In this case it appears that the material is a component of an item that is being manufactured for sale or to be used in another process. So the final product could have a Bill of Materials, and a operation resulting in a finished item. Perhaps this somewhat similar question will help:
We have already set Conversion Factor but still when we create a Work Order for manufacturing it is converting on one to one basis meaning if we set the Quantity to 1000 pieces it is issuing 1000 Kg from store instead of 6.76 Kg.
After looking at your sample it seems we are making some mistake somewhere.
Within the manufacturing process, the UOM would be Stock UOM in ERPNext. If you need to convert between steps then you may need to customize or build a solution for it. If your requirement is to convert UOMs of Purchase Order etc then that would work. I agree with you that some industries do have the requirement to convert within processes.
Thanks for your input. I will try my hand at customizing it.
But actually I am surprised that even after more then a decade ERPNext has not solved this flaw in UoM. Or it is only me who has such a typical requirement.
Just recently I read a blog about MultliColor Steel converting from SAP to ERPNext. Such a company would surely require such a feature. It would be interesting to see how they have managed this short coming of ERPNext.
There are work arounds with different types of Stock Entries available in the system. However, I do not have enough visibility into your manufacturing processes to suggest anything tangible at this point.