assets – Assets that are important production, but do not generate cash within a year like building, machinery, etc.

General ledger – A permanent, live record where all the business financial transactions are recorded.

Implementation – the process of deploying and setting ERP software. 

Integrated Software – Two or more functions of different software are within an ERP application.

Job cost – A method where every cost incurred for a project is recorded and calculated at the end. Here, the recorded and planned cost is compared to get variances that are put in the accounting software.

Job Shop – a fairly small manufacturing facility that produces specialized products.

Kaizen – it is a Japanese word that means improvement. It believes in continuous improvement with the help of analytical tools and approaches.

Kanban – It is a communication system that governs and manages the flow of the shop, synchronizing the production as per the customer demand.

Key Performance Indicator (KPI) – Helping businesses achieve the goals by improving the decided performance targets and measuring progress based on them. 

Lean Manufacturing – a manufacturing method that tries to function with the least waste and most efficiency.

Liquidity – The scale up to which the business capital can be turned into cash.

Master Production Schedule – A schedule that decides how many units of products need to be produced within a given time. 

Material control management – It often deals with shifting, storing, and assessing materials used in manufacturing. 

Material requirements planning (MRP) – a system used to plan actual manufacturing, scheduling, and inventory.  The system makes sure that the required material is available for production, enough products are available for customers, etc.

Mobile data collection – An approach where mobile transactions are designed for hand-held devices. Deploying bar-code enabled, mobile devices are a part of it.

Network Administrator– A person who manages the computer network of the entire business.

Operations Management – A department that cares for all the aspects of a customer’s production resources.

Order Management – the process of meeting and monitoring customer orders.

Purchase Requisition – Asking for approval to buy material or service.

Return merchandise authorization (RMA) – It is a unique document that carries an identifying number that allows customers to return goods.

Routing –AA sequence or a route that materials follow to produce a part or final product.

Software License – It offers multiple access to the same software. 

Total Quality Management (TQM) – a manufacturing approach that believes in quality improvement throughout the operation.

Value Stream Mapping (VSM) – A feature that lets users understand how the workflow, flow of data or product, etc. is and allows to improve it.

Visual scheduling – A real-time data of shop floor activity including.