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A company that assembles, transforms or makes what it sells lives with a permanent question: how much does this product really cost? Without a tool, the answer sits in a calculation spreadsheet made two years ago, with purchase prices that have changed since. That is where an ERP with a manufacturing module pays off most.
In short
The bill of materials says what each product is made of, in what quantities.
The manufacturing order consumes components and produces the finished good.
Work centres add machine time and labour time.
Cost price is calculated on real prices and real times.
Start simple: bills of materials and orders, detailed planning later.
The bill of materials
The bill of materials is the product’s recipe: the list of components and their quantities, sometimes with sub-assemblies that are themselves manufactured. A table sold means four legs, a top, a box of fittings and a carton. Once the bill of materials is in the ERP, every sale knows what it will need, and every component purchase can be triggered by forecast sales.
Odoo handles multi-level bills of materials, variants (the same table in three finishes) and kits, sold as one product but delivered in parts. Odoo’s manufacturing documentation describes these cases. Dolibarr also offers bills of materials and manufacturing orders, for simpler needs.
The manufacturing order
The manufacturing order says how many to produce, and when. When it is validated, the ERP takes the components out of stock and adds the finished product. Deviations (a scrapped part, a replaced component) are declared on the order, which keeps stock accurate.
- The need
A customer order, a minimum stock reached or a production plan.
- The order
Quantity, date, bill of materials used.
- Availability
The ERP checks components are there, or proposes buying them.
- Production
Operations are declared work centre by work centre.
- Closing
Components consumed, finished product in stock, cost calculated.
Work centres
A work centre is a machine, a workshop or a team, with its capacity and hourly cost. The routing attached to the bill of materials says which centres the product goes through and for how long. The ERP can then add manufacturing time to the cost of components, and show each centre’s load in the coming weeks.
Cost price
This is the most concrete gain. The real cost price adds components at the price they were bought and times spent at the centres’ cost. Compared with the sales price, it gives the real margin per product. Products sold at a loss without anyone knowing often show up in the first months, information leadership did not have before.
What not to do at the start
Detailed planning (scheduling to the minute, optimising machine load) needs very reliable data on times and capacities. Launched too early, it produces wrong schedules nobody follows. Start with bills of materials and orders, measure real times for a few months, then refine. The same caution applies to customisation, detailed in Customising an ERP safely.
Links with other flows
Manufacturing touches everything: sales (what to produce), purchasing (components to order), stock (components and finished goods) and accounting (valuation). That is why it is set up after the sales, purchasing and stock batches, on data that is already clean. See Inventory management in an ERP and Purchasing in an ERP.
Where to start
Choose a representative product family, write its complete bills of materials and check them with the workshop, part by part. Run a few real manufacturing orders and compare the calculated cost with your current estimate. This test on one family tells you whether the module meets the need before extending it. The complete ERP guide places manufacturing in the order of batches, and our CRM and ERP offer prices it within the Odoo tiers, on a written scope.
Frequently asked questions
Do you need separate production software?
For most SMEs that assemble or transform, an ERP’s manufacturing module is enough: bills of materials, orders, work centres and costs. Specialised production software is justified by strong constraints, such as just-in-time planning on many machines or direct control of equipment.
How do you handle made-to-order products?
With a bill of materials created from a template, adjusted for each order. The ERP keeps the real bill of materials used, which lets you calculate the cost of each unique piece. For repetitive configurations, product variants avoid recreating the bill of materials every time.
How long does it take to set up manufacturing?
Configuration is rarely the longest part. What takes time is writing accurate bills of materials and measuring real times. For one product family, a few weeks are enough; for a whole catalogue, you need to proceed family by family, starting with those that weigh most.
Sources
Jim · founder of Brain Plus AI
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