The Definitive ERP Glossary: Master the Language of Business Operations

The module or function within an ERP system that manages the money a company owes to its suppliers (vendors). It tracks invoices, schedules payments, and ensures timely and accurate financial disbursements. Effective AP management is crucial for maintaining good supplier relationships and managing cash flow.

The ERP function responsible for managing the money owed to a company by its customers for goods or services delivered. This includes creating invoices, tracking payments, and managing collections. A streamlined AR process is vital for a healthy cash flow.

A set of rules and tools that allows different software applications to communicate with each other. In the context of ERP, APIs are essential for integrating the ERP system with other business software, such as e-commerce platforms, CRM systems, or specialized third-party tools.

A comprehensive list of the raw materials, components, sub-assemblies, and quantities of each needed to manufacture a finished product. The BOM is a foundational element in manufacturing ERPs, driving purchasing, production planning, and inventory control.

The tools and processes for analyzing a company's data to gain insights and make better business decisions. ERP systems with strong BI capabilities provide dashboards, reports, and analytics that turn raw operational data into actionable strategic information.

An ERP system that is hosted on the vendor's servers and accessed by customers via a web browser (also known as SaaS - Software as a Service). Cloud ERPs offer benefits like lower upfront costs, scalability, automatic updates, and accessibility from anywhere.

A system for managing a company's interactions and relationships with current and potential customers. When integrated into an ERP, the CRM module provides a 360-degree view of the customer, linking sales activities, order history, and service requests to financial and inventory data.

The core definition. ERP is a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.

The process of overseeing and controlling the ordering, storage, and use of a company's inventory (raw materials, components, and finished goods). An ERP's inventory management module tracks stock levels in real-time, manages stock locations, and automates reordering processes to prevent stockouts and reduce carrying costs.

A system used to calculate the materials and components needed to manufacture a product. It consists of three primary steps: taking inventory of the materials and components on hand, identifying which additional ones are needed, and then scheduling their production or purchase. For manufacturers, this is the heart of operational efficiency.

An evolution of MRP that incorporates not just materials but all resources involved in manufacturing, including machinery, labor, and financial resources. MRP II provides a more holistic view of the manufacturing process, helping to coordinate all aspects of production for maximum efficiency.

An ERP system that is installed and run on a company's own servers and computing infrastructure. This model provides greater control over data and customization but typically involves higher upfront costs for hardware and software licenses, as well as ongoing internal IT maintenance.

A software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. It is a synonym for Cloud ERP. Users access the software over the internet, eliminating the need for local installation and maintenance.

The management of the flow of goods and services, from the procurement of raw materials to the delivery of final products to consumers. An ERP's SCM module helps optimize this entire process by providing visibility into procurement, production, inventory, and logistics.

A software application that supports and optimizes warehouse functionality and distribution center management. A WMS module within an ERP helps manage receiving, put-away, stock locating, inventory management, cycle counting, picking, packing, and shipping.