How to Manage Scrap in Odoo 18 Manufacturing: Complete Guide
By Braincuber Team
Published on March 24, 2026
Every manufacturing operation produces waste. Whether it is damaged components during assembly, defective raw materials, or overproduction that cannot be sold, scrap is an inevitable part of production. Without proper scrap management, manufacturers lose visibility into material costs, inventory becomes inaccurate, and profitability suffers. Odoo 18 provides a comprehensive scrap management system that tracks every piece of material moved to scrap, maintains full traceability, and integrates seamlessly with your manufacturing orders. This complete tutorial shows you how to configure and use scrap management in Odoo 18, from setting up scrap locations to creating scrap orders during production.
What You'll Learn:
- What scrap management means in Odoo 18 Manufacturing
- Enabling Storage Locations to activate scrap functionality
- Creating a dedicated Scrap Location in Inventory
- Creating standalone scrap orders from the Manufacturing module
- Creating scrap orders directly during a manufacturing operation
- Tracking scrap movements through product moves
Understanding Scrap Management in Odoo 18
In Odoo 18, scrap refers to material that is no longer usable for production due to damage, defects, overproduction, or quality failures. When products or components are scrapped, they are moved to a designated Scrap Location rather than remaining in regular inventory. This separation is critical for several reasons. First, it provides accurate inventory valuation by keeping scrapped items separate from usable stock. Second, it enables full traceability so you can trace exactly when, why, and how materials were scrapped. Third, it supports quality control by identifying patterns in material loss and enabling process improvements.
Scrap management in Odoo 18 is particularly valuable for manufacturers in industries where material costs represent a significant portion of production costs. By tracking scrap systematically, you can identify suppliers with higher defect rates, adjust Bills of Materials to account for normal waste, and calculate accurate product costs that include realistic material allowances.
Inventory Accuracy
Scrap locations keep damaged or defective materials separate from usable inventory, ensuring your stock levels always reflect what you actually have available for production.
Material Loss Tracking
Every scrap transaction is logged with the product, quantity, location, and reason, enabling detailed reporting on material loss patterns and supplier quality issues.
Full Traceability
Link scrap orders to manufacturing orders, lot numbers, or serial numbers. Every instance of material loss is auditable and can be traced back to its source.
Cost Calculation
Accurate scrap data enables precise product costing by including realistic material waste percentages in your Bills of Materials and work center costs.
Enabling Storage Locations for Scrap Management
Before you can create scrap locations and manage scrap orders, you must enable the Storage Locations feature in Odoo 18. This feature allows you to define multiple locations within your warehouses, which is essential for creating dedicated scrap locations separate from your regular inventory locations.
Access the Inventory Module
Log into your Odoo 18 instance and navigate to the Inventory module from the main application dashboard.
Open Settings
Go to Configuration in the left sidebar, then click on Settings to access the warehouse configuration options.
Enable Storage Locations
Scroll to the Warehouse section in the Settings page and locate the Storage Locations option. Check the box to enable this feature. If the feature is already enabled, you will see it marked as active.
Important Note
Enabling Storage Locations is a global setting that affects your entire Odoo database. Once enabled, all products and moves will require a specific location. Make sure this aligns with your warehouse management strategy before proceeding.
Creating a Scrap Location in Odoo 18
Now that Storage Locations is enabled, you can create a dedicated Scrap Location. This location will serve as the destination for all scrapped materials, keeping them separate from your regular inventory and enabling accurate tracking and reporting.
Navigate to Locations
In the Inventory module, go to Configuration and select Locations from the dropdown menu.
Create New Location
Click the New button in the upper left corner of the Locations list view to open the location creation form.
Configure Location Details
Enter the following information in the location form: Location Name as "Scrap", Parent Location as "Virtual Locations", Location Type as "Inventory Loss", and enable the Is a Scrap Location checkbox.
Location Name: Scrap
Parent Location: Virtual Locations
Location Type: Inventory Loss
Is a Scrap Location: Checked (Enabled)
Once you save this location, Odoo 18 will recognize it as your designated scrap destination. You can create multiple scrap locations if you have different types of scrap or want to track scrap by production line or warehouse. The location type "Inventory Loss" ensures that materials moved to this location are treated as reductions in inventory value, which is important for accurate financial reporting.
Creating a Standalone Scrap Order
A standalone scrap order is useful when you need to scrap materials that are not associated with a specific manufacturing order. This could include damaged raw materials in your warehouse, obsolete inventory, or materials that have exceeded their shelf life. This step by step guide shows you how to create a scrap order from the Manufacturing module.
Access Scrap Orders
Navigate to the Manufacturing module, then go to Operations and select Scrap from the menu.
Create New Scrap Order
Click the New button to open the scrap order creation form where you will specify the product, quantity, and locations.
Select Product to Scrap
In the Product field, click the dropdown and search for the product you want to scrap. You can scrap any product in your inventory, including raw materials, components, and finished goods.
Specify Locations and Quantity
Enter the Quantity to scrap, select the Source Location (where the product is currently located), and verify the Scrap Location is set to your configured scrap location.
Save and Validate
Click Save to create the scrap order. The order will automatically create the necessary stock moves to transfer the product from the source location to the scrap location.
View Product Moves
After saving the scrap order, click on the Product Moves button to view the stock moves created by the scrap order. This shows exactly where the product was moved from and to, with timestamps for full traceability.
Creating Scrap Orders During Manufacturing Operations
One of the most powerful features of scrap management in Odoo 18 is the ability to create scrap orders directly from within a manufacturing order. This is particularly useful when a component becomes damaged during the production process. Instead of completing the manufacturing order with missing or defective components, operators can immediately scrap the damaged items and continue production. This complete tutorial section walks you through the process.
Creating a Bill of Materials for Practice
Before demonstrating how to create scrap during a manufacturing order, let us set up a sample Bill of Materials that we will use throughout this demonstration. This will help you understand the complete workflow.
Create a New Bill of Materials
Navigate to Products in the Manufacturing module, then select Bill of Materials. Click New to create a new BOM.
Configure Product and BoM Type
Select the Product you want to manufacture (for example, a Table), add a Product Variant if applicable, and set the Quantity. Choose BoM Type as "Manufacture this Product".
Add Components
In the Components tab, add the materials needed for production. For example, if manufacturing a table, you might add Table Top, Table Legs (4 units), and Assembly Hardware as components.
Define Operations
In the Operations tab, add the production steps. For example, "Cutting" and "Finishing" as two separate operations. Assign each operation to a Work Center and define the sequence so finishing occurs after cutting.
| Operation | Work Center | Sequence |
|---|---|---|
| Cutting | Assembly 1 | 1 |
| Finishing | Assembly 1 | 2 |
Creating the Manufacturing Order
Now that the Bill of Materials is ready, let us create a manufacturing order and see how to handle scrap during production.
Create Manufacturing Order
Go to Manufacturing module, navigate to Operations, and select Manufacturing Orders. Click New to create a new production order.
Select Bill of Materials
Choose the Bill of Materials you created earlier. The product, components, and operations will automatically populate based on the BOM configuration.
Confirm and Plan
Review the manufacturing order details and click Confirm to validate the order. Then click Plan to schedule the production operations.
Creating Scrap During Production
When a component becomes damaged during the manufacturing process, you can create a scrap order directly from the manufacturing order without leaving the production workflow. This beginner guide shows exactly how to do it.
Start the First Operation
Click Start on the first operation (Cutting) to begin production. Once the operation is complete, proceed to the next operation.
Access Scrap Functionality
During or after the operation, click on the Settings icon (gear icon) in the manufacturing order to access additional options including the scrap functionality.
Add Scrap Details
In the scrap dialog, enter the Product that was damaged, the Quantity, and optionally a Lot/Serial Number if the product is tracked. Click Scrap Products to transfer the item to the scrap location.
Continue Production
After creating the scrap order, click Produce All to complete the manufacturing order. The system will account for the scrapped components and continue production with the remaining materials.
Tracking Scrap Through Product Moves
Every scrap transaction in Odoo 18 creates product moves that you can trace for auditing and reporting purposes. Understanding how to view and interpret these moves is essential for effective scrap management.
View Scrap Orders
In the Manufacturing module, go to Operations and select Scrap to see all scrap orders. Click on any scrap order to view its details.
Access Product Moves
In the scrap order form, click the Product Moves button to see the stock movements created by this scrap order. Each move shows the source location, destination location, product, quantity, and date.
View Manufacturing Order Scraps
In the manufacturing order, click the Scrap button to see all scrap orders created during that specific production. This gives you a complete picture of material loss for each manufacturing order.
The product moves clearly show that a component (such as a Tabletop) was damaged during production and moved from the stock location to the scrap location. This level of detail is crucial for identifying quality issues, tracking supplier problems, and calculating accurate product costs.
Product = Tabletop
Source Location = WH/Stock
Scrap Location = WH/Scrap
Quantity = 1
Date = 2025-07-30 10:45:00
This scrap management functionality is particularly valuable when combined with other Odoo 18 Manufacturing features. For example, you can analyze scrap data alongside quality control checks to identify patterns, use the information to negotiate better terms with suppliers whose materials have higher defect rates, and incorporate scrap percentages into your Bills of Materials for more accurate costing.
Related Operations in Odoo 18 Manufacturing
Scrap management in Odoo 18 does not exist in isolation. It connects with several other manufacturing operations to provide a complete production management system. Understanding these connections helps you leverage the full power of Odoo's manufacturing suite.
| Operation | Description | Integration with Scrap |
|---|---|---|
| Manufacturing Orders | Create and manage production orders | Create scrap orders directly from MOs |
| Bill of Materials | Define product structures and components | Components can be scrapped during production |
| Work Centers | Define production resources and capacity | Scrap tracked by work center for analysis |
| Unbuild Orders | Disassemble finished products | Reverse of scrap - recovers components |
| Quality Control | Check products during production | Failed QC items can trigger scrap orders |
Frequently Asked Questions
How do I enable scrap management in Odoo 18?
Enable Storage Locations in Inventory > Configuration > Settings > Warehouse. Then create a Scrap Location in Inventory > Configuration > Locations, setting Location Type to Inventory Loss and enabling Is a Scrap Location.
Can I create scrap orders during an active manufacturing order?
Yes. During a manufacturing operation, click the Settings icon in the manufacturing order, add the damaged product details, quantity, and lot/serial number if applicable, then click Scrap Products to transfer the item to your scrap location.
What is the difference between a scrap location and a virtual location?
Virtual locations are abstract locations used for inventory planning (like virtual output). A scrap location is a specific type used to track materials that are no longer usable, with Location Type set to Inventory Loss for accurate financial reporting.
How do I track what was scrapped in a manufacturing order?
In the manufacturing order, click the Scrap button to see all scrap orders created during that production. Each shows the product, quantity, source location, scrap location, and timestamps for complete traceability.
Can I scrap products with serial or lot numbers?
Yes. When creating a scrap order, you can specify the Lot/Serial Number for tracked products. This maintains full traceability and ensures inventory records accurately reflect which specific items were scrapped.
Need Help with Odoo?
Our experts can help you configure scrap management, optimize your manufacturing operations, and implement AI-powered quality control in your Odoo system.