Manufacturing Glossary — Plain-English Definitions

A method of categorising inventory items into three groups — A (high value), B (medium value), and C (low value) — based on their contribution to total spend or revenue. It helps manufacturers focus attention on the items that matter most. Nstock surfaces usage and cost data that makes running an ABC analysis straightforward.

A supplier-issued declaration listing which major allergens a food, beverage, or cosmetic ingredient contains, may contain through cross-contact, or is free from — used to support accurate product labeling and prevent allergic reactions. Allergen statements are often requested during customer audits and retailer onboarding. Nstock supports attaching an allergen statement as a typed document to a material lot, so the declaration travels with that lot from receiving through to the finished product.

A chronological record of every action taken in a system — who did what, when, and what changed. Audit trails are essential for compliance, quality investigations, and fraud prevention. Nstock logs every inventory movement, adjustment, and user action automatically with full user attribution.

An inventory valuation approach that calculates the cost of goods sold using a running average of all purchase prices paid for a given item. It smooths out price fluctuations compared to FIFO or LIFO. Nstock supports average cost valuation alongside FIFO for flexible reporting.

A per-unit cost that combines the actual FIFO cost of units you can supply from on-hand inventory with the current bill-of-materials cost of units you would still need to produce. Blended cost matters when quoting quantities larger than current stock. Nstock calculates it automatically on sales quotes so margins stay honest at any quantity.

A customer order that cannot be fulfilled immediately because stock is unavailable, but will be shipped once inventory is replenished. Backorders indicate demand that outpaces supply and can damage customer relationships if unmanaged. Nstock's reorder point alerts help you catch low stock before backorders occur.

The use of barcode readers or mobile cameras to capture product or lot information quickly and accurately during receiving, picking, or cycle counting. Scanning eliminates manual entry errors and speeds up warehouse operations. Nstock supports barcode scanning for cycle counts and inventory movements.

A structured list of all raw materials, components, and sub-assemblies required to manufacture a finished product, including quantities and units of measure. A BOM is the foundation of production planning and costing. Nstock lets you build multi-level BOMs with yield percentages and auto-deducts components when a production run completes.

A manufacturing method where goods are produced in defined groups (batches) rather than continuously. Each batch moves through production stages together and can be tracked as a unit. Nstock tracks batch production runs from start to finish, automatically updating component inventory and recording output.

Extra inventory held above the expected demand to absorb unexpected spikes in sales or delays in supply. Buffer stock is closely related to safety stock and protects against uncertainty. Nstock's inventory projection helps you calibrate the right buffer stock level based on historical usage.

The featured "Add to Cart" / "Buy Now" placement on an Amazon product listing when multiple sellers offer the same item — winning it drives the majority of sales on that listing, based on factors like price, fulfillment method, and seller performance. Losing the Buy Box because of a stockout is one of the most common ways Amazon sellers lose sales without realizing it. Nstock's Amazon integration syncs FBM order fulfillment and imports FBA orders for reporting, so a manufacturer can see stock and sales activity across channels in one place instead of only inside Seller Central.

A document issued by a supplier or lab confirming that a material or product lot meets specified quality standards. CoAs are required in food, pharma, and cosmetics manufacturing. Nstock lets you attach CoA documents directly to individual material lots, alongside other document types like SDS, CoC, and certifications, for instant retrieval during audits.

A supplier-issued document stating that a shipped material or part meets the purchase order's specifications and any referenced industry standards, without necessarily including lab test data. A CoC is common in contract manufacturing and regulated assembly work, where a customer needs written assurance a lot conforms before it enters production. Nstock supports attaching a CoC as a typed document on the receiving material lot, so it travels with that lot through production and into any finished-goods record.

A continuous inventory auditing process where a subset of items is counted on a rotating schedule rather than shutting down for a full physical count. Cycle counts catch discrepancies early and maintain inventory accuracy. Nstock supports barcode-assisted cycle counting with automatic discrepancy flagging.

The direct costs attributable to producing the goods sold during a period — including materials, labour, and overhead. COGS is subtracted from revenue to calculate gross profit. Nstock calculates COGS automatically per product using your BOM costs and chosen valuation method.

The total cost of holding inventory over a period, including storage, insurance, spoilage, obsolescence, and the opportunity cost of tied-up capital. Carrying costs typically range from 20–30% of inventory value per year. Understanding carrying cost helps manufacturers find the optimal order quantity.

Inventory owned by a supplier but held at the buyer's location. Payment is made only when the items are used or sold. Consignment arrangements reduce the buyer's cash outlay but require careful tracking to reconcile ownership and usage accurately.

A document, often issued or endorsed by a chamber of commerce or trade body, certifying the country in which a material or product was manufactured or produced. Country of origin documentation is often required for customs clearance, import/export compliance, and increasingly for retailer or customer sourcing disclosures. Nstock lets you attach a Country of Origin Certificate as a typed document to a material lot, keeping it available alongside the lot's other compliance paperwork.

DNS records (SPF, DKIM, and DMARC) that prove an email service is authorized to send mail on behalf of your company's domain. Authenticated domains dramatically improve deliverability and prevent spoofing. Nstock uses domain authentication so purchase orders and sales quotes can send from your own company email address instead of a generic system address.

Inventory that has not sold or been used within a defined period and is unlikely to move — often due to obsolescence, over-purchasing, or a discontinued product. Dead stock ties up capital and storage space. Nstock's inventory reports help identify slow-moving and zero-movement items before they become a write-off.

The process of estimating future customer demand using historical sales data, market trends, and statistical models. Accurate forecasting reduces overstock and stockouts. Nstock applies AI-driven demand signals to help you order the right quantities at the right time.

A metric that measures how many days, on average, it takes to sell or consume the inventory on hand. A lower DIO indicates faster turnover and less capital tied up in stock. DIO is calculated as (average inventory / COGS) × number of days in the period.

A formula-based model that calculates the optimal order quantity that minimises total inventory costs (ordering cost plus carrying cost). EOQ balances the cost of ordering too frequently against the cost of holding too much stock. Use EOQ alongside Nstock's reorder point data to set cost-effective purchase quantities.

The practice of recording and monitoring the expiration dates of perishable materials or finished goods to ensure items are used or sold before they expire. Expiry tracking is critical in food, pharma, and beauty manufacturing. Nstock tracks expiry dates at the lot level and alerts you before stock expires.

Amazon's fulfillment service: sellers ship inventory in bulk to Amazon's warehouses, and Amazon handles storage, picking, packing, shipping, and customer service for each order. It shifts fulfillment work off the seller but means the seller no longer directly controls when and how that stock moves. Nstock can import FBA orders for sales and COGS reporting, but never deducts its own inventory for them, since that stock already left the seller's warehouse when it shipped to Amazon.

The alternative to FBA: the seller (or their own 3PL) picks, packs, and ships each Amazon order directly, rather than Amazon doing it from its own warehouses. It gives sellers more control over fulfillment and shipping cost but means inventory accuracy depends entirely on the seller's own system. Nstock syncs FBM orders the same way it syncs Shopify or WooCommerce orders — importing the order and, if turned on, deducting finished goods from inventory automatically on fulfillment.

An inventory valuation and rotation method where the oldest stock is consumed or sold first. FIFO is the most common method for perishable goods and generally reflects real-world product flow. Nstock supports FIFO costing for accurate inventory valuation and COGS reporting.

Products that have completed the manufacturing process and are ready for sale or shipment to customers. Finished goods inventory is distinct from raw materials and WIP (Work in Progress). Nstock tracks finished goods quantities in real time and syncs stock levels to Shopify.

A measure of how closely predicted demand matches actual demand, typically expressed as a percentage. High forecast accuracy reduces both excess inventory and stockouts. Reviewing forecast accuracy over time helps manufacturers continuously improve their ordering decisions.

A document created when a delivery of goods is received from a supplier, recording what was delivered, in what quantity, and in what condition. GRNs are matched against purchase orders to verify accuracy. In Nstock, receiving stock against a purchase order creates the equivalent of a GRN and updates inventory automatically.

A product made from raw materials that is itself consumed to make a finished good — for example, bulk unpackaged gummies that later become a branded 30-pack. Intermediate products carry their own SKU, BOM, and rolled-up cost, and can also be sold directly (e.g. to white-label buyers). Nstock supports multi-level BOMs so intermediate costs flow accurately into finished goods.

The degree to which recorded inventory quantities match the physical quantities on hand, usually expressed as a percentage. High inventory accuracy is foundational to reliable production planning and order fulfillment. Nstock's real-time tracking and cycle count tools help manufacturers maintain 98%+ accuracy.

A ratio that measures how many times inventory is sold or used within a period (usually a year). Higher turnover indicates efficient use of capital; low turnover signals overstock or slow sales. Nstock's reports surface turnover by product so you can spot underperforming SKUs quickly.

The process of assigning a monetary value to unsold or unused inventory on hand, using a method such as FIFO, LIFO, or average cost. Accurate valuation is required for financial reporting and tax purposes. Nstock provides real-time inventory valuation dashboards using your chosen costing method.

A production strategy that schedules the receipt of materials and components to arrive exactly when they are needed in the production process, minimising on-hand inventory. JIT reduces carrying costs but requires reliable suppliers and accurate lead time data. Nstock's lead time tracking and reorder alerts support a JIT approach.

A visual inventory management system that uses cards or signals to indicate when more stock should be ordered or produced. Kanban is common in lean manufacturing and links directly to actual consumption rather than forecasts. Min/max inventory settings in Nstock can replicate the core logic of a kanban pull system.

The total time from placing a purchase order to receiving the goods and having them available for use. Lead time includes supplier processing, production, and transit time. Nstock records supplier lead times so reorder point calculations account for how long it takes to replenish each material.

An inventory costing method where the most recently purchased or produced items are recorded as sold or consumed first. LIFO is permitted under US GAAP but not under IFRS. It can reduce taxable income when prices are rising but rarely reflects actual physical product flow.

A unique identifier assigned to a batch of materials or finished goods produced or received together under the same conditions. Lot numbers enable manufacturers to trace a specific group of items through the supply chain. Nstock assigns and tracks lot numbers from receipt through production to shipment.

The systematic recording of which lot of materials was used in which production run, and where finished goods from a given lot were shipped. Lot tracking is essential for quality recalls and regulatory compliance. Nstock provides full forward and backward lot traceability across your entire operation.

The end-of-day (or end-of-batch) summary document a shipper submits to a carrier, listing every package being handed off for pickup along with tracking numbers and label details — carriers use it to reconcile what they physically received against what was billed. Manifesting is a shipping-software function: tools like ShipStation generate and submit manifests as part of the label workflow, and it stays a shipping-side concept rather than something an inventory system needs to manage.

Routing shipments across more than one carrier — UPS, FedEx, USPS, regional carriers, and others — rather than committing to a single carrier contract, usually to compare rates per shipment or route around one carrier's service issues. Shipping platforms like ShipStation exist largely to make multi-carrier shipping practical from one interface instead of logging into each carrier separately. Nstock doesn't manage carrier relationships directly; its ShipStation integration pulls back whichever carrier a given order actually shipped with, along with the tracking number, onto the matching order record.

Amazon's program that lets sellers use FBA inventory to fulfill orders placed on channels outside Amazon — a Shopify store or wholesale order, for example — using Amazon's warehouses and shipping network. It blurs the line between "Amazon inventory" and "everywhere-else inventory," which is exactly the reconciliation problem multi-channel manufacturers run into. Nstock's Amazon integration keeps FBM and FBA orders distinct for inventory and reporting purposes, so that split stays visible instead of collapsing into one blended number.

A bill of materials whose components include other manufactured items (intermediate products) rather than only raw materials — creating a nested recipe structure. Multi-level BOMs let cost and traceability roll up from raw materials through intermediates into finished goods. Nstock calculates rolled-up costs recursively across every BOM level.

A plan specifying what finished products will be manufactured, in what quantities, and by when — typically covering a rolling time horizon of weeks or months. The MPS drives material requirements planning. Nstock's production run scheduling and inventory projection features support MPS-style planning for growing manufacturers.

A replenishment policy where stock is reordered when it falls to a defined minimum level and replenished up to a defined maximum level. Min/max is simple to operate and effective for stable-demand items. Nstock lets you set min and max thresholds per SKU and alerts you when stock hits the minimum.

A planning system that calculates what materials are needed, in what quantities, and by what dates to meet a production schedule — based on BOMs, current inventory, and open orders. MRP prevents material shortages and overstock simultaneously. Nstock's BOM-linked production planning provides the core logic of lightweight MRP.

Inventory held in excess of what is needed to meet demand within a reasonable period. Overstock increases carrying costs and risks obsolescence. Nstock's AI-powered inventory projection helps identify overstock situations before they become costly write-offs.

The end-to-end process of receiving a customer order, picking and packing the items, and shipping them to the customer. Efficient fulfillment depends on accurate inventory data and streamlined workflows. Nstock tracks order fulfillment status from confirmed to shipped with real-time inventory reservation.

A purchase order that has been issued to a supplier but for which goods have not yet been fully received. Open POs represent committed future inventory and future cash outflows. Nstock tracks all open purchase orders so you can see incoming stock alongside current on-hand levels.

The number of additional units of a product you could manufacture right now from current raw material stock, calculated through the bill of materials — including nested intermediate products. Producible quantity tells sales what they can safely promise beyond finished goods on hand. Nstock shows on-hand and producible quantities side by side on sales quotes.

An inventory accounting method that continuously updates stock records in real time with every transaction — every receipt, sale, adjustment, or production run. Perpetual inventory gives an always-current view of stock levels without periodic physical counts. Nstock operates on a perpetual inventory model by design.

A document or screen that directs warehouse staff to pick specific items and quantities from specific locations to fulfil an order or production run. Accurate pick lists reduce picking errors and improve throughput. Nstock generates pick lists based on sales orders and production requirements.

A single manufacturing execution that produces a defined quantity of a finished product, consuming raw materials according to the product's BOM. Production runs are the primary unit of manufacturing activity. In Nstock, starting a production run automatically deducts component inventory and records the output.

A formal document issued by a buyer to a supplier authorising the purchase of specific goods at agreed prices and quantities. POs create a paper trail and form the basis of supplier invoicing and goods receiving. Nstock lets you create and track POs, with stock levels updating automatically when goods are received.

A set of procedures used to inspect and verify that materials and finished products meet defined quality standards before they are used in production or shipped to customers. QC can include visual inspection, lab testing, and document review. Nstock supports QC workflows by linking CoAs and test results to individual lots.

The current physical quantity of a specific item that is in stock and available for use or sale. Quantity on hand is the most fundamental inventory data point. Nstock displays real-time quantity on hand for every SKU, updated instantly with every transaction.

Unprocessed inputs purchased from suppliers that will be transformed into finished goods through the manufacturing process. Raw materials are the first stage of the manufacturing inventory cycle. Nstock tracks raw material quantities, costs, lot numbers, and supplier details in one place.

The stock level at which a new purchase order should be placed to replenish inventory before it runs out, calculated as (average daily usage × lead time) + safety stock. Setting accurate reorder points prevents stockouts without excess carrying costs. Nstock calculates and displays reorder points and alerts you when stock hits them.

The practice of comparing shipping rates across multiple carriers and service levels for a given package before choosing which one to book, to get the lowest cost or fastest delivery for that shipment's weight, dimensions, and destination. It's typically done at the point of label purchase rather than negotiated once in advance, since the cheapest carrier can vary order by order. Rate shopping happens in shipping software like ShipStation; Nstock's ShipStation integration records whichever carrier was ultimately chosen, along with the tracking number, on the matching Nstock order.

The first, lowest-commitment stage of vetting a prospective supplier — asking for company background, certifications, production capacity, and references before any pricing discussion. An RFI answers "who are you," filtering out suppliers who aren't worth further evaluation before more time is invested. Nstock's supplier vetting pipeline treats the RFI stage as fully optional, fillable at any point.

The second stage of supplier vetting, asking a prospective supplier how they would actually work with you — lead times, minimum order quantities, payment terms, and quality certifications. An RFP answers "how would you serve us," surfacing dealbreakers before a formal price quote is requested. Nstock's vetting pipeline supports RFP details independently of RFI or RFQ.

The final stage of supplier vetting, requesting itemized pricing on specific materials at the quantities actually ordered, with lead times attached. An RFQ answers "what would it cost," producing a number directly comparable against current suppliers or other prospects. Nstock lets an RFQ's line items reference existing catalog materials for direct cost comparison.

A formal price offer sent to a prospective buyer listing products, quantities, and sell prices before an order is placed. In manufacturing, a good quote is built against live cost data so margins are known at the moment of quoting. Nstock sales quotes show your team real-time COGS, margin, and availability, while the buyer sees only sell prices.

A standardized document from a chemical or material manufacturer describing a substance's hazards, safe handling procedures, and emergency measures — required for many industrial and hazardous materials under OSHA and similar regulations globally. SDS documents (formerly called MSDS, or Material Safety Data Sheets) are often requested during safety audits, by employees handling the material, or by shipping and customs authorities. Nstock lets you attach an SDS as a typed document directly to a material lot, alongside its Certificate of Analysis and other compliance paperwork.

Extra inventory held as a buffer against unexpected demand spikes or supply delays, above and beyond the quantity needed for normal operations. Safety stock reduces stockout risk but increases carrying costs. Nstock's demand and usage analytics help you calibrate the right safety stock level for each material.

The practice of monitoring a package's progress from pickup through delivery using carrier scan data — typically stages like label created, accepted, in transit, out for delivery, and delivered. For manufacturers, inbound shipment tracking (materials arriving from suppliers) matters just as much as outbound tracking to customers, since production scheduling depends on knowing when raw materials will actually land. Nstock puts a live, animated shipment tracker directly on every purchase order, with a separate progress bar per box for split shipments and full carrier checkpoint history.

The carrier-generated document — barcode, tracking number, service level, and addresses — affixed to a package that a carrier scans to move it through their network; buying one is what actually commits a shipment and its cost. Label purchase happens in the shipping tool (for example, ShipStation), not the inventory system. Nstock's role via its ShipStation integration is to receive back what the label decided — the tracking number, the carrier, and the shipped status — and apply that to the originating order, rather than to buy the label itself.

A unique alphanumeric code assigned to a specific product variant to distinguish it from all other items in inventory. SKUs enable precise tracking and ordering of each distinct product configuration. Every item in Nstock is identified by its SKU, enabling accurate tracking across locations and transactions.

A manual correction to recorded inventory quantities to reconcile the system record with the physical count — for example, after a cycle count finds a discrepancy. Stock adjustments should always be logged with a reason. Nstock records every stock adjustment in the audit trail with the user, timestamp, and reason.

A situation where demand for a product or material exceeds available supply, leaving zero units on hand. Stockouts disrupt production, delay orders, and damage customer relationships. Nstock's low-stock warnings and AI reorder advisor are designed to alert you before a stockout occurs.

The time between placing a purchase order with a supplier and having the goods available for use. Supplier lead time is a critical input for calculating reorder points and safety stock. Nstock stores lead times per supplier so reorder calculations always reflect current reality.

A manufacturer-issued document describing a material's physical and chemical properties, recommended use, and handling guidance — distinct from an SDS, which focuses on safety hazards rather than performance characteristics. TDS documents help formulators and production teams confirm a material behaves as expected before it's used in a batch. Nstock lets you attach a TDS as a typed document to a material lot, keeping formulation reference data available wherever that lot is used.

The ability to track the history, location, and use of a material or product through all stages of the supply chain — from raw material source to end customer. Traceability is a regulatory requirement in many industries and essential for efficient product recalls. Nstock provides full lot-level traceability forward and backward through your production records.

The combined ability to follow a material or product forward through the supply chain (tracking) and backward to its origin (tracing) — often used interchangeably with traceability, though "track and trace" more specifically refers to the physical movement and scanning events themselves. Track and trace systems typically rely on lot numbers, barcodes, or serial numbers scanned at each handoff point. Nstock builds track-and-trace into every lot automatically, recording each receipt, production consumption, and shipment against the lot number.

Another term for inventory turnover rate — the number of times inventory is sold, consumed, or replaced in a given period. A high turn rate indicates lean, efficient operations; a low turn rate points to overstock or slow-moving items. Nstock's analytics surface turn rate by SKU to help you act on the data.

The standard quantity used to express and track an inventory item — for example, kilograms, litres, units, boxes, or metres. Using consistent UOMs across purchasing, production, and sales prevents costly conversion errors. Nstock supports flexible UOMs per item and handles conversions within BOM recipes.

The difference between expected and actual inventory quantities or costs — often surfaced during cycle counts, production runs, or period-end reconciliation. Unexplained variances can indicate shrinkage, waste, or data entry errors. Nstock flags variances automatically during cycle counts and production so you can investigate promptly.

The process of selecting, evaluating, and maintaining relationships with suppliers — including tracking performance, lead times, pricing, and purchase history. Good vendor management reduces supply risk and improves purchasing decisions. Nstock centralises supplier records, purchase orders, and delivery history in one place.

Producing goods that another company sells under its own brand — typically unbranded or bulk versions of a product. White-label deals are usually quoted on intermediate products with their own SKU and cost structure. Nstock supports quoting white-label and wholesale buyers directly from intermediate product SKUs with real-time cost and margin visibility.

Inventory that has entered the production process but has not yet been completed as a finished good. WIP represents capital tied up between raw materials and finished goods. Nstock tracks batch production status so you always know how much WIP is in your operation at any given time.

The systematic recording of materials lost during production — by quantity, reason, and associated cost. Waste tracking reveals where yield losses occur and quantifies the financial impact. Nstock logs waste by material and reason on every production run so you can identify patterns and reduce costs.

An inventory costing method that calculates the cost of each unit by dividing the total cost of all units available by the total number of units — updated each time new stock is received. Also called the moving average cost method, it is less volatile than FIFO in fluctuating-price markets.

The proportion of input material that successfully becomes usable output in a production process, expressed as a percentage. A yield of 90% means 10% of input is lost to waste or rework. Nstock lets you record yield percentages on BOMs so production run quantities and material deductions account for expected losses.