Glossary of terms for manufacturing

About the Author: Ashley Thomson
Ashley Thomson

This glossary has been collated for growing manufacturing businesses, with a special nod to businesses that we coach. (Tip: If you’re specialising in the commercial sector, check out our glossary on tender terms.)

Before you dive in, I’ll say this: it’s one thing to understand the concepts of manufacturing; it’s another thing to apply them to run your business well. If you want to know how to take your business to the next level, give us a call or drop us a line.


Alternative Components (ALTS)

Components that can be substituted for those initially specified without compromising performance in an effort to reduce cost or lead times.

Assemble to order (ATO)

Assemble-to-order (ATO) is a business production strategy where products that are ordered by customers are produced quickly and are customisable to a certain extent. This often requires that the basic parts of the product are already manufactured but not yet assembled.

Available-to-Promise (ATP)

ATP is a business function that provides a response to customer order inquiries, based on resource availability. It generates available quantities of the requested product, and delivery due dates. Therefore, ATP supports order promising and fulfillment, aiming to manage demand and match it to production plans.



The concept of updating component inventory balances automatically when finished goods are in the process of production.

Bill of Materials (BOM)

the complete list of all the materials and parts that a manufacturer needs to create a certain product.

Bill-of-Materials (BOM)

Bill of Materials (BoM) – the complete list of all the materials and parts that a manufacturer needs to create a certain product.


Change Request

A request specifying proposed modifications to the manufacturing process or equipment


The process by which a new product is introduced into the general market

Computational Fluid Dynamics (CFD)

The examination of fluid flow in accordance with its physical properties such as velocity, pressure, temperature, density and viscosity.

Computer Aided Design (CAD)

a specialized graphics software used to design a part or work piece.

Configure-to-order (CTO)

Configure-to-Order (CTO) is a manufacturing process based on design selection at the time of order. A CTO process uses customer requirements, picked from a set of product features with pre-defined possible values, to select a combination of parts and assemblies to make a specific pre-defined, pre-engineered, pre-validated variant of a product.


Partial outsourcing in which companies are able to retain some of the in-house controls over the manufacturing and supply chain processes.

Contract Manufacturer (CM)

A manufacturer who contracts with companies to make certain components or products over a mutually agreed period of time.

Costed BOM

The bill of materials including the component costs for each component of the product.

Cumulative Lead Time

The longest planned length of time to accomplish the activity in question. It is found by reviewing the lead time for each bill of material path below the finished item; whichever path adds up to the greatest number defines cumulative lead time.


Design Failure Mode Effects Analysis (DFMEA)

an analytical technique used by a design responsible engineer or team as an effective means to identify potential failure modes and their associated causes, assign a risk priority number and address ways to mitigate the potential failures through enhanced process controls or increased detection controls.

Design for Manufacturing (DFM)

the practice in which ease and cost of manufacturing, as well as quality-assurance issues, are emphasized during the product design stage.

Design History File (DHF)

A document mandated by the FDA containing all of the product development documentation pertaining to a finished medical device.

Design Validation Test (DVT)

Using one design configuration to build a small quantity of units using proper production processes and put them through strenuous tests to ensure durability and reliability.

Discrete Manufacturing

Discrete manufacturing is an industry term for the manufacturing of finished products that are distinct items capable of being easily counted, touched, or seen. Discrete manufacturing involves parts and systems like nuts and bolts, brackets, wires, assemblies, and individual products. Examples of products made from discrete manufacturing include automobiles, furniture, airplanes, toys, smartphones and defence systems. In theory, a discrete product can be broken down at the end of its lifecycle so its basic components can be recycled.


Engineer Change Order/Request (ECO/ECR)

Engineer Change Orders (ECO’s) are a revision to a drawing or design released by engineering to modify or correct a part via a Bill of Material (BoM). Engineer Change Requests (ECR’s) for change can be initiated by the customer, from production, quality control or any other department.

Engineering Bill of Materials (EBOM)

Defines the finished product as it was originally designed by engineering, including the items, parts, components, sub-assemblies and assemblies.

Engineering Change Order (ECO)

a documentation packet that outlines the proposed change, lists the product or parts that would be affected and requests review and approval from the individuals who would be impacted or charged with implementing the change. They are used to make modifications to components, assemblies, associated documentation and other types of product information.

Engineering Validation Test (EVT)

Combining works-like and looks-like prototypes to ensure all functional requirements are to spec. The goal here is to finalize an intended design to weed out any hardware failures.

Estimated Annual Usage (EAU)

The quantity of a component or material used in a year, multiplied by its unit cost.


Intellectual Property (IP)

A collection of ideas to which one has rights and for which one may apply for a patent, trademark or copyright. One type of IP, industrial property, includes patents for inventions and industrial designs.


Lean Manufacturing

An act of continuous improvement within a business to be environmentally responsible by reducing the seven wastes often occurring in manufacturing so the quality, cost and production time can all be reduced when manufacturing a part.


Make-to-order (MTO)

Make to order (MTO), or made to order, is a manufacturing production strategy that typically allows consumers to purchase products that are customised to their specifications. It’s a manufacturing process in which the production of an item begins only after a confirmed customer order is received.

Make-to-stock (MTS)

Make-to-stock (MTS) is a manufacturing strategy in which production planning and production scheduling are based on forecasted product demand. Products made during one production period are used to fulfill orders made in the next production period. This means that in make-to-stock production planning, production is triggered prior to and independent of specific customer orders.

Manufacturing BOM (MBOM)

contains information on all the parts and assemblies required to build a complete and shippable product, including all of the packaging materials required to ship the finished product to the customer.

Master Production Scheduling (MPS)

The Master Production Schedule (MPS) is the disaggregated version of the sales and operations plan. That is, it states which end items or product options manufacturing will build in the future.

Minimum Order Quantity (MOQ)

The lowest quantity of a certain product that a supplier is willing to sell.


New Product Development (NPD)

The early development to finalise the product design, requiring many iterations to get the product ready to hand off to operations

New Product Introduction (NPI)

Similar to NPD, NPI focuses more on getting operations teams and supply chain partners aligned around the final released product design to effectively plan, produce and ramp to volume production.


Original Design Manufacturer (ODM)

A company which designs and produces a product according to their own specifications.

Original Equipment Manufacturer (OEM)

the company responsible for designing and building a product according to the buyer’s specifications.


Phantom Bill of Material

A Bill-of-Material (BoM) structuring technique used primarily for transient (non-stocked) subassemblies. A phantom BoM represents an item that is physically built but rarely stocked before being used in the next step or operation in manufacturing a finished good.

Process Manufacturing

Process manufacturing is a production method that uses formulas or recipes to produce goods by combining ingredients or raw materials. It’s commonly used in industries that produce bulk quantities of goods, such as food, beverage, chemical, and pharmaceutical.

Product Lifecycle Management (PLM)

the integration of all aspects of a product, taking it from conception through the product life cycle to the disposal of the product and components. This typically lowers the cost and speeds the time to market (TTM) for new product development.

Product Validation Test (PVT)

The first official production run, with units ideally passing all tests and proving suitable to sell.

Production Planning

A process to develop tactical plans based on setting the overall level of manufacturing output and other activities to best satisfy the current planned levels of sales while meeting the general business objectives of profitability, productivity, competitive customer lead times etc. expressed in the overall business plan.

Project based Manufacturing

Delivered within a project framework it’s a process used for large, often unique items or structures that require a custom design capability (engineer-to-order (ETO) ) and a process that is highly flexible and caters for a high degree of product changes and product designs.


A first or preliminary model of a product from which other forms are developed.


Reference Designator

identifies a component within an electrical schematic or on a printed circuit board (PCB)

Request for Information (RFI)

a preliminary document used by companies that don’t understand the marketplace they’re about to enter.

Request for Proposal (RFP)

A document asking vendors to propose solutions to a customer’s problems or business requirements. This usually follows an RFI.

Request for Quote (RFQ)

A detailed document drilling down to the exact specifications required by the company and the cost of the service or product. These are more specifically focused on a cost estimate that an RFP, but may also contain

Restriction of Hazardous Substances (RoHS)

restricts the use of specific hazardous materials found in electrical and electronic products.

Return Material Authorisation (RMA)

An authorisation from a manufacturer for their customer to return products that do not meet the required specifications.


Fixing defective products so they pass final inspection


Single Level BOM

Displays the assembly or sub-assembly with only one level of children and only the components directly needed to make the assembly or sub-assembly.

Six Sigma

A set of management techniques intended to improve business processes by greately reducing the probability that an error or defect will occur.

Standard Operating Procedure (SOP

A set of step-by-step instructions compiled by an organization to help workers carry out complex routine operations with efficiency, quality and uniformity.

Stock Keeping Unit (SKU)

a product code that can be used to search and identify stock on hand from lists, invoices or order forms.


A unit assembled separately but designed to be incorporated with other units into a larger manufactured product


Anyone who provides goods or services to another entity


Time to Market (TTM)

the period of time from the start of design and development work to commercial product availability.


A range of dimensions that is given for a certain part labelling how close a part must be made to that specific dimension.


The tools and equipment that help industrial personnel make product parts of consistent size, shape and quality.


A complete manufacturing function that provides all manufacturing and supply chain services.


Unit of Measure (UoM)

a physical unit, such as kg or meter, used to quantify the inventory items in stock.


Vendor Managed Inventory (VMI)

materials, components or sub-assemblies managed and replenished by on-site vendors with whom the plant has prearranged purchasing agreements. The supplier takes responsibility for the availability of supplies.


Work Centre

A specific production area consisting of one or more people and/or machines with similar capabilities that can be considered one unit for the purpose of capacity requirements planning and detailed scheduling.