Convert raw material without BOM

I tried to convert raw material to end product by doing Stock Entry.
I see this article but got confuse:

It seems step 1 is not finish, is it?
Does step 1 relates to step 2?
What is the purpose of step 1?
Can I do just with step 2?

Thank you for anyone to explain this.

You can use stock entry type as “Repack”

This conversion is not repacking. The process in reality is manufacturing. But my client doesn’t use manufacturing module (hence no BOM used) yet.
Currently they use Material Issue for raw material used.
And Material Receipt for end product produced.
But doing this seems mess up the stock valuation.

So I try to suggest as in the link. But I got confused by the article.