Losing $147K on Waste? Track By-Products in Odoo 18 Manufacturing

Wood furniture manufacturer produces 100 tables monthly. Each table generates 8.4 kg sawdust, 2.7 kg wood scraps. Total monthly by-products: 1,110 kg. Warehouse throws it all away ($0 revenue). Competitor down the street sells same sawdust to particle board manufacturer: $0.42/kg × 840 kg = $353/month. Sells wood scraps to biomass plant: $0.18/kg × 270 kg = $49/month. Competitor makes extra $402/month = $4,824/year from "waste." You? Nothing. CFO asks: "Why aren't we tracking manufacturing by-products?"

Your by-product disaster: Manufacturing generates valuable by-products (sawdust, scrap metal, offcuts, chemical residues). Warehouse treats as waste (throws away or pays disposal fees). No tracking in ERP (by-products not in Bill of Materials). Inventory counts wrong (only tracks main products, ignores by-products). Lost revenue opportunities (could sell by-products). Compliance issues (environmental regulations require by-product tracking). Manual spreadsheets track waste disposal (disconnected from MRP).

Cost: Lost revenue from sellable by-products = $4,824/year (small manufacturer) to $147,000/year (large facility). Disposal fees for "waste" that could be sold = $23,400 annually. Inventory inaccuracy = stock counts off by 12-18% (includes untracked by-products). Compliance violations (EPA requires by-product reporting) = $87,000 fines. Manual tracking time = 4.7 hours monthly × 12 × $67/hour = $3,780/year. Can't optimize production (no data on by-product yield rates).

Odoo 18 By-Product Management fixes this: Add by-products to Bill of Materials—define what's produced alongside main product. Manufacturing Order automatically creates by-product inventory. Track by-product quantities in stock. Sell by-products like regular products (create sales orders). Cost accounting accurate (by-product costs separated from main product). Compliance reports show all manufacturing outputs. Here's how to configure by-product tracking so you stop losing $147K annually to untracked manufacturing outputs.

What By-Product Management Does

By-products = Secondary outputs from manufacturing process (in addition to main product). Example: Sawdust when making tables, scrap metal when cutting parts, offcuts when sewing garments. Odoo tracks, inventories, and lets you sell these.

Step 1: Enable By-Product Feature

1. Go to Manufacturing app
2. Navigate to Configuration → Settings
3. Find Operations section
4. Enable By-Products checkbox
5. Click Save

Step 2: Create Products

Create product records for main product, components, and by-products.

Create Main Product

1. Go to Manufacturing → Products → Products
2. Click Create
3. Product details:
   • Product Name: Wooden Table
   • Product Type: Storable Product
   • Unit of Measure: Units
   • Sales Price: $450
   • Cost: $287 (will calculate from components)
4. Open Inventory tab
5. Under Routes, enable:
   • ☑ Manufacture: Product can be manufactured
   • ☑ Replenish on Order (MTO): Auto-create MO when needed
6. Click Save

Create Component Products

Create products for raw materials consumed in manufacturing:

• Wood Plank: Type = Storable, UoM = Units, Cost = $45
• Screw: Type = Storable, UoM = Units, Cost = $0.12
• Varnish: Type = Storable, UoM = Liters, Cost = $18/L

Create By-Product Products

Create products for by-products generated during manufacturing:

1. Create product: Sawdust
   • Type: Storable Product
   • UoM: kg
   • Can be Sold: ☑ Yes
   • Sales Price: $0.42/kg
   • Cost: $0 (by-product has no input cost)
2. Create product: Wood Scrap
   • Type: Storable Product
   • UoM: kg
   • Can be Sold: ☑ Yes
   • Sales Price: $0.18/kg
   • Cost: $0
3. Click Save for each

Step 3: Create Bill of Materials with By-Products

Create BoM

1. Go to Manufacturing → Products → Bill of Materials
2. Click Create
3. BoM details:
   • Product: Wooden Table
   • Quantity: 1
   • BoM Reference: BoM-TABLE-001

Add Components

1. In Components tab, click Add a line
2. Add components:
   • Wood Plank: Quantity = 4
   • Screw: Quantity = 16
   • Varnish: Quantity = 1 L

Add By-Products

1. Click By-Products tab
2. Click Add a line
3. Add first by-product:
   • Product: Sawdust
   • Quantity: 8.4 kg
   • Unit of Measure: kg
4. Click Add a line again
5. Add second by-product:
   • Product: Wood Scrap
   • Quantity: 2.7 kg
   • Unit of Measure: kg
6. Click Save

Step 4: Create Manufacturing Order

Option 1: Manual Manufacturing Order

1. Go to Manufacturing → Operations → Manufacturing Orders
2. Click Create
3. Select product: Wooden Table
4. Quantity: 10 (manufacturing 10 tables)
5. BoM auto-fills based on product
6. Click Confirm

Option 2: Auto-Create from Sales Order

1. Go to Sales app
2. Create New quotation
3. Add product: Wooden Table × 5
4. Click Confirm
5. Manufacturing Order auto-created (because MTO route enabled)
6. Click Manufacturing smart button to view MO

Step 5: Process Manufacturing Order

Check Components

1. Open Manufacturing Order
2. Click Components tab
3. Verify components to consume:
   • Wood Plank: 40 units (4 per table × 10 tables)
   • Screw: 160 units
   • Varnish: 10 L
4. Check availability (should be "Available" if stock sufficient)

Check By-Products

1. Click By-Products tab
2. By-products auto-populated from BoM:
   • Sawdust: 84 kg (8.4 kg per table × 10)
   • Wood Scrap: 27 kg (2.7 kg per table × 10)
3. Can edit quantities if actual production differs
4. Can change destination location (where by-products stored)

Complete Production

1. Click Check Availability (if not already available)
2. Click Produce All button
3. Production complete popup appears
4. Click Validate
5. Manufacturing Order status: Done

Step 6: Sell By-Products

By-products are regular products in inventory—create sales orders to sell them.

1. Go to Sales app
2. Create New quotation
3. Customer: Select buyer (e.g., "Particle Board Manufacturer")
4. Add product lines:
   • Sawdust: 84 kg @ $0.42/kg = $35.28
   • Wood Scrap: 27 kg @ $0.18/kg = $4.86
   • Order Total: $40.14
5. Click Confirm
6. Delivery Order auto-created
7. Process delivery (Validate)
8. Create invoice, receive payment

Advanced Features

1. By-Product Cost Share

Allocate manufacturing costs between main product and by-products for accurate costing.

1. In BoM → By-Products tab → Click by-product line
2. Set Cost Share (%):
   • Sawdust: 5% of total manufacturing cost
   • Wood Scrap: 2% of total cost
   • Main Product: 93% (remaining)
3. Odoo allocates costs accordingly in accounting

2. Operations for By-Products

Link by-products to specific manufacturing operations.

1. In BoM, create Operations tab entries (Work Centers)
2. In By-Products tab → Select by-product line
3. Set Produced in Operation: Choose operation (e.g., "Sawing")
4. By-product only created when that operation completes

3. Conditional By-Products

Set different by-product quantities based on conditions.

# In BoM, can create multiple BoMs with different by-product yields

BoM-TABLE-PINE:
  Main Product: Wooden Table (Pine)
  By-Product: Sawdust - 6.2 kg (softer wood, less waste)

BoM-TABLE-OAK:
  Main Product: Wooden Table (Oak)
  By-Product: Sawdust - 10.8 kg (harder wood, more cutting waste)

Select appropriate BoM when creating Manufacturing Order

Real-World Impact Examples

Example 1: Metal Fabrication Shop

Example 2: Food Processing Plant

Best Practices