Glossary

Vendors will use these words at you. Here is what they mean, in plain language, and why each one matters when you are choosing something.

MRP is not MCP

MRP plans materials for manufacturing. MCP usually means Model Context Protocol in modern software: an open standard that lets AI applications connect to outside data and tools. MCP support may help an AI assistant read or act on manufacturing data, but it does not make a product an MRP system.

API

A documented programming interface that lets other software read and write your data. The difference between a system you can build around and one you are stuck inside.

Why it matters here: Frequently gated to the highest pricing tier. On MRPeasy the API is only on the $149-per-user plan; on Odoo's hosted plans it requires the Custom tier. If integration is part of your plan, price the tier that includes it.

Batch or process manufacturing

Making products from recipes or formulas in runs: soap, candles, food, beverages, cosmetics, supplements. Quantities are weights and volumes rather than counts, and yield varies.

BOM

Also called: Bill of Materials, recipe, formula

The parts and quantities needed to make one of something. In batch and process businesses the same idea is called a recipe or a formula, and is usually measured by weight or percentage rather than by count.

Why it matters here: A BOM counts components; a recipe scales proportions. Products built for discrete assembly often handle the first well and the second badly, which catches out food, cosmetics and candle makers.

Capacity planning

Also called: finite capacity, infinite capacity

Checking whether your people and machines can do the work in the time available. Finite-capacity planning refuses to schedule more than a resource can do; infinite-capacity planning will happily promise three shifts of work in one day.

COGS

Also called: Cost of Goods Sold

The recognized cost of the products you sold during a period. For a manufacturer that means the material, labour and overhead that went into them, not what you spent on inventory that is still on the shelf.

Why it matters here: This is the number your accountant needs and the one most spreadsheets get wrong. Costing that counts material only will make every product look more profitable than it is.

Discrete manufacturing

Making countable items: furniture, electronics, machines, assemblies.

ERP

Also called: Enterprise Resource Planning

A broad business system that may combine manufacturing with accounting, sales, purchasing, HR and more. An ERP with a manufacturing module can do MRP; plenty of ERPs cannot.

Why it matters here: Buying an ERP to get MRP often means buying and configuring a great deal you did not need. Sometimes that is the right trade, one system, one ledger, and sometimes it is not.

Expiry and shelf life

Dates after which material or finished goods should not be used or sold. Applies to incoming ingredients as well as to what you ship.

Why it matters here: Frequently missing, and frequently sold as a tier upgrade. Check it explicitly if you make anything perishable.

Inventory management

Tracking what is in stock and where it is. Essential, and not the same as planning, an inventory system tells you what you have, not what you will need.

Job shop

A shop where most work is quoted and made to order, one job at a time: machining, fabrication, custom woodwork. Scheduling and job costing usually matter more here than material planning.

Lead time

The time between placing an order and having the thing available to use. Supplier lead time covers purchasing; production lead time covers making. Both are needed to work backwards from a due date.

Why it matters here: This is the field that separates real planning from reorder alerts. A system that stores lead time is not the same as a system that uses it to calculate an order-by date.

Lot or batch traceability

Also called: lot genealogy

The ability to trace which incoming material lots went into which finished goods, and where those goods went afterwards. Good traceability runs both directions: forward from a suspect ingredient, and backward from a customer complaint.

Why it matters here: For food, beverage and cosmetics this is a legal requirement, not a convenience. Storing a lot number in a text field is not the same as genealogy, and the difference only becomes obvious during a recall.

Make-to-order

Beginning or finishing production in response to a specific customer order. Common in job shops, custom furniture and engineered products.

Make-to-stock

Producing ahead of orders, based on forecasts or stock targets, so goods are on the shelf when someone buys.

MCP

Also called: Model Context Protocol

Model Context Protocol, an open standard that lets AI applications connect to outside data and tools. It has nothing to do with manufacturing. MCP support may let an AI assistant read or act on your manufacturing data, but it does not make a product an MRP system.

Why it matters here: The two acronyms are one letter apart and increasingly appear in the same sentences. We record MCP support as an integration field on product pages, never as a manufacturing capability.

MES

Also called: Manufacturing Execution System

Software for running and recording what happens on the shop floor, which operator, which machine, how long, what came out. MES is execution; MRP is planning. They sit next to each other, and neither replaces the other.

MPS

Also called: Master Production Schedule

The dated plan of what finished products you intend to make and when. It is the demand that drives an MRP run when you are making to stock rather than purely to order.

MRP

Also called: Material Requirements Planning, MRP I

Material Requirements Planning. It answers three questions: what materials do I need, how many, and when. It reads your recipe or bill of materials, looks at what you have committed to make, subtracts what is already on the shelf and what is already on order, applies supplier and production lead times, and produces a dated list of what to buy or make.

Why it matters here: The letters MRP appear in a lot of product names. Very few products in this market actually do the calculation. We apply six specific tests before using the label.

MRP II

Also called: Manufacturing Resource Planning

MRP plus the rest of the factory: labour, machines, capacity and broader production planning. Where MRP asks whether you have the materials, MRP II also asks whether you have the hours and the machines.

Multi-level BOM

Also called: nested BOM, sub-assembly

A bill of materials containing parts that are themselves made from other parts, nested as deep as the product needs. Making a chair from an assembled leg unit, which is itself made from four legs and a brace, is a two-level BOM.

Why it matters here: Almost every manufacturer eventually needs this, and it is frequently gated behind a higher pricing tier, sometimes as a paid monthly add-on.

Open core

An open-source core with proprietary paid modules or a paid hosted edition. Legitimate and common, but which features are withheld is the whole question.

Open source

Published under a license that lets anyone use, modify and redistribute the software. Distinct from open core (an open core with paid proprietary parts), source available (readable but restricted), and free tier (no source at all).

Why it matters here: These four get used interchangeably in marketing. We read the license file in the repository before using the term.

Reorder point

Also called: ROP, minimum stock level, low-stock alert

A stock level that triggers an alert or an order when you cross it. Simple, useful, and fundamentally about today rather than about the future.

Why it matters here: Reorder points are frequently described as MRP. They are not. A reorder point fires when you are already low; time-phased planning tells you to act before you get there, based on demand you have not filled yet.

Routing

Also called: operations, work centre

The ordered steps a product goes through, and which machine or station does each one, usually with setup and run times attached.

Why it matters here: Setup time dominates short runs and disappears on long ones. Systems that lump setup and run time together will misprice both.

Scheduled receipts

Also called: expected receipts, on order

Stock you have already ordered but not yet received. A planning calculation that ignores these will tell you to order things twice.

Shop floor

Where the work happens, and by extension the software operators use to report progress, time and completions as it happens.

Work order

Also called: manufacturing order, production order, build order, batch

The record that authorises and tracks making a specific quantity of something. It consumes material and produces finished goods, and it is where planned production becomes actual production.