Manufacturing Accounting & Production Concepts

1. Overview & Business Value#

This comprehensive operational guide details the architecture, business workflows, configuration parameters, and execution steps for Manufacturing Accounting & Production Concepts within SmartERP.

Core architectural concepts: BoM explosions, double-entry WIP absorption, standard costing, and OEE.

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2. Prerequisites & Security Access Groups#

• Required Modules: mrp, quality_control, smarterp_manufacturing_costing
• Security Groups:
  • Manufacturing User (Technical ID: mrp.group_mrp_user)
  • Manufacturing Administrator (Technical ID: mrp.group_mrp_manager)
  • Quality Inspector (Technical ID: quality.group_quality_user)
• Master Data Dependencies: Bills of Materials (BoM), routing operations, work centers with machine/labor hourly rates, raw material stock, and inspection checkpoints.

3. Step-by-Step Configuration & Execution#

Step 1: Navigating to the Module Interface#

1. Log into your SmartERP instance at https://smarterp.et/odoo.
2. Open the main App Switcher (grid icon in the top-left corner).
3. Select the Manufacturing app icon.
4. From the top navigation bar, open Manufacturing → Operations → Manufacturing Orders / Work Orders; Quality → Quality Control.

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Step 2: Creating and Parameterizing Records#

1. Click the New button in the top-left control panel.
2. Complete the mandatory fields in the record form:
   • Finished Product (Mandatory): Manufacturable item variant linked to an active Bill of Materials
   • Quantity to Produce (Mandatory): Target production batch volume in standard unit of measure
   • Bill of Materials (BoM) (Mandatory): Active engineering recipe defining component roll-ups and operation steps
   • Scheduled Date (Mandatory): Target production execution date and shift allocation
3. Configure optional operational parameters and localized tags as required:
   • Work Center Routing (Optional): Specific shop floor machine or assembly station sequence
   • Lot / Serial Number (Optional): Assigned traceability lot for finished goods batch tracking
   • Analytic Cost Account (Optional): Cost absorption center for direct labor and utility overhead
4. Click the Save icon in the control bar to commit the record.

{screenshot:concepts-record-creation-form}

Step 3: Validating and Processing Transactions#

• State Transitions: Execute operational state progression (Draft → Confirmed → In Production → Quality Gate Passed → Done → Cost Closed).
• Ledger & System Impact: Consumes raw materials from inventory (crediting stock valuation), absorbs labor/machine overhead, and debits finished goods inventory at actual cost.
• Audit Verification: Automated recording of author ID, timestamp, and immutable revision history.

{screenshot:concepts-transaction-processing-state}

Core Production Mechanics#

Manufacturing in SmartERP is governed by double-entry operational and financial accounting. Every material conversion on the shop floor triggers simultaneous updates to inventory quants, analytic accounts, and general ledger journals.

The Bill of Materials (BoM) Explosion#

A Bill of Materials defines the engineering recipe for a product. When a Manufacturing Order (MO) is confirmed, SmartERP executes a BoM explosion:

• Level 0: Finished Good (e.g., Corrugated Steel Roofing Sheet 3m).
• Level 1: Semi-Finished Goods (e.g., Galvanized Steel Coil Strip) and direct raw materials.
• Level 2: Raw chemical coatings, zinc ingots, and packaging materials.

The system determines whether intermediate sub-assemblies should be manufactured via child MOs or treated as phantom kits that explode directly into the parent assembly.

[mrp-bom-cost-rollup]

Double-Entry WIP and Absorption Accounting#

Unlike simplistic ERP systems that record product costs only upon receipt, SmartERP tracks cost evolution across three continuous stages:

1. Raw Material Issuance:
   • Debit: Work-in-Progress (WIP) Inventory Account (103100)
   • Credit: Raw Materials Inventory Asset Account (102100)
2. Operational Overhead & Direct Labor Absorption:
   • Debit: Work-in-Progress (WIP) Inventory Account (103100)
   • Credit: Direct Labor Absorption Recovery Account (502100)
   • Credit: Machine Overhead Absorption Recovery Account (502200)
3. Finished Goods Receipt:
   • Debit: Finished Goods Inventory Asset Account (104100)
   • Credit: Work-in-Progress (WIP) Inventory Account (103100)

[mrp-wip-accounting-flow]

Overall Equipment Effectiveness (OEE)#

SmartERP calculates OEE across all active work centers to quantify production line efficiency:

$$\text{OEE} = \text{Availability} \times \text{Performance} \times \text{Quality}$$

• Availability: Actual operating time divided by planned production time (penalized by breakdowns, setup delays, and raw material stockouts).
• Performance: Actual units produced per hour divided by standard engineering design speed.
• Quality: Defect-free units (first-time pass) divided by total units produced.

By-Products, Co-Products, and Scrap Taxonomy#

• Finished Good: The primary output intended for customer sale or inventory stocking.
• Co-Product: A secondary valuable product generated simultaneously (e.g., refined oil and press cake during oilseed extraction). Cost is apportioned based on relative sales value.
• By-Product: A minor secondary output with nominal market value (e.g., sawdust in timber mills).
• Scrap / Spoilage: Damaged, off-spec, or waste material that cannot be used. Normal scrap is absorbed into product cost; abnormal scrap is expensed immediately to profit and loss.

4. Advanced Configuration Points#

• Automated Actions & Scheduled Tasks (Crons):
  • MRP: Recalculate BoM standard costs (mrp.ir_cron_bom_cost_roll): Runs weekly to update standard costing from latest procurement purchase prices
  • Quality: Trigger periodic inspection alerts (quality.ir_cron_inspection_check): Runs daily to flag mandatory quality testing queues
  • Workcenter: Update OEE statistics (mrp.ir_cron_workcenter_oee): Runs hourly to compute Overall Equipment Effectiveness metrics
• Custom Print Templates & Reports:
  • Production Order Traveler & Pick List
  • Shop Floor Work Order Execution Slip
  • Quality Inspection Certificate & Non-Conformance Report
  • Manufacturing Cost Analysis & Variance Ledger
• Multi-Company Rules: Record-level security isolation under Company 1 (Ashewa Technology Solutions S.C.), preventing cross-company ledger leakage across parent and subsidiary legal entities.

5. Comprehensive Troubleshooting Matrix#