Glossary

Document AI & Compliance Automation Glossary

Plain-language definitions of the terms used across MTR, PPAP, CBAM, invoice, and KYC automation.

Manufacturing & Materials

MTR (Material Test Report): A supplier-issued document certifying the chemical composition and mechanical properties (tensile strength, yield strength, etc.) of a batch of material, used to verify compliance with a purchase order or engineering spec.
Heat Number: A unique identifier assigned to a specific batch (heat) of melted metal, used to trace material properties and test results back to the exact production batch.
EN 10204 3.1 Certificate: A type of material inspection certificate defined by the EN 10204 standard, issued and validated by the manufacturer, confirming that a product complies with the order requirements and including actual test results.

PPAP & Quality

PPAP (Production Part Approval Process): An automotive and industrial quality framework, defined by AIAG, requiring suppliers to submit documented evidence (dimensional reports, process controls, material certifications) proving a production process can consistently produce parts meeting engineering specifications.
ISIR (Initial Sample Inspection Report): A PPAP element documenting the dimensional inspection results of initial production samples, comparing measured values against the engineering drawing's specified dimensions and tolerances.
PFMEA (Process Failure Mode and Effects Analysis): A structured PPAP document identifying potential failure modes in a manufacturing process, their effects, and the controls in place to prevent or detect them.
Control Plan: A PPAP document describing the systems and processes used to control part and process characteristics during manufacturing, including inspection methods, frequency, and reaction plans.
AIAG: The Automotive Industry Action Group, the organization that publishes the PPAP framework and related quality standards used across automotive and industrial manufacturing supply chains.

Carbon & Regulatory Compliance

CBAM (Carbon Border Adjustment Mechanism): An EU regulation requiring importers of certain goods (including steel, cement, and aluminum) to report the embedded greenhouse gas emissions of those goods, with a carbon price applied based on that data.
SEE (Specific Embedded Emissions): The CBAM metric representing the greenhouse gas emissions embedded per tonne of a specific product, calculated from energy consumption, fuel use, and production volume.
CBAM Default Value: A conservative emissions figure the EU applies under CBAM when an importer cannot provide verified actual emissions data, based on the emissions profile of the worst-performing installations, typically resulting in a higher carbon cost than reporting actual data. See the CBAM timeline.
Authorised CBAM Declarant: The status an EU importer must hold to import CBAM goods above the 50-tonne annual mass threshold under the definitive regime that began on 1 January 2026. The authorised declarant carries the legal declaration and certificate surrender obligation.
CBAM Certificate: The instrument an authorised CBAM declarant purchases and surrenders to cover the embedded emissions of imported CBAM goods. Sales open on 1 February 2027, with pricing based on EU ETS allowance auction prices.
Precursor: An input material whose embedded emissions are inherited by the finished good made from it. For example, steel wire rod used to manufacture screws carries precursor emissions into the final product's CBAM calculation.
CN Code: The Combined Nomenclature code classifying a traded good in the EU customs system. CBAM obligations are scoped by CN code, so mapping shipments to the correct code determines what is in scope.
Installation: A specific production site or facility whose emissions are measured and reported under CBAM. Emissions data is prepared at installation level rather than company level, which is why a single exporter with multiple plants may need separate evidence for each.
Evidence Locker: A structured repository grouping source documents by what they prove — energy, production, precursor and export evidence — with each document linked to the specific reported fields and calculations it supports. See CBAM Copilot.

Finance & Onboarding

KYC (Know Your Customer): The regulatory process banks, NBFCs, and fintechs use to verify a customer's identity before onboarding, typically involving collection and cross-verification of government-issued identity documents.
3-Way Matching: An accounts payable control that cross-references an invoice against its corresponding purchase order and goods-receipt note before approving payment, catching quantity or price discrepancies.

Document AI & Platform Concepts

OCR (Optical Character Recognition): Technology that converts an image of text into machine-readable characters. OCR digitizes text but does not, on its own, understand the meaning or validity of the data it extracts.
Document AI: Software that reads unstructured or semi-structured documents and converts them into structured, usable data, ranging from basic OCR to modern multimodal extraction models. See: What Is Document AI?
Rule-Based Validation: A deterministic layer applied after AI extraction that cross-references extracted values against spec libraries, purchase orders, or regulatory limits using explicit, engineer-configured logic, rather than relying on model confidence alone. See: Extraction vs. Validation
HITL (Human-in-the-Loop): A workflow design where an AI system routes low-confidence extractions or failed validation checks to a human reviewer, rather than either processing everything automatically or requiring full manual review. See: HITL in Enterprise AI
Audit-Ready: A property of data whose source document, validation history, and any human review can be independently traced and verified after the fact, typically supported by an immutable audit log. See: What Does "Audit-Ready" Mean?
Golden Thread: An audit-trail concept, used in CBAM and similar compliance contexts, where every calculated or reported value is cryptographically linked back to its original source document, allowing auditors to verify data provenance end-to-end.
RBAC (Role-Based Access Control): A security model that restricts system access and permissions based on a user's role, used to control who can view or modify validated compliance data.

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