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Glossary of Enterprise Applications Terminology

Enterprise resource planning (ERP) 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.

accounts payable (AP): The value of goods and services acquired for which payment has not yet been made.

accounts receivable (AR): The value of goods shipped or services rendered to a customer on which payment has not yet been received. Usually includes an allowance for bad debts.

advanced planning and scheduling (APS): Techniques that deal with analysis and planning of logistics and manufacturing over the short, intermediate, and long-term time periods. APS describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others. These techniques simultaneously consider a range of constraints and business rules to provide real-time planning and scheduling, decision support, available-to-promise, and capable-to-promise capabilities. APS often generates and evaluates multiple scenarios. Management then selects one scenario to use as the “official plan.” The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.

APICS: A nonprofit educational organization consisting of over 70,000 members in the production and operations, materials, and integrated resource management areas.

application Software: A program that performs a task or process specific to a particular end-user’s needs, or solves a particular problem. Enterprise applications are typically large-scale business systems that organizations use to manage their operations.

application programming interface (API): A set of routines, protocols, and tools for building software applications or for communicating with programs or other systems. A good API makes it easier to develop a program by providing all the building blocks that a programmer needs Although APIs are designed for programmers, they are ultimately good for users because they guarantee that all programs using a common API will have similar interfaces, which makes it easier for users to learn new programs. On the other hand, many enterprise applications vendors provide APIs for integrating other applications with their systems.

application service provider (ASP): A third-party entity that manages and distributes software-based leased services and solutions to customers across a wide area network from a central data center. In essence, ASPs are a way for companies to outsource some or almost all aspects of their information technology needs.

architecture: A structured set of protocols that implements a system’s functions.

available-to-promise (ATP): The uncommitted portion of a company’s inventory and planned production, maintained in the master schedule to support customer order promising.

back scheduling: 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/or due dates for each operation.

bill of material (BOM): A listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly.

browser: Software used on the Web to retrieve and display documents on-screen, connect to other sites using hypertext links, display images, and play audio files.

business intelligence (BI): Sets of tools that provide graphical analysis of business information in multidimensional views thus enabling people to make better decisions and improve their business processes.

business-to-business e-commerce (B2B) (A): Business being conducted over the Internet between businesses. Thhe implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations, reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.

business-to-consumer sales (B2C) (A): Business being conducted between businesses and final consumers largely over the Internet. It includes traditional brick and mortar businesses that also offer products online and businesses that trade exclusively electronically.

capable-to-promise (CTP): The process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites. Capable-to-promise is used to determine when a new or unscheduled customer order can be delivered. Capable-to-promise employs a finite-scheduling model of the manufacturing system to determine when an item can be delivered. It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies. The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments. The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.

capacity requirements planning (CRP): The function of establishing, measuring, and adjusting limits or levels of capacity. The term CRP in this context refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production.

client/server system: A distributed computing system in which work is assigned to the computer best able to perform it from among a network of computers.

client: In information systems, a software program that is used to contact and obtain data from a server program on another computer. Each client program is designed to work with one or more specific kinds of server programs, and each server requires a specific kind of client. A Web browser is one type of client.

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

computerized maintenance management systems (CMMS): Automated software systems for handling maintenance work orders, as well as associated inventory, purchasing, accounting, and human resources functions. In some industries—particularly process production, in which manufacturers look to optimize use of capital-intensive equipment—maintenance management systems play a leading role as the enterprise system.

Maintenance management systems have similar basic functionality, including:

  • use of work orders for preventive and predictive maintenance,
  • equipment recording and tracking,
  • inventory control,
  • scheduling labor and resources, and
  • purchasing.

corporate performance management (CPM): An overarching term that describes the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise. Applications that enable CPM translate strategically focused information to operational plans and send aggregated results.

cost of goods sold (COGS): An accounting classification useful for determining the amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time.

customer relationship management (CRM): Software systems that range from simple, off-the-shelf contact management solutions to high-end interactive selling suites that combine sales, marketing, and executive information tools. These include product configuration, quote and proposal management, and marketing encyclopedias. Some systems extend functions to include complex pricing, promotions, commission plans, team selling, and campaign management. Enterprise-level solutions installed at large companies with hundreds or even thousands of users have capabilities for call center and help desks; field service; forecasting; and analysis.

database: A data processing file-management approach designed to establish the independence of computer programs from data files. Redundancy is minimized, and data elements can be added to, or deleted from, the file structure without necessitating changes to existing computer programs.

database management system (DBMS): The software designed for organizing data and providing the mechanism for storing, maintaining, and retrieving that data on a physical medium (i.e., a database). A DBMS separates data from the application programs and people who use the data and permits many different views of the data.

data warehouse: A repository of data that has been specially prepared to support decision-making applications.

discrete manufacturing: Production of distinct items such as automobiles, appliances, or computers.

e-Business: The generic name given to any type of business conducted using the Internet from online trading to self-service.

engineer-to-order (ETO): Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings.

enterprise application integration (EAI): The unrestricted sharing of data and business processes throughout the networked applications or data sources in an organization, since early software programs in areas such as inventory control, human resources, sales automation and database management were designed to run independently, with no interaction between the systems. There are four major categories of EAI:

  • database linking: databases share information and duplicate information as needed;
  • application linking: the enterprise shares business processes and data between two or more applications;
  • data warehousing: data is extracted from a variety of data sources and channeled into a specific database for analysis; and
  • common virtual system: the pinnacle of EAI; all aspects of enterprise computing are tied together so that they appear as a unified application.

enterprise asset management (EAM): A term used by maintenance management software vendors to connote the wide-ranging functionality that their systems include, for example inventory management and financials. A company’s total assets might include labor, tools, equipment, materials, and information. The goal of asset management is to optimize asset use and manage all maintenance efforts involved in making assets as reliable, accurate, and efficient as possible. A further crucial element in enterprise wide asset management is integration with financial, human resources, and purchasing functions, as well as production, material requirements planning, and enterprise resources planning systems.

enterprise resources planning (ERP) system:

  • An accounting-oriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders. An ERP system differs from the typical MRP II system in technical requirements such as graphical user interface, relational database, use of fourth-generation language, and computer-assisted software engineering tools in development, client/server architecture, and open-system portability.
  • More generally, a method for the effective planning and control of all resources needed to take, make, ship, and account for customer orders in a manufacturing, distribution, or service company.

finite scheduling: 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.

flow manufacturing: A form of manufacturing organization, in which machines and operators handle a standard, usually uninterrupted, material flow. The operators generally perform the same operations for each production run. A flow shop is often referred to as a mass production shop or is said to have a continuous manufacturing layout. Each product, though variable in material specifications, uses the same flow pattern through the shop. Production is set at a given rate, and the products are generally manufactured in bulk.

fourth-generation language (4GL): A general term for a series of high-level nonprocedural languages that enable users or programmers to prototype and to code new systems. Nonprocedural languages use menus, question-and-answer combinations, and a simpler, English-like wording to design and implement systems, update databases, generate reports, create graphs, and answer inquiries.

graphical user interface (GUI): A connection between the computer and the user employing a mouse and icons so that the user makes selections by pointing at icons and clicking the mouse.

infinite loading: Calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work.

Internet: A worldwide network of computers belonging to businesses, governments, and universities that enables users to share information in the form of files and to send electronic messages and have access to a tremendous store of information. Also referred to as Web, it is a universal mass of web pages connected together through links.

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.

lead time:

  • A span of time required to perform a process (or series of operations).
  • 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: 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:

  • 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.
  • The time from initial research and development to the time at which sales and support of the product to customers are withdrawn.
  • 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 softtware 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.