Industry Terminology Glossary - The Blytheco Blog
Industry Terminology Glossary

Industry Terminology Glossary


Whether you’re new to the industry or a well-established veteran, you know that there are plenty of terms we throw around when discussing things. Below is a constantly evolving glossary covering a gamut of terms that are helpful to know and understand while working in this industry. If there is a term you would like defined, add a comment to this post!

 

Industry Terminology Glossary 

A 

Account Manager—a person who works for a company and is responsible for the management of sales and relationships with customers 

Accounting Manager—a person responsible for calculating the total expenses incurred and the total revenue generated by an organization 

Accounting Software—a computing program that uses standard accounting methodology to maintain consistency and eliminate math errors in the accounting process 

Accounts Payable—a current liability account which represents owed, but unpaid, balances to vendors 

Accounts Receivable—a current asset account which represents owed, but unreceived, payments from customers 

Actual Cost—the true expense incurred to accomplish a task or complete a work order; the actual cost may be more or less than the standard (expected) cost 

Application Integration—the process of bringing data or a function from one application program together with that of another application program 

Authorized Training Center (ATC)— independent training facilities that are authorized to teach technical training to customers and partners

Average Cost—the numerical result of dividing total costs by total units, also known as unit costs; the concept of average costs is primarily beneficial in understanding how fixed costs are amortized 

Bellwether—a magazine Blytheco publishes twice per year

Beta Test—the final round of software testing, in which software deemed ready for commercialization is released to a small number of real external customers, who typically will uncover bugs not discovered in development testing 

Business Intelligence (BI)—transforms transactional data from ERP systems into actionable business information 

Bill of Material—a written outline of the name and quantity of components required to construct a part 

Business to Business (B2B)—the type of vendor and customer when the material or service being sold is not to an end consumer

Business to Consumer (B2C)—the business model when the final end user is the customer

Best of Breed—refers to the ERP package with the best performing solution within a specific functional area

Best Practices—business process decisions that are either the most common in an industry, or considered to be the best solution in an industry

Budgeting—the formal process of estimating the required expenses to operate the business in the future, normally in the next year; used as a method of financial control, as an input to income forecast, and as a means of prioritizing capital spending

Business Analyst—a person responsible for looking at the mathematical measurements of a business, and using those facts to construct performance assessments of how well the business strategy is working, where problems are, and what opportunities might exist

Business Processes—individual activities that aggregate to Business Operations, such as entering standard sales orders, scheduling work centers, or placing purchase orders with vendors; a successful ERP installation must be able to facilitate all business processes

C 

Capital Budgeting—the process of determining how to spend operating cash over a time period; namely, how much to spend, on what, and when

Change Management—the process of communicating, educating, training, and explaining the effects of an upcoming change to everyone in the organization, from the C-level to the shop floor

Chart of Accounts—the written list of numerical accounting codes, and what common sense name is associated with the number

Cloud Computing—a broad category of technology strategies which have in common providing IT functionality over the internet; varies from traditional models in that software, data storage, and processing occur as an on-demand service, are incrementally scalable, and may physically exist anywhere

Compatibility—the ease and efficiency with which two separate applications can work together to produce a near seamless result

Compliance—the condition of conforming with either legal requirements, or standard practices

Computer Software—a stand-alone, prepackaged group of computer programs, which have large robust functionality, and can be sold, installed, and operated on a variety of technology platforms

Content Management System (CMS)—a web platform or software that allows you to easily create, edit, and publish content to a website or blog without advanced coding or HTML knowledge

Cost Accounting—the process by which direct costs are combined with indirect costs to arrive at a consistent and believable product cost

Customer Relationship Management (CRM)—a technology for managing all your company’s relationships and interactions with customers and potential customers; it focuses on (but is not limited to) lead management, sales force automation, customer service and support, and sales analytics

Customization (ERP)—the rewriting of, or additional to, standard code, in order to accomplish some task not possible in the “out-of-the-box” version

D 

Dashboard—a user-interface which integrate key business information such as KPIs in a graphical and easily accessible manner

Demand Planning—the process of examining external sales trends over the long term, and applying various mathematical formulas to these trends to forecast what the future demand will be, and to plan appropriate production capacity and/or inventory levels.

Demonstration (Demo)—a presentation of what a product can do, most commonly computer software

Discrete Manufacturing—a type of manufacturing in which a finished product can be disassembled back to its component parts, like an automobile engine

Distribution Resource Planning (DRP)—the software system written specifically for planning and executing the logistics portions of a business operation, including warehouse management, inventory replenishment, distribution, and shipping

eCommerce—all business activity conducted over the internet

Electronic Data Interchange (EDI)—a structured exchange of information between two organizations, conforming to agreed upon standards 

Enterprise Resource Planning (ERP)—business process management software that allows an organization to use a system of integrated applications to manage the business and automate many functions related to technology, services, and human resources 

Expense—cost

First In, First Out (FIFO)—an inventory strategy which requires that the oldest inventory (first in) always be consumed next; this approach minimizes shelf life risk, and assuming that prices are generally inflationary over time, it tends to increase the value of inventory and decrease the cost of goods sold

Financial Reports—a collection of documents which summarize the financial activities and results of a business or organization

Financial Statements—a group of standard documents that are intended to express the comprehensive financial performance of a company or organization in unambiguous mathematical terms

Fiscal Year—the period of time that defines when an accounting year begins and ends; it does not have to conform to a calendar year, in terms of starting January 1 and ending December 31 

Fixed Assets (FAS)—the category of assets which is not expected to be converted to cash in a year or less

Fixed Costs—the category of costs which remain constant in the short term, independent of the level of business activity

G 

Gross Profit—the numerical difference between revenue and cost of goods sold; does not include non-manufacturing fixed costs, and so it will always be a larger number than net profit

H 

Human Capital Management (HCM)—the process which facilitates management of the human resource department, in areas like payroll, benefits, assessment, recruiting, training, and retention; as a module, HRM typically dovetails with core ERP, but its functionality is largely stand alone

Human Resources (HR)—Human Resources refers either to the parts of the organization which require human labor, or to the functional area that is charged with recruiting, training, developing, and retaining human labor for the organization. 

I 

Implementation—the large-scale process of installing and configuring software, testing the solution, preparing the organization for change, training the end-users, and establishing a support organization to sustain the implementation

Installation—the process of transferring computer programs, drivers, and plug ins to a computer

Integrated Software—a collection of computer programs which share common data across functional boundaries

Interface (Computing)—the point of data exchange between two stand-alone programs

Inventory Control—the process of determining upper and lower threshold limits for inventory and establishing appropriate actions to take to result in changing the inflow to or the outflow from an inventory category

Invoice—a document which specifies the amount of money expected to be paid by a customer in exchange for the goods and services detailed on the document

ISO Standards—the International Organization of Standards is a series of compliance requirements intended to demonstrate a stable and reliable manufacturing process 

J 

Job Costing—a cost methodology in which all of the costs associated with a specific project or manufactured product are recorded in a cost ledger over time, and totaled at the end of the project or manufacturing process

Legacy Systems—computer programs written specifically for a single organizational function, before the days of integrated software or ERP systems; tend to be highly customized, somewhat difficult to maintain, and are strongest where administrative labor was replaced: payroll, accounts payable, accounts receivable, order entry, etc.

Last In, First Out (LIFO)—an inventory strategy in which you always consume your most recently purchased raw materials first (which requires that the raw materials can be stored indefinitely without deteriorating)

M 

Manufacturing—the process of utilizing labor, machines, and materials to transform a raw material, or assembling semi-finished materials, into something that contains greater value

MRP II—a generic description of software applications that first combined supply chain functions like planning, inventory control, and purchasing, into a single integrated package

Network Administrator—the person or department responsible for ensuring the integrity, security, and performance of a computer network in a business or organization

Off the Shelf—using the features and functionalities of a software system as originally written, and without customization

Out of the Box (Software)—describes uncustomized software, particularly in ERP 

P 

Physical Inventory—the process of identifying and normally marking each individual inventory container and recording the amount on a piece of paper, until every unit of inventory in a location has been marked and recorded 

Pick List—a detailed set of instructions for the type and quantity of products that need to be retrieved from the warehouse and brought to a truck or staging area

Point of Sale (POS) —the time and place of a sales transaction exchanging cash (or credit) for goods or services

Pricing—the process of determining how much to charge for different quantities of each product or service; pricing structures can be simple or complicated, depending on the variable features offered on the product or sales agreement

Process Manufacturing—the opposite of discreet manufacturing; the finished product in process manufacturing cannot be disassembled into its component parts

Project Management—the process of breaking down a large specific objective into smaller sequential tasks, and establishing the dates by which each sequential task must be completed in order to reach the time and cost target of the large objective

Project Manager—the highest leader involved in a project and responsible for all aspects of project management

Project Planning—the process of breaking a project down into smaller sequential steps, and making certain that each steps has the appropriate resource and completion date to allow that overall project to be completed on time

Quotes—a binding agreement, for a specific length of time, to provide a material or service for a certain price

R 

Research and Development (R&D)—the activity or functional area responsible for envisioning and creating new products; to documenting and protecting intellectual property; and to engage in pure research in the hope of discovering concepts which might eventually result in commercial products

Revenue—an inflow of cash (or accounts receivable) resulting from the sales of a product or service

Request for Proposal (RFP)—a formal invitation for a vendor to participate in a bidding process when a company intends to purchase a product or service

Request for Quote (RFQ)—similar to an RFP, but used for less complicated purchasing situations; it does not require any supporting discussion or alternative strategies; it is a straightforward request for the price required to deliver a specific product or service

Return Merchandise Authorization (RMA)—a unique document with an identifying number that grants customers permission to return goods to a manufacturer

Return on Investment (ROI)—a standard financial measurement intended to assess the profitability effectiveness of investments, calculated by dividing the expected return (profit, cost savings, etc.) by the financial outlay

Sales and Operations Planning (S&OP)—the formal process of forecast consensus building between supply chain, manufacturing, and sales 

Sales Forecasting—a prediction of the amount of revenue and/or quantity of materials or services which will be sold in a given time frame

Sales History—the data set containing all of the sales records, normally at invoice and line item detail, and used for a variety of calculations, including forecasting, inventory levels, min/max and replenishment targets, and raw material negotiations

Software—all collections of computer code, or computer programs, that make a computer perform a function

Software as a Service (SaaS)—a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet

Software Development—the creation of computer code to create software applications, or the creation of enhanced computer code and additional computer code to make an existing software application contain easier or more robust functionality

Third-Party Application—a piece of software developed by an external company to the core vendor;ERP vendors are increasingly providing integration services for popular 3rd party applications including payroll and HR systems

Third-Party Logistics—a company’s use of third-party businesses to outsource elements of the company’s distribution and fulfillment services

Total Cost of Ownership (TCO)—a type of calculation designed to help consumers and enterprise managers assess both direct and indirect costs and benefits related to the purchase of any IT component

U 

Upgrade—a general improvement of a software program

User Interface (UI)—a part of a computer program in which a human contributes to the operation of the program, either by inputting data, making a decision, or performing other types of work that are dependent on current conditions and priorities

V 

Value-Added Reseller (VAR)—the middleman who sells software along with other bundled products such as hardware or implementation services

Vendors—companies or individuals that are willing to supply a given material or service at an agreed upon quality level in exchange for an agreed upon amount of cash

Version—the generation of a technology application; most often numbers and are most common in software programs, although anything with a brand name is liable to use a version number to indicate its manufacturing generation

W 

Warranty—a written legal promise that a product will conform to stated performance standards, or the consumer is entitled to the stated compensation, whether it is product replacement, return of purchase price, or someone to come fix the problem

Warehouse Management System (WMS)—an ERP module (either third party, or integrated, or stand alone) which focuses on the transactions, processes, and activities associated with warehousing and distribution centers; ERP Warehouse management systems are strong at things like picking strategies, load control, bin storage control, and unit handling management. 

Workflow Management—the process of controlling, communicating, and following up on a human approval chain, with the intent of making it more efficient. Workflow management is typically used for processes like product adoptions, or policy change approvals

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