ERP (enterprise resources planning) was an important step in an ongoing evolution of computer tools that began in the 1960s. Each evolutionary step is built on the fundamentals and principles developed within the previous one. As systems developed over time, a continuous stream of new terminology surfaced.
This is a glossary of those terms.
Part One of this glossary covers the terms from accounts payable through Internet.
For terms not covered here see The Lexicon of CRM Part 1: From A to I , Part 2: From J to Q , and Part 3: From R to Z.
Just-in-Time through Order Entry
just-in-time (JIT): A philosophy of manufacturing based on planned elimination of all waste and continuous improvement of productivity. It encompasses the successful execution of all manufacturing activities required to produce final product, from design engineering to delivery and including all stages of conversion from raw material onward.
1) A span of time required to perform a process (or series of operations).
2) In a logistics context, the time between recognition of the need for an order and the receipt of goods. Individual components of lead time can include order preparation time, queue time, processing time, move or transportation time, and receiving and inspection time.
lean production: A philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with the customers. Lean producers employ teams of multi-skilled workers at all levels of the organization and use highly flexible, increasingly automated machines to produce volumes of products in potentially enormous variety. It contains a set of principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes.
mass customization: The creation of a high-volume product with large variety so that a customer may specify his or her exact model out of a large volume of possible end items while manufacturing cost is low because of the large volume. An example is a personal computer order in which the customer may specify processor speed, memory size, hard disk size and speed, removable storage device characteristics, and many other options when PCs are assembled on one line and at low cost.
mass production: High-quantity production characterized by specialization of equipment and labor.
master production schedule (MPS): The anticipated build schedule for those items assigned to the master scheduler. It is a set of planning numbers that drives material requirements planning (MRP). It represents what the company plans to produce expressed in specific configurations, quantities, and dates.
material requirements planning (MRP): A set of techniques that uses bill of material data, inventory data, and master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for materials. Further, because it is time-phased, it makes recommendations to reschedule open orders when due dates and need dates are not in phase.
manufacturing resource planning (MRP II): A method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer what-if questions. It is made up of a variety of processes, each linked together: business planning, production planning (sales and operations planning), master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projections in dollars. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP.
manufacturing execution system (MES): A factory floor information and communication system with several functional capabilities. It includes functions such as resource allocation and status, operation/detailed scheduling, dispatching production units, document control, data collection and acquisition, labor management, quality management, process management, maintenance management, product tracking and genealogy, and performance analysis. It can provide feedback from the factory floor on a real-time basis. It interfaces with and complements ERP systems.
online analytical processing (OLAP): A category of software tools that provides analysis of data stored in a database. OLAP tools enable users to analyze different dimensions of multidimensional data. For example, it provides time series and trend analysis views. The chief component of OLAP is the OLAP server, which sits between a client and a database management systems (DBMS), and which understands how data is organized in the database and has special functions for analyzing the data. There are OLAP servers available for nearly all the major database systems.
order entry: The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order (MTO) products.
Portal through XML
portal: A personalized web site or service that offers a broad array of resources and services, such as e-mail, forums, search engines, and on-line shopping malls. The first web portals were online services that provided access to the Web, but by now most of the traditional search engines have transformed themselves into web portals to attract and keep a larger audience.
process manufacturing: Production that adds value by mixing, separating, forming, and/or performing chemical reactions. It may be done in either batch or continuous mode.
product data management (PDM): A system, which controls all product-related data and associated workflow processes within an enterprise. Product data management systems replace paper-based processes and information storage with a single, centralized data repository that enables authorized users throughout a company to access and update current product information, while ensuring they follow specific procedures. PDM vendors recently have emphasized the similarities between PDM and groupware technology appropriate to a range of business environments. Besides ensuring data integrity using relational database technology, both include workflow and web-based applications that ease collaboration efforts.
product configurator: A system, generally rule-based, to be used in design-to-order, engineer-to-order, or make-to-order environments where numerous product variations exist. Product configurators perform intelligent modeling of the part or product attributes and often create solid models, drawings, bills of material, and cost estimates that can be integrated into CAD/CAM and MRP II systems as well as sales order entry systems.
product life cycle:
1) The stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline.
2) The time from initial research and development to the time at which sales and support of the product to customers are withdrawn.
3) The period of time during which a product can be produced and marketed profitably.
product lifecycle management (PLM): A process for guiding products from idea through retirement to deliver the most business value to an enterprise and its trading partners. The applications that support the business activities enabled through PLM includes product ideation, design, engineering, manufacturing process management, product data management, and product portfolio management.
real time: The technique of coordinating data processing with external related physical events as they occur, thereby permitting prompt reporting of conditions. The immediate availability of data to an information system as a transaction or event occurs.
relational database: A software program that allows users to obtain information drawn from two or more databases that are made up of two-dimensional arrays of data.
reorder point (ROP) system: Inventory method that places an order for a lot whenever the quantity on hand is reduced to a predetermined level known as the reorder point.
return on investment (ROI): A financial measure of the relative return from an investment, usually expressed as a percentage of earnings produced by an asset to the amount invested in the asset.
routing: Information detailing the method of manufacture of a particular item. It includes the operations to be performed, their sequence, the various work centers involved, and the standards for setup and run time.
sales force automation (SFA): Technology used to improve the efficiency and effectiveness of the sales force by streamlining and speeding up processes and eliminating errors. It allows the sales force to access up to date information of customer accounts and pricing. It also eradicates errors involved with placing orders.
server: A computer, or software package, that provides a specific kind of service to client software running on other computers. The term can refer to a particular piece of software, for example a Web server, or to the machine on which the software is running. A single server machine could have several different server software packages running on it, thus providing many different servers to clients on the network.
supplier relationship management (SRM): Evolving set of applications enabling enterprises to create a more comprehensive lifecycle view of suppliers' operational contribution to the top and bottom lines. Strategic sourcing and spend management would be some of SRM parts.
supply chain management (SCM): The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.
supply chain planning (SCP): The determination of a set of policies and procedures that govern the operation of a supply chain. Planning includes the determination of marketing channels, promotions, respective quantities and timing, inventory and replenishment policies, and production policies. Planning establishes the parameters within which the supply chain will operate.
supply chain execution (SCE): Execution-oriented software applications for effective procurement and supply of goods and services across a supply chain. It includes manufacturing, warehouse, and transportation execution systems, and systems providing visibility across the supply chain.
supply chain inventory visibility (SCIV): Software applications that permit monitoring events across a supply chain. These systems track and trace inventory globally on a line-item level and notify the user of significant deviations from plans. Companies are provided with realistic estimates of when material will arrive.
strategic sourcing: The development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of a business. It is entirely aligned with the sourcing portion of managing the procurement process.
warehouse management system (WMS): Systems that integrate work performed within warehouses and distribution centers with a transactional-type information system. Simple storage and retrieval of materials is superseded by strategies to increase throughput and productivity by managing the full range of warehouse resources to effectively manage warehouse business processes and direct warehouse activities, including receiving, put away, picking, shipping, and inventory cycle counts. Most support radio-frequency communications, allowing real-time data transfer between the system and warehouse personnel.
work in process (WIP): A good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely processed material awaiting final inspection and acceptance as finished goods inventory. Many accounting systems also include the value of semi-finished stock and components in this category.
World Wide Web (WWW) (A): A set of software, protocols, hypertext conventions, and multimedia techniques that enable use of the Internet.
Web Services: A standardized way of integrating Web-based applications using the XML, SOAP, WSDL and UDDI open standards over an Internet protocol backbone. XML is used to tag the data; SOAP is used to transfer the data; WSDL is used for describing the services available; and UDDI is used for listing what services are available. Used primarily as a means for businesses to communicate with each other and with clients, Web services allow organizations to communicate data without intimate knowledge of each other's IT systems behind the firewall. Unlike traditional client/server models, Web services do not provide the user with a GUI, but instead share business logic, data, and processes through a programmatic interface across a network. Web services allow different applications from different sources to communicate with each other without time-consuming custom coding, and because all communication is in XML, Web services are not tied to any one operating system or programming language, and they do not require the use of browsers or hypertext markup language (HTML).
extensible markup language (XML): This language facilitates direct communication among computers on the Internet. Unlike the older hypertext markup language (HTML), which provides HTML tags giving instructions to a Web browser about how to display information, XML tags give instructions to a Web browser about the category of information.
Sources and Recommended Further Readings
- ERP: Tools, Techniques, and Applications for Integrating the Supply Chain. Second Edition; Carol A. Ptak, CFPIM, CIRM, and Eli Schragenheim; The St. Lucie Press/APICS Series on Resource Management; 2nd Edition, 2003
- Selected Readings in ERP; APICS Complex Industries SIG, 1999
- Maximizing Your ERP System: A Practical Guide for Managers; Dr. Scott Hamilton; McGraw-Hill Trade, 2002
- APICS Dictionary; 10th Edition