ERP glossary for manufacturers

Terms A–C

Aggregate annual turnover (AATO)

Total turnover across all GST registrations under one PAN, used to decide thresholds such as e-invoicing and ITC-04 frequency.

AQL

Acceptable quality limit: the maximum defect rate accepted in a sampled inspection lot, common in garment final inspection.

Audit trail

A record of who created or changed each document, and when.

Backward scheduling

Planning each stage of production back from the delivery date, using lead times. More on Backward scheduling

Batch

A quantity produced together under the same conditions, such as a dye batch, and tracked as one unit.

Bill of materials (BOM)

The list of materials and quantities needed to make one unit of a product, including process losses. More on Bill of materials (BOM)

Bundle

A group of cut garment pieces that moves through stitching together, used for line WIP and piece-rate wages.

Capacity planning

Checking whether machines and people can produce the planned quantity in the time available.

Challan

A document that accompanies goods without a sale, such as a delivery challan for job work. More on Challan

Cloud ERP

ERP hosted in a data centre and used over the internet. More on Cloud ERP

Consignee

The party to whom goods are delivered, which may differ from the buyer who is billed.

Cost sheet

The actual cost of an order or lot: material, conversion, job work, rejection and overheads.

Count

The fineness of yarn, such as 30s, used as an attribute of yarn stock in spinning and knitting.

Terms D–G

Delivery schedule

A customer's list of quantities and dates, often monthly from OEMs, against which dispatch is made.

Discrete manufacturing

Making countable units from parts, such as fasteners or auto components. More on Discrete manufacturing

Dispatch

Sending finished goods to a customer, the point at which invoice, e-invoice and e-way bill are created.

Doff

A completed set of output removed from a machine, such as a fabric piece from a loom or cones from a ring frame.

E-invoice

A B2B invoice registered on the government Invoice Registration Portal, which returns an IRN and signed QR code. More on E-invoice

E-way bill

An electronic document required for movement of goods above a value threshold, with invoice and vehicle details. More on E-way bill

Edition

A version of an ERP built for one trade, with that trade's masters, documents and reports. More on Edition

ERP

Enterprise resource planning: software that runs every department on one shared database. More on ERP

Finished goods

Products that have completed production and inspection and are ready for dispatch.

Gate entry

The record made when a vehicle or material enters or leaves the plant. More on Gate entry

Goods receipt note (GRN)

The document recording material received against a purchase order, which creates stock.

Greige (grey) fabric

Fabric straight from knitting or weaving, before dyeing or finishing.

Gross requirement

The total material an order needs, before stock and open orders are subtracted. More on Gross requirement

Terms H–L

Heat number

The identifier of a steel melt, carried on material and parts for traceability back to the mill certificate.

HSN code

Harmonised System of Nomenclature code that classifies goods for GST.

Implementation

The project that takes a business from its old records to running on an ERP. More on Implementation

Inspection plan

The checks to be made on an item or drawing at receipt, in process and before dispatch.

Inventory

Stock of raw material, work in progress and finished goods, by item, lot and location.

IRN

Invoice Reference Number, the unique number returned by the Invoice Registration Portal for an e-invoice.

ITC (input tax credit)

GST paid on purchases that can be set off against GST payable on sales.

ITC-04

The GST form in which a principal reports goods sent to and received from job workers. More on ITC-04

Job card

An instruction to produce a quantity through a routing, and the record of what actually happened.

Job work

Processing by an outside party on material owned by the principal manufacturer. More on Job work

KPO

Knitting programme order: the instruction to knit a fabric quality from specified yarn lots. More on KPO

Lead time

The time needed to buy or make an item, used to schedule when to start.

Lot

A quantity of material with one identity, such as a yarn lot or production lot, tracked through the process.

Terms M–P

Master data

The reference records an ERP depends on: items, parties, BOMs, routings, ledgers.

Mixing

In spinning, the blend of cotton bales or fibres planned for a lot of yarn. More on Mixing

Module

A part of an ERP responsible for one set of records, such as inventory or quality. More on Module

MRP

Material requirements planning: calculating what material to buy or make, how much and when. More on MRP

Net requirement

Gross requirement minus stock and material on order, plus any safety stock. More on Net requirement

On-premise ERP

ERP installed on a server owned by the business, usually in the plant. More on On-premise ERP

Piece rate

Wages paid per unit of output rather than per day or month, common in garment and engineering units.

PPAP

Production part approval process: the evidence an auto-component supplier gives an OEM that a part meets requirements. More on PPAP

PPM

Parts per million defective, a quality measure used by OEMs to rate suppliers.

Principal

Under GST job work, the registered person who owns the material sent for processing.

Process manufacturing

Production where material changes form by weight or volume, such as dyeing or spinning. More on Process manufacturing

Process loss

The expected reduction in quantity during a process, recorded in the BOM.

Purchase order (PO)

An approved order to a supplier for material or services at agreed terms.

Terms Q–S

QC hold

A status that blocks a lot from issue, packing or invoicing until it passes inspection.

Rack (bin) location

The exact storage place of a lot in the store, recorded so it can be found and picked. More on Rack (bin) location

RDSO

Research Designs and Standards Organisation, which approves vendors and standards for Indian Railways. More on RDSO

Recipe

In dyeing, the dyes and chemicals per kilo of fabric for a shade, scaled to the batch weight. More on Recipe

Rejection

Output that fails inspection and is scrapped, downgraded or sent for rework.

Reprocess

Running a failed batch through a process again, such as re-dyeing, recorded as a cost.

RGP and NRGP

Returnable and non-returnable gate passes for material leaving the plant without a sale.

Routing

The sequence of operations a product follows, with the machines or work centres used.

Safety stock

Extra stock kept to protect against late supplies or demand changes.

Sale order

A confirmed customer order with items, quantities, prices and delivery dates.

Shade lot

A group of dyed material with the same shade, kept together so a customer's order matches.

Shortage

The quantity missing between what was sent to a job worker and what came back, beyond the allowance. More on Shortage

Size ratio

The proportion of sizes in a garment order or carton, used in cutting and packing.

Terms T–Z

Total cost of ownership (TCO)

The full cost of an ERP over several years, including licences, implementation, support and hardware. More on Total cost of ownership (TCO)

Traceability

The ability to follow a product back to the lots, heats, machines and people that made it.

Unit of measure (UOM)

The unit in which an item is counted, such as kg, metre, piece or dozen, with conversions between them.

Work centre

A machine, line or group where an operation is performed and capacity is planned.

Work in progress (WIP)

Material issued to production that is not yet finished goods.

Yield

Good output as a share of input, the key efficiency number in process manufacturing.

Questions buyers ask