Manufacturing Glossary

5S is a lean method for organizing a workspace by removing unneeded items, arranging necessary items, cleaning, and maintaining these standards.

Advanced Planning and Scheduling (APS) systems use algorithms to analyze materials and capacity, creating optimized production schedules.

An Andon is a visual alert system on the shop floor that signals a problem with a process or quality.

An Application Programming Interface (API) is a set of rules that allows different software applications to communicate and exchange data with each other.

Assemble-to-Order is a production strategy where products are built from pre-made components after a customer places an order.

An assembly line is a manufacturing layout where a product moves sequentially from one workstation to the next, with a specific task performed at each stop.

A Bill of Lading (BOL) is a required legal document between a shipper and a carrier that details the goods being shipped.

A Bill of Materials (BOM) is a complete list of the raw materials, components, and assemblies required to build a product.

A bottleneck is the slowest point in a production process that limits the entire system's output.

Capacity utilization is a metric that measures the percentage of a facility's total potential production output that is actually being used.

Cellular manufacturing arranges equipment and workstations in a sequence to enable a smooth flow for a family of similar parts.

Changeover time is the total time it takes to switch a production line or machine from making one product to another.

A chargeback is a financial penalty a customer deducts from an invoice payment for a supplier's failure to meet specific operational requirements.

A Computerized Maintenance Management System (CMMS) is software that organizes, schedules, and tracks all maintenance activities for a facility's equipment.

Configure, Price, Quote (CPQ) is software that helps sales teams create accurate quotes for complex, customizable products.

Continuous improvement is the practice of making small, ongoing changes to manufacturing processes to increase efficiency and quality.

Corrective and Preventive Action (CAPA) is a structured process for investigating, fixing, and preventing quality problems.

Cost of Goods Sold (COGS) represents the direct costs of producing the goods sold by a business.

Cycle time is the total time required to complete all the steps of a process for one unit of production.

Demand planning is the process of forecasting future customer demand for products to guide production and inventory decisions.

A digital twin is a virtual model of a physical object or process that is updated with real-time data from its physical counterpart.

Discrete manufacturing is a production method that creates distinct, countable items like cars, computers, or furniture.

Downtime is any period when a machine or production line is scheduled to run but is not producing goods.

Economic Order Quantity (EOQ) is the ideal order size a company should purchase to minimize its total inventory costs, including holding and ordering costs.

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format.

Engineer-to-Order (ETO) is a production method where a product is designed and manufactured only after a customer order is received.

Enterprise Resource Planning (ERP) is a software system that integrates a company's core business functions into a single, shared database.

Failure Mode and Effects Analysis (FMEA) is a structured method for identifying and preventing potential failures in a product or process before they occur.

Finished goods are products that have completed all manufacturing processes and are ready to be sold to customers.

First Expired, First Out is an inventory management method that prioritizes using materials with the earliest expiration date first.

First Pass Yield is the percentage of products that meet quality standards after a single process step, without needing any rework or repair.

First-In, First-Out (FIFO) is an inventory management method where the first materials received are the first ones used in production or shipped.

Good Manufacturing Practice (GMP) is a system of rules and procedures that ensures products are consistently made and controlled according to quality standards.

A Human-Machine Interface (HMI) is a screen or dashboard that allows an operator to interact with and control a machine or production line.

The Industrial Internet of Things (IIoT) is a network of connected sensors and devices on industrial equipment that collect and share data over the internet.

Industry 4.0 is the use of automation and data exchange to create smart, connected manufacturing environments.

The International Organization for Standardization (ISO) is a global body that develops and publishes standards for products, services, and systems.

The Internet of Things (IoT) is a network of physical devices connected to the internet to collect and share data.

The inventory turnover ratio measures how many times a company sells and replaces its inventory over a specific period.

Job costing is an accounting method that tracks the costs of materials, labor, and overhead for a specific manufacturing job or work order.

A job shop is a manufacturing facility that produces small batches of custom products based on specific customer orders.

Just-In-Time is a production strategy where items are created or delivered only as they are needed, minimizing inventory.

Kaizen is a philosophy of making continuous, small improvements in processes and products, involving all employees.

Kanban is a scheduling system that uses visual signals to trigger the movement of materials and work through a manufacturing process.

A Key Performance Indicator (KPI) is a measurable value used to track progress toward a specific manufacturing goal.

Landed cost is the total expense of a product, including its purchase price, shipping, insurance, duties, and other fees, until it arrives at the buyer's facility.

Last-In, First-Out (LIFO) is an inventory management method that assumes the last items added to stock are the first ones to be sold or used.

Lead time is the total time elapsed from when a customer places an order to when they receive the finished product.

Lean manufacturing is a production method focused on maximizing customer value by systematically eliminating waste from processes.

Machine learning in manufacturing uses historical production data to find patterns, make predictions, and automate decisions on the shop floor.

Make to Order (MTO) is a production strategy where manufacturing starts only after a confirmed customer order is received.

Make-to-Stock (MTS) is a production strategy where items are manufactured based on demand forecasts to maintain a stock of finished goods.

A manufacturing cell is a dedicated arrangement of machines and workstations for producing a family of similar parts.

A Manufacturing Execution System (MES) is software that tracks and documents the transformation of raw materials into finished goods in real time.

A detailed plan that specifies what end products to build, how many are needed, and when they are needed.

Material Requirements Planning (MRP) is a system that calculates the materials and components needed to manufacture a product based on production schedules.

Mean Time Between Failures (MTBF) is the average time a piece of equipment operates before it breaks down.

Mean Time to Repair (MTTR) is the average time required to fix a failed piece of equipment and return it to service.

On Time In Full (OTIF) is a supply chain metric that measures whether an order was delivered to the customer at the agreed-upon time and with the correct quantity.

On-Time Delivery (OTD) is a performance metric that measures the percentage of orders shipped to customers on or before the promised delivery date.

Order-to-Cash (O2C) is the entire business process covering all steps from receiving a customer order to collecting the payment.

An Original Equipment Manufacturer (OEM) is a company that produces parts or equipment used in another company's end product.

Overall Equipment Effectiveness (OEE) is a metric that measures manufacturing productivity by combining equipment availability, performance, and quality.

Poka-Yoke is a lean manufacturing method that uses simple mechanisms to prevent human errors from occurring in a process.

Predictive maintenance uses data analysis and monitoring tools to detect potential equipment failures before they happen.

Preventive Maintenance (PM) is regularly scheduled work performed on equipment to lessen the likelihood of it failing.

Process manufacturing is a production method that creates goods by mixing ingredients or raw materials using a formula or recipe.

Procure-to-Pay is the complete process of acquiring goods or services, from the point of order to the final payment.

Product Information Management (PIM) is the process of managing all the data required to market and sell products through various distribution channels.

A production line is a factory setup where a product moves through a sequence of stations to be built.

Production planning is the process of deciding what to produce, in what quantity, and when, to meet customer demand using available resources.

Production scheduling is the process of assigning specific jobs to specific resources and work centers over a specific period of time.

A programmable logic controller (PLC) is a rugged industrial computer that automates and controls machines and processes on the shop floor.

A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

A Quality Management System (QMS) is a set of documented policies, processes, and procedures for achieving consistent product quality.

Real-time monitoring is the continuous collection and display of data from shop floor operations as they happen.

The reorder point is the inventory level that triggers a new order to replenish a specific item.

Root Cause Analysis (RCA) is a structured method used to find the underlying reason a problem occurred to prevent it from happening again.

Safety stock is extra inventory kept on hand to reduce the risk of a stockout caused by supply and demand volatility.

Sales and Operations Planning (S&OP) is a management process that aligns a company's sales forecasts with its production, inventory, and supply chain plans.

Scrap rate is the percentage of material that is wasted during a manufacturing process and cannot be used in a finished product.

The shop floor is the physical area in a manufacturing plant where production activities convert raw materials into finished goods.

Single-Minute Exchange of Die (SMED) is a lean manufacturing method for reducing the time it takes to complete an equipment changeover.

Six Sigma is a data-driven methodology for process improvement that aims to reduce defects to fewer than 3.4 per million opportunities.

A Standard Operating Procedure (SOP) is a document with step-by-step instructions for performing a routine task.

Statistical Process Control (SPC) is a method of quality control that uses statistics to monitor and manage a manufacturing process.

A Stock Keeping Unit (SKU) is a unique alphanumeric code assigned to a specific product variant to track inventory.

A stockout is a situation where the inventory for a requested item is completely depleted.

A system of software and hardware that allows operators to monitor and control industrial processes in real time.

Supply Chain Management (SCM) is the process of managing the flow of goods, data, and finances related to a product from procurement to final delivery.

Takt time is the rate at which you need to complete a product to meet customer demand.

The Theory of Constraints is a method for improving system performance by identifying and managing the single biggest limiting factor, or constraint.

A service that allows a manufacturer to outsource operational logistics, from warehousing to delivery.

Throughput is the rate at which a system produces finished goods over a specific period.

Total Cost of Ownership (TCO) is the full lifetime cost of an asset, including its purchase price, operating expenses, and disposal fees.

Total Productive Maintenance (TPM) is a strategy that makes equipment maintenance a shared responsibility for all employees to improve productivity.

Traceability is the ability to track a product's history, location, and components from raw materials to the final customer.

Value Stream Mapping is a flowcharting method used to illustrate, analyze, and improve the steps required to deliver a product or service.

A Warehouse Management System (WMS) is software that directs and optimizes warehouse operations from receiving to shipping.

A work cell is a specific arrangement of machines, tools, and personnel on the shop floor designed to produce a product or a family of similar products.

Work in Progress (WIP) is the inventory of partially finished goods waiting for completion and final inspection.

A work order is a document that authorizes and details a specific job, such as manufacturing a product or performing maintenance.