ERP Software Key Terms

Learn more about what ERP software can do to improve business

ERP (enterprise resource planning) software is a type of software that works to enhance the process of communication and decision-making in a business. ERP software works to open up the flow of information in an organization and can improve planning, scheduling and production. ERP implementation will not, however, help correct specific operational policies. This is why a re-engineering exercise is recommended for businesses before going through with ERP software implementation.

Activity-based costing (ABC)

Activity-based costing is one approach to evaluate specific costs of production to determine the true estimate of cost with a number of value-added activities.


Implementation is the process of integrating ERP software into a business. Implementation happens over time and uses ERP experts to see where the business can be streamlined for more efficient use of the software.

Dirty data

Dirty data is a series of data that can be entered into an ERP program, but is not in a format the program recognizes. Assumptions can be used to clean the data so it's usable with ERP software.

Just-in-time (JIT)

A just-in-time process is a process of either production or logistics that provides a supply delivery just when it is needed and not before. This helps to reduce large inventories.

Model-based management

Model-based management is a way to make decisions based on a the performance of a dynamic model instead of evaluation of actual supply chain performance.

Business process re-engineering (BPR)

Business process re-engineering is the process a business will undertake in order to get ready for the implementation of ERP software. This process looks for areas where the business needs to make changes to become compatible with ERP processes.

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