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Manufacturing Software Terms : A Glossary Of All Terms You Need To Know

Posted by Celine Heng on Jun 13, 2017 11:53:20 AM
Celine Heng
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With this glossary, we are bringing together relevant acronyms for manufacturing businesses and offer further guidance around these topics. We are aiming to help you build your vocabulary as we continuously update this list with the latest terms.

Last Updated: 16th June 2017

ASCL Average Sales Cycle Length

The average time in which a deal status transforms from lead to close. This metric helps assess sales efficiency, the shorter the sales cycle, the lower the sales costs.

Automation Using a control system to operate a device or process with minimal direct human intervention. The third industrial revolution brought computer use and automation into the manufacturing world. A new trend arising with Industry 4.0 points towards product variation in manufacturing. The ability to offer a high variation of products and solutions from lot size 1 to 1 million is offering opportunities for manufacturers to gain competitive advantages.
B2B (Sales) Business To Business (Sales)

A situation where one business makes a commercial transaction with another business. B2B sales processes are often more complex than B2C (business to consumer) sales, hence implying various risks during configuration, pricing and proposal creation.

B2C (Sales) Business to Consumer (Sales)

A situation where a business sells consumer goods or services to customers through multiple channels of distribution to earn profit. B2C sales processes are less complex in terms of configuration, costing and pricing.

BOM Bill of Materials

A structured list of parts or raw materials that constitute a product assembly. A complete product BOM regularly contains sub-assemblies, which may signify different steps in the assembly process. For example, a laptop may include the following elements: a circuit board assembly, a screen assembly, an outer cover assembly, a battery assembly.

In manufacturing industries, BOMs may contain thousands of items, thus making it necessary to automate the compilation of these BOMS and maintain maximum accuracy.

BOM Level Bill of Materials Level

The level in which an item or part occupies within the hierarchy of a BOM.

For manufacturing businesses, the BOM level determines what components are directly or indirectly used in a parent item. When an item is a sub-component, it has the ability to show all the different components such as the purchased parts and raw materials. With an increase of BOM levels, the complexity of the cost calculation is rising.

Cloud Computing A computing process where users connect to their software via the internet rather than a physical equipment at their location hence eliminating the need and cost of hosting and maintaining their own hardware infrastructure.

For manufacturers, the main advantages of cloud software are: Cost Effectiveness, Scalability, Security, Collaboration and Analytic.

CPQ (for Manufacturing) Configure, Price, Quote (for Manufacturing)

A sales software designed to help businesses produce accurately configured quotes for their complex products, given a constantly changing collection of variables. Essential for manufacturing industries to determine costs and calculate prices.

Find out more about CPQ for manufacturing industries in our beginner's guide to CPQ for manufacturing.

CRM (for Manufacturing) Customer Relationship Management (for Manufacturing)

A software for managing current and future customers. Prospective client’s information is organised, automated and analysed using software that connects and consolidates data from various other departments. Customer Relationship Management software for manufacturing industries includes a configure price quote tool, to focus on the revenue generating part of the sales process.

Digital Manufacturing An integrated approach to manufacturing that is based around a computer system which aims to improve product design and manufacturing processes.

Digital manufacturing simulates manufacturing procedures and processes before being physically implemented, saving time and money. In the same sense a CPQ system simulates configuration, costs and prices before offering quotes to the customer, protecting slim margins in manufacturing industries.

EMS Electronics Manufacturing Services

A term to describe companies that design, manufacture, test, repair and distribute electronic components and assemblies for OEMs. An EMS is not only a contract manufacturer in the electronics field, they also offer a variety of value-added services, such as support with design, design for manufacture, supply chain management, configure-to-order, outbound logistics and repair elements. EMS are often challenged when calculating the costs of their products and services, due to the nature of the make-to-order business.

ERP Enterprise Resource Planning

A software application that is used to keep track on the businesses’ resources like expenses, purchasing, inventory, HR, accounting etc.

Industry 4.0 Industry 4.0 describes the next phase in the digitisation of the manufacturing sector, driven by four disruptions: the astonishing rise in data volumes, computational power, and connectivity, especially new low-power wide-area networks; the emergence of analytics and business-intelligence capabilities; new forms of human-machine interaction such as touch interfaces and augmented-reality systems; and improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing.
Integrated Software/CPQ Two or more software functions within the overall ERP application that share data and combine functions, such as the CPQ system pulling costing information from the ERP. After successful/won quotes an integrated CPQ can transfer the costs and other details back to the ERP in a structured manner.
ISS Insight Selling Suite

In Mind Cloud’s lean CRM with embedded Configure Price Quote built for manufacturing industries like high-tech, automotive, electrical and precision engineering and machinery.

 ODM Original Design Manufacturer

A company that both designs and manufactures a product specified by another company, which is eventually re-branded by said company for sale. An ODM is similar to a contract electronics manufacturer (CEM), but they typically own IP for the product itself. ODMs typically specialise in a small number of specific product types. The sales process of an ODM centers around the accurate cost calculation of their quotes.

OEM Original Equipment Manufacturer

An Original Equipment Manufacturer offers components or sub-systems that are re-sold by another company as part of their end product. OEM business models focus on product innovation and development. They design most of the products themselves and own the "rights" to them - i.e. the intellectual property (IP).The accurate calculation of costs and prices of these components or sub-systems are the foundation of the business success of an OEM and are especially challenging, given the nature of the make-to-order environment.

PaaS Platform-as-a-Service

A platform that allows for customers to develop, run and manage application without the complexity of building and maintaining the infrastructure associated with developing and launching an app. Part of the category of cloud computing services. In Mind Cloud chose SAP's PaaS, which is the SAP Cloud Platform.

PLM Product Lifecycle Management

The management of the product record, including bills of materials, specifications, revisions and changes, from prototype through end-of-life. A functional PLM is well integrated into the ERP of a manufacturing company. An integrated Configure Price Quote application can access all product, BOM, costing and pricing data from the ERP.

Q2O, QTO Quote to Order

A set of business processes involving the significant steps in the deal making process, such as the quoting process utilising CPQ software, proposal generation, sales negotiation. Essentially the Quote-to-Order process is the revenue generator for a company.

For manufacturers, it is crucial to have a link from the CPQ to the ERP system where orders are created to maintain order accuracy and protect margins.

RFI Request for Information

A business process that collects information about the capabilities of various suppliers in order to make a decision on what steps to follow. In manufacturing industries it will typically be followed by an RFQ or RFP.

RFQ, RFP Request for Quote, Request for Proposal

A business process where companies ask external vendors to offer a quote for a specific product or service.

Request for Quote (RFQ) is commonly used when a buyer knows what he wants, but he needs more information on how vendors would meet his requirements and the costs.

Request for Proposal (RFP) is used when a buyer is looking for a product or solution provider. The RFQ is a formal request and has strict procurement rules for content, timeline and vendor responses.  

Contract manufacturers such as OEMs, ODMs or EMS' require an integrated CPQ to determine the costs and calculating prices for their RFQs and RFPs.

SaaS Software as a Service

A software distribution model in which software is licensed on a subscription basis and is centrally hosted and made available to customers over the Internet. The most visible advantages of cloud computing are its cost-effectiveness, scalability and enhanced security. Using a cloud-based CPQ also helps to radically improve internal collaboration and, most of all, to gather and interpret data analytics in order to gain very valuable insights on the business process.

SAP C4C, SAP CFC SAP Hybris Cloud for Customers

SAP's cloud CRM portfolio for sales and customer service, composing of SAP Cloud for Sales and SAP Cloud for Service. SAP Cloud for Customer runs on the SAP Cloud Platform (CP).

For manufacturing companies, SAP C4C needs to be complemented by an integrated CPQ in order to enable a seamless sales process.

SAP CP SAP Cloud Platform (previously SAP HANA Cloud Platform)

SAP's enterprise Platform-as-a-Service with comprehensive application development services and capabilities. It enables customers to accelerate digital transformation without the need for investing into onsite infrastructure.

In Mind Cloud choose SAP Cloud Platform as it prove the best results referring the speed to value and innovation and enables us to integrate deeply into SAP's front and backend.

SEC Sales Enquiry Checklist

Enables the sales user to maintain general information about the initial enquiry from the customer. It is used to ensure that all requirements specified by customers are fulfilled. An SEC is an essential part during the sales process of manufacturing companies as the success of the sales hinders on the ability to fulfill the customers specification.

Smart Manufacturing Smart Manufacturing aims to help optimise concept generation, production and product transaction, thus helping to reduce manufacturing cost.

This aims to strength emerging business practices as well as eliminate workplace inefficiencies and hazards. Business models are easily conceptualised around each step of the development process such as invention, manufacturing and retailing.

SOP Standard Operating Procedure

A written document or instruction detailing all steps and activities included in a process or procedure. It's purpose is to attain efficiency, maintain quality output and produce performance uniformity while reducing the margin for miscommunication and failure to meet industry's regulations. Introducing various software into the business process such as sales automation can help uphold the standards of what is required by SOPs.

TTM Time to Market

The duration of time from developing a product concept to the availability of the finished product. It begins when a development project has been agreed upon and resources have been committed and ends when the final product is received by the customers.

Under ever changing market conditions, manufacturing companies are forced to constantly innovate and bring these innovations to the market in a timely manner. It provides the ability to target customer segments with new offers faster and provides the opportunity to get ahead of the competition.

TTQ Time to Quote

Average time it takes from quote submission to quote approval. This measurement can be calculated to gain insight on the number of sales hours saved and use to improve the quoting process.

Integrating a CPQ software into the business process enables a drastic change in the length of time taken to quote and eliminate human errors.


Manufacturing Software Glossary

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Celine Heng

Written by Celine Heng

Celine is responsible for In Mind Cloud's Business Development in Asia. She's an expert on what manufacturers need and why adopting a reasonable CRM with integrated CPQ is the way forward in the rapidly changing economy.

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