What is Production Order?
A document that authorizes and controls the manufacture of a specific quantity of a product by a certain date.
Definition
A production order is the central control document for a manufacturing run, instructing the plant to produce a defined quantity of a finished or semi-finished item by a scheduled date. It is typically generated from a planned order created by MRP, from a sales order in make-to-order environments, or manually by a planner. The order references the item's bill of materials and routing, reserves or issues components, and becomes the object against which all actual costs, quantities, and quality results are recorded. It moves through a lifecycle of states such as planned, released, in process, and completed, then technically closed once all postings are reconciled.
How Production Order Works in ERP
In ERP, MRP creates planned orders that planners convert into firm production orders, at which point the system commits materials and schedules capacity. As the order runs, the shop floor confirms operations, issues or backflushes materials, and reports yield, scrap, and rework, with the ERP continuously updating WIP and cost. When fully confirmed, the order receives finished goods into inventory and posts cost variances to finance.
ERP Vendors with Strong Production Order
Frequently Asked Questions
How is a production order created in an ERP?
Most production orders begin as planned orders generated by the MRP run based on demand, then a planner firms and releases them. They can also be created directly from a sales order in make-to-order setups, or entered manually for unplanned runs. Once released, the ERP allocates components, schedules the work centers, and opens the order for shop floor reporting.
What is the lifecycle of a production order?
A production order typically moves through planned, released, in-process, and completed states before being technically closed. During the in-process stage, operators confirm operations and consume materials, and the ERP accumulates WIP cost. At completion the finished quantity is received into inventory, and technical closing reconciles all cost postings and calculates variances against the standard.