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.
4-D printing (four-dimensional printing)

4-D printing is additive manufacturing that prints objects capable of transformation and, in some cases, self-assembly.
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ABC classification

ABC classification is a ranking system for identifying and grouping items in terms of how useful they are for achieving business goals.
account

An account is a unique record for each type of asset, liability, equity, revenue and expense.
accounts payable

Accounts payable is a liability account in the general ledger (GL).

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. Anaplan is also the name of the company that created the platform.
Andon

An Andon is a visual control that indicates the status of a machine, manufacturing line or process.
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.
AR-to-GL reconciliation

AR-to-GL (accounts-receivable-to-general-ledger) reconciliation is a process commonly used to balance accounts in bookkeeping, particularly within an Oracle relational database.
asset liability management

Asset liability management (ALM) is the administration of policies and procedures that address financial risks associated with changing interest rates, foreign exchange rates and other factors that can affect a company’s liquidity.
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.
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BAI2 file format

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

A bar code (often seen as a single word, barcode) 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.
Basware

Learn about Basware, a Finland-based vendor of networked purchase-to-pay, e-invoicing, procurement, and financing software and services.
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.
BPaaS (Business Process as a Service)

Business Process as a Service (BPaaS) is a form of business process outsourcing (BPO) that employs a cloud computing service model.
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.
Business Planning and Control System (BPCS)

Business Planning and Control System (BPCS) is a popular system of application programs for manufacturing and other industries that is developed and sold by Systems Software Associates (SSA).
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cartonization

Cartonization is a process that uses algorithms to evaluate the items in an order to determine the number and size of each carton needed to ship the order.
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.
closed loop manufacturing resource planning (MRP)

Closed loop manufacturing resource planning, also known as closed loop MRP (CLMRP), is a manufacturing resource planning model that includes returned products in the supply chain.
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 method for automating control of machine tools through the use of software embedded in a microcomputer attached to the tool.
Computer-aided process planning (CAPP)

Computer-aided process planning is a link between design and manufacturing in a computer-integrated manufacturing (CIM) environment.
computer-aided software engineering (CASE)

Computer-aided software engineering (CASE) describes a broad set of labor-saving tools used in software development.
contract management software

Contract management software is a program or series of related programs for storing and managing legal agreements such as contracts with vendors, leases and licensing agreements.
cost of goods sold (COGS)

Cost of goods sold (COGS) is the total of the costs directly attributable to producing goods. It includes material and labor costs but not indirect costs such as sales, marketing and distribution. In accounting, it is a standard item in the expense section of a company's income statement.
cost-benefit analysis software

Cost-benefit analysis software is a computer program or suite that assists personnel in the complex task of determining whether or not a proposed plan or project will pay off.
cross-docking

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

A demand flow scheduling system is a software product designed to optimize demand-based manufacturing practices. (Continued)
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 modeling and fabrication

Digital modeling and fabrication is a design and production process that marries 3-D modeling or computing-aided design (CAD) software with additive and subtractive manufacturing.
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 product or workflow across its lifecycle. Digital twins play an important role in manufacturing, as well as supply chain management, healthcare and the court system.
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. Companies use this approach to lower the risk of relying on a single supplier, a practice called single sourcing. Sole sourcing, in contrast, means only one source is available.
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e-filing (electronic filing)

E-filing is the electronic submission of information that is required by law.
EDGAR

EDGAR (Electronic Data Gathering, Analysis, and Retrieval) is an online public database from the U.S. Securities and Exchange Commission (SEC).
EDIFACT

EDIFACT (ISO 9735) is the international standard for electronic data interchange (EDI).
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.
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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.
financial application

A financial application is a software program that facilitates the management of business processes that deal with money.
financial consolidation

Financial consolidation is the process of combining financial data from several departments or business entities within an organization, usually for reporting purposes.
financial controller

A financial controller, also referred to as financial comptroller, is a senior-level executive who usually reports to an organization's chief financial officer (CFO).
financial data management

Financial data management (FDM) is a process and policy, usually assisted by specialized software, that allows an enterprise or institution to consolidate its financial information, maintain compliance with accounting rules and laws, and produce detailed financial reports.
financial management system

A financial management system is the methodology and software that an organization uses to oversee and govern its income, expenses, and assets with the objectives of maximizing profits and ensuring sustainability.
financial modeling

Financial modeling is the construction of spreadsheet models that illustrate a company's likely financial results in quantitative terms. Financial models can simulate the effect of specific variables so that the company can plan a course of action should they occur.
financial planning and analysis (FP&A)

Financial planning and analysis (FP&A) is the budgeting, forecasting and analytical processes that support an organization's financial health and business strategy.
financial reporting

Financial reporting is the process of producing the reports, called statements, that disclose an organization's financial status to management, investors and the U.S. federal government.
financial supply chain management

Financial supply chain management (FSCM) is a set of software tools and processes designed to enhance an organization’s product flow, maximizing profitability and minimizing expenses.
finite capacity scheduling

In manufacturing, finite capacity scheduling is an approach to understanding how much work can be produced in a certain time period, taking limitations on different resources into consideration.
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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.
ghost asset

A ghost asset is a fixed asset in a general ledger (GL) that cannot be accounted for because it is physically missing or otherwise rendered unusable.
GMP (good manufacturing practice)

A good manufacturing practice (GMP) is one that conforms to the guidelines set by the regulatory agencies that control authorization and licensing for the production and sale of food, beverages and active pharmaceutical products.
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).
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hybrid manufacturing

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

IBM OpenPages is a governance, risk and compliance (GRC) platform that centralizes services and components associated with the challenges and management of regulatory initiatives.
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.
ISAE 3402

ISAE (International Standards for Assurance Engagements) 3402 is a global assurance standard for reporting on controls at service organizations.
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.
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last mile of finance (LMOF)

The last mile of finance is composed of the management processes that finance executives perform after the monthly, quarterly or annual close to prepare for financial reporting and disclosure.
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 is a term used in manufacturing that refers to a position in a production environment or warehouse that ensures materials are supplied where and when they are needed.
liquid logistics

Liquid logistics is a specialized material-handling and transportation discipline that is used when moving liquid products through a supply chain.
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.
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.