The Manufacturing ERP Decoder: A Guide to Common Terms and Acronyms

Navigating the manufacturing ERP landscape can often feel like deciphering a secret language filled with technical jargon, buzzwords and an endless sea of acronyms. 

As technology advances, new terms are constantly added, often causing more confusion than clarity for manufacturers looking to adopt or upgrade their systems.

This guide serves as your essential ‘decoder’, breaking down foundational concepts like ERP, MRP, and MES to help you communicate effectively with vendors and make confident, data-driven decisions for your business strategy. 

Whether you are a small job shop, an industrial machinery manufacturer or a manufacturer supplying aerospace and defense companies, mastering this terminology is the first step towards a successful digital transformation.

Let us give you a glimpse.

The Big Three: ERP, MRP, and MES

One of the most frequently asked questions by manufacturers is how these three core systems differ. Although they often work together, each serves very distinct purposes.

• ERP (Enterprise Resource Planning): This is your ‘all-in-one’ hub that connects every core business process from accounting and HR to sales, inventory, production and supply chain, within a single, centralized database.
• MRP (Material Requirements Planning): Often a built-in function of an ERP, MRP focuses specifically on production planning and inventory control. It ensures you have the right materials in the right quantity at the right time.
• MES (Manufacturing Execution System): MES acts as the bridge between your high-level planning and the physical shop floor. It monitors and controls production activities in real-time to ensure maximum efficiency.

Essential Inventory & Production Terms

Efficiency on the shop floor depends on accurate tracking and standardized processes. Here are a few common and foundational terms to be aware of:

• Bill of Materials (BOM): A comprehensive, structured list of every part, raw material, and component needed to manufacture a finished product.
• Backflush: An automated way to ‘use up’ raw material inventory in your system once a finished product is marked as complete.
• Work in Progress (WIP): This refers to any jobs or products that are currently ‘in-between’ steps on the manufacturing floor, partially finished and waiting for the next phase.
• Cycle Count: Instead of shutting down the whole plant for a massive annual inventory count, this method involves auditing smaller subsets of inventory on a regular, rotating schedule.

Quality Control & Compliance

Maintaining high quality and compliance standards isn’t just about pride or reputation; it’s often a legal or contractual obligation to be fulfilled to meet industry regulations and customer requirements.

• ISO (International Organization for Standardization): A global body that sets standards to ensure products and services are safe, reliable, and of good quality.
• CAPA (Corrective Action Preventative Action): A structured process used to investigate the root cause of an existing problem and implement steps to make sure it doesn’t repeat.
• Certificate of Conformance (CoC): An official document you issue to prove that your product meets all required industry specifications and standards.

Modern Technology & Automation

The manufacturing landscape is evolving rapidly with the rise of ‘smart’ technology.

• IoT (Internet of Things): A network of machines and sensors that ’talk’ to each other and share data without needing a human to intervene.
• SaaS (Software as a Service): A cloud-based model where you access your software via the internet, while the provider handles the maintenance and hosting.
• Workflow Automation: Using your ERP to automatically trigger tasks and steps, which eliminates manual errors and speeds up your design-to-delivery lifecycle.

Take the Next Step

Investing in a new ERP is a significant commitment. By mastering these terms, you’ll be better equipped to navigate vendor conversations and choose a solution that truly fits your unique manufacturing needs.

Expand your ERP knowledge horizon.

Download our detailed glossary of commonly used manufacturing ERP terms and acronyms.