Two-Step Manufacturing in Odoo 18
By Braincuber Team
Published on January 10, 2026
A furniture manufacturer runs a single production line where workers grab components directly from warehouse shelves whenever they need them. The problem? Workers often can't find what they need—someone moved the oak panels to make room for a delivery, the metal brackets got mixed up with another order, and half the screws are missing because nobody tracked who took them. Production stops while workers hunt for parts, and when they finally finish a batch of custom desks, the cost calculation is a mess because nobody knows exactly which materials went into each unit.
Odoo 18's two-step manufacturing configuration solves this by separating component picking from actual production. When you confirm a Manufacturing Order, the system first generates a transfer that moves all required materials from main inventory (WH/Stock) to a dedicated pre-production staging area (WH/Pre-Production). Workers pick and stage everything needed for the production run. Only after this transfer is validated does manufacturing begin—with all components confirmed present and accounted for. This creates clear visibility into material availability, prevents production stoppages from missing parts, and enables accurate cost tracking for every manufactured unit.
Two-Step Flow: MO Confirmed → Transfer created (Stock → Pre-Production) → Validate transfer → Components staged → Manufacturing begins → Work orders completed → Finished goods produced. Materials tracked at every stage.
Why Use Two-Step Manufacturing?
Component Staging
Materials move to a dedicated pre-production area before manufacturing starts. No more hunting for parts during production—everything is picked, verified, and staged in advance.
Availability Confirmation
Manufacturing begins only after all materials are confirmed present in pre-production. If components are missing, you discover it during the picking phase—not mid-production.
Accurate Cost Tracking
Every material movement is recorded. Know exactly which components went into each production run, enabling precise cost calculations and variance analysis.
Clear Separation
Warehouse and production teams work independently. Pickers prepare materials while production finishes previous orders—parallel workflows increase throughput.
Understanding One-Step vs Two-Step
MANUFACTURING CONFIGURATION COMPARISON
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ONE-STEP MANUFACTURING (Default)
───────────────────────────────────────────────────────────
Flow: MO Confirmed → Manufacturing Starts
(Components consumed directly from Stock)
Material Path: WH/Stock → Virtual/Production
Advantages:
• Simpler setup
• Fewer steps for small operations
• Works well for single-product runs
Disadvantages:
• No staging verification
• Missing parts discovered during production
• Harder to track material allocation
Best For: Small workshops, simple products,
single-item manufacturing
TWO-STEP MANUFACTURING
───────────────────────────────────────────────────────────
Flow: MO Confirmed → Transfer Created
→ Pick Components → Validate Transfer
→ Manufacturing Starts
Material Path: WH/Stock → WH/Pre-Production → Production
Advantages:
• Components verified before production
• Clear material staging
• Accurate inventory tracking
• Parallel picking and production
• Better cost allocation
Disadvantages:
• Additional step in workflow
• Requires pre-production location setup
Best For: Furniture, electronics, complex assemblies,
multi-component products, job shops
WHEN TO USE TWO-STEP
═══════════════════════════════════════════════════════════
✓ Products with 5+ components
✓ High-value materials that need tracking
✓ Multiple production runs per day
✓ Separate warehouse and production teams
✓ Need accurate cost analysis per order
✓ Quality control before production
✓ Limited production floor storage
Enabling Two-Step Manufacturing
Enable Multi-Step Routes
Activate the multi-step capability:
- Navigate to Inventory → Configuration → Settings
- Find the Warehouse section
- Enable Multi-Step Routes checkbox
- Click Save to apply changes
Configure Warehouse for Two-Step
Set manufacturing to two-step mode:
- Go to Inventory → Configuration → Warehouses
- Select your warehouse (e.g., Main Warehouse)
- Find the Manufacture section
- Select "Pick components and then manufacture (2 steps)"
- Click Save
Verify Auto-Created Route
Check the automatically created route:
- On the warehouse form, click the Routes smart button
- Find route: "[Warehouse]: Pick components and then manufacture"
- This route contains two rules managing material flow
- Odoo creates the Pre-Production location automatically
Understanding the Two-Step Route
TWO-STEP MANUFACTURING ROUTE RULES
═══════════════════════════════════════════════════════════
ROUTE NAME: Main Warehouse: Pick components and then manufacture
RULE 1: COMPONENT PICKING
───────────────────────────────────────────────────────────
Name: Pick Components
Action: Pull (materials pulled when needed)
Source: WH/Stock (main inventory)
Destination: WH/Pre-Production (staging area)
Trigger: MO Confirmed
What Happens:
1. Manufacturing Order confirmed
2. System creates internal transfer
3. Transfer lists all components needed
4. Warehouse team picks from Stock location
5. Materials moved to Pre-Production
6. Transfer validated when complete
RULE 2: MANUFACTURING CONSUMPTION
───────────────────────────────────────────────────────────
Name: Manufacture
Action: Pull (from pre-production to production)
Source: WH/Pre-Production (staged materials)
Destination: Virtual/Production (manufacturing location)
Trigger: Transfer Validated
What Happens:
1. Component transfer validated
2. Materials available in Pre-Production
3. Manufacturing can begin
4. Components consumed during work orders
5. Finished goods produced to stock
LOCATION FLOW DIAGRAM
═══════════════════════════════════════════════════════════
┌─────────────┐ STEP 1 ┌────────────────┐
│ WH/Stock │ ──────────────► │ WH/Pre-Prod │
│ (Inventory) │ Transfer │ (Staging) │
└─────────────┘ └────────────────┘
│
STEP 2│
▼
┌─────────────┐ ┌────────────────┐
│ WH/Stock │ ◄────────────── │ Production │
│ (Output) │ Finished Goods │ (Virtual) │
└─────────────┘ └────────────────┘
Setting Up the Bill of Materials
Before manufacturing, create a Bill of Materials (BoM) that defines components, quantities, and operations. The BoM serves as the recipe for production.
BILL OF MATERIALS: Executive Office Desk ═══════════════════════════════════════════════════════════ PRODUCT INFORMATION ─────────────────────────────────────────────────────────── Product: Executive Office Desk Product Type: Storable Product BoM Type: Manufacture this product Quantity: 1 unit COMPONENTS TAB ─────────────────────────────────────────────────────────── # | Component | Qty | Unit | Cost/Unit ──────────────────────────────────────────────────────────── 1 | Oak Desktop Panel | 1 | pcs | $120.00 2 | Steel Leg Frame | 1 | set | $85.00 3 | Cable Management Tray | 1 | pcs | $25.00 4 | Drawer Unit (3-drawer) | 1 | pcs | $95.00 5 | Mounting Brackets | 8 | pcs | $2.50 6 | Wood Screws (M4x30) | 24 | pcs | $0.15 7 | Allen Bolts (M6x40) | 12 | pcs | $0.45 8 | Rubber Feet Pads | 4 | pcs | $1.25 ──────────────────────────────────────────────────────────── COMPONENT TOTAL: $356.40 OPERATIONS TAB ─────────────────────────────────────────────────────────── # | Operation | Work Center | Duration ──────────────────────────────────────────────────────────── 1 | Frame Assembly | Assembly Line | 15 min 2 | Desktop Mounting | Assembly Line | 10 min 3 | Drawer Installation| Assembly Line | 8 min 4 | Cable Tray Install | Assembly Line | 5 min 5 | Quality Inspection | QC Station | 5 min 6 | Final Touches | Finishing Area | 7 min ──────────────────────────────────────────────────────────── TOTAL PRODUCTION TIME: 50 minutes WORK CENTER COSTS ─────────────────────────────────────────────────────────── Assembly Line: $45.00/hour → 38 min = $28.50 QC Station: $30.00/hour → 5 min = $2.50 Finishing Area: $35.00/hour → 7 min = $4.08 ──────────────────────────────────────────────────────────── OPERATION COST: $35.08 TOTAL MANUFACTURING COST ═══════════════════════════════════════════════════════════ Components: $356.40 Operations: $35.08 ──────────────────────────────────────────────────────────── ESTIMATED TOTAL: $391.48 per unit
Complete Two-Step Manufacturing Workflow
Create Manufacturing Order
Initiate production:
- Go to Manufacturing → Operations → Manufacturing Orders
- Click New to create an order
- Select the product (e.g., Executive Office Desk)
- Set quantity to manufacture (e.g., 5 units)
- System populates BoM details automatically
- Click Confirm to initiate the manufacturing process
Execute Component Transfer (Step 1)
Pick and stage materials:
- After confirming MO, click the Transfers smart button
- Open the transfer (status: Waiting or Ready)
- Transfer shows all components × quantity ordered
- Warehouse team picks items from WH/Stock
- Click Validate to confirm materials staged
- Components now in WH/Pre-Production location
Execute Manufacturing (Step 2)
Complete production operations:
- Return to the Manufacturing Order
- Open the Work Orders tab
- Start each operation with the Start button
- Record actual time spent and any additional materials
- Click Done when operation completes
- Repeat for all operations in sequence
Complete Production
Finalize and close the order:
- All work orders show "Finished" status
- MO status changes to "To Close"
- Click Shop Floor smart button or use Shop Floor module
- Close out the production
- MO status updates to Done
- Finished goods added to inventory
Complete Production Example
MANUFACTURING ORDER: 5 EXECUTIVE OFFICE DESKS ═══════════════════════════════════════════════════════════ MO INFORMATION ─────────────────────────────────────────────────────────── Reference: MO/2026/00089 Product: Executive Office Desk Quantity: 5 units Scheduled Date: 2026-01-10 Status: Confirmed → In Progress → Done STEP 1: COMPONENT TRANSFER ═══════════════════════════════════════════════════════════ Transfer: WH/INT/00234 Route: WH/Stock → WH/Pre-Production MATERIALS TO PICK (qty × 5 units) ─────────────────────────────────────────────────────────── Component | Per Unit | Total | Status ──────────────────────────────────────────────────────────── Oak Desktop Panel | 1 | 5 | ✓ Picked Steel Leg Frame | 1 | 5 | ✓ Picked Cable Management Tray | 1 | 5 | ✓ Picked Drawer Unit (3-drawer) | 1 | 5 | ✓ Picked Mounting Brackets | 8 | 40 | ✓ Picked Wood Screws (M4x30) | 24 | 120 | ✓ Picked Allen Bolts (M6x40) | 12 | 60 | ✓ Picked Rubber Feet Pads | 4 | 20 | ✓ Picked Transfer Status: Validated at 08:45 AM Duration: 25 minutes picking time Picker: John (Warehouse Team) STEP 2: MANUFACTURING EXECUTION ═══════════════════════════════════════════════════════════ WORK ORDERS (Batch of 5) ─────────────────────────────────────────────────────────── Op | Operation | Planned | Actual | Status ──────────────────────────────────────────────────────────── 1 | Frame Assembly | 1h 15m | 1h 18m | Done ✓ 2 | Desktop Mounting | 50m | 48m | Done ✓ 3 | Drawer Installation| 40m | 42m | Done ✓ 4 | Cable Tray Install | 25m | 22m | Done ✓ 5 | Quality Inspection | 25m | 28m | Done ✓ 6 | Final Touches | 35m | 33m | Done ✓ ──────────────────────────────────────────────────────────── TOTAL: 4h 10m 4h 11m Production Started: 09:00 AM Production Completed: 01:11 PM Operator: Sarah (Production Team) STEP 3: PRODUCTION CLOSED ═══════════════════════════════════════════════════════════ MO Status: Done Finished Goods: 5 units → WH/Stock Components Consumed: All materials from Pre-Production INVENTORY MOVEMENTS ─────────────────────────────────────────────────────────── Before Production: WH/Stock: 0 Executive Office Desks Oak Desktop Panels: 12 units (7 remaining after) After Production: WH/Stock: 5 Executive Office Desks ← NEW Components: Reduced by production quantities
Cost Calculation and Analysis
COST ANALYSIS: MO/2026/00089 (5 Executive Desks) ═══════════════════════════════════════════════════════════ MATERIAL COSTS ─────────────────────────────────────────────────────────── Component | Qty | Unit Cost | Total ──────────────────────────────────────────────────────────── Oak Desktop Panel | 5 | $120.00 | $600.00 Steel Leg Frame | 5 | $85.00 | $425.00 Cable Management Tray | 5 | $25.00 | $125.00 Drawer Unit (3-drawer) | 5 | $95.00 | $475.00 Mounting Brackets | 40 | $2.50 | $100.00 Wood Screws (M4x30) | 120 | $0.15 | $18.00 Allen Bolts (M6x40) | 60 | $0.45 | $27.00 Rubber Feet Pads | 20 | $1.25 | $25.00 ──────────────────────────────────────────────────────────── MATERIAL TOTAL: $1,795.00 LABOR COSTS (Work Center Rates) ─────────────────────────────────────────────────────────── Work Center | Actual Time | Rate/Hour | Cost ──────────────────────────────────────────────────────────── Assembly Line | 3h 10m | $45.00 | $142.50 QC Station | 28m | $30.00 | $14.00 Finishing Area | 33m | $35.00 | $19.25 ──────────────────────────────────────────────────────────── LABOR TOTAL: $175.75 COST SUMMARY ═══════════════════════════════════════════════════════════ Planned Cost: $1,957.40 (based on BoM estimates) Actual Cost: $1,970.75 Cost Variance: +$13.35 (0.68% over estimate) BREAKDOWN: Materials: $1,795.00 (planned: $1,782.00) Labor: $175.75 (planned: $175.40) Variance Analysis: • Material costs on target (+$13 from extra screws) • Labor only 35 cents over (1 minute overtime) • Overall variance under 1% = excellent accuracy PER-UNIT COST ─────────────────────────────────────────────────────────── Total Cost: $1,970.75 Quantity: 5 units Cost Per Unit: $394.15 Recommended Price: $550.00 (40% margin) Profit Per Unit: $155.85
Tracking Inventory Movements
Two-step manufacturing creates clear inventory movement records. Every component is tracked from main stock through pre-production to consumption.
✅ Inventory Visibility at Each Stage:
- WH/Stock (Main Inventory): Components available for all purposes—see quantities before production claims them
- Transfer Created: System reserves components for this specific MO—other orders see reduced availability
- WH/Pre-Production: Components staged and verified—production sees exactly what's available for this order
- Production Consumption: Materials consumed during work orders—inventory reduced, costs allocated
- Finished Goods: Completed products added to WH/Stock—ready for sale or further processing
Best Practices
✅ Follow These Guidelines:
- Validate transfers completely: Don't partial-validate component transfers—ensure all materials are staged before starting production
- Use barcode scanning: Enable barcode operations for fast, accurate picking during the transfer step
- Monitor pre-production location: Items shouldn't sit in pre-production long—it's staging, not storage
- Track work order times: Record actual durations for accurate labor costing and future estimates
- Review cost variances: Analyze differences between planned and actual costs to improve BoM accuracy
- Set up alerts: Configure low-stock alerts for critical components to prevent picking failures
- Parallel workflows: Start picking for next MO while current production is running
- Quality checks at staging: Inspect components during transfer validation, not during production
Common Issues and Solutions
🚨 Issue #1: Transfer Not Created After MO Confirmation
No transfer appears when MO is confirmed. Solution: Verify warehouse is configured for two-step manufacturing. Go to Inventory → Warehouses, check that "Pick components and then manufacture (2 steps)" is selected.
🚨 Issue #2: Components Unavailable in Transfer
Transfer shows "Waiting" status due to missing stock. Solution: Check component availability in WH/Stock. Either wait for replenishment, create purchase orders, or reduce MO quantity to match available stock.
🚨 Issue #3: Pre-Production Location Not Visible
Can't find pre-production location in inventory. Solution: Enable "Storage Locations" in Inventory settings. The WH/Pre-Production location is created automatically when two-step is enabled.
🚨 Issue #4: Production Started Without Transfer Validation
Work orders are available but transfer isn't validated. Solution: In two-step mode, always validate the component transfer first. Manufacturing will consume from Pre-Production—if materials aren't there, production can't proceed properly.
Conclusion
Two-step manufacturing in Odoo 18 separates component picking from production execution, creating a controlled workflow where materials are staged and verified before manufacturing begins. Enable the configuration in warehouse settings, and Odoo automatically creates the routing rules and pre-production location. When Manufacturing Orders are confirmed, the system generates component transfers that move materials from main stock to the staging area. Only after transfer validation does production proceed, ensuring all materials are present and accounted for. This approach prevents mid-production stoppages from missing parts, enables accurate cost tracking per order, and allows parallel workflows where warehouse teams prepare the next order while production completes the current one. The result is better inventory control, precise cost analysis, and smoother production operations.
🎯 Key Takeaway: Enable two-step in warehouse settings → confirm MO → transfer picks components to pre-production → validate transfer → manufacturing consumes staged materials → accurate tracking at every stage. Better control, better costs, smoother production.