Basic ERP Definitions for Distributors

The ever-evolving world of software makes it tough to stay current with industry jargon—especially for those new to the industry. Distribution and Enterprise Resource Planning (ERP) technology each come with a handful of key terms, so it’s important to know the lingo inside and out. To break it down for you, we compiled a list of essential ERP definitions that are important for you to know when moving forward in the world of distribution business software.

Breaking Down ERP Definitions

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. This includes 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)

Through customer relationship management, 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 that 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 more effective and time-saving when automated (as much as possible).

Order Processing

Order processing, or sales workflow, refers to the flow of an order. In a nutshell, it involves 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, so a well-developed replenishment plan is a must.

Inventory Management

Every distributor needs a comprehensive inventory management strategy that provides total inventory visibility. Proper inventory management entails supervising 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. An effective inventory management strategy helps businesses control ordering, handle quantities, manage pricing, and store goods. Essentially, the goal is to ensure that products are readily available upon request, without bottlenecks or backorders.

Omnichannel

Omnichannel refers to the way consumers engage with a company through different methods of shopping, whether it be online, in-store, or on the phone. and it contributes to the consumer’s experience with a business. Having multiple sales channels plays an important role in the customer’s buying experience, as it affords them the flexibility to choose their preferred shopping method.

Multi-channel

Similar to omnichannel, 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. Once again, having a strong presence across various channels is appealing to many customers, since they’ll be more likely to find your business via their preferred platform. Not to mention that expanding across channels improves brand recognition and opportunities to connect with new audiences.

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 the retailer to the company fulfilling the order. With EDI, businesses can sell their products via online stores of big-box retailers like Walmart, Target, and Best Buy, thus expanding their reach.

That’s a Wrap! (TAW)

This is by no means an exhaustive list of all relevant ERP definitions, but it’s a great place to start for those new to software, as well as anyone who could use a refresher. Take your understanding of ERPs a step further with our free eBook on postmodern ERP, and become an expert. Looking to enhance your ERP further? Talk to a profit expert today to make your most effective data-driven decisions and take manual tasks out of your order process with Cavallo’s Order Intelligence solutions.