ERP Glossary
Key ERP terms, acronyms, and concepts explained in plain language. Whether you're evaluating ERP systems or implementing one, this glossary covers the terminology you need to know.
3PL (Third-Party Logistics)
A 3PL is an outsourced provider that handles logistics functions such as warehousing, fulfillment, and transportation on behalf of a company.
ABC Analysis
ABC analysis classifies inventory items into A, B, and C groups by value or importance so management effort can be focused where it matters most.
Accruals
Accounting entries that record revenue earned or expenses incurred before the related cash is received or paid.
Agile ERP Implementation
An agile ERP implementation delivers the system in short, iterative cycles with frequent feedback rather than one long sequential plan.
AI in ERP
AI in ERP refers to embedding artificial intelligence capabilities such as prediction, automation, and natural-language interfaces into ERP systems to improve decisions and efficiency.
AP (Accounts Payable)
The money a company owes to its suppliers for goods and services it has received but not yet paid for.
API (Application Programming Interface)
An API is a defined set of rules and endpoints that lets one software system request data or trigger actions in another.
APS (Advanced Planning & Scheduling)
Software that optimizes production scheduling by considering capacity constraints, materials, and delivery deadlines simultaneously.
AR (Accounts Receivable)
The money customers owe a company for goods or services delivered but not yet paid for.
ASN (Advance Shipping Notice)
An ASN is an electronic notification sent by a supplier ahead of a shipment, detailing its contents, packaging, and expected delivery.
ATO (Assemble-to-Order)
A strategy where stocked sub-assemblies and components are assembled into a finished product only after a customer order is received.
ATP (Available-to-Promise)
ATP is the quantity of a product that can be promised to customers based on current and planned inventory not yet committed to other orders.
ATS (Applicant Tracking System)
An applicant tracking system is software that manages the recruiting workflow, from job postings through candidate selection and hiring.
Audit Log
An audit log is a chronological, tamper-resistant record of who did what and when within a system.
Audit Trail
A chronological, tamper-evident record of who did what and when within a financial system.
Backflushing
Automatically deducting component inventory based on the quantity of finished goods reported, rather than recording each material issue manually.
Backorder
A backorder is a customer order, or order line, that cannot be filled immediately and is held to be fulfilled when stock becomes available.
Bank Reconciliation
Matching a company's accounting records to its bank statement to confirm the two agree.
Batch Manufacturing
Producing goods in defined quantities or batches that move through production together and share a single lot identity and quality record.
Benefits Administration
Benefits administration is the management of employee benefit programmes such as health insurance, retirement plans, and other perks.
Big Bang Implementation
A big bang implementation switches off the legacy system and goes live with the full ERP across the organization on a single date.
Bin / Location Management
Bin or location management is the practice of tracking inventory at specific storage positions within a warehouse rather than only by total quantity.
Blueprint Phase
The blueprint phase is the ERP design stage where business requirements are translated into a detailed plan for how the system will be configured.
BOM (Bill of Materials)
A hierarchical list of all raw materials, components, and assemblies needed to manufacture a product.
Budgeting & Forecasting
Setting financial targets for a future period and continually updating expectations as conditions change.
Business Intelligence (BI)
Business intelligence is the technology and practice of analysing business data to produce reports, dashboards, and insights that guide decisions.
Business Process Automation (BPA)
Business process automation uses technology to execute recurring business processes automatically, reducing manual steps and handoffs.
Business Process Reengineering (BPR)
Business process reengineering is the fundamental redesign of business processes, often undertaken alongside an ERP implementation, to improve performance.
By-Products and Co-Products
Additional outputs that emerge alongside the main product in a process run, where co-products are intended and valuable and by-products are secondary or incidental.
Cash Flow Management
Monitoring, forecasting, and optimising the cash moving into and out of a business to keep it liquid.
Cloud ERP
ERP software hosted in the cloud (typically SaaS) where the vendor manages infrastructure, updates, and security.
COA (Chart of Accounts)
The structured list of all accounts a company uses to classify and record its financial transactions.
Compensation Management
Compensation management is the process of planning, administering, and governing employee pay, bonuses, and rewards.
Conference Room Pilot (CRP)
A conference room pilot is a structured walkthrough where key users test the configured ERP against real business scenarios before full testing.
Consignment Inventory
Consignment inventory is stock held at the customer's or distributor's location that remains owned by the supplier until it is used or sold.
Continuous Accounting
An approach that distributes accounting tasks evenly throughout the period rather than concentrating them at close.
Core HR
Core HR refers to the foundational administrative HR functions and the system of record that manages essential employee data and lifecycle events.
Cost Accounting
The practice of capturing, classifying, and analysing the costs of producing goods or delivering services.
CPQ (Configure, Price, Quote)
CPQ is software that helps sales teams configure complex products, apply correct pricing, and generate accurate quotes quickly.
CRM (Customer Relationship Management)
CRM is software that manages a company's interactions with prospects and customers across sales, marketing, and service.
Cross-Docking
Cross-docking is a logistics practice where incoming goods are transferred directly from receiving to outbound shipping with little or no storage in between.
CRP (Capacity Requirements Planning)
A process that calculates whether available work-center capacity is sufficient to meet the production plan generated by MRP.
CTO (Configure-to-Order)
A fulfillment strategy where customers select from predefined options and the ERP generates a unique product configuration, BOM, and price at order time.
CTP (Capable-to-Promise)
CTP determines whether a customer order can be fulfilled by a requested date by checking material availability and production capacity, not just existing inventory.
Currency Revaluation (FX Revaluation)
Restating foreign-currency balances at current exchange rates to reflect their up-to-date home-currency value.
Customer 360
Customer 360 is a unified, comprehensive view of a customer that aggregates data from across sales, service, finance, and operations.
Cutover
Cutover is the tightly choreographed set of activities that switches an organization from the legacy system to the live ERP system.
Cycle Counting
Cycle counting is a method of auditing inventory accuracy by counting subsets of items on a continuous, rotating schedule rather than all at once.
Cycle Time
The actual elapsed time required to complete one unit or one operation in a production process.
Data Cleansing
Data cleansing is the process of correcting, de-duplicating, and standardizing legacy data before migrating it into a new ERP system.
Data Governance
Data governance is the framework of policies, roles, and controls that ensures data is accurate, secure, consistent, and used responsibly.
Data Migration
Data migration is the process of moving data from one system to another, typically from a legacy application into a new ERP.
Data Warehouse
A data warehouse is a centralised repository that stores integrated data from multiple systems, optimised for reporting and analysis.
DDMRP (Demand-Driven MRP)
A planning method that positions strategic inventory buffers and replenishes them based on actual demand rather than forecast-driven MRP calculations.
Deferred Revenue
Money a company has received or invoiced for goods or services it has not yet delivered.
Demand Forecasting
Demand forecasting is the use of historical data and statistical or machine-learning models to predict future product demand.
Demand Planning
Demand planning is the process of developing and managing a forward-looking estimate of customer demand to guide supply and inventory decisions.
Disaster Recovery (DR)
Disaster recovery is the set of plans and technologies for restoring systems and data after a major outage, failure, or catastrophic event.
Discovery Phase
The discovery phase is the early stage of an ERP project where requirements, current processes, and goals are gathered to shape the solution.
Discrete Manufacturing
Production of distinct, countable items such as machines, vehicles, electronics, or assemblies that can be disassembled back into their components.
Double-Entry Accounting
The bookkeeping method where every transaction is recorded as equal and offsetting debits and credits.
Dropshipping
Dropshipping is a fulfillment model in which a seller passes customer orders to a supplier who ships the goods directly to the end customer.
DSO (Days Sales Outstanding)
The average number of days it takes a company to collect payment after making a sale on credit.
Dunning
The process of systematically reminding and pressing customers to pay their overdue invoices.
EAM (Enterprise Asset Management)
Software for managing the lifecycle of physical assets — maintenance scheduling, work orders, spare parts, and asset performance.
ECO (Engineering Change Order)
A controlled document that authorizes and records a change to a product's design, bill of materials, or specifications.
EDI (Electronic Data Interchange)
A standard for exchanging business documents (purchase orders, invoices, ASNs) electronically between trading partners.
Embedded Analytics
Embedded analytics places reports, dashboards, and data visualisations directly inside an application's own interface and workflow.
EOQ (Economic Order Quantity)
EOQ is the order quantity that minimizes the combined cost of ordering and holding inventory for an item.
ERP (Enterprise Resource Planning)
Integrated business management software that connects finance, manufacturing, supply chain, HR, CRM, and other core business functions.
ESS (Employee Self-Service)
Employee self-service lets employees view and manage their own HR information and requests through a portal or app.
ETL (Extract, Transform, Load)
ETL is a data pipeline pattern that extracts data from sources, transforms it into a target structure, and loads it into a destination such as a data warehouse.
ETO (Engineer-to-Order)
A manufacturing strategy where products are designed and engineered to customer specifications before production begins.
Field Service Management (FSM)
Field service management is software for scheduling, dispatching, and supporting technicians who perform work at customer sites.
FIFO / LIFO (Inventory Costing & Flow)
FIFO and LIFO are inventory methods that define the order in which costs (and often physical units) are assumed to be consumed: oldest-first or newest-first.
Financial Consolidation
Combining the financial results of a parent company and its subsidiaries into a single set of group statements.
Finite vs Infinite Scheduling
Two scheduling approaches: infinite assumes unlimited capacity and may overload resources, while finite respects real capacity limits when sequencing work.
Fit-Gap Analysis
An evaluation process comparing ERP system capabilities against business requirements to identify gaps that need customization.
Fixed Asset Management
The process of tracking a company's long-lived physical assets and calculating their depreciation over time.
FLSA Compliance
FLSA compliance is adherence to the US Fair Labor Standards Act rules on minimum wage, overtime, and worker classification.
Formula and Recipe Management
The definition and control of ingredient quantities, instructions, and scaling rules used to produce process-manufactured products.
FP&A (Financial Planning & Analysis)
The finance function responsible for budgeting, forecasting, and analysing performance to guide business decisions.
Garnishments
Garnishments are court- or agency-ordered deductions from an employee's pay that an employer must withhold and remit to a third party.
GL (General Ledger)
The central accounting record that holds every financial transaction a company posts, organised by account.
Go-Live
The moment when an organization switches from its old system to the new ERP system for day-to-day operations.
HCM (Human Capital Management)
Software for managing the complete employee lifecycle — recruiting, onboarding, payroll, benefits, performance, and talent management.
Headcount Planning
Headcount planning is the process of forecasting, budgeting, and tracking the number of employees an organisation needs.
HRIS (Human Resource Information System)
An HRIS is the central software system of record for an organisation's employee data, HR processes, and people-related transactions.
Hypercare
Hypercare is the intensive support period immediately after ERP go-live when extra resources resolve issues and stabilize the new system.
Implementation Partner
An implementation partner is the external firm a company hires to plan, configure, and deploy its ERP system.
In-Memory Database
An in-memory database stores and processes data primarily in main memory (RAM) rather than on disk, enabling much faster reads and analytics.
Intercompany Accounting
Recording and reconciling transactions that occur between legal entities within the same corporate group.
Inventory Management
The process of tracking, managing, and optimizing inventory levels across locations to meet demand while minimizing costs.
iPaaS (Integration Platform as a Service)
iPaaS is a cloud-hosted platform that lets organisations build, run, and manage integrations between applications without maintaining their own integration infrastructure.
Kanban
A visual signaling system that triggers replenishment or production only when downstream demand consumes existing stock.
Key User / Power User
A key user is a business expert who represents their department in an ERP project and becomes the go-to support resource after go-live.
Kitting
Kitting is the process of grouping individual components into a single packaged kit that is stocked, picked, or shipped as one unit.
Labor Distribution
Labor distribution is the allocation of employee wages and costs across the projects, departments, or cost centres where the work was performed.
Landed Cost
Landed cost is the total cost of a product once it arrives at its destination, including purchase price plus freight, duties, insurance, and handling.
Lead Management
Lead management is the process of capturing, qualifying, nurturing, and routing potential customers until they become sales opportunities.
Lead Time
Lead time is the total elapsed time between initiating an order and receiving or completing it.
Lean Manufacturing
A production philosophy focused on maximizing customer value while systematically eliminating waste in every process.
Leave Management (Absence Management)
Leave management is the process of tracking, requesting, approving, and accounting for employee time away from work.
LMS (Learning Management System)
A learning management system is software for delivering, tracking, and managing employee training and development.
Lot Sizing
Lot sizing is the determination of how much to order or produce in a single batch when replenishing inventory.
Lot Tracking (Traceability)
The capture of lot or batch identifiers through receiving, production, and shipping so materials can be traced forward and backward for recalls and compliance.
Low-Code / No-Code
Low-code and no-code platforms let people build applications and automations mostly through visual tools instead of writing traditional code.
Master Data Management (MDM)
Master Data Management is the discipline and tooling used to maintain a single, consistent, and accurate set of core business records across systems.
MES (Manufacturing Execution System)
Shop floor software that tracks and monitors production in real time, bridging the gap between ERP planning and actual manufacturing.
Microservices
Microservices is an architecture that builds an application as a collection of small, independently deployable services that communicate over APIs.
Middleware
Middleware is software that sits between applications and brokers communication, data exchange, and integration between them.
Mixed-Mode Manufacturing
An operation that combines discrete and process methods, such as producing a bulk material and then packaging it into countable finished units.
MRP (Material Requirements Planning)
A system for planning manufacturing materials and production scheduling based on demand forecasts and bills of materials.
MRP II (Manufacturing Resource Planning)
An expanded planning method that extends material requirements planning to coordinate labor, machine capacity, and financials across the whole manufacturing operation.
MSS (Manager Self-Service)
Manager self-service gives managers direct access to HR tools and data for the employees they oversee.
MTO (Make-to-Order)
A manufacturing strategy where production begins only after a customer order is received.
MTS (Make-to-Stock)
A manufacturing strategy where products are made in advance based on demand forecasts and stocked in inventory.
Multi-Entity Accounting
Managing the books of multiple legal entities or subsidiaries within a single, shared accounting system.
Multi-Tenant vs Single-Tenant Architecture
Multi-tenant architecture serves many customers from one shared software instance, while single-tenant gives each customer its own dedicated instance.
OEE (Overall Equipment Effectiveness)
A manufacturing metric that measures equipment productivity as a percentage combining availability, performance, and quality.
OLAP (Online Analytical Processing)
OLAP is a technology for fast, multidimensional analysis of large volumes of data, enabling users to slice, dice, and drill into measures across dimensions.
On-Premise ERP
ERP software installed and run on the organization's own servers and IT infrastructure.
Onboarding
Onboarding is the process of integrating and equipping new hires so they become productive and engaged members of the organisation.
Opportunity Management
Opportunity management is the CRM process of tracking and progressing qualified sales deals through defined stages toward close.
Order Management
Order management is the process of capturing, processing, fulfilling, and tracking customer orders from placement through delivery.
Org Chart Management
Org chart management is the maintenance and visualisation of an organisation's reporting structure and hierarchy.
Organizational Change Management (OCM)
OCM is the structured approach to preparing, supporting, and helping people adopt the new ways of working introduced by an ERP system.
Parallel Adoption
Parallel adoption runs the new ERP and the legacy system side by side for a period so results can be compared before retiring the old system.
Payroll
Payroll is the process of calculating, distributing, and recording employee compensation along with associated taxes and deductions.
Payroll Tax Filing
Payroll tax filing is the process of calculating, reporting, and remitting employment taxes to government authorities on the required schedules.
Performance Management
Performance management is the ongoing process of setting expectations, evaluating, and improving employee performance against goals.
Period Close (Month-End Close)
The recurring process of finalising a company's books at the end of an accounting period so results can be reported.
Perpetual Inventory
Perpetual inventory is a system that continuously updates inventory records in real time as each transaction occurs.
Phantom BOM
A non-stocked sub-assembly in a bill of materials that exists only to group components and is consumed straight into its parent during production.
Phased Rollout
A phased rollout deploys an ERP system in stages, by module, location, or business unit, rather than switching everything on at once.
PLM (Product Lifecycle Management)
Software that manages a product's entire lifecycle from concept and design through manufacturing, service, and disposal.
Position Management
Position management is the practice of organising the workforce around defined positions rather than around individual employees.
Process Manufacturing
Production that blends, mixes, or chemically transforms ingredients via formulas or recipes into bulk goods that cannot be disassembled back into raw materials.
Procurement
The process of sourcing, purchasing, and receiving goods and services from external suppliers.
Production Order
A document that authorizes and controls the manufacture of a specific quantity of a product by a certain date.
PSA (Professional Services Automation)
Software that helps professional services firms manage projects, resources, time/expenses, and billing in one platform.
QMS (Quality Management System)
A structured system for managing quality processes including inspections, non-conformance tracking, CAPA, and compliance documentation.
Quote-to-Cash (QTC)
Quote-to-cash is the end-to-end business process spanning from generating a customer quote through to collecting and recognizing payment.
RBAC (Role-Based Access Control)
RBAC restricts what users can see and do by assigning permissions to roles and then assigning users to those roles.
Real-Time Reporting
Real-time reporting delivers analytics and metrics based on current data as transactions happen, rather than on periodically refreshed extracts.
Reorder Point (ROP)
A reorder point is the inventory level at which a replenishment order should be placed to avoid running out before new stock arrives.
Replenishment
Replenishment is the process of restoring inventory to target levels by triggering and fulfilling supply orders as stock is consumed.
REST API
A REST API is a web API style that uses standard HTTP methods and URLs to read and modify resources, usually exchanging data as JSON.
Revenue Recognition (ASC 606 / IFRS 15)
The accounting rules that determine when and how much revenue a company can record from its contracts with customers.
RFI (Request for Information)
A preliminary document sent to vendors to gather general information before a more detailed RFP process.
RFP (Request for Proposal)
A formal document sent to ERP vendors requesting detailed proposals for how they would meet your business requirements.
ROI (Return on Investment)
A metric measuring the financial return of an ERP investment relative to its total cost.
Routing
The defined sequence of operations and work centers a product passes through during manufacture, with standard times for each step.
RPA (Robotic Process Automation)
RPA uses software robots to mimic human interactions with applications, automating repetitive, rule-based digital tasks.
S&OP (Sales and Operations Planning)
S&OP is a recurring cross-functional process that aligns demand, supply, and financial plans into a single agreed operating plan.
SaaS ERP
ERP delivered as a multi-tenant Software-as-a-Service subscription with automatic updates and shared infrastructure.
Safety Stock
Safety stock is the buffer inventory held above expected demand to protect against variability in demand or supply lead time.
Sales Pipeline
A sales pipeline is the visual, staged representation of all open sales opportunities and their progress toward closing.
Sandbox Environment
A sandbox is an isolated, non-production copy of a system used to test changes safely without affecting live data or operations.
SCM (Supply Chain Management)
The management of the flow of goods, information, and finances across the entire supply chain from suppliers to customers.
Scrap and Rework
Scrap is material or product discarded because it cannot be used, while rework is defective output repaired to bring it back to specification.
Serial Number Tracking
Assigning a unique identifier to each individual unit so it can be traced through production, sale, warranty, and service.
Shop Floor Control
The functions that manage, track, and report production activity on the factory floor in real time, from order release to completion.
Single Source of Truth (SSOT)
A single source of truth is one authoritative, agreed-upon place where a given piece of data is maintained and trusted across the organisation.
SSO (Single Sign-On)
Single sign-on lets users access multiple applications, including HR and ERP systems, with one set of login credentials.
Standard Costing
A method that values inventory and production at predetermined expected costs, then analyses the differences as variances.
Statement of Work (SOW)
A statement of work is the contract document that defines the scope, deliverables, timeline, and responsibilities of an ERP implementation engagement.
Statutory Reporting
Producing the financial reports that laws and regulators in each jurisdiction require a company to file.
Stockout
A stockout is a situation where an item is unavailable to meet demand because its on-hand inventory has reached zero.
Subledger
A detailed ledger for a specific area of accounting whose totals roll up into a control account in the general ledger.
Subscription Billing
Subscription billing is the automated management of recurring charges, renewals, and usage-based fees for subscription products and services.
Succession Planning
Succession planning is the process of identifying and developing internal candidates to fill key roles when they become vacant.
Supplier Scorecard
A supplier scorecard is a structured evaluation that rates suppliers on metrics such as quality, on-time delivery, cost, and responsiveness.
System Integrator (SI)
A system integrator is a consulting firm that implements, configures, and integrates an ERP system on behalf of the customer.
T&E (Travel and Expense Management)
Travel and expense management is the process of handling employee business travel, expense reporting, reimbursement, and policy compliance.
Takt Time
The pace of production required to meet customer demand, calculated as available production time divided by customer demand.
Talent Acquisition
Talent acquisition is the strategic process of identifying, attracting, and hiring the people an organisation needs.
Talent Management
Talent management is the integrated set of HR processes for attracting, developing, retaining, and advancing employees.
Tax Management (Sales Tax / VAT / GST)
Calculating, collecting, reporting, and remitting indirect taxes such as sales tax, VAT, and GST on transactions.
TCO (Total Cost of Ownership)
The complete cost of an ERP system including software licensing, implementation, customization, training, and ongoing maintenance.
Three-Way Matching
A control that verifies a supplier invoice against the purchase order and the goods receipt before payment.
Time and Attendance
Time and attendance is the tracking of when employees work, including hours, shifts, breaks, and absences, to support pay and compliance.
TMS (Transportation Management System)
A TMS is software that plans, executes, and optimizes the physical movement of goods, including carrier selection, routing, and freight settlement.
Two-Tier ERP
A strategy where a large enterprise runs a Tier 1 ERP at headquarters and a lighter Tier 2 ERP at subsidiaries or divisions.
UAT (User Acceptance Testing)
UAT is the final testing phase where business users validate that the configured ERP system meets real-world requirements before go-live.
Uptime / SLA (Service Level Agreement)
Uptime is the percentage of time a system is operational, and an SLA is a formal commitment from a provider specifying guaranteed service levels such as availability.
Value-Added Reseller (VAR)
A VAR is a partner that licenses ERP software to customers and adds its own implementation, configuration, and support services.
VMI (Vendor Managed Inventory)
VMI is an arrangement where the supplier monitors and replenishes the customer's inventory based on shared demand and stock data.
Webhook
A webhook is an automated HTTP callback that a system sends to a URL when a specific event occurs, pushing data to another system in near real time.
WIP (Work in Process)
The value and quantity of partially completed goods that have entered production but are not yet finished.
WMS (Warehouse Management System)
Software that optimizes warehouse operations including receiving, putaway, picking, packing, and shipping.
Work Center
A specific machine, group of machines, or labor resource where manufacturing operations are performed and capacity is planned.
Work Order
An authorization to perform a specific manufacturing, assembly, or maintenance task, listing the materials, operations, and resources required.
Workflow Engine
A workflow engine is software that defines, executes, and monitors a sequence of tasks, approvals, and rules that move work through a process.
Workforce Planning
Workforce planning is the process of forecasting and aligning an organisation's future staffing needs with its business strategy.
Yield
The percentage of usable, good output produced from a process relative to the input or theoretical maximum.