Computer-aided manufacturing (CAM) is software that turns a 3D design into the program that a cutting machine follows. The program tells the machine which tool to use, where to move it and how fast to turn and cut. CAM stands for computer-aided manufacturing, and the machine is usually a CNC machine.
A CNC machine does exactly what its program says. Nobody guides it by hand during the cut. The program is often written in a standard language called G-code, which is a list of moves such as "go to this point, at this speed". Writing it by hand for a complex shape would take days, so CAM software writes it. Each make of machine understands G-code a little differently, so CAM software has a setting, called a post-processor, that adjusts the program to the machine that will run it.
Imagine a workshop in Ludhiana that must cut 200 aluminium hub plates for a bicycle maker. The programmer loads the plate's CAD model into the CAM software. First, he chooses a 12 mm cutter, which removes most of the metal quickly and leaves a rough shape. Then he chooses a 6 mm cutter, which cuts the final shape slowly and smoothly. For each cutter, the software draws the path it will follow, and the programmer sets the spindle speed and the feed, which is the speed at which the tool moves through the metal. The software then shows the cut on screen. So he can see a mistake, such as the tool hitting the clamp that holds the block, before it damages the machine. Last, the software writes the G-code, and he sends it to the machine.
The choice of tool matters, because cutting tools wear out. Some CAM software comes from the tool makers themselves, who know best what their tools can do.
CAM is also used by on-demand manufacturing platforms, which program many different parts every day. Without CAM, a skilled programmer is needed to write the program for every new part, and a small workshop cannot take many different jobs. With CAM, a good programmer can prepare a new part in an hour.
CAM is different from CAD. CAD decides what the part looks like. CAM decides how a machine will make it. It is also different from the machine's own controller, which only reads the program and moves the tool.