Manufacturing Glossary for Indian Manufacturers
Simple definitions of manufacturing, ERP, GST, inventory, production, and factory-floor terms — explained for Indian MSMEs.
About This Manufacturing Glossary
Running a manufacturing business involves hundreds of technical terms related to production, inventory, accounting, GST, job work, HR, and ERP systems.
This glossary explains commonly used manufacturing and factory terms in simple language, with real factory examples, so that owners, supervisors, accountants, and plant managers all speak the same language.
Whether you are managing production on paper, Excel, or using ERP software, this glossary will help you understand the terms used daily on the factory floor.
🔎 How to Use This Glossary
- Use the search bar below to quickly find a term
- Use the A–Z filter to browse terms alphabetically
- Click any term to see its detailed explanation with examples
📚 Popular Manufacturing Terms
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ABC Analysis
Inventory & StoresA method of categorizing inventory into three classes (A, B, C) based on value and importance for optimized management.
AQL (Acceptable Quality Level)
Quality & InspectionThe maximum percentage of defects that is considered acceptable in a batch during inspection.
BOM (Bill of Materials)
Production & OperationsA comprehensive list of raw materials, components, and instructions needed to manufacture a product.
Bottleneck
Production & OperationsThe slowest process or machine in a production line that limits overall output.
Capacity Utilization
Production & OperationsThe percentage of total production capacity that is actually being used.
Contribution Margin
Costing & FinanceThe amount remaining from sales revenue after variable costs are subtracted, contributing to covering fixed costs and profit.
Cycle Time
Production & OperationsThe time required to complete one cycle of an operation or to complete a specific task from start to finish.
Dead Stock
Inventory & StoresMaterials or products that have not been used or sold for a long time and are unlikely to move in the future.
E-Invoice
GST & ComplianceA digitally signed invoice uploaded to the government portal for real-time GST verification.
E-Way Bill
GST & ComplianceAn electronic document required for movement of goods worth more than ₹50,000 within or across states.
ERP (Enterprise Resource Planning)
ERP & Digital ManufacturingSoftware that integrates all core business processes like production, inventory, sales, and accounting into a single system.
ESIC (Employee State Insurance)
HR, Attendance & PayrollA social security scheme in India providing medical and cash benefits to employees and their families.
FIFO (First In, First Out)
Inventory & StoresAn inventory management principle where the oldest stock is used or sold first.
Finite vs Infinite Scheduling
Planning & SchedulingTwo approaches to production planning based on whether capacity constraints are considered.
First Article Inspection (FAI)
Quality & InspectionA comprehensive inspection of the first production unit to verify that all specifications are met before mass production begins.
GRN (Goods Receipt Note)
Inventory & StoresA document confirming that materials ordered have been received and inspected.
HSN Code
GST & ComplianceHarmonized System of Nomenclature code used to classify goods for taxation under GST.
Input Tax Credit (ITC)
GST & ComplianceThe GST paid on business purchases that can be subtracted from the GST liability on sales.
Job Work
Job Work & OutsourcingOutsourced manufacturing processes performed by a third-party vendor on raw materials supplied by the principal manufacturer.
Job Work Challan
Job Work & OutsourcingA delivery document issued when sending material to a job worker, required for GST compliance.
Just-In-Time (JIT)
Lean & Continuous ImprovementA production strategy where materials arrive exactly when needed, reducing inventory holding costs.
Kaizen
Lean & Continuous ImprovementA Japanese philosophy of continuous, incremental improvement involving all employees.
Lead Time
Production & OperationsThe total time from receiving a customer order to delivering the finished product.
Lead-to-Ledger
ERP & Digital ManufacturingAn end-to-end process covering everything from capturing a sales lead to the final accounting entry.
MRP (Material Requirement Planning)
Planning & SchedulingA system that calculates the materials and components needed to manufacture products based on production schedules.
MTBF (Mean Time Between Failures)
MaintenanceThe average time between equipment breakdowns, indicating reliability.
MTTR (Mean Time To Repair)
MaintenanceThe average time required to repair a machine or system after a breakdown.
Non-Conformance Report (NCR)
Quality & InspectionA document that records details when a product or process does not meet specifications.
Overtime (OT)
HR, Attendance & PayrollWork hours put in by an employee beyond the standard shift hours.
PF (Provident Fund)
HR, Attendance & PayrollA retirement savings scheme where both employer and employee contribute a percentage of salary.
Poka-Yoke
Lean & Continuous ImprovementError-proofing mechanisms designed to prevent mistakes or defects in the manufacturing process.
Reorder Level
Inventory & StoresThe inventory level at which a new order should be placed to replenish stock before it runs out.
Shift Allowance
HR, Attendance & PayrollAdditional payment given to employees working in night shifts or rotating shifts.
SKU (Stock Keeping Unit)
Inventory & StoresA unique code used to identify and track specific products or materials in inventory.
Standard Costing
Costing & FinanceA predetermined cost assigned to products based on expected material, labor, and overhead costs.
Takt Time
Production & OperationsThe rate at which a finished product must be completed to meet customer demand.
TPM (Total Productive Maintenance)
MaintenanceA holistic approach to equipment maintenance involving operators in daily upkeep to maximize productivity.
Variance Analysis
Costing & FinanceThe process of comparing actual costs to standard or budgeted costs to identify differences and their causes.
WIP (Work in Progress)
Production & OperationsMaterials currently being processed on the shop floor but not yet finished goods.
Glossary Categories
This glossary covers terms across all major factory functions:
Production & Operations
WIP, BOM, Cycle Time, Capacity Utilization...
Inventory & Stores
SKU, Stock Levels, GRN, Dead Stock...
Job Work & Outsourcing
Job Card, Challan, Inward/Outward...
GST & Compliance
ITC, HSN Code, E-Invoice, GST Types...
HR & Payroll
Shift, Overtime, PF, ESIC...