Product Cost Management with Odoo 16’s Manufacturing Module

product cost management

Manufacturing products invoicing multiple components and processes can lead to complex cost structures. Moreover , the generation of byproducts during the manufacturing process adds another layer of cost management. With the introduction of the Cost Management in Odoo 16’s Manufacturing module, these challenges are now seamlessly addressed, providing manufactures with a powerful tool to manage production cost byproducts effectively. 

The Cost Management in Odoo 16’s Manufacturing module enables businesses to manage manufacturing processes involving multiple components and the generation of valuable byproducts. Consider a scenario where Product B is manufactured using Components 

A , and an additional byproduct , Product C , is created in the process.This features allows the manufacturer Product B, ensuring accurate cost calculation and transparent cost allocations.

Setting Up Manufacturing Items : 

Begin by defining products to be manufactured and the equipment involved in the process. Create new products under the Products tab, specifying the manufacturing route for each item. 

Creating Work Centers :

Established work centers as the locations where manufacturing operations take place. Configure work centers under the Configuration tab , enabling options such as Work Orders and By – Products. This allows you to manage specific operations and define byproducts created during production. 

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Building Bill of Materials ( BOM ) : 

Craft a Bill of Material that outlines the components required for manufacturing the final product. Include the necessary raw materials and their quantities in the BOM. Specify the manufacturing type as Manufacturing type as Manufacture this product. 

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Product → Bill of Material → Create 

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Defining Operations : 

Outline the operations involved in the manufacturing process. Add operations in the Operations tab of the BOM. Define the sequence , work center , time required , and costs for each operation. 

Handling By Products : 

Within the By – Products tab of the BOM , specify any byproducts generated during the manufacturing process. Define the cost share for each byproduct , indicating how much of its cost contributes to the main product’s cost. 

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Calculating Costs :  

Odoo 16’s Manufacturing module dynamically calculates the costs for each component and operation , factoring in labor , materials , and work center costs. The cost share for byproducts is also automatically considered , ensuring accurate cost allocation. 

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Viewing manufacturing Orders : 

Create manufacturing orders to initiate the production process. Manufacturing orders are generated based on the BOM and products selected. Odoo’s Manufacturing module facilitates real – time cost tracking and adjustment as production progresses. 

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Accounting Entries : 

Once production is complete , the Accounting module generates journal entries reflecting the allocated costs , including byproduct costs. These entries provide comprehensive insights into the distribution of costs across various elements of the production process. 

The cost Management within Odoo 16’s Manufacturing module is a game – changer for businesses engaged in complex manufacturing processes. By seamlessly integrating cost allocation for both primary products and byproducts , manufacturers can achieve accurate cost calculations , transparent resource allocation , and insightful cost analysis. This feature empowers manufacturers to make informed decisions , optimize pricing strategies , and enhance overall operational efficiency. 

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