Odoo By-Products: How to Manage Secondary Outputs in Manufacturing
Manufacturing does not always produce just one finished product. In many industries, the production process generates additional materials or secondary products alongside the primary finished product.
For example, a furniture manufacturer producing wooden tables may also generate wood offcuts. A food-processing company producing oil may generate oil cake as a secondary output. A metal manufacturer may produce metal scrap while manufacturing a finished component.
These secondary outputs can have significant operational and financial value.
Odoo Manufacturing provides a way to manage these secondary outputs through By-Products. By configuring by-products correctly, businesses can track additional outputs, update inventory accurately, and gain better visibility into their manufacturing processes.
In this guide, we will explain what Odoo by-products are, how they work, how to configure them, and how businesses can use them effectively.
What Is a By-Product in Odoo?
A by-product is a secondary product generated during the manufacturing of a primary finished product.
For example, suppose a company manufactures:
Primary Product: Wooden Table
During production, it also generates:
By-Product: Wood Scrap
The manufacturing process can be represented as:
Raw Materials
↓
Manufacturing Process
↓
┌───────────────┐
│ Primary │
│ Product │
│ Wooden Table │
└───────────────┘
+
┌───────────────┐
│ By-Product │
│ Wood Scrap │
└───────────────┘
The primary product is the main output, while the by-product is an additional output created during the same manufacturing operation.
Why Are By-Products Important?
Many businesses lose visibility into secondary production outputs because they focus only on the main finished product.
However, by-products can affect:
Inventory
Manufacturing costs
Waste management
Sales opportunities
Recycling
Production efficiency
Profitability
For example, if a factory generates 500 kg of recyclable metal scrap every month, that scrap may have significant resale value.
Recording it in Odoo allows the company to track the quantity and availability instead of treating it as an unrecorded production waste.
Common Examples of Manufacturing By-Products
By-products are common across many industries.
Food Manufacturing
A food-processing company may produce:
Primary Product: Cooking Oil
By-Product: Oil Cake
Another example:
Primary Product: Sugar
By-Product: Molasses
Metal Manufacturing
A metal fabrication company may produce:
Primary Product: Metal Components
By-Product: Metal Scrap
Scrap can potentially be recycled or sold to another business.
Wood Manufacturing
A furniture manufacturer may produce:
Primary Product: Wooden Furniture
By-Product: Wood Offcuts
The wood offcuts may be reused, recycled, or sold.
Textile Manufacturing
A textile company may generate:
Primary Product: Fabric
By-Product: Fabric Scraps
These scraps may be reused for smaller products or sold as waste material.
Chemical Manufacturing
Chemical processes may produce secondary materials that can be recovered, reused, or sold.
Odoo can help businesses maintain inventory visibility for these secondary outputs when they are configured as by-products.
By-Products vs. Waste
A by-product and waste are not always the same thing.
By-Product
A secondary output that has potential value or can be used elsewhere.
Examples:
Metal scrap
Wood pieces
Molasses
Recovered chemicals
Reusable materials
Waste
Material that has little or no usable value and is discarded.
For example:
Manufacturing
│
├── Finished Product
│
├── By-Product → Reusable / Sellable
│
└── Waste → Disposed
Understanding this distinction helps businesses maintain more accurate inventory records.
How Odoo By-Products Work
By-products are configured as additional outputs associated with a manufacturing process.
Suppose a company manufactures:
100 kg of Product A
The process also generates:
10 kg of By-Product B
The manufacturing order can reflect both outputs.
Input Materials
↓
Manufacturing Order
↓
┌─────────────────────┐
│ Product A │
│ 100 kg │
└─────────────────────┘
+
┌─────────────────────┐
│ By-Product B │
│ 10 kg │
└─────────────────────┘
When production is recorded, the appropriate quantities of the primary product and by-product can be reflected in inventory according to the configured manufacturing workflow.
Example: Metal Manufacturing
Let's take a practical example.
A company manufactures steel components.
The production order is:
Finished Product: Steel Component
Quantity: 1,000 units
During production, the process generates:
Metal Scrap: 100 kg
Instead of ignoring the scrap, the business can configure it as a by-product.
The manufacturing output becomes:
| Output | Quantity |
|---|---|
| Steel Components | 1,000 units |
| Metal Scrap | 100 kg |
The scrap can then be tracked separately in inventory.
How to Configure By-Products in Odoo
The exact menu names can vary slightly depending on the Odoo version and configuration, but the general process is straightforward.
Step 1: Open the Manufacturing Application
Go to the Manufacturing application.
Make sure the required manufacturing features are enabled.
Step 2: Open the Bill of Materials
Navigate to the relevant Bill of Materials (BoM).
The BoM defines the materials and manufacturing structure required to produce the finished product.
For example:
Product: Steel Component
The BoM may include:
Steel Sheet
Screws
Coating Material
Step 3: Add the By-Product
Within the BoM configuration, add the relevant secondary output under the By-Products section.
For example:
By-Product: Metal Scrap
Quantity: 100 kg
The configuration should reflect the expected output generated during the manufacturing process.
Step 4: Define the Appropriate Location
The by-product may need to be directed to an appropriate inventory location.
For example:
WH/Stock
│
├── Finished Goods
│
└── Scrap / By-Products
Separating by-products into dedicated locations can make inventory management easier.
Step 5: Create the Manufacturing Order
Create a manufacturing order using the configured Bill of Materials.
When the production order is processed, Odoo can account for the configured primary product and by-product outputs.
Example: Food Manufacturing
Imagine a company producing refined cooking oil.
The manufacturing process uses:
Raw Material: Seeds
The primary output is:
Cooking Oil: 1,000 kg
The process also generates:
Oil Cake: 200 kg
The production structure can be represented as:
Seeds
↓
Processing
├──────────────→ Cooking Oil
│ 1,000 kg
│
└──────────────→ Oil Cake
200 kg
The oil cake may then be:
Sold
Reused
Sent to another production process
Stored for future use
By tracking it in Odoo, the business gains better visibility into this secondary output.
By-Products in Multi-Step Manufacturing
Some manufacturing processes have multiple stages.
For example:
Raw Materials
↓
Cutting
↓
Processing
↓
Assembly
↓
Finished Product
A by-product may be generated at an intermediate stage.
For example, cutting metal sheets may generate scrap before the final assembly stage.
In such cases, businesses should design the manufacturing workflow carefully so the by-product is recorded at the correct stage.
By-Products and Inventory Management
Once a by-product is produced, businesses may need to track its inventory separately.
For example:
Metal Scrap
Available stock:
350 kg
New production generates:
100 kg
Updated stock:
450 kg
This makes the secondary output visible to warehouse and inventory teams.
By-Products and Sales
A valuable by-product may become a sellable product.
For example:
A furniture manufacturer produces:
Wooden Tables
and generates:
Wood Scrap
If the scrap can be sold to another company, it can be treated as an inventory item and included in the company's sales process.
The workflow becomes:
Manufacturing
↓
By-Product Created
↓
Inventory
↓
Sales Order
↓
Customer
This can turn what was previously considered production waste into an additional revenue stream.
By-Products and Reuse
Not all by-products need to be sold.
A business may reuse a secondary output in another manufacturing process.
For example:
Process A
Produces:
Primary Product + By-Product
The by-product can then become a component for:
Process B
This creates a closed-loop manufacturing workflow.
Manufacturing A
↓
By-Product
↓
Inventory
↓
Manufacturing B
↓
New Product
This can reduce material waste and improve resource utilization.
By-Products and Manufacturing Costs
One of the most important considerations when using by-products is cost allocation.
A manufacturing process consumes raw materials, labor, machine time, and other resources.
If the process produces both a primary product and a valuable by-product, businesses may need to determine how the manufacturing cost should be allocated between those outputs.
For example:
Total Production Cost: $10,000
Outputs:
Main Product
Valuable By-Product
The accounting and costing treatment should be designed according to the company's requirements and Odoo's configured valuation and costing methods.
For businesses with complex cost allocation requirements, Odoo may require additional configuration or customization.
By-Products and Quality Control
By-products may also need quality inspection.
For example, a food manufacturer produces a secondary material that must meet specific quality standards before it can be reused or sold.
A workflow could be:
By-Product Created
↓
Quality Check
↓
┌───────────────┐
│ │
Pass Fail
│ │
↓ ↓
Stock Scrap
This allows businesses to avoid using or selling secondary outputs that do not meet quality requirements.
By-Products vs. Scrap in Odoo
It is important to understand the difference between a by-product and a scrap operation.
By-Product
A planned secondary output generated by the manufacturing process.
Scrap
A product or material that is intentionally removed from usable inventory because it is damaged, defective, unusable, or otherwise no longer available for normal operations.
For example:
Planned metal scrap generated during cutting may be configured as a by-product.
A damaged finished product discovered during quality inspection may instead be moved to a scrap location.
Benefits of Managing By-Products in Odoo
Proper by-product management can provide several benefits.
Better Inventory Visibility
Businesses can see how much secondary material is available.
Reduced Material Waste
Reusable materials can be tracked instead of being discarded unnecessarily.
Additional Revenue Opportunities
Valuable by-products can potentially be sold.
Better Production Analysis
Managers can analyze how much secondary material is generated by production.
Improved Resource Utilization
By-products can be reused in other manufacturing processes.
Better Traceability
Businesses can maintain a record of where secondary outputs came from and where they were used.
Best Practices for Odoo By-Products
1. Identify Valuable Secondary Outputs
Not every manufacturing output needs to be tracked as a product.
Focus on outputs that have operational, financial, or environmental value.
2. Define Realistic Quantities
The expected by-product quantity should reflect actual production behavior.
If production normally generates 50 kg of scrap per batch, the BoM should reflect a realistic quantity.
3. Create Dedicated Storage Locations
Consider separating by-products from finished goods.
For example:
WH/Stock │ ├── Finished Goods ├── Raw Materials └── By-Products
4. Review By-Product Quantities
Compare planned by-product quantities with actual production results.
Large differences may indicate:
Production inefficiency
Material quality issues
Machine problems
Incorrect BoM quantities
Process variation
5. Connect By-Products With Business Processes
If by-products are sold, reused, or recycled, integrate them into the relevant sales, inventory, quality, or manufacturing workflows.
Common Mistakes When Managing By-Products
Mistake 1: Treating Every Waste Material as a By-Product
Only meaningful secondary outputs should generally be tracked as products.
Mistake 2: Ignoring Storage Locations
If by-products are mixed with finished products, warehouse management can become confusing.
Mistake 3: Using Incorrect Quantities
Incorrect BoM quantities can lead to inaccurate inventory expectations.
Mistake 4: Ignoring Costing
Businesses should understand how secondary outputs affect manufacturing costs and inventory valuation.
Mistake 5: Not Reviewing Actual Output
Regular comparison between planned and actual by-product quantities can reveal manufacturing inefficiencies.
Practical Example: Furniture Manufacturing
Consider a furniture manufacturer producing:
100 Wooden Tables
The production process uses:
500 kg Wood
100 kg Metal
20 kg Adhesive
The production also generates:
50 kg Wood Scrap
The output becomes:
100 Wooden Tables
+
50 kg Wood Scrap
The wood scrap can be:
Option 1: Sold to a recycling company
Option 2: Reused for smaller products
Option 3: Used as fuel
Option 4: Stored for future production
Odoo can help the company maintain visibility of this secondary output and integrate it into the relevant business process.
How ERP Harbor Consulting Services Can Help
At ERP Harbor Consulting Services, we help manufacturing companies configure Odoo to accurately reflect their real-world production processes.
Our Odoo Manufacturing services can include:
Odoo Manufacturing implementation
Bill of Materials configuration
By-product management
Manufacturing routes
Work center configuration
Work order management
Inventory integration
Quality management
Scrap management
Production planning
Inventory valuation
Manufacturing customization
Reporting and dashboards
User training and support
We help businesses build manufacturing workflows that improve production visibility, inventory accuracy, resource utilization, and operational efficiency.
Conclusion
Manufacturing is rarely limited to producing a single finished product. Many processes generate secondary outputs that can have significant operational or financial value.
With Odoo By-Products, businesses can incorporate these secondary outputs into their manufacturing workflow and maintain better visibility over inventory.
Whether your business produces metal scrap, wood offcuts, food-processing residues, textile scraps, recovered materials, or other secondary outputs, a properly configured Odoo manufacturing process can help you track, store, reuse, recycle, or sell them.
The key is to identify which secondary outputs have meaningful value, configure realistic quantities, organize appropriate storage locations, and connect them with inventory, sales, quality, and manufacturing processes.
With the right Odoo configuration, by-products don't have to be treated as waste—they can become a valuable part of your manufacturing strategy.