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.
APS (Advanced Planning & Scheduling)
Software that optimizes production scheduling by considering capacity constraints, materials, and delivery deadlines simultaneously.
BOM (Bill of Materials)
A hierarchical list of all raw materials, components, and assemblies needed to manufacture a product.
Cloud ERP
ERP software hosted in the cloud (typically SaaS) where the vendor manages infrastructure, updates, and security.
EAM (Enterprise Asset Management)
Software for managing the lifecycle of physical assets — maintenance scheduling, work orders, spare parts, and asset performance.
EDI (Electronic Data Interchange)
A standard for exchanging business documents (purchase orders, invoices, ASNs) electronically between trading partners.
ERP (Enterprise Resource Planning)
Integrated business management software that connects finance, manufacturing, supply chain, HR, CRM, and other core business functions.
ETO (Engineer-to-Order)
A manufacturing strategy where products are designed and engineered to customer specifications before production begins.
Fit-Gap Analysis
An evaluation process comparing ERP system capabilities against business requirements to identify gaps that need customization.
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.
Inventory Management
The process of tracking, managing, and optimizing inventory levels across locations to meet demand while minimizing costs.
MES (Manufacturing Execution System)
Shop floor software that tracks and monitors production in real time, bridging the gap between ERP planning and actual manufacturing.
MRP (Material Requirements Planning)
A system for planning manufacturing materials and production scheduling based on demand forecasts and bills of materials.
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.
OEE (Overall Equipment Effectiveness)
A manufacturing metric that measures equipment productivity as a percentage combining availability, performance, and quality.
On-Premise ERP
ERP software installed and run on the organization's own servers and IT infrastructure.
PLM (Product Lifecycle Management)
Software that manages a product's entire lifecycle from concept and design through manufacturing, service, and disposal.
Procurement
The process of sourcing, purchasing, and receiving goods and services from external suppliers.
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.
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.
SaaS ERP
ERP delivered as a multi-tenant Software-as-a-Service subscription with automatic updates and shared infrastructure.
SCM (Supply Chain Management)
The management of the flow of goods, information, and finances across the entire supply chain from suppliers to customers.
TCO (Total Cost of Ownership)
The complete cost of an ERP system including software licensing, implementation, customization, training, and ongoing maintenance.
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.
WMS (Warehouse Management System)
Software that optimizes warehouse operations including receiving, putaway, picking, packing, and shipping.