Losing $147K on Waste? Track By-Products in Odoo 18 Manufacturing
By Braincuber Team
Published on December 22, 2025
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.
You're Losing Money If:
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.
| Without By-Product Tracking | With By-Product Tracking |
|---|---|
| By-products thrown away ($147K lost) | By-products tracked, sold ($147K revenue) |
| Manual spreadsheet tracking (4.7 hrs/month) | Auto-tracked in MO (0 manual work) |
| Inventory wrong (by-products uncounted) | Accurate inventory (all outputs counted) |
| Pay disposal fees ($23K/year) | Sell to recyclers (revenue, not cost) |
| No production optimization data | Track yield rates, optimize processes |
💡 By-Product Example:
Product: Wooden Table
- Main Product: 1 Wooden Table (finished good)
- Components Consumed: 4 Wood Planks, 16 Screws, 1 L Varnish
- By-Products Generated: 8.4 kg Sawdust, 2.7 kg Wood Scraps
- Manufacturing Order Result: +1 Table (main), +8.4 kg Sawdust (by-product), +2.7 kg Scrap (by-product)
- Inventory Update: All three products added to stock automatically
Step 1: Enable By-Product Feature
- Go to Manufacturing app
- Navigate to Configuration → Settings
- Find Operations section
- Enable By-Products checkbox
- Click Save
✓ By-Products Feature Enabled
You can now add by-products to Bills of Materials. "By-Products" tab will appear in BoM form.
Step 2: Create Products
Create product records for main product, components, and by-products.
Create Main Product
- Go to Manufacturing → Products → Products
- Click Create
- Product details:
- Product Name: Wooden Table
- Product Type: Storable Product
- Unit of Measure: Units
- Sales Price: $450
- Cost: $287 (will calculate from components)
- Open Inventory tab
- Under Routes, enable:
- ☑ Manufacture: Product can be manufactured
- ☑ Replenish on Order (MTO): Auto-create MO when needed
- 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:
- 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)
- Create product: Wood Scrap
- Type: Storable Product
- UoM: kg
- Can be Sold: ☑ Yes
- Sales Price: $0.18/kg
- Cost: $0
- Click Save for each
Step 3: Create Bill of Materials with By-Products
Create BoM
- Go to Manufacturing → Products → Bill of Materials
- Click Create
- BoM details:
- Product: Wooden Table
- Quantity: 1
- BoM Reference: BoM-TABLE-001
Add Components
- In Components tab, click Add a line
- Add components:
- Wood Plank: Quantity = 4
- Screw: Quantity = 16
- Varnish: Quantity = 1 L
Add By-Products
- Click By-Products tab
- Click Add a line
- Add first by-product:
- Product: Sawdust
- Quantity: 8.4 kg
- Unit of Measure: kg
- Click Add a line again
- Add second by-product:
- Product: Wood Scrap
- Quantity: 2.7 kg
- Unit of Measure: kg
- Click Save
Complete Bill of Materials:
Main Product:
• Wooden Table × 1
Components (Consumed):
- • Wood Plank × 4 @ $45 = $180
- • Screw × 16 @ $0.12 = $1.92
- • Varnish × 1 L @ $18 = $18
- Total Component Cost: $199.92
By-Products (Generated):
- • Sawdust × 8.4 kg (Sellable @ $0.42/kg = $3.53)
- • Wood Scrap × 2.7 kg (Sellable @ $0.18/kg = $0.49)
- Potential By-Product Revenue: $4.02 per table
Step 4: Create Manufacturing Order
Option 1: Manual Manufacturing Order
- Go to Manufacturing → Operations → Manufacturing Orders
- Click Create
- Select product: Wooden Table
- Quantity: 10 (manufacturing 10 tables)
- BoM auto-fills based on product
- Click Confirm
Option 2: Auto-Create from Sales Order
- Go to Sales app
- Create New quotation
- Add product: Wooden Table × 5
- Click Confirm
- Manufacturing Order auto-created (because MTO route enabled)
- Click Manufacturing smart button to view MO
Step 5: Process Manufacturing Order
Check Components
- Open Manufacturing Order
- Click Components tab
- Verify components to consume:
- Wood Plank: 40 units (4 per table × 10 tables)
- Screw: 160 units
- Varnish: 10 L
- Check availability (should be "Available" if stock sufficient)
Check By-Products
- Click By-Products tab
- 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)
- Can edit quantities if actual production differs
- Can change destination location (where by-products stored)
Complete Production
- Click Check Availability (if not already available)
- Click Produce All button
- Production complete popup appears
- Click Validate
- Manufacturing Order status: Done
✓ Manufacturing Complete - Inventory Updated:
- Components consumed: -40 Wood Planks, -160 Screws, -10 L Varnish
- Main product added: +10 Wooden Tables
- By-products added: +84 kg Sawdust, +27 kg Wood Scrap
- All inventory movements tracked automatically
Step 6: Sell By-Products
By-products are regular products in inventory—create sales orders to sell them.
- Go to Sales app
- Create New quotation
- Customer: Select buyer (e.g., "Particle Board Manufacturer")
- Add product lines:
- Sawdust: 84 kg @ $0.42/kg = $35.28
- Wood Scrap: 27 kg @ $0.18/kg = $4.86
- Order Total: $40.14
- Click Confirm
- Delivery Order auto-created
- Process delivery (Validate)
- Create invoice, receive payment
By-Product Revenue from 10 Tables:
Revenue previously lost: $40.14 × 10 batches/month = $401.40/month = $4,816.80/year
Advanced Features
1. By-Product Cost Share
Allocate manufacturing costs between main product and by-products for accurate costing.
- In BoM → By-Products tab → Click by-product line
- Set Cost Share (%):
- Sawdust: 5% of total manufacturing cost
- Wood Scrap: 2% of total cost
- Main Product: 93% (remaining)
- Odoo allocates costs accordingly in accounting
2. Operations for By-Products
Link by-products to specific manufacturing operations.
- In BoM, create Operations tab entries (Work Centers)
- In By-Products tab → Select by-product line
- Set Produced in Operation: Choose operation (e.g., "Sawing")
- 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
Before By-Product Tracking:
- Manufacture 500 steel brackets monthly
- Scrap metal generated: 847 kg/month
- Disposal: Pay $0.08/kg removal = $68/month = $816/year
- Inventory inaccuracy: 14% (scrap metal not counted)
- No tracking = no optimization opportunities
After Implementing By-Product Management:
- Added "Steel Scrap" as by-product in BoM
- Manufacturing Order auto-tracks 847 kg scrap monthly
- Sell scrap to recycler: $0.34/kg × 847 kg = $288/month
- Revenue swing: -$68 (cost) to +$288 (revenue) = $356/month improvement
- Annual impact: $356 × 12 = $4,272
- Inventory accuracy: 99.7% (all outputs tracked)
Additional Benefits:
- Optimized cutting patterns: Reduced scrap from 847 kg to 714 kg/month
- Additional savings: 133 kg × $4.20 material cost = $558/month = $6,696/year
- Total annual impact: $10,968
Example 2: Food Processing Plant
Challenge:
Orange juice manufacturer processes 10,000 kg oranges monthly. Generates 3,200 kg orange peel, 840 kg pulp by-products. Previously: Paid disposal fees. Untracked in ERP. EPA compliance issues (organic waste reporting required).
Solution: By-Product Tracking
- Created by-products: "Orange Peel", "Orange Pulp"
- Added to juice production BoM
- Sell orange peel to cosmetics company (essential oil extraction): $0.67/kg
- Sell orange pulp to animal feed manufacturer: $0.24/kg
- Monthly revenue: (3,200 × $0.67) + (840 × $0.24) = $2,144 + $202 = $2,346
- Annual revenue: $2,346 × 12 = $28,152
Compliance Impact:
- EPA organic waste reporting: Now automated from MO data
- Avoided $87,000 fine (previous violation resolved)
- Environmental certification achieved (waste reduction)
- Total value: $28,152 revenue + $87,000 fine avoided = $115,152
Best Practices
- Track All By-Products (Even "Waste")
- Even if by-product has no current buyer, track it in BoM
- Enables future revenue opportunities (market changes)
- Provides accurate inventory and compliance data
- Set Realistic Quantities
- Base by-product quantities on actual production data
- Track variance: If BoM says 8.4 kg sawdust but actual is 11.2 kg, update BoM
- Use average over 10-20 production runs for accuracy
- Research By-Product Markets
- Google "[your by-product] buyers near me"
- Contact recycling centers, animal feed suppliers, composters
- Industrial waste = someone else's raw material
- Configure Separate Storage Locations
- In Warehouse, create location: "By-Products Storage"
- In MO → By-Products tab → Set destination location
- Prevents mixing by-products with main product inventory
- Monitor By-Product Inventory Levels
- Set up inventory alerts: "If sawdust > 500 kg, alert sales"
- Sell regularly to avoid storage costs
- Some by-products degrade (organic matter) - track expiry
Pro Tip: Manufacturing generates by-products you don't realize are valuable. Sawdust → particle board, animal bedding, fuel pellets. Metal shavings → recycled metal. Chemical residues → sold to labs. Textile offcuts → insulation, stuffing. Spend 30 minutes researching "[your by-product] recycling" or "[your by-product] buyers"—you'll find markets. One manufacturer discovered their "waste" plastic trimmings worth $14K/year to injection molding company down the street.
Losing $147K Annually on Untracked By-Products?
We configure Odoo 18 Manufacturing by-product tracking: Bills of Materials setup, inventory integration, sales processes for by-products, compliance reporting. Turn manufacturing "waste" into $147K revenue.
