Manufacturing ERP Glossary
Clear definitions of 20 essential manufacturing and ERP terms every Indian MSME manufacturer should know. From BOM and MRP to ITC-04 and Kanban, each term explained with Indian context.
Manufacturing & Production
Bill of Materials (BOM)
Structured list of raw materials, components, and sub-assemblies needed to manufacture a finished product.
MRP
Material Requirements Planning. Calculates what materials are needed, how much, and when, based on BOM and demand.
Work Order
A document authorizing the shop floor to manufacture a specific quantity of a product by a target date.
Production Routing
The sequence of operations, work centers, and times required to manufacture a product.
Job Work
Sending material to a third party for processing like heat treatment, plating, or machining, then receiving it back.
Phantom BOM
A non-stocked sub-assembly used for BOM structuring that passes straight through to the parent.
Kanban
A visual pull-based signalling system that triggers replenishment only when material is consumed.
Inventory & Planning
Safety Stock
Buffer inventory held to protect against demand or supply variability and prevent stock-outs.
Reorder Level
Inventory threshold that triggers a new purchase order to replenish stock before it runs out.
EOQ
Economic Order Quantity. The order size that minimizes combined ordering and holding costs.
FIFO vs LIFO
Inventory valuation methods: First-In-First-Out or Last-In-First-Out for costing consumed stock.
Purchasing & Receiving
GRN
Goods Receipt Note. A document confirming receipt of goods from a supplier against a purchase order.
3-Way Match
Matching purchase order, GRN, and supplier invoice before approving payment.
Quality Control
GST & Indian Compliance
GST E-Invoice (IRN)
Electronic invoice registered on the IRP portal that returns an Invoice Reference Number and QR code.
E-Way Bill
Electronic document required for movement of goods above INR 50,000 in value.
ITC-04
Quarterly return filed by manufacturers for goods sent to and received from job workers.
HSN Code
Harmonised System of Nomenclature code for classifying goods under GST.
SAC Code
Services Accounting Code for classifying services under GST.