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ERP Glossary of Terms and Acronyms

Just like any specialized field, ERP comes with its own lexicon of terms, acronyms, and jargon that can often leave users feeling overwhelmed. Whether you're a seasoned IT professional, a business executive, or a newcomer, this comprehensive Glossary of ERP (Enterprise Resource Planning) Terms, Acronyms, and Definitions will help to build or supplement an understanding of the intricate language of ERP systems.​​


  • Accounts Payable (AP) - Money owed by a company to its suppliers or vendors.

  • Accounts Receivable (AR) - Money owed to a company by its customers or clients.

  • Applicant Tracking System (ATS) - Software that streamlines the recruitment process by managing job postings, resumes, and candidate communication.

  • Application Programming Interface (API) - A set of protocols used by programmers to create applications for a specific operating system or to interface between the different modules of an application.

  • Audit - A systematic examination and verification of a company's financial records, processes, and controls.

  • Authorization for Expenditure (AFE) - A document used to request and track the approval of capital expenditures.


  • Balance Sheet - A statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.

  • Bill of Materials (BOM) - A comprehensive list of all components and materials required to manufacture a product.

  • Bill of Materials (BOM) - A comprehensive list of all the materials, components, and quantities required to manufacture a product.

  • Business Intelligence (BI) - Technologies and processes used to collect, analyze, and present business information.

  • Business Process Management (BPM) - A discipline that focuses on optimizing and managing end-to-end business processes for improved efficiency and effectiveness.

  • Business Process Reengineering - The redesign and optimization of business processes to achieve dramatic improvements in performance, efficiency, and effectiveness.


  • Cash Flow - The total amount of money being transferred into and out of a company over a specific period.

  • Cash Flow Forecasting - The process of estimating and predicting the future cash inflows and outflows of a company.

  • Cash Flow Statement - A financial statement that shows the inflows and outflows of cash during a specific period.

  • Change Control - A formal process for managing and documenting changes to system configurations or software code.

  • Change Management - The structured approach to transitioning individuals, teams, and organizations from the current state to a desired future state.

  • Change Request - A formal request to modify or enhance an existing system or software based on new

  • Chart of Accounts (COA) - A list of all accounts used by a company to record financial transactions.

  • Collaborative Planning, Forecasting, and Replenishment (CPFR) - A process where trading partners collaborate on demand forecasting and inventory replenishment.

  • Competency Talent Management (CTM) - A strategic approach to managing talent that focuses on developing and leveraging employees' skills and competencies.

  • Compound Annual Growth Rate (CAGR) - The average annual growth rate of an investment over a specified period of time.

  • Computer-Aided Design (CAD) – The use of computer software to aid in the creation of 2D and 3D designs and models.

  • Consolidated Omnibus Budget Reconciliation Act (COBRA) - A federal law that allows employees and their families to continue group health insurance coverage after a job loss or other qualifying event.

  • Cost Allocation - The process of identifying, aggregating, and assigning costs to specific cost objects, such as products, services, or departments.

  • Cost of Goods Sold (COGS) - The direct costs incurred to produce or acquire the goods sold by a company.

  • Cost-Volume-Profit (CVP) Analysis - A tool used to determine how changes in costs and volume affect a company’s operating and net income.

  • Cross-Docking - A distribution strategy where goods are received and immediately transferred to outbound vehicles without being stored.

  • Customer Relationship Management (CRM) - A system that helps manage and track a company's interactions with current and potential customers.


  • Days Sales Outstanding (DSO) - A measure of the average number of days that it takes for a company to collect payment for a sale.

  • Demand Forecasting - The process of estimating future demand for inventory, products, or services.

  • Depreciation - The systematic allocation of the cost of an asset over its useful life.

  • Distribution Requirements Planning (DRP) - A planning process that determines the distribution and replenishment needs of goods based on demand and inventory levels.

  • Downtime - The period during which equipment or machinery is not operational.


  • Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) - A measure of profits and financial performance for a company.

  • Economic Value Added (EVA) - A measure of a company's financial performance that calculates the value generated after deducting the cost of capital from operating profit.

  • Electronic Data Interchange (EDI) - The electronic exchange of business documents between trading partners in a standardized format.

  • Employee Benefits - Non-wage compensation provided to employees, such as health insurance, retirement plans, or paid time off.

  • Employee Development Plan - A structured approach to identify and support the professional growth and skill development of employees.

  • Employee Engagement - The extent to which employees are committed to their work, feel valued, and motivated to contribute to the organization's success.

  • Enterprise Resource Management (ERP) - A software system that integrates various business operations and functions into a unified platform.

  • Equal Employment Opportunity Commission (EEOC) - A federal agency that enforces laws against workplace discrimination.

  • Equity Financing – The process of raising capital by issuing and selling shares of ownership (equity) in the company.


  • Family and Medical Leave Act (FMLA) - A U.S. law that allows eligible employees to take unpaid leave for specific family and medical reasons.

  • Financial Analysis - The examination and interpretation of financial data and statements to assess the financial performance and health of a business.

  • Financial Ratio - A comparison of two or more financial values to evaluate a company's performance and financial health.

  • First-In, First-Out (FIFO) - An asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first.

  • Fourth-Party Logistics (4PL) - Outsourcing all aspects of supply chain and logistics management to a single service provider.

  • Free On Board (FOB) - A shipping term that defines the point in the supply chain when a buyer or seller becomes liable for goods that are damaged or destroyed.

  • Freight Management - The coordination and optimization of shipping and transportation activities, including carrier selection and route planning.

  • Full-Time Equivalent (FTE) - A unit of measure representing the number of hours a full-time employee works for a company.


  • General Ledger (GL) - A record of all financial transactions of a company.

  • Generally Accepted Accounting Principles (GAAP) - A common set of accounting rules and standards and guidelines used in financial reporting.


  • Human Capital Management (HCM) - A set of practices and tools used to attract, manage and retain employees to achieve business goals.

  • Human Resources Business Partner (HRBP) - An HR professional who works closely with business leaders to align HR strategies with business objectives.

  • Human Resources Information System (HRIS) - A software system that manages employee data, HR processes, and payroll.


  • Internal Controls - Policies, procedures, and systems implemented to safeguard assets, ensure accuracy of financial records, and prevent fraud.

  • Internet of Things (IoT) - A network of interconnected physical devices embedded with sensors and software that enable them to collect and exchange data.

  • Inventory Accuracy - The degree to which the physical inventory quantities match the recorded inventory levels in the system.


  • Just-in-Time (JIT) – An inventory management strategy that aims to deliver products or components just when they are needed, minimizing inventory and storage costs.


  • Kanban - A visual system that uses cards or signals to control and manage the flow of materials and production activities.

  • Key Performance Indicator (KPI) - A measurable value that indicates how well an individual or department is achieving specific objectives.

  • Key Result Area (KRA) - Specific areas of responsibility or goals that are critical to an employee’s or department's success.


  • Last-In, First-Out (LIFO) - An inventory valuation method where the last units received are assumed to be the first ones sold.

  • Lead Time - The time it takes for an order to be fulfilled, from placement to delivery.

  • Lead Time Variability - The degree of variation or uncertainty in the time it takes to fulfill an order or procure materials.

  • Lean Manufacturing - An approach that focuses on reducing waste and improving efficiency in production processes.

  • Learning Management System (LMS) - A software platform that manages employee training and development programs.

  • Less Than Truckload (LTL) - A shipping method for relatively small freight that does not require a full truckload.


  • Manufacturing Execution System (MES) - Software that manages and controls manufacturing operations on the factory floor.

  • Master Data - Core data elements that are shared across an organization, such as customer data, product data, or supplier data.

  • Master Production Schedule (MPS) - A detailed plan specifying how and when products will be manufactured.

  • Material Requirements Planning (MRP) - A planning system that calculates the materials and components needed for production based on demand.

  • Minimum Order Quantity (MOQ) - The minimum quantity of a product that a supplier is willing to produce or sell.


  • Onboarding - The process of integrating and orienting new employees into the organization and their roles.

  • Operating Expenses (OPEX) - The ongoing costs incurred by a company to operate its business on a day-to-day basis.

  • Order Fulfillment - The process of receiving, processing, and delivering customer orders.

  • Overall Equipment Efficiency (OEE) - A measure of manufacturing productivity that takes into account availability, performance, and quality.


  • Packing - The process of preparing and packaging products for shipment.

  • Paid Time Off (PTO) - Time off from work for which an employee is paid, including vacation, sick leave, and personal days.

  • Performance Appraisal - The formal assessment and evaluation of an employee's job performance.

  • Performance Improvement Plan (PIP) - A formal process used to address performance issues and help employees retain their job.

  • Pick-and-Pack - The process of selecting items from inventory and packaging them for shipment.

  • Pick-to-Order - The process of picking items from inventory based on specific customer orders.

  • Picking - The process of selecting items from inventory to fulfill customer orders.

  • Profit and Loss (P&L) - A financial statement that summarizes a company's revenues, costs, and expenses during a specific period.

  • Putaway - The process of storing received goods in their designated locations within the warehouse.


  • Quality Assurance - The process of ensuring that products meet specified quality standards through inspections, testing, and control procedures.

  • Quality Control (QC) - Processes and activities implemented to ensure product quality and adherence to specifications.

  • Quality Management System (QMS) - A set of policies, processes, and procedures for managing and improving product quality throughout the manufacturing process.


  • Radio-Frequency Identification (RFID) - A technology that uses electromagnetic fields to automatically identify and track tags attached to objects.

  • Receiving - The process of accepting and inspecting incoming goods or materials into the warehouse.

  • Reorder Point - The inventory level at which a new order should be placed to replenish stock before it runs out.

  • Return on Assets (ROA) - A financial ratio that measures the profitability of a company relative to its total assets.

  • Return on Investment (ROI) - A financial metric that calculates the return generated from an investment relative to its cost.

  • Reverse Engineering - The process of analyzing and disassembling a product to understand its components, structure, and functionality.

  • Risk-Adjusted Return on Capital (RAROC) - A measure of the return on investment generated by a business considering the level of risk involved.

  • Routing - The predetermined sequence of operations and processes that a product or order follows in the manufacturing process.


  • Safety Stock - Additional inventory held as a buffer to protect against unforeseen fluctuations in demand or supply.

  • Scalability - The ability of a system or process to handle increased workload or growth without significant performance degradation.

  • Shipment Tracking - The ability to monitor and trace the movement of goods throughout the transportation process.

  • Society for Human Resource Management (SHRM) - A professional association for HR practitioners offering education, resources and certifications.

  • Software as a Service (SaaS) - A software distribution model where applications are hosted by a service provider and accessed online via a subscription.

  • Stock Keeping Unit (SKU) - A unique identifier assigned to a specific item or product variant to track inventory.

  • Succession Planning - A strategic process for identifying and developing internal talent to fill key positions in the future.

  • Supplier Performance Metrics - Key performance indicators used to measure and evaluate the performance of suppliers, such as on-time delivery or quality.

  • Supply Chain Management (SCM) - The coordination and management of all activities involved in the flow of goods and services from suppliers to customers.

  • Supply Chain Operations Reference (SCOR) - A framework that provides a standardized way to analyze, evaluate and improve supply chain performance.

  • System Integration - The process of connecting and merging different software systems or modules into one system.


  • Talent Acquisition - The process of attracting, sourcing, and recruiting qualified candidates for job vacancies.

  • Third-Party Logistics (3PL) - Outsourcing logistics and supply chain management services to another company.

  • Transportation Management System (TMS) - Software that optimizes and manages transportation operations, including routing and scheduling.

  • Travel and Expense (T&E) - Costs associated with employee travel and business-related expenses.


  • User Acceptance Testing (UAT) - The final phase of software testing where end-users validate the system or software to ensure it meets their requirements.


  • Vendor Evaluation - The assessment of suppliers based on organizational standards such as quality, delivery performance, pricing, and reliability.

  • Vendor-Managed Inventory (VMI) - An inventory management technique in which a supplier manages the inventory levels at the customer’s location.


  • Warehouse Management System (WMS) - Software that manages and optimizes warehouse operations, including inventory management and order fulfillment.

  • Work in Progress (WIP) - Partially completed products or assemblies that are in the manufacturing process.

  • Work Order - A document that specifies the tasks, materials, and resources required to complete a specific job or production order.

  • Workforce Planning - The process of analyzing and forecasting the workforce needs and requirements of an organization.

  • Workstation - A specific area or location in a manufacturing facility where tasks or operations are performed.


  • Yield - The ratio of usable output to the input, typically used to measure production efficiency or quality.

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