Basic ERP Definitions for your Distribution Business
At Cavallo, we toss around a lot of lingo that may cause some confusion for our customers, and sometimes even our own employees. The terminology around ERP systems, the distribution industry, and integrating new software into your business can make you 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 distribution business software.
The Breakdown
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.
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.
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).
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.
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.
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.
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.
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.
That’s a Wrap! (TAW)
These ERP definitions 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.
