ERP Terminology Glossary
ERP Terminology Glossary
The Definitive ERP Dictionary & Terms
Simply look for an ERP Terminology below!
- ABC Analysis
- What is the ABC approach to inventory control?
ABC inventory analysis involves grouping your products into three categories based on their usage value—the total number of units sold (or used) in a given period, multiplied by the cost per unit.
While the details vary from business to business, ABC inventory categories usually follow the same pattern:
-A items: Your company’s most important products. This category usually includes items with high sale volumes, high costs, or both.
-B items: Less important items. These products may not sell as quickly as A-level items, or they may be cheap to produce.
-C items: The least important items in your inventory. This category is the largest of the three, but it makes up the smallest portion of your business’s total inventory value.
Once items are assigned to a category, inventory managers can prioritize their tasks (like reordering, cycle counting, and supply chain supervision) based on the importance of the item. This ensures that the most important, A-level items in your inventory remain tightly controlled, which minimizes loss.
Pros and cons of ABC inventory analysis
-Lower risk of stock outs for high-value products
-Stock management efficiency
-Limited flexibility for nonstandard items
-Potential for overcomplication
When you use ABC analysis, you can easily prioritize management tasks for the items that have the biggest impact on your business. This ensures that your class A items get the most attention, so you’re less likely to run out of safety stock on your highest-value products.
ABC classification also helps make your stock management process more efficient, since your inventory planner knows exactly which items to focus on to minimize your costs and maximize your profit.
ABC inventory can be somewhat limited, however. For starters, classifying items by their usage value means new items (with no sales data to draw from) have zero usage value.
It also doesn’t account for items that would normally be class B or class C items but need to be temporarily treated as class A items. So let’s say a manufacturing issue forces you to immediately reorder all your stock on a C-level item. You may need to temporarily treat that item as an A-level item, but your system would de-prioritize tasks for that item because it’s technically a C-level product.
Now, you can create a list of products that are exceptions to your ABC classification. But that means every time you reclassify your items (which we recommend doing regularly), you need to compare your classification to your list of exceptions and adjust. This can get inflated and over complicated very quickly, especially if multiple people within your organization have a say over how products get prioritized.
- What is inventory allocation?
In the simplest terms, inventory allocation describes where in the supply chain an organization’s inventory is. In other words, how many units are present in which stores, warehouses, and distribution centers.
However, when enterprise retailers talk about “planning and allocation” or “initial allocation,” they’re usually describing specific processes within their organizations.
“Planning and allocation” definition
Planning and allocation is a pre-season planning process retailers use to decide how much of each SKU needs to go to each location and sales channel in order to meet customer demand.
“Planning” is the key word here. Planning where inventory will be allocated takes place in advance of a sales season.
Don’t let the simplicity of our planning and allocation definition fool you. Allocation will make or break a sales season. The right amount of each product needs to be in each location (and enough safety stock needs to be present in warehouses to buffer demand swings).
Customers can’t buy products that aren’t there and they won’t buy more than they need.
As such, retailers need to accurately forecast sales demand for a particular SKU at each sales location.
To avoid costly consequences of poorly distributed inventory, retailers employ a variety of allocation methods.
“Initial allocation” definition
While “allocation” can refer to the location of any SKUs across your channels, when retailers use the term “initial allocation,” they’re typically referring to how new products will be distributed across their sales channels. Basically, how many units of a new SKU will go to which store, warehouse, or DC.
- What is Backflushing?
From a functional perspective, backflushing automates the issuing of material to the manufacturing floor upon the completion of the production process, which the ERP system defines as the point when the manufactured part is transacted into Finished Goods.
From a backflushing evangelist’s perspective, Backflushing is a way to significantly increase manufacturing efficiencies by eliminating manufacturing Work Orders and its associated task of issuing material to the Work Order.
How does Backflushing Work?
The actual backflushing process is really quite simple and contains a few basic steps:
1. Employees use the materials it needs to manufacture the quantity of the Part ID for a particular manufacturing schedule
2. Scrap is tracked
3. When the Part ID is ready to be transferred to another Inventory location (e.g., Finished Goods) the following information is entered into the ERP system:
-Part ID manufactured
ERP System Calculations and Automated Entries
4. The ERP system will reduce the amount of raw materials and/or any sub-assemblies for the:
-Per Bill-of-Material (BOM) in the ERP system for quantity manufactured
5. Increase the inventory in Finished Goods for the quantity of the part that was manufactured.
One can certainly make an argument that any one of the above examples where the prevention of an error, cost avoidance, and/or process improvement could very easily pay for the cost of an alerts module all by itself.
- What is a Back Order?
A back order is a customer order which the supplier cannot currently ship, but expects to ship at a later date. The proportion of customer orders that are on backorder is a common customer service metric. Another related metric is the average number of days that a customer must wait before back orders can be filled.
A more refined form of the back order is to only identify an undelivered item as a back order if a customer agrees to wait for the late delivery. If not, the back order is cancelled.
Back orders are heavily influenced by the inventory stocking policies of a business. For example, if management elects to maintain large stocks of all items offered for sale, then the probability of a stockout condition is low, and there will be few back orders. However, this requires a major investment in inventory, and may result in write-offs related to obsolete goods. The reverse situation is to stock minimal amounts of inventory and rely upon customers to wait while back ordered items are acquired elsewhere or produced in-house.
Accounting for Backorders
When a customer places an order that is placed on backorder, any payment made by the customer is recorded by the seller as a liability. Once the backordered item has been delivered to the customer, the liability is debited (to clear it from the books), and a credit is used to record a sale. If customers make no cash payments up-front, then there is no accounting transaction to record. Instead, the backorder is recorded within the firm’s order entry system, which is not related to the accounting system.
Advantages of Backorders
The main advantage of backorders is that they allow a business to invest less in inventory. Instead, they wait for customer orders to arrive, take their money, and then produce the goods. The result is a low working capital investment in the business, which makes it easier to operate with a minimal investment.
Since the presence of backorders reduces the inventory investment and holding costs of a business, this means that the firm could pass these savings through to its customers. Doing so will attract customers who like low prices, and who do not mind waiting a while to obtain the ordered items. This approach can be especially effective when customer demand is high.
Having a low backorder percentage can be a competitive advantage. A business could use a variety of inventory management techniques to fill a high percentage of its orders within a short period of time, and then market its order fulfillment rate to customers. If customers want to have their orders filled at once, then they will be more likely to place orders with a firm that reports a low backorder rate.
Disadvantages of Backorders
A key problem with backorders is that a business is losing sales to its competitors. This happens because customers are not willing to wait for the firm to deliver backordered goods to them. Another concern is that repeated backorders can result in the permanent loss of customer loyalty, who never return to the organization to place orders. This is a particular concern when customer loyalty is not strong; instead, they had previously only been placing repeat orders out of habit. If a competitor can provide better products or service, then customers will leave.
- Beverage Distribution Software
- What is a Beverage Distribution Software?
A beverage ERP Software will cater to your company’s needs for flexibility and consistency in a fully integrated business management solution. Thin profit margins and intense competition are hallmarks of the beverage industry, and softwares must adapt to your specific process manufacturing requirements. Whether you produce private-label, co-pack, distribute or make your own line of beverages, a beverage distribution software should know your industry needs and optimize processes in quality control, recipe management, inventory, safety and regulatory compliance, so you can raise a glass to increased company profits.
Delivering new and innovative craft juices, blends and cocktails quickly to keep up with consumer demands can get complicated while at the same time maintaining production of the high quality and consistent products your customers expect. With a comprehensive system, this type of solution manages all of your critical business functions: manufacturing, quality, inventory, financials, sales and reporting. Also, offering formulation management of varied beverage product offerings, accurate costing capabilities to increase competitiveness and an R&D sandbox environment to keep up with consumer trends.
Benefits of ERP Software Designed Specifically for the Beverage Industry
1. Accounting with Product Costing
Beverage Production Software provides full accounting software and assists with calculating the cost of current products and estimating new beverages through the integrated ERP solution’s access to the actual ingredient, packaging and shipping costs. Strong sales reporting functionality enables you to analyze and make informed decisions regarding price increases to maximize profit margins.
Ensure consistency and quality control through testing, recording and regulatory compliance. The solution’s QC features are flexible and scalable to meet your quality needs with in-production and customer-specific testing, including pasteurization information, that ensure your customers receive the same experience with your beverages that they expect every time. In addition, easily generate customized Certificates of Analysis (CofA) reports.
3. Recipe Management
Maintain real-time formulations with bill of materials (BOMs) to store and scale beverage recipes including physical properties, versions, revisions and production notes, in order to provide accurate labeling, reporting and consumer information for product packaging.
4. Safety and Compliance
Beverage softwares make complying to ever-changing FDA and HACCP regulations manageable within a centralized solution. By generating audit trails throughout the manufacturing process, to full forward and backward traceability from raw ingredients to finished goods, Beverage softwares provides the necessary tools and reports for lot tracking compliance. With the ERP’s mock recall functionality and product recall procedures, your beverage operation gains the control and preparedness you need to meet and stay ahead of safety and compliance regulations.
5. Inventory Management
Track inventory from incoming raw materials to bottled products throughout the entire production process in real-time – monitoring pasteurization, cold-pressed or high pressure processes, blending and bottling. Materials Requirement Planning (MRP) assists with demand planning and scheduling based on sales orders and future forecasts, minimizing costs and waste by maintaining appropriate inventory levels of raw ingredients, finished products and packaging.
6. Research and Development (R&D)
Easily develop and experiment with new beverage formulations in the software’s sandbox environment without affecting live manufacturing processes. Streamline new product and recipe development with access to cost history and revisions, with the capability to readily convert R&D items into live production.
7. Point of Sale (POS)
Take advantage of the latest touch-screen, scanning and barcoding technologies to facilitate rapid transaction processing in both single store or multi-point retail environments. Through instant updates of available inventory and payment processing, your retail associates can provide the highest level of customer service.
8. Direct Store Delivery (DSD)
The DSD feature extends POS functionality by mobilizing route sales and delivery teams for order entry, invoicing and payment transactions on the road. Your sales team will be equipped with the ability to create and edit orders, track inventory, as well as invoice and accept payment offsite with DSD.
- Bill of Lading (BOL)
- What is a Bill of Lading and what is it used for?
Here’s a simple Bill of Lading definition: It’s a document used to ship less-than-truckload (LTL) freight. You manually fill out a blank paper Bill of Lading form and give it to the driver who picks up your freight shipment. Then they give it to your recipient upon delivery.
A paper Bill of Lading has multiple important purposes:
-It acts as your receipt and shipping label.
-It contains the details of your shipment, including content, origin, and destination.
-It serves as a legal contract of carriage with terms and conditions of the logistics company’s shipments.
-It’s used to calculate charges.
-It includes the purchase order number, other reference numbers, and freight classification.
When is a paper Bill of Lading or freight label required?
A freight shipping label (whether it’s a paper Bill of Lading or a label created online) is required for all domestic and international LTL shipments, including those shipped through a freight forwarder. For domestic LTL freight shipments, you now have the option to create a shipping label online.
A freight shipping label created online serves the same purposes as a paper Bill of Lading—and it has other benefits.
-Your pickup process will be faster, since you no longer have to provide a paper Bill of Lading to a driver.
-You’ll avoid invoice errors from keying mistakes.
-You can instantly track your shipment (paper Bill of Lading tracking doesn’t begin until the shipment is manually entered into the system).
-You’ll have a digital trail that’s not available with paper forms.
Hazmat shipments and Shipper Load and Count customers must still provide a paper Bill of Lading to the driver at pickup, even if they created the shipment online.
- Cycle Counting
- What Is Inventory Cycle Counting?
Inventory cycle counting is a fast and efficient way to ensure that physical inventory matches the reported inventory, which helps small-business owners avoid stockouts, obsolete inventory, profit loss, and more.
Inventory management is one of the most crucial elements of running a small business. By minimizing safety stock (the extra product kept to avoid running out) and obsolete inventory (the leftover, unsellable product), business owners can maximize profits and keep their customers happy. Check out our guide to learn how inventory cycle counting plays an important role in effective inventory management.
Small-business staff count a certain set of inventory on a regular basis (weekly, monthly, or quarterly), rotating which set of inventory is counted each time. Once the cycle is complete, all inventory in the warehouse should be accounted for.
What are the benefits of inventory cycle counting?
Inventory cycle counting is an important part of inventory management for any small business. In comparison to an annual physical inventory count, cycle counting saves time and ensures greater accuracy in inventory forecasting. Here are some of the other benefits of inventory cycle counting:
1. Reduced required safety stock
2. Lower overhead costs
3. Minimized chances of running out of stock
4. Minimized obsolete stock
5. Improved customer service
6. Better order fulfillment rates
7. Fewer inventory errors
8. Greater efficiency in inventory management
9. Lower audit fees
- Drill Down
- What Is Drill Down Capability & Drill Down Analysis?
Drill down capability is an essential feature, used for making reports more useful and powerful. It helps the users to visualize data thoroughly and in a detailed fashion. For any level of data, drill-down is a feature used to get a more granular overview of the data rather than a general view.
When you are looking at a report, say the report generated by the sales team and you want to look at the revenue based on geography. You can select a country, and “drill down” to more definitive semantics like state, city, town, and zip code. You can go deep into the specific details of the information you need for analysis.
As long as there is data to support, you can drill down to multi-level of data. Although the look of the report remains the same, it gives you insights on the data granularity. Another such feature is the drill through, which displays relevant data instead of providing a more granular level of the information.
The Many Benefits of Drill Down Capability
The user gains a more in-depth insight into data. For example, if you are looking at sales figures, a user can find out how the statistics are making sense. From answering questions like, which states are performing? Which are not? Which territories can perform better? Etc.
It helps to enhance reporting and reporting performance. It allows the users to present layers of data by eliminating the load on the server. Also, reduce query time and improve performance. It adds significant value for the end-user, high usability and ease.
- ERP System
- Enterprise Resource Planning (ERP): Meaning, Components, and Examples
ERP: Process used by companies to manage and integrate the important parts of their businesses, often via software to connect planning, purchasing planning, sales, marketing, finance, human resources and more.
What Is Enterprise Resource Planning (ERP)?
Enterprise resource planning (ERP) is a platform companies use to manage and integrate the essential parts of their businesses. Many ERP software applications are critical to companies because they help them implement resource planning by integrating all the processes needed to run their companies with a single system.
An ERP software system can also integrate planning, purchasing inventory, sales, marketing, finance, human resources, and more.
-ERP software can integrate all of the processes needed to run a company.
-ERP solutions have evolved over the years, and many are now typically web-based applications that users can access remotely.
-Some benefits of ERP include the free flow of communication between business areas, a single source of information, and accurate, real-time data reporting.
-There are hundreds of ERP applications a company can choose from, and most can be customized.
-An ERP system can be ineffective if a company doesn’t implement it carefully.
- Enterprise Resource Planning (ERP)
- What is ERP?
Enterprise resource planning (ERP) is a type of software system that helps organizations automate and manage core business processes for optimal performance. ERP software coordinates the flow of data between a company’s business processes, providing a single source of truth and streamlining operations across the enterprise. It’s capable of linking a company’s financials, supply chain, operations, commerce, reporting, manufacturing, and human resources activities on one platform.
Most companies have a finance and operational system in place, but siloed systems can’t go beyond everyday business processes or help with future business growth. As companies expand and their needs change, their systems should keep up with them. In this article, you’ll learn what ERP is and why having software in place that keeps up with your needs can help run a more agile and efficient business.
Modern ERP software systems
Historically, ERP systems were suites that worked separately and didn’t talk with other systems. Each system required expensive, complex, and customized code to meet unique business requirements which slowed—or even prevented—the adoption of new technology or process optimization.
What makes today’s ERP software different is that it brings all these different processes together in one fluid system. It doesn’t just offer data connectivity within your ERP system, but also within your productivity tools, e-commerce, and even customer engagement solutions. It enables you to connect all your data for better insights that help you to optimize your processes across your entire business.
In addition, a modern ERP solution offers flexible deployment options, improved security and privacy, sustainability, and low-code customization. But most importantly, it builds continuity and resiliency into your business and processes through insights that help you innovate at a rapid rate today while preparing your business for what’s next.
- Fixed Assets
- What Is a Fixed Asset in Accounting?
The term fixed asset refers to a long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income. The general assumption about fixed assets is that they are expected to last, be consumed, or be converted into cash after at least one year. As such, companies are able to depreciate the value of these assets to account for natural wear and tear. Fixed assets most commonly appear on the balance sheet as property, plant, and equipment (PP&E).
-Fixed assets are items that a company plans to use over the long term to help generate income.
-Fixed assets are most commonly referred to as property, plant, and equipment.
-Current assets are any assets that are expected to be converted to cash or used within a year.
-Noncurrent assets, in addition to fixed assets, include intangibles and long-term investments.
-Fixed assets are subject to depreciation to account for the loss in value as the assets are used, whereas intangibles are amortized.
- General Ledger (G/L)
- What Is a General Ledger?
A general Ledger is the complete record of a company’s financial data over a period of time, documenting changes to assets, liabilities, equity, expenses and revenue, with debit and credit account records validated by a trial balance.
It provides a record of each financial transaction that takes place during the life of an operating company and holds account information that is needed to prepare the company’s financial statements. Transaction data is segregated, by type, into accounts for assets, liabilities, owners’ equity, revenues, and expenses.
-The general ledger is the foundation of a company’s double-entry accounting system.
-General ledger accounts encompass all the transaction data needed to produce the income statement, balance sheet, and other financial reports.
-General ledger transactions are a summary of transactions made as journal entries to sub-ledger accounts.
-The trial balance is a report that lists every general ledger account and its balance, making adjustments easier to check and errors easier to locate.
- Gross Pricing
- What is Gross Price?
Gross pricing is the total amount charged for goods or services, including any related costs, taxes or fees, but before applying any discount.
What are Gross Sales?
Gross pricing are the total sales recorded prior to sales discounts and returns. It is useful as a measure of the overall sales activity of a business. However, if a company is selling faulty products that are later returned, gross sales is not a good indicator of the abilities of an entity; in this case, net sales is a better indicator.
Investors commonly track gross sales to see if a business is generating sales at a faster or slower pace than its competitors. This can be used as an indicator of whether a company’s product niche is maturing, which in turn can indicate changes in the value of an organization.
- Invoice Date
- Invoice Date – Payment terms
The invoice date is the date when an invoice is issued. Invoices include a timeline for shipment of goods or expectation of payment. The payment term of “net 30 days,” for example, is calculated from the invoice date, so that the payment is due no later than 30 days from the date of the invoice. The shipment date may be the date of the invoice if the invoice was produced the same day the goods were shipped. If a payment becomes overdue, businesses will rely on the timeline provided by the invoice date and the terms to take collection activity. If customers receive a discount for early payment, these dates determine whether the invoice was paid in sufficient time to receive the bonus.
Businesses that send out a lot of invoices should have a system to generate unique invoice numbers for each sale. A sequential numbering system ensures that invoices are easily tracked when they are produced and paid, even if several invoices are produced with the same invoice date.
- Lead Time
- What is Lead Time?
Lead time is the amount of time that passes from the start of a process until its conclusion. Companies review lead time in manufacturing, supply chain management, and project management during pre-processing, processing, and post-processing stages. By comparing results against established benchmarks, they can determine where inefficiencies exist.
Reducing lead time can streamline operations and improve productivity, increasing output and revenue. By contrast, longer lead times negatively affect sales and manufacturing processes.
Production processes and inventory management can affect lead time. In regards to production, building all elements of a finished product onsite may take longer than completing some items offsite. Transportation issues can delay delivery of necessary parts, halting or slowing production and reducing output and return on investment (ROI).
- Lot Number
- What is a Lot Number?
A lot number is an identification number assigned to a certain quantity or group of products from a single manufacturer. If you’ve never heard of a lot number before, you may have heard it under a different name. It can also be called a batch number, code number, or lot code.
Lot numbers are a combination of numerical digits that are then assigned to a group of products with similarities. If you are unsure of where these numbers are, you can typically find them outside the packaging.
Many companies will have a different way of assigning lot numbers to their products. Some factors that determine these differentiations can be based on the date of manufacture, location, expiration date, or a combination of different numbers. However, one thing that won’t change is that a lot number is a unique group of digits applicable to that specific group of products.
One important thing to know is that a lot number is only applied to one batch of products. However, all of the items in that batch will have the same lot number.
- Lot Tracking
- What is Lot Tracking?
Lot tracking is the act of recording the movements of stock lots. In inventory management, a stock lot is one batch of some Stock Keeping Unit. When a lot of goods arrives in a facility, or when a batch of products is manufactured, the lot is assigned a stock lot number that applies to every unit from that particular lot. This code can later be used to determine the quantity, value, and location of the goods; which lot was used in the production of which products; which suppliers the materials or goods came from and when; and which customers have received products related to this stock lot.
This process of recording and tracing the movement of goods and materials is the essence of lot tracking. Even though lot tracking is critical to companies that need to comply with strict regulations, it should be a part of any modern manufacturer’s or distributor’s business process and inventory optimization toolkit.
Lot tracking, also known as batch tracking, is an important process for ensuring quality, most commonly for traceability and recall purposes. It is a crucial part of doing business in highly regulated industries, but it has its advantages regardless of the product.
- Material Requirements Planning (MRP)
- What is MRP?
MRP (Material Requirements Planning) is a system designed to plan manufacturing production. It identifies necessary materials, estimates quantities, determines when materials will be required to meet the production schedule, and manages delivery timing, with the goal of meeting demands and improving overall productivity.
Material planning can be relatively simple and straightforward, but only when volumes are low, the number of products is limited, and there are only a few components within each product.
For complex products and higher production volumes, complex calculations are needed. The ability to forecast and plan for materials and components is critically important to the effective management of production and finished goods inventory. This planned production is an essential building block for planning and scheduling equipment and skilled personnel.
Inventory is usually a major cost of doing business and one of the biggest factors in manufacturers’ profitability. Without material requirements planning, it is impossible to effectively manage inventory to have just the right amount of the right items at the right time. Having too much inventory is expensive, yet having not enough can create stock-outs, which are often the main cause of production disruptions, late shipments, added costs, and poor customer service.
Although we tend to think of MRP as a function that is exclusive to manufacturers, it’s important to understand that the term “manufacturer” can be broad indeed. In the MRP sense, a manufacturer is any organization that acquires components or materials and transforms them in some way to produce a different item that can be sold to customers.
- Materials Management
- What is Materials Management?
Materials management is a core function of supply chain management, involving the planning and execution of supply chains to meet the material requirements of a company or organization. These requirements include controlling and regulating the flow of material while simultaneously assessing variables like demand, price, availability, quality, and delivery schedules.
Material managers determine the amount of material required and held in stock, plan for the replenishment of these stocks, create inventory levels for each type of item (raw material, work in progress or finished goods), and communicate information and requirements to procurement operations and the extended supply chain. Materials management also involves assessing material quality to make sure it meets customer demands in line with a production schedule and at the lowest cost.
Material management systems embrace all of the activities related to materials and are a basic business function that adds value to a finished product. It can also include the procurement of machinery and other equipment needed for production processes as well as spare parts.
Typical roles in Materials Management include inventory analysts, inventory control managers, materials managers, material planners, and expediters as well as hybrid roles like buyer/planners.
Regardless of role, the main objective of Materials Management is assuring a supply of material with optimized inventory levels and minimum deviation between planned and actual results.
- Packing Slip
- What is a Packing Slip?
A packing slip is a document that includes the complete list of items included in a package. Packing slips include SKU numbers, weights, dimensions, and the number of units that are used by shipping departments to determine what inventory needs to be sent out to accurately complete an order. Finally, the buyer or receiver of the order will check the received items against the packing slip to ensure all the ordered items arrived.
Packing slips note everything that the customer ordered. Because you’re not getting the items from a brick-and-mortar store, ecommerce orders use packing slips for many reasons that help connect the digital world to the physical world through essential shipping documents.
Packing slips are important to double check the fulfillment of processes in ecommerce. Before a box is sealed and labeled, a packer should verify the items inside are indeed what the customer ordered, including exact counts of multiple SKUs. A packing slip is a reflection of all ordered items and is a record of the physical items included on the shipping list. As soon as it’s verified, they can place the printed packing slip in the box and ship the order out.
Depending on the size of the order and products, as well as the location of different SKUs among different warehouses, an order may need to be split into separate shipments (meaning certain items are sent in different boxes). If an order is spread out across multiple boxes, a packing slip can help both the seller and recipient stay organized.
Packing slips help identify and sort out damaged items — whether a fragile item broke in transit or the entire package was damaged in transit. Delivery exceptions like this happen, but having a packing slip as a backup can help speed up the issuing of a refund or resending the package.
- Physical Count
- What is a Physical Count?
A physical count is an actual count of the goods in stock. This is a carefully coordinated counting process in which counting areas are segregated and count teams examine assigned inventory areas, recording their counts on count sheets. If there are any differences between the amounts counted and the amounts recorded in the inventory records, the records are updated to match the counted amounts.
A cycle count is a subset of a physical count, since it involves counting only a small portion of the total inventory each day. In addition, cycle counting is more concerned with discovering the reasons why specific inventory records are inaccurate, and correcting the underlying problems. The actual counts are then compared to the quantities reported on the detailed inventory records. If a difference exists, the quantity shown on the inventory record should be changed to the physical count.
- Purchase Requisition
- What is a Purchase Requisition?
A purchase requisition is an internal document that authorizes the Purchasing department to buy items or services. Depending on the setup of your organization, you can create purchase requisitions for products that your organization uses.
After a purchase requisition is approved, it can be used to generate a purchase order. Purchase orders are the external documents that the Purchasing department submits to vendors.
You can select items from a procurement catalog that your organization has created, or you can request items that aren’t found in a catalog by selecting a procurement category and entering the product details.
When you create a purchase requisition, a status is assigned to it. A status is also assigned to every line that you add to a purchase requisition. When you submit a purchase requisition to a workflow for review, the status of the purchase requisition and the status of each line are updated as the lines move through the workflow process.
You can configure the purchase requisition workflow process to route a purchase requisition through the review process as a single document. Alternatively, the lines on a purchase requisition can be routed individually to the appropriate reviewers. If the purchase requisition lines are reviewed individually, the status of each purchase requisition line can be updated as the line moves through the review process. When all lines have completed the review process and no review steps remain for the purchase requisition, the status of the whole purchase requisition is updated.
- What is a Replenishment?
Replenishment is the controlled and regular movement of inventory from an upstream point on the supply chain to a downstream location that requires sufficient stock to cover demand.
The process of inventory replenishment varies depending on the type of business and circumstances. For example, it can refer to any of the following situations: shipping raw materials from suppliers to manufacturing facilities; moving inventory from reserve product storage to packing and shipment locations; ordering inventory from suppliers to ensure that a warehouse or fulfillment center has adequate product; and relocating stock from a warehouse to a pickup facility or retail.
Replenishment is an important part of inventory management. The purpose of replenishment is to keep inventory flowing through the supply chain by maintaining efficient order and line-item fill rates. Without a proper replenishment plan, organizations may put their business at risk. For instance, a manufacturer might run out of raw materials, leading to production delays, or a retailer might not have the products that customers need, resulting in lost sales and customer attrition.
Inventory replenishment — also known as stock replenishment — helps avoid running out of inventory while preventing costly overstocking. It does not matter whether the inventory itself comprises raw materials or ready-to-sell products, as long as the stock is available where and when it’s needed, without incurring excessive carrying costs. Replenishment keeps inventory flowing through the supply chain.
- Retail ERP
- What is Retail ERP and Why Is It Important?
An enterprise resource planning (ERP) software that is tailor-made for the needs of the retail industry is called a Retail ERP. Like regular ERP solutions, Retail ERP helps collect, manage and store data while allowing retailers to automate their business processes from a single interface. What sets a Retail ERP apart from its coequals is its ability to help retailers move stock quickly, manage employees at different outlets, implement loyalty plans, and multiple products, services, and items.
The retail industry faces tough competition from online stores and eCommerce giants, which have better access to automation tools simply due to the nature of their business. A retail ERP factors this in and ensures the smooth functioning of multiple retail outlets from a single interface.
Essential functions of a retail ERP
-Power backend operations such as warehouse management and stock replenishment.
-Effortlessly manage front-end and customer-facing processes
-Implement brand differentiation and reputation management
-Improve customer experience both online and offline
-Generate valuable retail-specific reports.
Retail ERP is essential for smooth Retail functioning
Most retail businesses find it difficult to manage different organizational functions – such as customer service, liaising with warehouses and employees, managing inventory, replenishing stocks, and enforcing planning and forecasting. A robust retail ERP does all of the above and helps businesses make informed decisions. It eliminates the need to use multiple software programs for different functions and acts as a single point of contact for all stakeholders while saving valuable time and resources.
- SAP Business One
- What is SAP Business One?
SAP Business One (B1) is one of the important ERP business software provided by SAP AG and used by small and medium business companies to operate and control various functions like Finance, Hr, marketing, and various operations.
SAP Business One is a self-contained single solution that is suitable for all the ERP requirements of small and medium-scale enterprises and is very easily affordable by them. It covers all the areas of business such as sales, Financials, vendor relationship management, CRM, procurement, inventory, manufacturing, tracking of projects, reporting, and planning.
SAP Business One has been built on the highly reliable Microsoft SQL Server Database and it supports SAP HANA perfectly. The advantage of SAP B1 is its complete reliability, as there is little scope for data corruption or misuse due to the lack of security which is a constant feature of other ERP software for small businesses
That is the reason why SAP has developed SAP Business One. SAP B1 is a solution that has been built specifically for the interest of SMEs, companies that cannot afford to spend dozens of millions of dollars or more on the ERP software and services.
- SAP Manufacturing
- What is SAP Manufacturing?
Fast-track time to market, gain new production efficiencies, and lower costs with SAP manufacturing software and Industrial Internet of Things (IIoT) solutions. Digital manufacturing solutions are the future of productivity.
Meet demand in a challenging market with manufacturing automation and flexible operations. Track and enhance manufacturing performance. Empower key stakeholders to analyze global and plant-level manufacturing performance. Improve visibility and reporting consistency. Acquire data from different manufacturing operations management (MOM) systems and automation systems by integrating multiple systems and standards-based interfaces. Gain faster and more consistent insights. Accelerate root-cause analysis with advanced algorithms and machine learning to facilitate continuous business improvement.
- SAP Platform
- What is the SAP Platform?
Application development and integration capabilities, previously available in SAP Cloud Platform, are now cloud services that run on SAP BTP – providing users with a cloud environment to develop, manage, extend, and deliver applications.
SAP Integration Suite, an integration platform as a service (iPaaS), enables users to implement data, application, API, and process integration projects involving any combination of cloud-resident and on-premise end points.
Application development can help you build and enhance your solutions, optimize your business processes, and create an engaging digital experience. With more than 80 services available, SAP can help you boost development productivity and efficiency.
- SAP Retail
- What is SAP for Retail?
Retailers face new challenges in the way goods are marketed, bought, fulfilled, delivered, and sold in a highly competitive marketplace, but emerging technology innovations are ushering in new opportunities as well. Retailers can leverage technologies, such as cloud, AI, robotics, IoT, and VR/AR, to provide the shopping experiences that delight customers.
From in-store digital displays to online marketplaces and pop-up stores, today’s omnichannel retail eliminates the lines between channels. To compete and thrive, retailers must provide seamless shopping experiences that exceed customer expectations.
Curbside pickup, “buy online pick up in store” (BOPIS), “scan and go,” and “just walk out” options are here to stay, allowing customers to shop and collect goods conveniently. Micro fulfillment centers and partnerships with last-mile companies, such as Uber and Lyft, offer additional customer-pleasing options – all made possible through smart technologies.
Understanding changing trends and unique customer preferences is key to the success of every retail business. Powerful retail analytics can shed light on customers’ current and future needs, helping retailers shape their offerings. Personalized marketing and experiences – based on consent and trust – build customer loyalty and, ultimately, profitability.
- SAP Tracking
- What is SAP Tracking?
SAP SuccessFactors Time Tracking. Manage and track attendance of your complete workforce including salaried and hourly employees through advanced capabilities to streamline time-entry, automate pay-rules, and improve approval processes.
The SAP SuccessFactors HXM Suite is an evolved, cloud-based human resources management system (HRMS) with a focus on engagement and experiences.
Manage employee master data with an integrated suite of core human experience management applications.
Control your payroll processes to ensure your workforce is paid accurately and on time.
Manage and track attendance of your complete workforce including salaried and hourly employees through advanced capabilities to streamline time-entry, automate pay-rules, and improve approval processes.
- Safety Stock
- What is a Safety Stock?
A safety stock is an extra quantity of a product which is stored in the warehouse to prevent an out-of-stock situation. It serves as insurance against fluctuations in demand.
Safety stock helps eliminate the hassle of running out of stock. If you hold sufficient safety stock, you needn’t rely on your suppliers to deliver quickly or turn away customers because of depleted inventory levels. Safety stock covers you until your next batch of ordered stock arrives.
Why is safety stock important for your business?
Safety stock protects you against the sudden demand surges and inaccurate market forecasts that can happen during a busy or festive season. It serves as a cushion when the products you’ve ordered take longer to reach your warehouse than you expected. It ensures that your company doesn’t run out of popular items and helps you keep fulfilling orders consistently.
Even if your supplier has been consistent with delivering products on time and you’ve never faced a supply lag yet, this might not always be the case. Unexpected delays in production or transportation, such as a bottleneck at your supplier’s end or a weather-related shipping delay, can cause your products to reach you later than expected. During these situations, safety stock acts as your defense against a possible stockout scenario and helps you fulfill your orders until your ordered stock is delivered to you.
Unpredicted market fluctuations can cause the cost of your goods to increase suddenly. This can be due to a sudden scarcity of raw materials, an increase in price of raw materials, unexpected demand surges in the market, new competitors, or new government policies. If you’ve got enough safety stock during these unpredictable situations, it can help you avoid the costs of buying stock at higher prices without sacrificing sales.
- Sales Order
- What is a Sales Order?
A sales order is a document generated by the seller specifying the details about the product or services ordered by the customer. Along with the product and service details, the sales order consists of price, quantity, terms, and conditions etc.
A sale order usually carries information such as customer’s name, shipping address, transaction date, products ordered, descriptions, units of measure, quantities, prices, taxes, etc.
Key details of the sales order
-Name and contact information of the company (seller),
-Name and contact information of the customer,
-Customer billing information,
-Customer shipping information,
-Information about product or service,
-Price before taxes,
-Tax, delivery, and shipping charges,
-Total price after taxes,
-Terms and conditions,
-Any other relevant information as needed.
- Unit of Measure
- What is a Unit of Measure?
Units of measure are terms that give meaning to quantities. Common units are ea., pc., ft., lb., gal., etc. When they do their job, you hardly notice them. But if they are missing, confusing, or unclear, they will cause problems, ranging from minor headaches and annoyances to massively expensive blunders. To keep units consistent and to make sure that the people in your organization use the same variations of units, Clearly Inventory allows you to set up a table of “approved” units of measure. You can lock this table so no one can change it.
Unless it will confuse the meaning of the unit of measure, consider keeping all of your abbreviations lowercase. For example, “lb.” instead of “LB” or “Lb” and “ea.” instead of EA.
Try to incorporate both the singular and plural forms of the unit into one term. For example, instead of having “crate” and “crates” as units, consider one unit of measure called “crate(s)” that can apply to any quantity.
Try to avoid using multiple units with the same meaning. For example, instead of using both “pc.” and “ea.” (for piece and each), decide on one only.
The “default unit of measure” should be the units in which you usually purchase or stock an item. Consistent units of measure are essential to a good system.
- Warehouse Organization
- What is Warehouse Organization?
Warehouse organization is primarily a method of storing inventory using vertical storage. It is like placing items on pallet racks. It allows you to maximize your warehouse space more than horizontal storage. Let’s say you have a small warehouse and need to store many goods soon but can’t buy more space. Then storing your inventory vertically is the best way to go and is very cost-effective.
The people, materials, finance, and sales are the basis of enterprise management. It is from the point of view of business management. A successful enterprise, its warehouse management is certainly good. Suppose you are forming a warehouse or preparing to update your warehouse. You need to understand the importance of warehouse organization.
Suppose a business wants to maintain adequate facilities continuously. It needs to manage its warehouse inventory effectively. The smoothness of a company’s warehouse operations can also be seen in managers’ measures to organize their inventory. Even if you think everything is fine, you must improve it frequently. You can consider whether your warehouse is deficient by following these implementations. It will allow you to make full use of your limited space.
It may be helpful for you to consider and implement these measures for organizing your warehouse. A few key factors are:
-You must locate best-selling products at the front of the warehouse;
-Same selling products close to each other;
-Information labels and product photos are used together;
-Warehouse aisles are neatly arranged;
-Warehouse items are placed in stacks to make good use of vertical space.
Want to learn more? Read our blog!