From Factory Floor to Invoice: A Practical Guide to Odoo Manufacturing (MRP) for Entrepreneurs

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Why entrepreneurs pick Odoo as their MRP

• One platform, modular growth. Start with Manufacturing + Inventory; add Quality, Maintenance, PLM, Accounting, and e-commerce when you need them.
• Real-time numbers. Stock levels, WIP, throughput, and margins update automatically.
• Accounting that matches reality. Automated valuation and Work-In-Progress (WIP) keep your balance sheet and P&L clean—no spreadsheet acrobatics.

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Key manufacturing terms (and how they work in Odoo)

• Manufacturing Order (MO)
  What it is: A job to produce a finished good (FG) in a quantity by a due date.
  In Odoo: MO holds the product, BoM, operations (work orders), reservations of components, time tracking, quality checks, and final costing. Statuses: Draft → Confirmed → In Progress → Done.
• Bill of Materials (BoM)
  What it is: The recipe: components, semi-finished items, and operations that make the FG.
  In Odoo: Supports multi-level BoMs, by-products, operation-level consumption (e.g., “consume at Op#2”), and alternative BoMs for engineering changes.
• Work Center
  What it is: A line, cell, or team that performs an operation (e.g., CNC, assembly bench).
  In Odoo: Stores capacity (hours, OEE targets), costing (machine + labor per hour), OEE metrics, and maintenance calendar. Work orders log real time.
• Route / Operations
  What it is: The ordered sequence of steps across Work Centers.
  In Odoo: Defined on the BoM as “Operations.” Drives scheduling, barcode screens, IoT data capture, and per-operation quality checkpoints.
• Master Production Schedule (MPS)
  What it is: A rolling plan that translates demand into planned MOs and purchase needs.
  In Odoo: The MPS board proposes production and purchase quantities based on sales forecasts, min/max, safety stock, and lead times. One click creates MOs and RFQs.
• WIP — Work-In-Progress
  What it is: The value of partially completed goods in production at period end (materials consumed + labor/overhead applied, not yet finished).
  In Odoo: When you post WIP at month-end, Odoo debits a WIP account and credits raw-material stock / overhead, then reverses next period. When the MO finishes, the final FG cost is capitalized to inventory automatically. Net effect: expenses are deferred into inventory while the item is in production, then recognized correctly on COGS only when sold.

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Production models you can run in Odoo

1. Make-to-Order (MTO) / Engineer-to-Order (ETO)
   MOs are triggered by a sales order; BoMs can be project-specific; lead times flow to the customer promise date.
2. Make-to-Stock (MTS) / Serial (batch) production
   You build to a plan (MPS), hold stock, and fulfill fast.

➡️ Outsourcing / Subcontracting
Many firms send customer-supplied (or purchased) components to a third party for specific operations. Odoo’s Subcontracting manages:

• sending components to the subcontractor (stock move + valuation),
• receiving finished goods with landed cost and vendor charge,
• optional consigned stock and quality checks on receipt.

Conclusion: Odoo ERP handles MTO, MTS, and subcontracting in one flow—planning, execution, inventory, quality, and accounting.

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The Odoo module stack for a manufacturing company

• Manufacturing (MRP): MOs, BoMs, work orders, by-products, scrap, backflushing, subcontracting.
• Inventory (Warehouse): Multi-warehouse/location, putaway, removal (FIFO/LIFO), lot/serials, barcode, wave picking, cross-dock.
• Purchase: RFQs, vendor pricelists, lead times, reordering rules, dropship, blanket orders.
• Sales: Quotes, product configurators, lead times/availabilities, margin view, pricelists.
• Quality: Plans, control points, SPC-style checks, NCs (non-conformances), CAPA, approvals.
• Maintenance (TPM): Preventive/corrective work orders, MTBF/MTTR, parts usage linked to stock.
• PLM: Eco/ECR workflows, BoM versioning, document control, engineering change approvals.
• Accounting: Automated stock valuation (FIFO/Avg/Standard), WIP, landed costs, COGS on delivery, price difference, interim accounts.
• Planning: Capacity planning, shift calendars, skills, load leveling.
• MPS: Demand planning that raises MOs/RFQs.
• IoT & Barcode: Device connectors (scales, printers, gauges), paperless shop-floor.
• Productivity add-ons: Project (ETO), Timesheets (labor capture), Repair (RMA/rework), eCommerce/Shopify/Magento connectors, Direct Print, Office 365/Google integrations.

Important: All modules share one database. Every movement (receive, consume, produce, deliver) posts the right journal entries automatically when automated valuation is enabled.

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Example 1: Watch manufacturer (serial production with 10–12 suppliers)

Goal: Stable monthly output, consistent quality, short lead-time to distributors.

Setup

• BoMs: Multi-level (movement, dial, case, strap). Operation-level consumption for assembly/QA.
• Quality: Control points—torque test, water resistance, visual inspection; NC workflow.
• Suppliers: Vendor pricelists with lead times; alternate vendors for at-risk parts.
• Inventory: Lots/serials for traceability; putaway by ABC/velocity; cycle counts by location.
• MPS: 12-week horizon using sales forecast; safety stock for A-parts (e.g., movements).
• Work Centers: Assembly, calibration, packaging; barcode terminals, IoT torque drivers.
• Accounting: Average cost or FIFO; landed costs on imported components; month-end WIP.

Day-to-day flow

1. MPS proposes production → Planner confirms MOs and auto-creates RFQs for shortages.
2. On receipt, incoming QC checks critical parts; lots enter stock.
3. MO starts; components are reserved and backflushed per operation via barcode.
4. Inline QA raises an NC if torque or water-resistance fails; rework route triggers.
5. Finished watches serialized, packed, and put to “FG/Ready.”
6. Delivery to distributors posts COGS; dashboards show OEE, yield, and margin by SKU.

Value

• 5–15% inventory reduction via MPS + vendor alternates.
• Fewer stockouts and scrapped builds thanks to operation-level QC.
• Clean costing: materials + applied labor/overhead roll into FG; COGS only on shipment.

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Example 2: Automotive equipment (one-off, project-based MTO/ETO)

Goal: Engineer-to-Order projects with strict QA and documented traceability.

Setup

• Project + PLM: ECR/ECO drive BoM versions; project tasks tie to engineering and build.
• BoMs: Project-specific; long-lead items flagged with procurement deadlines.
• Work Centers: Fabrication, wiring, programming, test bay; calibrated instruments via IoT.
• Purchase: Centralized buying; framework agreements; milestone-based receipts.
• Quality: PPAP-like plans, first-article inspections, test protocols as QC checks.
• Accounting: WIP posted monthly to reflect partial builds; landed costs and overheads applied; revenue recognized on delivery.

Project flow

1. Sales order confirms → Project and draft MO generated with Version A BoM.
2. Engineering issues ECO → BoM vB; impact report updates shortages and costs.
3. Purchasing executes RFQs; critical items tracked by promise dates.
4. Work orders run; labor is timesheeted against operations; IoT pulls test data to QC.
5. Factory Acceptance Test (FAT) logged as QC stage; deviations create CAPA tasks.
6. Shipment + installation → warranty timer starts; COGS recognized; project margin visible in real time.

Value

• Single source of truth from CAD change to shipment.
• Predictable margins through live WIP, landed cost, and labor capture.
• Faster audits with serial-level traceability and attached test certs.

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What entrepreneurs usually ask (and the short answers)

• Can I start small? Yes—begin with MRP + Inventory + Purchase; add Quality/Maintenance later.
• Do I need barcode/IoT from day one? No, but barcode terminals pay back quickly in accuracy and speed; IoT adds value where measurements matter.
• Will accounting keep up? With automated valuation on product categories, Odoo posts all stock/accounting moves (receipts, consumption, production, delivery, WIP, landed costs) for you.

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Implementation checklist (pragmatic and short)

1. Product categories: choose costing (Avg/FIFO/Standard) and automated valuation.
2. Chart of accounts: set Stock Valuation, Interim (Received/Delivered), WIP, and Overhead/Absorption accounts.
3. BoMs & Operations: model one flagship product perfectly; include QC steps.
4. Work Centers: load calendars, hourly cost (machine + labor), maintenance.
5. MPS & reordering: safety stock, lead times, alternates; test suggestions.
6. Quality/Maintenance: add minimal control plan + PM schedule; expand later.
7. Go live: barcode flows, receiving to shipping, month-end WIP posting.

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TL;DR (Executive summary)

• Odoo is a modern MRP that unifies planning (MPS), execution (MOs, QC, IoT), inventory, and accounting with WIP—so numbers match the shop floor.
• It supports Make-to-Order, Make-to-Stock, and Subcontracting on one platform.
• Watch factory or one-off automotive builds—both work with the same building blocks.

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Want help picking the right starting set?

Typical starter bundle: Manufacturing, Inventory, Purchase, Accounting. Add Quality and Maintenance in phase 2; PLM and MPS as volume grows.

If you’d like, I can tailor this article into a landing page with SEO sections (FAQ, schema, CTAs) and add keyword-focused meta tags for “MRP software,” “Odoo manufacturing,” and “manufacturing automation tool.”