ERP Glossary
Lean manufacturing
A philosophy of manufacturing that emphasizes the minimization of resources used in the various activities of the enterprise. It involves identifying and eliminating non-value-added activities in design, production, supply chain management, and interfacing with customers.
Manufacturing Best Practices
A best practice is a method or technique that has consistently shown results superior to those achieved with other means, and that is used as a benchmark. In addition, a "best" practice can evolve to become better as improvements are discovered.
ERP – Abbreviation for Enterprise Resource Planning
A computerized framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so it can use its internal knowledge to seek external competitive advantage.
MRP – Abbreviation for Material Requirements Planning (or Manufacturing Resource Planning)
Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three objectives:
- Ensure materials are available for production and products are available for delivery to customers.
- Maintain the lowest possible material and product levels in inventory.
- Plan manufacturing activities, delivery schedules and purchasing activities.
BOM – Abbreviation for Bill of Material
A listing of sub-assemblies, intermediate parts, components, and raw materials that make up a parent assembly. It shows the quantity required to make that assembly. It is used to determine the quantity of parts that must be manufactured or purchased to make that parent assembly.
Backflush
A method of inventory bookkeeping where the theoretical inventory of components is automatically reduced by the computer after the completion of activity.
Sales and Operations planning
A process to develop tactical plans that provide management with the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating and balancing demand requirements and the management of the supply chain.
Cycle counting
An inventory accuracy audit technique where inventory is counted on cyclical schedule rather than once a year. It is often performed with high value and high volume items being counted more often that lower value or lower volume items.
MTS – an abbreviation for Make to Stock
A production environment where products are usually finished before receipt of a customer order. The amount of product produced is managed by using forecasting techniques.
ATO – an abbreviation for Assemble to Order
A production environment where a product can be assembled after receipt of a customer order. The key components are planned and usually stocked in anticipation of a customer order.
MTO – an abbreviation for Make to Order
A production environment where goods or services are made after receipt of a customer order, and are usually custom-designed to meet the specific needs of the customer.
ETO – an abbreviation for Engineer to Order
A production environment where products usually require unique engineering design, significant customization, or new purchased materials.
