An experienced Odoo Consultant knows that managing production efficiently requires precision and control over stock movement. In Odoo 18, businesses can simplify their manufacturing operations using a three-step warehouse configuration that mirrors real-life processes: picking raw materials, executing production, and transferring finished products into stock.
This blog explains the complete workflow—from creating products and setting up Bills of Materials (BoM) to configuring work centers, enabling three-step routing, and reviewing costs and journal entries. By the end, you’ll understand how Odoo 18 ensures full visibility of raw material consumption, product tracking, and finished goods movement.
Enabling Multi-Step Routes and Storage Locations
Before setting up the three-step process, activate two key options in Inventory > Settings:
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Multi-Step Routes – Allows you to manage product transfers in multiple stages like input, production, and stock.
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Storage Locations – Lets you divide your warehouse into raw materials, production areas, and finished goods zones.
This setup provides better visibility and control at each stage of the manufacturing cycle.
Configuring the Warehouse for Three-Step Manufacturing
Go to Inventory > Configuration > Warehouses, open your warehouse, and under the Manufacturing section select:
“Manufacture in 3 steps: pick components, manufacture, then store products.”
With this setup, raw materials are first picked, then sent to production, and finally, finished goods are transferred into stock. This structure ensures complete traceability of every movement.
Creating a Product and Assigning Routes
Create your product under Manufacturing > Products > Products. For example, a Wooden Table should be marked as a Storable Product. In the Inventory tab, select the Manufacture route to indicate it will be produced internally.
To ensure accurate accounting, set automated inventory valuation in the product category of both raw materials and finished goods. Configure stock input, output, and valuation accounts to automate journal entries.
Setting Up the Bill of Materials (BoM)
Go to Manufacturing > Products > Bill of Materials and create a BoM for the product. Add components like wood planks, nails, and glue, along with their quantities.
In the Operations tab, you can also define steps (cutting, assembly, finishing) and assign them to specific work centers for better organization and costing.
Configuring Work Centers and Operations
Work centers represent machines or stations where tasks are performed. For example:
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Cutting Station – cutting wood pieces.
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Assembly Station – assembling parts.
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Finishing Station – sanding and painting.
Each work center must be assigned capacity, cost per hour, and an expense account. Operations like Cutting Wood or Assembling Parts can then be linked to these work centers in the BoM. This ensures accurate scheduling and cost tracking.
Executing the Manufacturing Order (MO)
Create a Manufacturing Order (MO) under Manufacturing > Operations > Manufacturing Orders. Select your product and quantity (e.g., 10 Wooden Tables).
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Odoo fetches the BoM, reserves raw materials, and creates a picking order for transferring them from stock to pre-production.
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Validate the transfer to move items and mark components as “Ready.”
Running Production with Work Orders
From the MO’s Work Orders tab, start and complete each operation (Cutting, Assembling, Finishing). Odoo 18 offers a Shop Floor interface that production workers can use in real-time to start, pause, or mark tasks as done.
During this stage, stock moves from pre-production to production, and raw materials are consumed.
Moving Finished Goods into Stock
Once all operations are completed, Odoo automatically generates a final transfer to move finished goods from post-production to stock. Validate the transfer to update inventory and make items available for sale or internal use.
Tracking Costs and Journal Entries
The Overview tab of the MO shows a live breakdown of:
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Raw materials consumed (from the BoM).
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Work center operational costs.
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Total production cost.
If automated valuation is enabled, Odoo creates journal entries:
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Raw material consumption reduces stock and moves value into production.
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Finished products transfer total cost (materials + operations) into finished goods inventory.
This ensures both stock levels and accounting stay accurate.
Conclusion
The three-step warehouse configuration in Odoo 18 provides a structured, transparent, and efficient approach to manufacturing. By separating material picking, production, and storage, businesses gain better control of their workflow, accurate cost tracking, and real-time visibility of product movements.
With the guidance of an Odoo Consultant, companies can configure this setup to streamline operations, reduce errors, and scale their manufacturing process effectively.