ERP Glossary - B: B2B to Best Practices

B2B (Business to Business)

An acronym defining the type of vendor and customer, when the material or service being sold is not to an end consumer. Selling auto parts to Ford Motor Company, computer chips to Dell computer, or lumber to a construction company are all examples of B2B relationships.

B2C Business To Consumer

The business model when the final end user is the customer. B2C requires a different business model and transactional conventions than with business to business (B2B).

Back Flushing

The process decision to allow earlier inventory movements to occur as a result of later production reporting or inventory movement transactions. For instance, rather than require that raw material be issued to a production machine, and then consumed out of work in process by production reporting, back flushing would simply relieve the appropriate quantity of raw material from inventory when production was reported. Back flushing cannot be used when lot tracking or traceability is critical.

Bad Debts

Amounts due to accounts receivable that are judged to be unrecoverable, and are removed as a current asset and recorded as a cost.

Balance Sheet

One of the primary documents of a standard financial statement, a balance sheet attempts to demonstrate the net value of the company's assets. Normally, if the balance sheet increases each year, then stockholder wealth is increasing, and the company is growing.

Bankruptcy

A legal status requested by a company when it is no longer able to pay its debts. There are several forms of bankruptcy, ranging from a short moratorium on payments until the bankrupt firm can reorganize its finances, to selling off all the assets, and using the proceeds to pay off as many creditors as possible.

Benchmarking

The process of comparing your organization's policies, practices, and results, to an external organization's policies, practices and results, for the purposes of discovering opportunities for improvement, and/or realistic performance goals. The more similar the external company is to your organization, the more relevant the benchmark findings.

Best of Breed

Relating to ERP, "best of breed" refers to the ERP package with the best performing solution within a specific functional area. One ERP vendor might have a supply chain solution which is "best of breed", while a competitor's financial module might be recognized as "best of breed". It is almost a certainty that one software will not be "best of breed" in all categories, and you will have to decide what compromises are right for your business.

Best Practices

Best practices is a common - approaching overused - phrase used to describe the business process decisions - and subsequently the ERP configuration choices - that are either the most common in an industry, or considered to be the best solution in an industry. Because "best practices" is not a scientific standard, it's factual context can easily be overstated or misunderstood.

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Tom Stephenson

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Tom Stephenson