Manufacturing Terms Glossary

Production & Processes

Assembly

The process of combining component parts or materials to create a finished product. 

• Related Terms: Bill of Materials (BOM), Disassembly
• Context: An assembly tracks the components you use, the costs of any labor and overhead, costs of wastage, as well as the total cost of assembled finished products. Assemblies are intended for simple manufacturing processes (e.g. assembling items into a gift box, T-shirts into a multi-pack, putting together furniture from pre-made components). An assembly can also be used as a component within a BOM.

Disassembly

The process of breaking down products into their component parts.

• Related Terms: Unit Conversion, Component Breakdown, Inventory Management
• Context: In manufacturing, disassembly is used to recover valuable parts from returned or unsold products, convert bulk items into individual units for sale, and manage inventory by separating bundled goods into sellable components.

Production Order

A manufacturing directive that authorizes and details the production of a specific quantity of a product, including materials, processes, work centers, and schedules, within a defined timeframe. 

• Related Terms: Work Order, Manufacturing Order, Production Run
• Context: A production order is a critical document in manufacturing that initiates and oversees production activities. It ensures that materials are available, processes follow predefined workflows, and production stays on schedule. Manufacturers rely on production orders for tracking costs, managing inventory, and maintaining efficiency throughout the production cycle.

Production Run

A specific quantity of units manufactured in one continuous process as part of a larger production order. It is determined by factors like machine capacity, labor, and material availability.

• Related Terms: Batch Production, Manufacturing Cycle, Production Batch
• Context: A production run helps manage resources efficiently by breaking larger production orders into smaller, manageable segments. This approach optimizes machine use, minimizes waste, and improves quality control. For example, a factory producing 10,000 units of a product may divide the order into multiple production runs to streamline workflow and monitor defects. 

Operation

A single step or process within the overall production sequence.

• Related Terms: Production Step, Manufacturing Process, Work Center Operation
• Context: An operation defines a specific task in the manufacturing workflow, such as cutting, welding, or assembling. Each operation has assigned resources, time requirements, and quality standards, ensuring efficient production. Operations are often tracked within work centers to optimize scheduling and efficiency.

Job Costing

A manufacturing accounting method that tracks and accumulates all costs associated with a specific customer order or production run.

• Related Terms: Cost Tracking, Production Costs, Milestone Tracking, Expense Allocation
• Context: Used to monitor expenses—including inventory and services—throughout the production process, especially for custom or small-batch manufacturing. It tracks material, labor, and overhead costs for individual projects, ensuring accurate pricing and profitability analysis.

Make to Order (MTO)

A manufacturing approach where products are customized and produced specifically based on individual customer orders, with production initiated only after a sale is authorized.

• Related Terms: Customizable Products, Made-to-Order Manufacturing
• Context: This approach enables manufacturers to tailor products to customer specifications, reducing excess inventory and minimizing waste. It is commonly used in industries such as custom jewelry, furniture, and high-end electronics, where customers select features like materials, gemstones, or engravings before production begins.

Parallel Operations

Manufacturing process steps that can be executed simultaneously, allowing multiple production activities to occur at the same time.

• Related Terms: Concurrent Manufacturing, Simultaneous Production
• Context: This method improves efficiency by reducing overall production time. For example, assembling the frame and upholstering cushions in furniture production can happen concurrently, speeding up completion.

Backflushing

A method in manufacturing that automatically tracks and deducts materials from inventory only after the final product is completed, rather than at each production step.

• Related Terms: Automatic Inventory Deduction, Component Issuing

• Context: Backflushing simplifies inventory management by automatically tracking material usage after production finishes. It works well in industries with consistent material needs, like furniture manufacturing, where wood and fabric are deducted from inventory only when a finished chair or sofa is completed.

Shop Floor

The physical area where production activities take place, including workstations, machinery, and assembly lines.

• Related Terms: Work Center, Production Area, Manufacturing Floor
• Context: This is where manufacturing tasks happen, from assembling products to quality checks. It includes everything from automated machines to manual workstations. For example, in a furniture factory, the shop floor is where workers cut wood, assemble frames, and upholster chairs.

Production Scheduler

A tool or system used to create and manage production schedules, ensuring that operations are sequenced efficiently and resources are allocated optimally.

• Related Terms: Scheduling Software, Planning System, Manufacturing Schedule

• Context: Helps optimize production workflows by planning tasks based on material availability, lead times, and production constraints. It reduces downtime, balances workloads, and ensures timely order fulfillment. 

Capacity Planner

A tool that calculates and manages resource allocation to optimize production capacity and prevent bottlenecks.

• Related Terms: Resource Management, Production Planning, Capacity Calculation
• Context: Helps manufacturers determine whether they have enough resources—such as workers, equipment, and materials—to meet demand. It identifies potential shortages or excess capacity, allowing adjustments to schedules or resources.

Non-Parallel Operations

Manufacturing processes that must be performed in sequence rather than simultaneously.

• Related Terms: Sequential Operations, Linear Production Flow, Step-by-Step Process
• Context: These processes are common in industries where each stage depends on the completion of the previous one, such as food processing or electronics assembly. For example, in baking, ingredients must be mixed before baking, and baking must occur before packaging.

Cycles

The number of times an operation is repeated within a production process, defining how many times a specific step must be completed to fulfill a production order.

• Related Terms: Production Runs, Repetitive Manufacturing, Manufacturing Iterations
• Context: Used to determine how long a process takes based on capacity limits. For example, if a roaster can handle 20lb of coffee beans per cycle and an order requires 100lb, the process must run for five cycles. Helps with efficiency and scheduling in batch production.

Inventory & Materials

Bill of Materials (BOM)

A comprehensive document specifying the components, materials, and configuration options required to manufacture a specific product.

• Related Terms: Parts List, Product Structure, Material Requirements, Component List
• Context: A BOM ensures accurate assembly by outlining every component needed for production. It guides manufacturing, procurement, and inventory planning, preventing missing parts and ensuring the final product meets design specifications.

Production BOM

A specialized bill of materials that defines each step of a production operation, including duration, components, and required resources.

• Related Terms: Manufacturing BOM, Process BOM, Manufacturing Specification, Production Recipe, Production Process Blueprint
• Context: UUnlike a normal BOM, which only lists raw materials and components, a production BOM includes step-by-step operational details. It is essential for complex manufacturing processes, guiding production sequences, resource allocation, and ensuring consistency in manufacturing customizable or multi-stage products.

Components

Individual parts or materials that are combined to create a finished product.

• Related Terms: Raw Materials, Parts, Inputs, Sub-assemblies
• Context: Basic elements listed in the Bill of Materials, used in production ranging from raw materials to pre-assembled parts.

Finished Goods

Completed products that have gone through the manufacturing process and are ready for sale.

• Related Terms: Final Products, Completed Products, Manufactured Items
• Context: Items a company has produced and are ready for distribution, sale, or shipment to customers. They have passed all production stages, quality checks, and packaging and are stored in inventory until sold.

Semi-finished Products

Products at an intermediate stage of production before becoming final goods.

• Related Terms: Work in Progress (WIP), Intermediate Products
• Context: These items have undergone some manufacturing processes but require additional work before they are ready for sale. They are commonly used in multi-stage manufacturing operations, where components or subassemblies are produced separately before final assembly.

Consumption Bin

A designated storage area where raw materials or components are temporarily placed before being used in production.

• Related Terms: Staging Area, Material Holding, Production Input Storage
• Context: Unlike regular inventory stored on shelves for long-term storage, a consumption bin holds materials ready for production. These materials are inventory set aside and reclassified as work-in-progress (WIP) or pre-production stock once moved to the bin.

Output Bin

A storage location where finished or semi-finished products are placed after production before being moved to the next stage in the supply chain.

• Related Terms: Finished Goods Storage, Production Holding Area, Warehouse Staging
• Context: An output bin temporarily holds completed items before quality checks, packaging, or shipment. It helps streamline workflow by keeping products organized and ensuring they are ready before being added to inventory as final products.

Template Entry

A placeholder in a Bill of Materials that represents a customizable component or option that can be defined during the product configuration process.

• Related Terms: Customization Placeholder, Configuration Option
• Context: Used in Make to Order products, a template entry allows flexibility in product design by letting manufacturers define specific components based on customer preferences. This ensures customization without needing a separate Bill of Materials for each variation.

Phantom BOM

A special type of bill of materials representing a subassembly that is not stocked but built directly into a higher-level assembly.

• Related Terms: Virtual BOM, Intermediate Assembly, Component Explosion, Nested BOM
• Context: Phantom BOMs group parts used together without storing them separately, making production faster and reducing extra inventory tracking. They simplify planning in multi-level manufacturing and prevent unnecessary stock of intermediate assemblies.

Think of a Phantom BOM like the chassis frame of a Lego racecar. Instead of building and storing the chassis separately, you immediately attach it as part of the final build. Similarly, in manufacturing, a Phantom BOM defines a subassembly that is built directly into the final product, streamlining production.

Nested-BOMS (Multi-level Assembly)

Hierarchical Bill of Materials used for multi-level assembly production. The manufacturing process involves multiple stages or levels of component assembly.

• Related Terms: Complex Assembly, Hierarchical Manufacturing
• Context: Nested BOMs help manage complex manufacturing by breaking down products into multiple sub-assemblies, each with its own components. 

• Think of Nested BOMs like building a Lego racecar with multiple sections. You first assemble the engine, wheels, and chassis separately, then combine them into the final racecar. Each section has its own parts, but they all fit together to form the complete product.

Product Family BOMs

A bill of materials that defines multiple product variations under a single structure, simplifying manufacturing for similar products with different configurations.

• Related Terms: Configurable BOM, Variant BOM, Product Structure BOM
• Context: Helps manufacturers manage product variations without creating separate BOMs for each version. For example, a furniture company can use a Product Family BOM to manage different table models that share the same base but have different tabletop materials or leg styles.

Make-to-Order BOMs

A bill of materials (BOM) created specifically for each individual order, tailoring components to meet unique customer requirements.

• Related Terms: Custom BOM, On-Demand Manufacturing BOM, Configurable Product BOM
• Context: Used by businesses that produce custom items based on customer specifications. For example, a bicycle manufacturer may use a Make-to-Order BOM to assemble bikes with customized frames, gears, and colors based on each customer's preferences.

Manufacturing Systems & Planning

Factory Calendar

A schedule that defines operational hours and availability of production resources.

• Related Terms: Production Schedule, Operating Hours, Resource Availability
• Context: Helps manufacturers plan capacity and optimize production schedules by outlining workdays, shifts, holidays, and maintenance periods. Ensures accurate forecasting of production timelines and resource utilization.

Production Resources

Tools, machines, people, Energy and Utility, and other resource assets required for manufacturing operations.

• Related Terms: Manufacturing Assets, Production Assets
• Context: Within an MRP, production resources are tracked and allocated to ensure efficient scheduling, inventory management, and capacity planning. These systems help monitor machine availability, workforce capacity, and material usage to optimize production workflows.

Work Center

A specific location or station where manufacturing operations take place.

• Related Terms: Production Station, Manufacturing Cell, Operation Area, Production Area, Manufacturing Resource Location
• Context: Designated areas for specific manufacturing activities and resource allocation; defines the physical spaces where components are processed and products are manufactured

Work in Progress (WIP) Stage

A production stage where products are partially completed and awaiting further processing before reaching the final assembly or packaging phase.

• Related Terms: Semi-Finished Goods, In-Process Inventory, Manufacturing Workflow
• Context: Used to track partially completed products and manage inventory costs. For example, in a furniture factory, a half-built chair in the sanding phase is considered WIP, helping manufacturers monitor progress.

Co-Products

Multiple finished products that result from a single production process, often used in industries such as food processing and chemical manufacturing.

• Related Terms: Joint Products, Simultaneous Production, Multi-Output Manufacturing
• Context: In many industries, a primary product is created, and instead of discarding byproducts, they are processed into valuable co-products. For example, in cheese production, milk is separated into curds for cheese and whey, which can be sold for further processing as protein powder or animal feed.

By-Products

Secondary outputs generated during production that can be repurposed, sold separately, or disposed of as waste.

• Related Terms: Manufacturing Residues, Waste Products, Side Outputs
• Context: By-products can either be repurposed or require disposal. For example, in metal refining, slag—a stony waste material—is produced. While some slag can be used in construction, certain types may contain impurities and require costly disposal to comply with environmental regulations.

Operation Sequence

The structured order of manufacturing steps, defining the progression of production activities.

• Related Terms: Production Workflow, Manufacturing Process Flow
• Context: Establishes the logical flow of production activities, ensuring that each step is completed in the correct order.

Milestone Tracking

A method of dividing manufacturing jobs into distinct phases or achievements for tracking progress and costs.

• Related Terms: Progress Monitoring, Phase Management, Production Planning
• Context: Used in various manufacturing processes to track key stages, ensuring timely completion and efficient resource allocation. 

Co-manufacturing Location

An external location where manufacturing operations are performed by a third party.

• Related Terms: Outsourced Production Facility, Contract Manufacturing, Outsourced Production, External Manufacturing
• Context: Enables businesses to scale production by outsourcing full or partial manufacturing to third parties. Provides access to specialized capabilities and helps meet demand spikes without additional infrastructure investment. Common in industries requiring specialized equipment or certifications, such as food & beverage and cosmetics.

Production Component Tracing

The ability to track every part and product throughout the manufacturing process, from raw materials to finished products.

• Related Terms: Batch Tracking, Serial Number Tracking, Component Mapping, Traceability, Component Monitoring
• Context: Enables manufacturers to monitor inventory, ensure quality control, and quickly identify defects or recalls. Parts tracking is crucial in industries with strict regulations, where compliance and safety depend on detailed tracking.

Manufacturing Execution System (MES)

A mobile application that allows shop floor workers to input and track production tasks on-the-go.

• Related Terms: Shop Floor Management, Production Tracking
• Context: Used to manage and optimize production by collecting real-time data from machines and workers. It helps track work orders, monitor machine performance, and ensure quality control. MES bridges the gap between enterprise resource planning (ERP) systems and shop floor operations.

Traceability Concepts

Batch Traceability

The process of tracking product components using batch numbers throughout the manufacturing process.

• Related Terms: Lot Tracking, Component Mapping
• Context: Helps manufacturers track product components from raw materials to finished goods. Essential for quality control, recalls, and regulatory compliance. For example, if a defect is found in a batch of food products, batch traceability allows pinpointing and removing only affected items instead of an entire production run.

Serial Number Tracing

A tracking method that uses unique serial numbers to follow individual product components and finished goods.

• Related Terms: Product Identification, Component Tracking
• Context: Enables precise tracking of specific product units, useful for warranty claims, recalls, and service history. For example, electronics manufacturers use serial number tracing to monitor defects in individual devices rather than entire production batches.

Costing Methods

Specific approaches to tracking and calculating the cost of manufacturing products.

• Related Types:

• FIFO (First In, First Out) - Serial Number
• FIFO - Batch
• FEFO (First Expired, First Out) - Serial Number
• FEFO - Batch
• Special - Batch
• Special - Serial Number

• Context: These methods define how inventory is valued and how production costs are assigned. FIFO tracks costs based on the oldest inventory first, while FEFO prioritizes items with the earliest expiration date. Special costing methods apply to unique items, allowing businesses to track individual serial numbers or batches to ensure accurate cost allocation.

Resource Costs

Time-dependent costs associated with manufacturing resources such as labor, machinery, and overhead.

• Related Terms: Production Expenses, Operational Costs
• Context: Determines the cost of production by factoring in labor hours, machine run time, and overhead expenses. For example, a factory calculating costs for a custom furniture piece includes worker wages, machine usage, and facility expenses per hour.

Capacity Costing

A costing method that calculates the financial impact of production based on available resource capacity rather than actual output.

• Related Terms: Absorption Costing, Overhead Allocation, Production Cost Analysis
• Context: Helps manufacturers analyze fixed costs per unit based on potential production, not just actual output. This approach identifies underutilized capacity and informs decisions on pricing, resource allocation, and operational efficiency.

Work in Progress (WIP) Account

An accounting method to track costs accumulated during the production process.

• Related Terms: Production Cost Tracking, Interim Accounting
• Context: Used to monitor labor, material, and overhead costs for unfinished goods. For example, a furniture maker tracks wood, wages, and factory expenses before a table is completed and moved to finished goods inventory.

Cost of Goods Sold (COGS)

Total cost of producing goods sold during a specific period.

• Related Terms: Production Expenses, Manufacturing Costs
• Context: Used in financial analysis to determine profitability and pricing strategies. COGS includes direct costs like raw materials and labor but excludes indirect expenses such as marketing and distribution. Lowering COGS can improve profit margins.

Logistics & Supply Chain

Logistics Path

The predefined movement of raw materials and finished goods between different locations, such as storage areas, workstations, or distribution centers.

• Related Terms: Material Flow, Supply Chain Routing, Production Workflow
• Context: Defines the movement of materials and products through a facility or supply chain. An efficient logistics path streamlines handling, prevents delays, and enhances inventory tracking, ensuring seamless manufacturing and distribution.

Manufacturing Buffer

A time percentage added to protect production order deadlines and account for potential delays.

• Related Terms: Production Time Protection, Scheduling Buffer
• Context: Used to absorb unexpected disruptions like equipment failures, material shortages, or labor inefficiencies. It ensures production schedules stay on track and prevents bottlenecks that could delay order fulfillment.

Procurement Modes

Transfer Components

Transferring components from manufacturer to co-manufacturer while retaining ownership.

• Related Terms: Internal Component Transfer, Owned Component Logistics
• Context: Used when the original manufacturer manages component costs but relies on a co-manufacturer for production. This ensures inventory control while leveraging external manufacturing capacity, commonly seen in food production, electronics, and apparel industries.

Sell Components

Selling components to a co-manufacturer, transferring ownership.

• Related Terms: Component Sales, Outsourced Production Inputs
• Context: Used when the co-manufacturer takes full responsibility for components, including procurement, storage, and production. This approach reduces the original manufacturer's inventory risk and shifts cost management to the co-manufacturer, common in contract manufacturing agreements.

Procurement Scheduling

The process of aligning material purchases with production schedules to ensure timely availability of components.

• Related Terms: Supply Chain Planning, Material Requirement Scheduling (MRS), Inventory Procurement

• Context: Ensures manufacturers maintain optimal inventory levels by synchronizing procurement with production cycles. This minimizes delays caused by material shortages and reduces excess stock that ties up capital. For example, a furniture manufacturer schedules wood and fabric purchases to align with assembly timelines, preventing production bottlenecks.

Transfer Time

The estimated time required to move materials between production locations, affecting workflow efficiency and scheduling accuracy.

• Related Terms: Material Handling Time, Manufacturing Lead Time, Production Transfer Delay

• Context: In a furniture factory, if wooden panels take too long to transfer from cutting to assembly, workers must wait, slowing production. Accurate transfer times ensure materials arrive exactly when needed, preventing bottlenecks, reducing idle time, and maintaining a smooth, efficient workflow.

Dropshipping

Delivering components directly from suppliers to manufacturers or finished products directly to customers.

• Related Terms: Direct Shipping, Supplier-to-Customer Delivery
• Context: Suppliers store inventory in their warehouses and fulfill orders as they come in. Some also manufacture and white-label products, allowing retailers to customize branding. This is common in industries like beauty, fashion, and electronics.

Production Constraints

Restrictions or limitations that impact manufacturing efficiency, such as machine capacity, labor availability, or material shortages.

• Related Terms: Bottlenecks, Scheduling Limitations, Capacity Constraints
• Context: Identifying production constraints allows manufacturers to anticipate potential disruptions, such as machine downtime or labor shortages, and implement solutions like workflow adjustments, overtime scheduling, or supplier diversification. Proactively managing these constraints helps maintain efficiency and prevent costly delays.

Quality Control & Compliance

Quality Control Operation

A specialized operation type focused on inspecting products or components during manufacturing.

• Related Terms: Quality Inspection, Product Testing, Quality Assurance
• Context: Ensures products meet required standards before reaching customers. This can include visual inspections, functional testing, and measurement checks at various production stages to identify defects, maintain consistency, and comply with regulatory requirements.

Scheduler Constraints

Limitations set within the production scheduling system to ensure quality, efficiency, and compliance with manufacturing standards.

• Related Terms: Scheduling Rules, Production Constraints, Planning Restrictions
• Context: When setting constraints in the scheduler, factors like machine capacity, labor shifts, and material availability must be configured to prevent scheduling conflicts. For example, defining maintenance windows ensures machines are not scheduled for production during downtime.

Capacity Optimization

A method used to ensure production does not exceed available resources, such as labor, equipment, or materials, to maintain efficiency and quality.

• Related Terms: Resource Planning, Lean Manufacturing, Production Efficiency
• Context: Helps manufacturers align production with actual capacity, preventing overproduction, minimizing idle time, and reducing waste. For example, a factory might adjust work shifts or upgrade machinery to match production demands without overloading resources.

Authorization

The process of approving and validating manufacturing operations and changes.

• Related Terms: Approval Process, Validation, Quality Verification
• Context: In manufacturing resource planning (MRP) systems, authorization is required to release production orders, approve purchase orders, and adjust inventory levels. This ensures that only verified materials are procured, production schedules remain accurate, and costs are controlled.

Production Output

The quantity and quality of products completed during a manufacturing process.

• Related Terms: Production Yield, Manufacturing Output

• Context: Used for tracking production efficiency and performance. It helps manufacturers assess whether production meets targets, identify bottlenecks, and improve processes. Metrics like defective rates and total units produced are commonly analyzed.

Write-Off Management

The process of managing and accounting for inventory losses due to damage, theft, or internal use.

• Related Terms: Inventory Adjustment, Loss Management
• Context: Helps maintain accurate inventory records by tracking and categorizing losses. For example, a retailer may write off expired food products, while a manufacturer may write off defective materials that cannot be used in production.