ERP Glossary: Key Terms Explained

Enterprise software comes with a wall of acronyms. This glossary explains the terms you will meet most when evaluating, buying or implementing ERP — in plain language, without the vendor spin.

ERP (Enterprise Resource Planning)

Integrated business-management software that unifies core processes — finance, procurement, inventory, sales, manufacturing and HR — into one shared database, so every department works from the same numbers instead of disconnected spreadsheets.

MRP (Material Requirements Planning)

MRP calculates what materials to buy, how much, and when, based on the production plan and bill of materials. It answers the question: what do we need to build the finished goods on time?

MRP II (Manufacturing Resource Planning)

MRP II extends MRP with capacity planning, scheduling and finance, giving a fuller simulation of the plant. It is the direct predecessor of modern ERP.

BOM (Bill of Materials)

The complete list of raw materials, parts, sub-assemblies and quantities needed to make a product. It is the backbone of production planning and product costing.

CRM (Customer Relationship Management)

CRM manages leads, opportunities, the sales pipeline and customer service. It often connects to ERP so orders and finances stay in sync automatically.

SCM (Supply Chain Management)

SCM covers the flow of goods, information and money from supplier to customer — procurement, logistics, inventory and fulfillment — across the whole network.

WMS (Warehouse Management System)

A WMS directs put-away, picking, packing and stock moves inside a warehouse. It is narrower than ERP but integrates with it to keep inventory accurate.

MES (Manufacturing Execution System)

MES tracks and controls production on the shop floor in real time — work orders, machine status, yield. It bridges ERP planning and the physical production line.

PLM (Product Lifecycle Management)

PLM manages a product's data and changes from ideation through design, engineering and end-of-life. It is complementary to ERP, which focuses on execution and delivery.

Financial-ERP integration (业财一体化)

The tight linking of operational transactions — sales, purchases, production — with the general ledger, so every business event automatically posts to finance, removing manual re-entry and reconciling the books in near real time.

Inventory, Sales & Procurement (进销存)

The Chinese '进销存' covers purchasing (进), sales (销) and stock (存). ERP unifies these flows with finance so stock, money and orders are always consistent.

Multi-currency & multi-entity (多币种 / 多账套)

For overseas operations, ERP handles transactions in local currencies, consolidates legal entities into group reports, and keeps separate books (账套) per entity while allowing group-wide visibility.

TCO (Total Cost of Ownership)

TCO is the full cost of a system over its life — licence or subscription, implementation, hardware, training, maintenance and upgrades — not just the sticker price.

Cloud ERP vs On-premise

Cloud ERP runs on the vendor's infrastructure (subscription, faster start, automatic updates); on-premise runs on your own servers (more control, higher upfront cost). Many vendors now offer both deployment options.