The Basic ERP Definitions

Operational ERP

At SalesPad, we toss around a lot of lingo or ERP definitions that may cause some confusion for our customers, and sometimes even our own employees. When you first take a look at the terminology around ERP systems and integrating new software into your business, you may scratch your head at what’s going on.

We wanted to break it down for you and clear up any confusion you may have. Below, we have compiled a list of definitions we think are important for you to know when moving forward in the world of ERP software designed for distribution and manufacturing businesses.

The Breakdown

Customer Relationship Management (CRM)

Customer Relationship Management is the way businesses manage and analyze customer interactions and data throughout the sales lifecycle. The goal of CRM is to improve customer relationships, assist in customer retention, and drive sales growth.

Electronic Data Interchange (EDI)

Electronic Data Interchange allows a company to electronically send item information to an online retailer and to send order information from an online retailer to the company fulfilling the order. EDI allows businesses to sell their products through the online stores of big-box retailers such as Walmart, Target, and Best Buy.


Inventory Management

Inventory management is the way a business supervises stock items, including the varied movement of raw materials and finished goods from vendors to warehouses, and from these facilities to the point of sale. Inventory management helps businesses control ordering, handle quantities, manage pricing, and storing of goods. A successful inventory management plan can ensure that goods are readily available upon request.

Multi-channel

Multi-channel refers to the different ways a company can interact with a potential customer on various platforms, including print, retail store, website, event, packaging, or word-of-mouth.

Omnichannel

Omnichannel refers to the way consumers engage with a company through different methods of shopping and contributes to the consumer’s experience with a business. Omnichannel allows the customer to shop online (via desktop or mobile device), in store, or on the phone.

Check out Omnichannel Retail 101, a complete guide to customer-focused, multi-channel retail from our partners at SPS Commerce.


Operational Enterprise Resource Planning (ERP)

Our brand of ERP is a little different than the traditional sense, and thus, we have coined the term Operational ERP. Operational ERP is business management software focusing on the core functionality utilized by distribution and manufacturing companies - inventory management, purchasing, and order processing. Operational ERP solutions leave the other ERP tasks of accounting, human resources, and marketing automation to integration partners.

Order Processing

Order processing, or sales workflow, refers to the flow of an order. In a nutshell, taking an order from a customer, sending that order to be fulfilled (picking and packing), and then shipping it out. Basically, it’s the movement of an order from initiation to completion.

Purchasing

Purchasing simply refers to buying goods from vendors in order to stock inventory at your facility. Generally, you can’t sell inventory you don’t have.

Workflow

Workflow is the defined path a document (sales order, purchase order, quote, invoice, sales receipt, return, refund) moves through until it is considered completed. This path includes different batches or queues that represent each stage in the workflow process. By establishing a clearly defined path for each document and specifying rules which must be met in order for documents to move between batches, errors are reduced, efficiency is increased, and a checks-and-balances system is created.  Workflows are even better when automated (as much as possible).

That's a Wrap! (TAW)

The ERP definitions given above are provided to offer a guide for those just getting started, or for our employees. They can also provide a refresher for those who may have business experience, but need an update on current terminology. We hope you are able to become familiar with these definitions as you move forward with your business. If there’s a different business definition you’d like to learn more about, stay tuned, as we will be posting additional terminology blog entries, or just ask us! We love hearing from you in the comments below.

Inventory management and operational ERP terms

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