Work Orders (WOs) play a crucial role in inventory management, particularly when tracking raw materials and finished goods at your manufacturer’s location. Understanding how inventory is affected by Work Orders can help prevent discrepancies and streamline operations.
1. Setting up inventory for Work Orders
Before placing a Work Order, ensure that inventory is available at your manufacturer’s location. Work Orders assume that raw materials required for production are already stored at your manufacturing site.
If inventory needs to be sent to the manufacturer, you must either:
Create a Purchase Order (PO) with the manufacturer as the receiving location.
Transfer inventory from your warehouse to the manufacturer’s location.
To view inventory levels at your manufacturer:
Navigate to Locations.
Select the manufacturer’s location.
If this is your first time setting up the manufacturer, enter the initial inventory balance manually.
If you notice inventory decreasing immediately after entering the balance, it’s because an existing Work Order has already drawn from that stock.
2. Work Order creation and inventory decreases
When a Work Order is created for a manufacturer:
The inventory of raw materials at the manufacturer’s location is decremented.
The system does not immediately increase the inventory of the finished product.(e.g., a pizza made from sauce, dough, and mozzarella).
Example:
Imagine you are producing Pizza and it consists of:
Sauce
Dough
Mozzarella
When a Work Order is created:
Sauce, Dough, and Mozzarella quantities decrease at the manufacturer’s location.
Pizza inventory does not increase yet.
3. Receiving the finished product
Once production is complete, you must receive the finished goods into your inventory. To do this:
Create a Goods Receipt Note (GRN) when inventory arrives at your destination.
At this point, the final product (e.g., Pizza) inventory increases at the warehouse or any designated location.
Inventory changes take effect only after the GRN is recorded.
Key considerations
Work Orders only deduct inventory at the manufacturer’s location. If you do not see a decrease, ensure the correct location was selected.
Transfers are separate from Work Orders. Moving stock to a manufacturer must be done through a Transfer Order or Purchase Order.
Finished goods inventory is only updated upon receipt. A Work Order does not automatically increase the finished goods stock.
Editing an existing Work Order does not re-process inventory consumption automatically. Adjustments may require re-entering inventory levels.
By following these steps, you can ensure that your inventory is accurately tracked and updated throughout the production process.
👉 Read more about creating and managing Work Orders in Settle.
👉 Read more about Inventory in Settle.