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  • Writer's pictureChuck Coxhead

ERP Glossary of Terms and Acronyms

Updated: Aug 18, 2023

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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