ERP Terminology (ERP Glossary, ERP Dictionary)

Last updated on by Editorial Staff
ERP Terminology Dictionary

This ERP Dictionary provides you with ERP vocabulary.


ABC analysis
Acceptable quality level

Achieving carbon neutrality in technology companies
Actual cost
Advanced planning and scheduling (APS)

Additive manufacturing
Aggregate planning

Agile SDLC

American carbon registry
Andon board

Andon cord

Andon lights
Annual physical inventory
Application programming interface (API)
Application service provider (ASP)

Archimate diagram

Assemble-to-order (ATO)
Available capacity
Available-to-promise (ATP)


Back Scheduling

Back scheduling is a technique for calculating operation start dates and due dates. The schedule is computed starting with the due date for the order and working backward to determine the required start date and due dates for each operation.

Backward Scheduling

Backward scheduling starts with the date the order is required and calculates the schedule back through the routing to determine the accurate release date of the order.

Botton-up replanning

Bottom-up replanning is the process of replanning using pegging data to solve material shortage problems.


Base Inventory Level

The base inventory level is the inventory level made up of aggregate lot size inventory plus the aggregate safety stock inventory. 

Batch Splitting

Dividing a batch into two or more sub-batches and simultaneously processing each on similar facilities as separate batches (usually to compress the lead time or expedite a small quantity).

Bill Of Distribution

Bill of distribution is BOM which shows the structure of the flow of material from its supply source to the distribution centers that stock the product.

Bill of Materials (BOM)

Bill Of Resources

Bill of resources is a synonym for the rough cut capacity plan (RCCP).

Blanket Order

A blanket order is a long-term commitment to a supplier for material against short-term releases that will be generated to satisfy requirements.

Block Scheduling

An operation scheduling technique where each operation is allowed a “block” of time, such as a day or a week.

Blockchain for supply chain


Bucketless MRP

Bucketless MRP is a material requirement planning system whereby the requirements for lower-level items can be specified on a daily basis.

Business architecture

Business continuity certification

Business intelligence (BI)

Business process reengineering


Capable-to-promise (CTP)

Capacity balance

Capacity balance is balancing the required and available capacities by sub-contracting, overtime, etc.

Capacity control report

Contains information used to control work center capacity (work center, planned week, hours of production)

Capacity planning

Capacity requirements planning (CRP)
Capital expenditure

Carbon accounting

Cellular manufacturing

Cellular manufacturing produces families of parts within a single line or cell of machines operated by operators who work only within the line or cell.

CCISO certification compliance

Changeover time

Changeover time is required for a specific machine, resource, work center, or line to convert from the production of the last good piece of lot A to the first good piece of lot B.

Chief human resource officer

Chase production strategy

Citizen developer

Closed-loop manufacturing system

Manufacturing system in which feedback is provided by the manufacturing execution functions so that the planning can be kept valid.

Cloud service architecture

Cob Douglas production function

Collaborative learning

Cold storage warehouse

Computer-assisted software engineering (CASE)

Computer-assisted software engineering (CASE) is the use of computerized tools to assist in the process of designing, developing, and maintaining software products and systems.

Computerized maintenance management systems (CMMS)
conference room pilot (CRP)

Corporate performance management (CPM)
Contact Management

Contract life cycle management

Cost of goods sold (COGS)

An accounting classification helps determine the number of direct materials, direct labor, and allocated overhead associated with the products sold during a given period.

Cost of ERP

Critical path method

A network planning technique for analyzing a project’s completion time is used for planning and controlling the activities in a project.

Critical resources

Critical Ratio

The critical ratio is the number of days until the job is required divided by the number of days required to complete the job. The rule is often used for production scheduling and finite capacity planning.

Cumulative gross requirements

The total of the gross requirements, over some time, for an item.


Composable business

Customer order
Customer service level

Cyber-physical systems

What are customer complaints?

Customer complaints are the grievances customers air about an aspect of the goods/services they have been supplied. The number of complaints may be used to rate suppliers.


Data accuracy

Data Architecture for machine learning
Data warehouse
Database management system (DBMS)

Data fabric

Data quality metrics

Data virtualization

Days of inventory formula

DCAA-approved accounting system
Delivery performance

Capital expenditure
Demand management

Demand management in SAP
Demonstrated capacity
Democratization of technology

Dependent demand

Dependent demand is the demand for lower-level items resulting from other items at a higher level in the BOM structure (this demand is calculated, not forecasted).

Digital dexterity

Digital twin in supply chain

Digital twin in construction

Digital twin in manufacturing

Digital maturity score

Digital twin in aerospace

Digital Thread

Direct numerical control
Discounting procedure
Discrete manufacturing
Dispatch list
Distribution Requirements Planning (DRP)?

Distribution Resource Planning

Distribution resource planning is the time phasing of demand from warehouses or distribution centers in the factory.



Epicor CPQ

Epicor ECM

Epicor inventory management

Epicor QMS

Embedded Business Intelligence (EBI)

Engineer-to-order (ETO)

Engineering change order

The engineering change order is the order which is issued that details an engineering change (see Engineering change).

Engineering change request

The engineering change request is a request for an engineering change. This can be originated from any department.

Enterprise application integration (EAI)

Enterprise architecture books

Enterprise asset management best practices

Enterprise applications

Enterprise content management

Enterprise data modeling

Enterprise level

Employee capacity planning

ERP implementation in agriculture

ERP requirements template


Facility Layout

Facility layout is the arrangement style of the production facilities.

Final assembly schedule

A final assembly schedule is a schedule of end items to finish the product for specific customer’s orders in a make-to-order or assemble-to-order environment.

Finance reporting and analysis

Finite capacity loading

Finite capacity loading is assigning work to the actual capacity of a work center in a given period. Usually refers to a computer technique that calculates shop priority revisions to level load operation by operation.

Finite capacity planning

Finite capacity planning is the planning of capacity requirements considering the various capacity restrictions that (will) exist.

Finite scheduling

Finite scheduling is a scheduling methodology where work is loaded into work centers such that no work center capacity requirement exceeds the capacity available for that work center.

Firm Planned Order

Firm planned order is a planned order that can be frozen in quantity and time.


A dispatching/stock issuing rule under which the jobs/stock items are sequenced by their arrival times.

Focused factory

Focusing the manufacturing system on a limited range of products precisely defined by the company’s competitive strategy and the realities of its technology and economics

Fog computing

Food engineering

Forward scheduling

Forward scheduling is a scheduling technique where the scheduler proceeds from a known start date and computes the completion date for an order, usually proceeding from the first operation to the last.

Fourth-generation Language (4GL)

A general term for a series of high-level nonprocedural languages that enables users or programmers TO prototype and code new systems. Nonprocedural languages use menus, question-and-answer combinations, and a more straightforward, English-like wording to design and implement systems, update databases, generate reports, create graphs, and answer inquiries.

Frozen zone

Future of enterprises architecture


Global supply chain

Gross requirements

GHG Protocol



Human resource

Human machine interface


Hybrid Architecture

A hybrid architecture contains elements of more than one manufacturing control system approach.



Independent demand

Independent demand is demand for an item unrelated to other things.


Industrial Internet of Things (IIOT)

Industry 4.0

Industry 4.0 technologies

Infinite capacity planning

Infinite capacity planning is the planning of capacity requirements assuming there are no restrictions on capacity level (See Capacity planning).

Infinite loading

Information security management system (ISMS)
Internal carbon pricing

Inventory DATA accuracy

The percentage of inventory records that do not contain any errors.

Inventory records
Islands of automation

Item master record

Item master record is the record for an item containing descriptive data, control values (lead times, order quantities, etc.), and other information. Synonym- part master record.

ITIL demand management



Just-in-time is a manufacturing philosophy whose aim is to produce the required items at the right quality in the right numbers and at the exact time they are needed, thereby minimizing nonvalue-adding activities.


Kanban methodology


Process of issuing components to the production floor on a job by job basis


Labor loading

Labor loading is the process of assigning labor to particular tasks.


Lean warehouse management

Learning management system

Line balancing

The process of balancing an assembly line to ensure that all workstations have an equal amount of work to perform

Line stop authority

Individual operators have the authority to stop the line to ensure compliance with standards.

Long Range planning

Lot for lot

A lot-sizing technique that generates planned orders in quantities equal to the net requirements in each period.

Lot tracking

Low-code application platforms


Make-to-Order (MTO)

Manufacturing execution system (MES)

Manufacturing instructions

Manufacturing instructions are the detailed process parameters and operating data required for a specific production operation, including basic production rate data and detailed engineering specifications and notes.

Manufacturing order
Manufacturing resource planning (MRP II)

Mass production

Mass production is the high-quantity production characterized by specialization of equipment and labor.

Master Production Schedule

Material Resource Planning

Mixed model production

Mixed model production is the manufacturing and assembling of different products in the same manufacturing facility over a relatively short period.

Multi-model production

A variety of models are produced but not simultaneously over a while.

MODAF framework



Negative inventory

An error condition results from a transaction that drives the perpetual inventory below zero. Systems that allow negative inventory usually provide exception reports for cycle counting and analysis and specify how the negative is handled in modules such as MPS and MRP.

Net change MRP

Net change MRP is the material requirements plan continually retained in the computer. Whenever a change is needed in the requirements, open order inventory status, or BOM, a partial explosion and netting are made for only those parts affected by the change.

Net requirements

Nominal Range

The nominal range is the distance that a system that transmits signals, such as a network or FRID device, can reliably complete transmission.


Non-value-added activities and costs can be eliminated without reducing performance, function, or value as perceived by the customer.

Non renewable resources examples

Non-stationary demand

A pattern in which demand is not constant for each time frame but varies due to seasonality, trend, or other factors.

Numerical control (NC)

A machine tool that uses machine-readable sets of numeric codes that control the activities used in its operation.


Objectives and key results(OKRs)

Online analytical processing (OLAP)


Open order is an active manufacturing order or purchasing order.

Open Source ERP Definition

Operations sequencing

Simulation, manual or computerized, is the process used to decide the order in which the required operations should be carried out.

Optimized production technology

Optimized production technology is an MPC system that assumes that the primary goal of any manufacturing business is to make money. The bottom line financial measures used are- net profit, ROI, and cash flow. Work is scheduled around bottlenecks.

Order Action Report

Order action report is an MRP report which details order actions that need to be taken. The report answers what to order, how much to order, and when to order it.

Order Entry

Process of accepting and translating what a customer wants into terms used by the vendor (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.)

Order release
Order up to level
Output control

Outbound logistics

Overdue Work

Overdue work is work that has not been completed by the required date.


P chart

An attribute control chart is showing the fraction or percent of nonconforming data out of a given population.

Packing department

P2p cycle

Parallel Conversion

A project implementation technique in which an existing system is run in parallel with the new system, comparing operations and results to verify that the new system will properly replace the old functions. Parallel conversions are often difficult due to the time, expense, and viability of operating two systems and problems in comparison and verification when functions have changed significantly. In addition, a parallel is often unnecessary when the conference room pilot and issue identification and resolution phases are made well, and adequate resources are made available at the cutover time.

Part family

A part family is a set of parts that require similar machinery, tooling, machining operations, and jigs and fixtures.

Part Master Record

The part master record is an item containing descriptive data, control values (lead times, order quantities), and other information. Synonym – Item master record.

Part number

The part number is the set of alphanumeric characters that identifies a specific manufactured item or purchased item and is used in all databases, orders, inventory, and other functions. (A part number is a number that serves to identify a part uniquely. )

Part period balancing (PPB)
Partnership for Carbon Accounting Financials (PCAF)

Parts list

Listing all components used in producing a parent item does not reflect its structure or intermediate levels and is not helpful in time-phasing requirements based on lead time offsets.

Parts Per Million (PPM)

Parts per million (PPM) is a quality measure of the number of defective items observed or projected out of a population of one million.


PayPoint is the operations in a routing used to report production and labor. Quantities reported at pay points are backflushed into previous non-PayPoint operations, which may be listed on routing but are not used for reporting due to process limitations or a condensed time frame that does not require a real-time status update of each step.

Paying jobs in oil and gas production

Pegged requirements


Pegging in MRP and MPS, the capability to identify the sources of its gross requirements and/or allocations for a given item. Pegging can be thought of as active where-used information. (pegging, Tracing the source of requirements in a materials plan, caused by dependent demand from an upper-level item, independent demand from a customer or interplant order, or to replenish a desired inventory stock level.)

Period order quantity

Perpetual inventory system


An item with an identifying product number that is not normally built and then stocked but is immediately used in the next production stage. MRP processing logic will blow through a phantom down to the next level (and not generate planned orders for the phantom) but will net against its on-hand inventory if it does occasionally exist. A phantom bill of material is sometimes used to ease maintenance when a set of parts consumed in production has identical usage across many bills of material.

Phases of SDLC


A picklist is a list of all components and materials required to fill a specific production, sales, or interplant order. It often specifies the warehouse locations to pick from and sometimes consolidates more than one order requirement.

Picking list

A document is used to pick manufacturing or shipping orders, listing the required components and quantities.

Piece part

A piece part is a discrete component item such as nuts, bolts, or screws used in an upper-level assembly.

4PL logistics

Plan-Do-Check-Action (PDCA)

A four-step quality improvement cycle, based on a process described by Walter Shewhart, involves continuous improvement based on analysis, design, execution, and evaluation. Sometimes referred to as plan/do/study/act, it emphasizes the constant attention and reaction to quality factors.

Planned cost
Planned order
Planned order receipt

Planned order release

Planned order release is the date required to firm or release a planned order based on the specified lead time until the planned receipt date. Many systems allow the selection and review of planned orders based on specifying a release date time frame.

Planned orders

Planned orders are a suggested order quantity, release date, and due date created by the planning system’s logic when encountering net requirements in processing MRP.

Planned receipts
Planning BOM

Planning horizon

The amount of time the master schedule extends into the future.

Planning yield

An MRP/MPS planning parameter is used to adjust requirements to take account of the expected Yield (See Yield).

Post-implementation audit

The post-implementation audit is a review process that takes place after installing a new system to determine status, level of user satisfaction, the accomplishment of stated goals, and further action items required. It is usually timed to allow the new system to operate for a given period, such as a quarter, to concentrate on ongoing issues rather than those generated and resolved at the cutover time.

Postmodern ERP

Predictive maintenance

Predictive analytics

Premium freight

Prerequisite tree

A logic tree is used in the theory of constraints that identifies and time phases obstacles associated with the intermediate objectives that must be accomplished to achieve an overall goal.

Prescriptive analytics

Primary location

The primary location is the default stock location used for receipts and picks of a given item, supplemented by other locations if full or overstocked.

Primary Operation

Primary operation is a routing operation used unless an alternate is selected when opening production orders and the normal basis for MRP processing, capacity planning, and standard cost estimation.

Priority control

Process manufacturing

A manufacturing environment is often characterized by a batch or continuous transformation of a gas, liquid, or powder, low product complexity, manufacturing variations, fixed or dedicated facilities, a flat bill of material, and relatively few transactions. (Process manufacturing, Continuous, dedicated production of large amounts of bulk product, for example, paint, chemicals, etc. )

Process sheet

Process View

Process view: A diagram or flow chart that graphically represents a given process’s activities, resources, and timing.

Process mining

Product Acceptance
Process flow diagram

Product code

Synonymous with part number, although sometimes used to represent only finished items.

Product data management (PDM)

Product Lifecycle Management (PLM)

Product lifecycle management (PLM) is 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 include product ideation, design, engineering, manufacturing process management, product data management, and product portfolio management.

Product load profile

A product load profile lists the required capacity and key resources needed to manufacture one unit of a selected item or family.

The resource requirements are further defined by a lead-time offset to predict the product’s impact on the key resources’ load by the time period.

Product specification

A statement of acceptable characteristics that distinguish one product from another.

Product structure file

Containing BOM data for products.

Product structure

Product structure is the bill of material.

Production activity control

Production activity control is a system for utilizing data from the shop floor to maintain status information on shop orders and work centers (production activity control (PAC), The activities related to scheduling, releasing, and tracking production orders and schedules, and reporting the materials and resources used and the results of the production process.)

Production possibility curve

Production order

Production order authorizes the manufacture of a specific quantity of an item or group of items, contains the release and due dates, and documents requirements for the materials and resources used.

It is assigned a different number or identifier used in reporting material and labor transactions.

Production plan
Production planning

Production schedule

A prioritized report of released production orders for a manufacturing facility or specific department.

Program evaluation and review technique (PERT)

A project management system determines the project finish date by estimating the best (shortest), worst (longest), and most likely duration times for activities on the critical path. (Program evaluation and review technique (PERT), A network planning technique for the analysis of a project’s completion time. )

Programmable logic controller (PLC)

A device using programmed, custom instructions to provide automated monitoring and control functions by evaluating a set of inputs. It is used to automate complex functions in machining, packaging, materials handling, or other applications.

Projected available balance
Projected balance

A projected balance is a future estimated inventory balance calculated by taking the current on-hand inventory, adding scheduled receipts, and subtracting requirements or allocations. IN planning systems, a projected balance is compared to the order point or safety stock level to determine the need to reorder. 

Promise date

Proof of delivery

Pseudo BOM

Pseudo BOM is an artificial grouping of items that facilitates planning.

Pull system

A system where the production or movement of inventory items is initiated as required by the using department or location or to replace items removed from an authorization queue. Production and inventory moves are not made based on a predetermined schedule but only when consumed or signaled by the point of usage.

Purchase Order (PO)

Purchase price variance (PPV)

Purchase requisition

An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time.

Purchase to order (PTO)

Purchase to order (PTO) is the method used to respond to demand in which an item is purchased only when required by a customer order that specifies that item and not for processing or assembling into a different item number.

Purchase to stock (PTS)

Purchase to stock (PTS) is the demand response method where an end item or service part required as is for an expected customer order is purchased and stocked against a forecast.

The forecast represents an independent customer or interplant demand, not an upper-level item’s usage.

Procure-to-pay cycle P2P

Purchasing lead time

Purchasing lead time is the total time required to place and receive purchased items, including internal review and placement time (order release), vendor transportation time, and the dock-to-stock activities to receive and store.

Purpose of a cold room

Push System

A push system is a system where the production and movement of inventory items are determined by a preexisting schedule that authorizes a material issue or transfer or the start of a production operation.

The using department or location receives material when determined by the feeder location and not based on their generation of a replenishment signal.push-systemThe using department or location receives material when determined by the feeder location and not based on their generation of a replenishment signal.


Quality engineering


RAMI 4.0

Regression analysis
Reorder point
Reorder point (ROP) system

Resource planning

Represents the process of determining the long-range capacity needs of the business

Robotic process automation

Rough cut capacity planning


Document detailing the manufacture of a particular item (includes operations to be performed, their sequence, work centers used, etc.)


Safety time

Safety time is material is planned to arrive ahead of its requirement date.

Sales performance management software

Sales intelligence

SCADA system

Schedule adherence

Schedule adherence is the ability of a work center to follow the work schedule to which it has been assigned.

Scheduled receipt

Scrap factor

The scrap factor is a percentage factor in the product structure used to increase gross requirements to account for an anticipated loss in manufacturing a particular item. Synonym – scrap rate.

SD-WAN monitoring

Shadow IT

Shop floor control

A system for using data from the shop floor to maintain and communicate status information on shop orders and work centers.

Shop order

Shop Packet

The shop packet is the paperwork (routing sheets, material requisitions) associated with an order released by production control.

Single source of truth

Slack time

Slack time is the amount of time by which the expected finish date precedes the due date.

Smart factory

Sparx Enterprise Architect

Software Bill of Materials (SBOM)

Standing orders

Standing orders are the firm customer orders covering long periods in the manufacturing cycle (enables planners to assign manpower to a core of work).

Standard deviation

Statistical analysis

Statistical process control

Strategic planning process

Stockout costs

Stockout costs: The costs associated with a stockout. Those costs may include lost sales, backorder costs, expediting, and additional manufacturing and purchasing costs.

Stock status
Storage costs
Subtractive manufacturing

Supplier performance

Supplier performance evaluates suppliers, usually concerning delivery, quality, and price.

Supplier Relationship Management (SRM)

Supplier relationship management (SRM) is an evolving set of applications enabling enterprises to create a more comprehensive lifecycle view of suppliers` operational contributions to the top and bottom lines. Strategic sourcing and spend management would be some of SRM’s parts.

Supply chain execution (SCE)

Supply chain management (SCM)

Supply chain management (SCM) is the design, planning, execution, control, and monitoring of supply chain activities to create net value, build a competitive infrastructure, leverage worldwide logistics, synchronize supply with demand, and measure performance globally.

Supply chain 4.0

Supply chain planning (SCP)

Supply chain shortages

Supervisory skills

Sustainability certificate

Sustainability in supply chain

Sustainability reporting


A computer or software package that provides a specific service to client software running on other computers. The term can refer to a particular piece of software, such as a Web server or the software’s machine. For example, a single server machine could have several different server software packages running on it, thus providing many different servers to clients on the network.


Are expense items or non-productive materials (they do not become part of the end product).

Supplier evaluation risk rating

System architect tools


Talent management

Target inventory level

Total quality control

Total Quality Control – the objective of eliminating all possible sources of defects from the manufacturing process.

TOGAF framework

TOGAF certification cost

Tracking signal

The ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation.

Traits of an Effective CISO


Unconsumed forecast

The unconsumed forecast is planned items that are not assigned to a particular order.

Universal product code


Vendor capacity planning

Vendor capacity planning is the process of assessing and allocating the capacity earmarked by the vendors.

Validation master plan

Vendor rating
Vendor scheduling



Is the same as idle time?

Wand readers

Devices used for reading bar codes.

Warehouse club

Warehouse design and layout ideas

warehouse management system (WMS)

Warehouse material handling
warehouse zone

Wave picking

Wave picking is a warehouse order picking scheme in which all zones are picked simultaneously as required to fill multiple item requirements for a given order or destination.

What-IF analysis

The simulation of various scenarios and alternatives results when changes to the inputs and parameters are done.


A listing of every parent item that calls for a given component and the respective quantity required from a BOM file.

WORK assignment
Workforce planning

WORK breakdown structure

Work breakdown structure is a hierarchical Definition of the tasks and activities of a project that usually begins with the highest-level activities and works downward into the individual tasks and components.

WORK center

WORK center scheduling

Work center scheduling is the process of scheduling the operations to be carried out in a particular work center.

WORK instructions

Work instructions are the same as – manufacturing instructions.

Work-to list

Work-to list is a sequence of work to be completed by a specific work center.




Yamazumi chart


Zero Defects
Zero inventory
Zone picking

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