k
kezi Docs

Manufacturing Orders

Overview

Manufacturing Orders (MOs) are work orders that instruct your production team to manufacture finished goods from raw materials according to a Bill of Materials (BOM). The system tracks the entire manufacturing lifecycle from planning to completion.

Manufacturing Order Lifecycle

graph LR A[Draft] --> B[Confirmed] B --> C[In Progress] C --> D[Done] A -.-> E[Cancelled] B -.-> E C -.-> E

Status Definitions

  • Draft: MO is being planned, can be edited freely
  • Confirmed: MO is approved and ready to start production
  • In Progress: Production has started, components are being consumed
  • Done: Production complete, finished goods received
  • Cancelled: MO was cancelled before completion

Creating a Manufacturing Order

Method 1: From a Bill of Materials

  1. Navigate to Manufacturing → Bills of Materials
  2. Open the BOM for the product you want to manufacture
  3. Click Create Manufacturing Order
  4. The system pre-fills the BOM and product

Method 2: Direct Creation

  1. Go to Manufacturing → Manufacturing Orders
  2. Click New Manufacturing Order
  3. Fill in the required fields

Required Information

Product & BOM

  • Bill of Materials: Select the BOM to use
  • Product: Auto-filled from BOM (the finished product)
  • Quantity to Produce: How many units to manufacture

Locations

  • Source Location: Where raw materials will be taken from
  • Destination Location: Where finished goods will be placed

Scheduling

  • Planned Start Date: When production should begin
  • Planned End Date: Expected completion date

Optional

  • Notes: Special instructions for production team
  • Reference: External reference number (e.g., customer order)

Manufacturing Order Operations

Confirming an MO

When: After creating and reviewing the MO Action: Click Confirm button Effect:

  • Status changes to Confirmed
  • MO number is assigned (if not already)
  • Component requirements are reserved
  • Cannot be edited anymore

Starting Production

When: Production begins Action: Click Start Production button Effect:

  • Status changes to In Progress
  • Actual start date is recorded
  • Component consumption can begin

Completing Production

When: All units are manufactured Action: Click Complete Production button Effect:

  • Status changes to Done
  • Actual end date is recorded
  • Components are consumed from inventory
  • Finished goods are received into inventory
  • Accounting entry is created:
    • DR Finished Goods Inventory
    • CR Raw Materials Inventory

Cancelling an MO

When: MO is no longer needed or was created by mistake Action: Click Cancel button (available in Header or Table actions) Available: For Draft, Confirmed, or In Progress status Effect:

  • Status changes to Cancelled
  • Inventory Cleanup: All reserved stock for this MO is automatically released (unreserved).
  • Work Orders: All associated pending or in-progress Work Orders are set to Cancelled.
  • Data Integrity: Cannot be reactivated once cancelled.

Guardrails:

  • Consumption Block: You cannot cancel an MO if any components have already been consumed (Done stock moves).
  • Production Block: You cannot cancel an MO if any finished goods have already been produced.
  • Recommendation: If production has already started and items were moved/consumed, you should complete the order and then use a "Return" or manual inventory adjustment to reverse the impact (to ensure proper audit trails).

Component Consumption

Automatic Consumption

When you complete a Manufacturing Order:

  1. System calculates required quantities from BOM
  2. Components are consumed from the source location
  3. Stock moves are created for audit trail
  4. Inventory valuation is updated

Viewing Component Lines

On the MO form, the Components tab shows:

  • Product: Component name
  • Quantity Required: Based on BOM × MO quantity
  • Quantity Consumed: Actual consumption (updated on completion)
  • Unit Cost: Cost per unit of component
  • Total Cost: Quantity × Unit Cost

Finished Goods Receipt

Automatic Receipt

When production completes:

  1. Finished goods are received into destination location
  2. Quantity produced is recorded
  3. Product cost is calculated from component consumption
  4. Stock quants are updated

Quantity Produced

  • Normally equals "Quantity to Produce"
  • Can be adjusted if actual production differs
  • Affects inventory and costing calculations

Accounting Integration

Journal Entry Creation

Upon MO completion, the system automatically creates a journal entry:

Debit: Finished Goods Inventory Account

  • Amount: Total cost of components consumed

Credit: Raw Materials Inventory Account

  • Amount: Total cost of components consumed

Viewing the Journal Entry

  1. Open the completed Manufacturing Order
  2. Scroll to Accounting section
  3. Click the linked Journal Entry number
  4. Review the accounting impact

Manufacturing Accounts Setup

Required Configuration (Settings → Company):

  • Default Finished Goods Inventory Account
  • Default Raw Materials Inventory Account
  • Default Manufacturing Journal

Dashboard & Reporting

Manufacturing Dashboard

Access via Manufacturing → Dashboard

Widgets Available:

  • Pending Orders: Draft + Confirmed MOs
  • In Production: Currently active MOs
  • Completed: Recently finished MOs with completion rate

Active Manufacturing Orders Widget

Shows real-time view of:

  • MO Number
  • Product being manufactured
  • Quantity to produce vs. produced
  • Current status
  • Planned start date

Best Practices

Planning

  • Create MOs in advance to ensure component availability
  • Check inventory levels before confirming
  • Use realistic planned dates for scheduling

Production Tracking

  • Confirm MOs only when ready to start
  • Start production when work actually begins
  • Complete promptly to maintain accurate inventory

Quality Control

  • Review component consumption before completing
  • Verify finished goods quantity
  • Document any variances in notes

Batch Processing

For multiple similar MOs:

  1. Create all MOs in Draft status
  2. Review and confirm as a batch
  3. Start production in sequence
  4. Complete in order to maintain FIFO costing

Common Scenarios

Scenario 1: Standard Manufacturing Flow

  1. Create MO for 100 Widgets using BOM-WIDGET-001
  2. Confirm the MO (reserves components)
  3. Start Production (records start time)
  4. Complete Production (consumes 200 Steel Plates, 400 Bolts, receives 100 Widgets)
  5. System creates accounting entry

Scenario 2: Partial Production

Situation: Planned to make 100 units, only completed 80

Steps:

  1. Before clicking Complete, adjust "Quantity Produced" to 80
  2. Complete the MO
  3. Components consumed = BOM qty × 80
  4. Only 80 units received into inventory

Scenario 3: Multi-Stage Manufacturing

Product: Complex Assembly

Approach:

  1. Create MO for sub-assembly A
  2. Create MO for sub-assembly B
  3. Complete both sub-assembly MOs
  4. Create final MO using sub-assemblies as components
  5. Complete final MO

Troubleshooting

Cannot Confirm MO

Issue: "Insufficient inventory for components" Solution:

  • Check component availability in source location
  • Adjust MO quantity or
  • Receive more raw materials first

Components Not Consumed

Issue: Completed MO but inventory unchanged Solution:

  • Verify MO status is "Done"
  • Check component lines show "Quantity Consumed"
  • Review stock moves linked to the MO

Accounting Entry Missing

Issue: No journal entry created Solution:

  • Verify company manufacturing accounts are configured
  • Check MO is fully completed (status = Done)
  • Ensure components have unit costs

Wrong Product Cost

Issue: Finished goods cost seems incorrect Solution:

  • Review component unit costs
  • Check BOM quantities are accurate
  • Verify quantity produced matches quantity to produce