ERPNext Manufacturing Setup Guide

Table Of Contents
Welcome 3
1. Key Features 4
2. Manufacturing Setup 5
2.1 Items and Pricing 5
2.2 Warehouse 6
2.3 Workstation 6
2.4 Operation 7
2.5 Routing 8
2.6 Bill Of Materials 8
3. Manufacturing Transactions 10
3.1 Work Order 10
3.2 Job Cards 11
3.3 Production Plan 11
3.4 Stock Entry 12
4. Purchase Transactions 13
4.2 Material Request 14
4.3 Purchase Order 14
4.4 Purchase Receipt 15
4.5 Purchase Invoice and Payment 15
5. Sales Transactions 16
5.1 Customers 16
5.2 Sales Order 17
5.3 Delivery Note 18
5.4 Sales Invoice and Payment 18
6. Advanced Features 19
6.1 Shop Floor Management 19
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https://erpnext.com | +91-22-48970555

6.2 Production Status Tracking 19
6.3 Item Variants 19
6.4 Automatic Reordering 20
6.5 Subcontracting 20
6.6 Material Resource Planning 20
6.7 Serialized Inventory 21
6.8 Batched Inventory 21
7. Reports 22
7.1 Manufacturing Reports 22
7.2 Stock Reports 22
7.3 Accounts Reports 23
8. Case Studies of Manufacturing Companies using ERPNext 24
8.1 Eso-Electronic 24
8.2 Sapcon Instruments 24
8.3 Union Home Appliances 24
9. FAQs 25



Welcome
Hello there, welcome to the ERPNext Manufacturing setup guide. In this document, we will
guide you through the manufacturing cycle and help you get up and running with
manufacturing in ERPNext.
The manufacturing flow in ERPNext looks like this:
Everything starts with the Bill of Materials (BOM), it records the required raw materials and
operations to manufacture a product. Consider it a recipe for the products (Items) you’re
going to manufacture. Once a BOM is created, you can proceed to the Work Order to
manufacture the items. Now, raw materials need to be transferred from a warehouse (or rack)
to another warehouse (or rack). This transfer can happen against the work order, or
individual Job Cards denoting individual jobs (or operations) done at specific workstations.
Now, the material transfer can happen directly and manufactured immediately or your raw
materials may hang out for a while in a Work In Progress warehouse (WIP Warehouse).



1. Key Features
Before we begin, here’s an overview of the multiple scenarios that can be managed using
ERPNext’s manufacturing module:
● Track Bills of Materials
● Plan Production Orders
● Monitor the operations for manufacturing the item
● Keep an account of the warehouse locations of your stock
● Track fulfillment of orders
● Oversee inventory procurement
● Control stock levels
● Track serialized and batched inventory



2. Manufacturing Setup
Before you can begin transactions in sales, purchase, and manufacturing cycles, some master
data needs to be configured. This is the foundation before you start making transactions.
2.1 Items and Pricing

An Item is a product or service offered by your Company. Say that your company
manufactures furniture and also offers maintenance for bigger items like beds. Both the chair
and bed maintenance are items in ERPNext. A big differentiator is that the stock count needs
to be maintained for physical products and not for service items.
The term Item is also applicable to raw materials or components of products yet to be
produced (before they can be sold to customers). ERPNext allows you to manage all sorts of
items like raw-materials, sub-assemblies, finished goods, item variants, and service items.
To access Item in ERPNext, go to:
Home > Stock > Items and Pricing > Item
To learn how to set up items in your ERPNext account, use the following links:
User Manual
Video Tutorial


2.2 Warehouse
Now that you’ve recorded Items, you need a place to store them—Warehouses. ERPNext
Warehouses can have Warehouse managers, separate accounts, and you can store the
address of each Warehouse.
A warehouse is a commercial building for storage of goods. The terminology of 'Warehouse'

in ERPNext is a bit broader and can be regarded as "storage locations". You can create a
sub-Warehouse which could be a shelf inside your actual location. Inside a shelf, there can be
racks, which are sub warehouses to the shelves.
To access Warehouse in ERPNext, go to:

Home > Stock > Settings > Warehouse
To learn more about Warehouses, visit:
User Manual
2.3 Workstation
After creating Items, discussing a BOM would’ve been logical but let’s make things easier for
the long run. You’ll be carrying out operations at different workstations. Under each
Workstation, all the associated costs can be recorded so that you get accurate data about
manufacturing costs at the end of a product cycle.
A Workstation stores information regarding the place where the workstation operations are
carried out.


To access Workstation in ERPNext, go to:

Home > Manufacturing > Bill of Materials > Workstation
Learn more here:
User Manual
2.4 Operation
At workstations, you’ll carry out operations that transform raw materials to either
sub-assemblies or the finished product. Now, manufacturing can also be done without
operations, it depends on your business.
An Operation refers to any manufacturing operation performed on the raw materials to
process it further in the manufacturing path.
In the Operation master, you can store a single manufacturing operation, its description, and
the Default Workstation for the Operation. Setting a default workstation is useful since you
won’t have to select it each time.
To access Operation in ERPNext, go to:

Home > Manufacturing > Bill of Materials > Operation
Learn more about Operations:
User Manual
Video Tutorial


2.5 Routing
Now that we have workstations and operations set up, let’s go one step further to make
things easier. We’ll set up various Routings as per your business needs.
Routing is a template of BOM Operations. A Routing stores all Operations along with the
description, hourly rate, operation time, batch size, etc.
Creating a Routing for your BOM Operations is very useful when similar Operations are used
for manufacturing different items.
To access Routing in ERPNext, go to:
Home > Manufacturing > Bill of Materials > Routing
Learn more about Routings:
User Manual
2.6 Bill Of Materials

If you’ve set up your Workstations, Operations, and Routings, creating a BOM is going to be
simple. The BOM is a record of all materials (either bought or made) and operations that go
into manufacturing a finished product or sub-assembly. Finished products can have default
BOMs.
In ERPNext, each item (sub-assembly) could have its own BOM hence forming a tree of Items
with multiple levels.


To access Bill Of Materials in ERPNext, go to:
Home > Manufacturing > Bill of Materials > Bill of Materials
Learn more about BOMs here:
User Manual
Video Tutorial



3. Manufacturing Transactions
3.1 Work Order

Now that you’re ready with Items and BOMs, let’s get into Work Orders and manufacture
products.
A Work Order is a document given to the manufacturing shop floor by the Production Planner
as a signal to manufacture a certain quantity of a certain Item.
The Work Order also shows the material requirements (Stock Entry) for the Item to be
produced from its Bill of Materials.
To access Work Order in ERPNext, go to:
Home > Manufacturing > Production > Work Order

Learn more about Work Orders here:
User Manual
Production Order Cycle


3.2 Job Cards

To store the individual operations performed at different workstations, use Job Cards. These
are generally used in comprehensive manufacturing lines with multiple operations and
multiple workstations to carry out each operation.
A Job Card stores actual production information about a particular Operation performed on a
particular Workstation.
A Job Card is created from the Work Order and given to each of the Workstations in the
manufacturing floor to start the production of an item with a certain quantity in each of the
operations defined in the Work Order.
To access Job Card in ERPNext, go to:
Home > Manufacturing > Production > Job Card
Learn more about Job Cards here:
User Manual
3.3 Production Plan

Let’s take a step back and look at the larger picture. When your company receives Sales
Orders, you need to collate them and plan the production of items according to the available
resources and time.
A Production Plan helps in production and material planning for the Items planned for
manufacturing. It helps the user to plan production against multiple Sales Orders or Material
Requests. Also, it helps in Material Procurement planning for the raw material item, based on
the quantity of finished products to be manufactured.
To access Production Plan in ERPNext, go to:
Home > Manufacturing > Production > Production Plan
Learn more about Production Plans here:
User Manual
Video Tutorial


3.4 Stock Entry

In between manufacturing items need to be moved between warehouses. Stock entries are
created automatically in many cases when manufacturing items.
A Stock Entry lets you record Item movement between Warehouses.
In the Manufacturing process flow, you will mainly come across two types of stock entries:
● Material Transfer for Manufacturing
If raw materials are being transferred for manufacturing. The transfer can happen
against a Work Order or a Job Card. To know more, visit Bill Of Materials.
● Manufacture
If the Material is being received from a Manufacturing/Production Operation.
To access Stock Entry in ERPNext, go to:
Home > Stock > Stock Transactions > Stock Entry
Learn more about Stock Entries here:
User Manual
Video Tutorial



4. Purchase Transactions
For manufacturing or selling, you first need to procure items and store them in your
warehouses. Let’s look at the procurement or buying flow in ERPNext.
The important actions are marked with a dark border, so here you create a Purchase Order
and when it's time to pay, mark it with a Purchase Invoice. Ok, now your actual procurement
flow may have more actions, so let’s go through each of them.
It all starts with a Material Request which indicates that materials are required either for
manufacturing products or replenishing the warehouses since the stock levels have dipped.
To buy Items, you may send a Request for Quotation (RFQ) to multiple suppliers. They’ll send
back a Supplier Quotation and you’ll pick the best one. Note that the best one always isn’t the
cheapest, time to ship is also a factor.
After choosing a supplier, you place a Purchase Order with them containing the items and
quantities with any additional terms and conditions if applicable. Depending on your
arrangement with the supplier, an advance payment might be made at this point.
After a Purchase Order comes the Purchase Receipt which denotes that you’ve received the
stock at your warehouse. This changes the stock ledger. This leads to the Purchase Invoice
when you’re billed for the Items that have been shipped. In the end, comes the Payment
Entry to record the payments you’ve made. This changes the accounting ledger.



4.1 Suppliers
Suppliers are companies or individuals who provide you with products or services.
Transactions that can be made for a Supplier are Supplier Quotation, Purchase Order,
Purchase Receipt, Purchase Invoice, and Payment Entry.
To access Supplier in ERPNext, go to:
Home > Buying > Supplier > Supplier
Learn more about Suppliers here:
User Manual
Video Tutorial
4.2 Material Request

To indicate that items are required, material requests are generated. These are either
generated automatically or can also be created manually. It can be used to keep a record of
the items that are required so that the inventory can be properly maintained.
To access Material Request in ERPNext, go to:
Home > Buying > Purchasing > Material Request
Learn more about Material Requests here:
User Manual
Video Tutorial
4.3 Purchase Order

By raising a Purchase Order with a Supplier you enter into a promise to be provided with
certain items under certain shipping or other conditions. A Purchase Order can be created as
a fresh standalone record or via the ‘Material Request’ or ‘Supplier Quotation’ DocTypes
among others, depending on your process flow.
To access Purchase Order in ERPNext, go to:
Home > Buying > Purchasing > Purchase Order
Learn more about Purchase Orders here:


User Manual
Purchase Cycle
4.4 Purchase Receipt

After placing a Purchase Order, you may want to record that the Items have reached your
warehouse. To do this, use a Purchase Receipt. Purchase Receipts are made when you accept
Items from your Supplier usually against a Purchase Order. This aids in keeping track of the
ordered items that have or have not been received, at which Warehouse they have been
received and the status of billing for those items.
To access Purchase Receipt in ERPNext, go to:
Home > Stock > Stock Transactions > Purchase Receipt
Learn more about Purchase Receipts here:
User Manual
4.5 Purchase Invoice and Payment

Depending on your arrangements, the supplier will raise a Purchase Invoice with you for the
items he’s selling. It’s a bill against which you need to make the payment. Using ERPNext’s
Purchase Invoice, you can track Advance Payments and Purchase Returns, apply the relevant
taxes as well as have ready-to-export accounting reports. Once the Purchase Invoice has been
generated, you can update its payment status by creating a Payment Entry against it.
To access Purchase Invoice and Payment Entry in ERPNext, go to:
Home > Buying > Purchasing > Purchase Invoice
Home > Accounting > Accounts Receivable > Payment Entry
Learn more about Purchase Invoices and Payments here:
Purchase Invoice
Payment Entry
Once this is done, your Purchase Invoice is marked as ‘Paid’ and your purchase cycle is
complete.


5. Sales Transactions
Once you’ve procured items and manufactured some finished goods, the next step is selling
the procured or manufactured items. Here’s the overall sales flow in ERPNext:
Similar to the buying cycle, here only the Sales Order and Sales Invoice are mandatory
transactions. But an actual sales flow may include multiple other documents to keep proper
records of everything.
It all starts with a Lead, someone who might be interested in your products or services. When
the requirements are confirmed, a Lead becomes an Opportunity. You’ll send a Quotation to
a Lead to list down the items and conditions of the transaction.
Once your Lead agrees to the Quotation, you’ll create a Sales Order to record the goods to be
sold. You can ask for advance payment, depending on your arrangement.
After you have the order, you’ll ship the Items to your Customer. To denote that items have
been delivered, use the Delivery Note. After this, raise a Sales Invoice with your Customer
indicating that payment needs to be made for the goods provided. In the end, the Customer
pays you and you create a Payment Entry to record the payments against the customer’s
account.
5.1 Customers
Customers are the parties with whom you transact with and log them in your ERPNext
account. Transactions that can be made for a Customer are Quotation, Sales Order, Delivery
Note, Sales Invoice, and Payment Entry.


To access Customer in ERPNext, go to:
Home > Selling > Sales > Customer
Learn more about Customers here:
User Manual
Video Tutorial
5.2 Sales Order

A Sales Order is a confirmation of an order from your customer. This can be created directly
via the Quotation, once it is agreed upon by the Customer.
To access Sales Order in ERPNext, go to:
Home > Selling > Sales > Sales Order
Learn more about Sales Orders here:
User Manual
Sales Cycle


5.3 Delivery Note

A Delivery Note is made when a shipment is shipped from your Company’s Warehouse to the
customer.
You can set up Quality Inspections for the items, add Transporter information, and manage
short-closing via the Delivery Note in ERPNext. Submitting a Delivery Note affects the stock
ledger.
To access Delivery Note in ERPNext, go to:
Home > Stock > Stock Transactions > Delivery Note
Learn more about Delivery Notes here:
User Manual
5.4 Sales Invoice and Payment

A Sales Invoice is a bill that you send to your Customers against which they make payments.
Through the Sales Invoice, you can monitor the payment status and Sales Returns, if any. You
can also integrate it with Employee timesheets as well as adjust any Advance Payments here.
Once the Sales Invoice is created, a Payment Entry will need to be created to record the
payment against the invoice. Submitting the Sales Invoice and Payment Entry, both affect the
accounting ledger.
To access Sales Invoice and Payment Entry in ERPNext, go to:
Home > Selling > Sales > Sales Invoice
Home > Accounting > Accounts Receivable > Payment Entry
Learn more about Sales Invoices and Payments here:
Sales Invoice
Payment Entry
Creating a Payment Entry will then change the status of the Sales Invoice to ‘Paid’ and the
sales cycle will be complete.


6. Advanced Features
Here’s an overview of some advanced features in manufacturing that may come in handy.
6.1 Shop Floor Management

ERPNext enables you to effectively organize and optimize your manufacturing processes
being executed at your workstations using Job Cards, Work Orders, and Production Plans.
You can do this by simply creating a Kanban Board from the Work Order list. It’s on the menu
on the left.
Learn more about Kanban Boards here:
User Manual
6.2 Production Status Tracking

You can also track and update the status of the items being produced using the ERPNext
Kanban board.
Learn more about Kanban Boards here:
User Manual
6.3 Item Variants

You may have various items to sell. Among those items, there may be multiple variants. Now,
consider a t-shirt, it can be of different colors and sizes. The different colors and sizes are the
item attributes using which several Item Variants are created. For example, there can be Red,
Blue, and Green t-shirts of sizes ranging from small to medium to large.
An Item Variant is a version of an Item with different attributes like sizes or colors. Using this
feature, you can create a template of an Item and create variations of this item based on
either some attributes that you have configured or a manufacturer.
Learn more about Item Variants here:
User Manual
Video Tutorial


6.4 Automatic Reordering

Running out of stock at the last moment is a pain. To tackle this, you can set up automatic
reordering. This creates a Material Request of a pre-set quantity when the stock reaches a
certain level.
Learn more about Automatic Reordering here:
User Manual
6.5 Subcontracting
When manufacturing goods, you may use external parties to carry out certain tasks and send
back those raw materials. A simple example would be that you’re manufacturing metal tables
and you send out individual parts for painting. The painting part here is ‘subcontracted’.
With this feature, you can track the transfer of your raw materials to the subcontractor and
your receipt of the finished goods.
Learn more about Subcontracting here:
User Manual
Video Tutorial
6.6 Material Resource Planning

To ensure smooth functioning and flow of goods, make use of Material Resource Planning. A
material request plan is generated in a Production Plan. It is a table that lists all the required
materials and quantities.
This enables you to efficiently manage material procurement, planning, and usage ensuring
that your manufacturing cycle runs smoothly.
Learn more about Material Resource Planning here:
User Manual


6.7 Serialized Inventory

You can assign a unique value like a serial number to each unit of an item. This can help track
its movement in transactions as well as monitor its warranty and expiry information. Serial
numbers are useful to track warranty.
Learn more about Serialized Inventory here:
User Manual
6.8 Batched Inventory

You can group multiple units of an item and assign these groups with a number called Batch
Number. Batches can be split or moved within warehouses.
All stock transactions are then tagged with this batch number to enable you to track it in
transactions as well as monitoring expiry and quality.
Learn more about Batched Inventory here:
User Manual



7. Reports
7.1 Manufacturing Reports

The following reports provide an overview of your manufacturing processes so you can
always stay up-to-date:
1. Open Work Orders
2. Work Orders in Progress
3. Issued Items Against Work Order
4. Completed Work Orders
5. Production Analytics
6. BOM Search
7. BOM Stock Report
7.2 Stock Reports

Managing multiple stock shipments along with their location and financial aspects can be
daunting. The following reports are designed to give you more insight into these areas.
1. Stock Ledger
2. Stock Balance
3. Stock Projected Qty
4. Stock Summary
5. Stock Ageing
6. Item Price Stock
7. Ordered Items to be Received
8. Ordered Items to be Delivered



7.3 Accounts Reports

The following reports are crucial for most companies to be able to analyze their accounts and
financial data.
1. Balance Sheet
2. Profit and Loss Statement
3. General Ledger
4. Trial Balance
5. Accounts Payable/Receivable with Ageing Analysis
6. Budget Variance Report



8. Case Studies of Manufacturing Companies using

ERPNext
8.1 Eso-Electronic
Eso-electronic is using ERPNext to track the manufacturing of printed circuit boards in
Germany. Check the following links to learn about their ERPNext implementation story.
Case Study
Video Testimonial
8.2 Sapcon Instruments

A proud 35+-year-old Indian company, Sapcon Instruments is a leading manufacturer of level
measurement and speed instruments. Click on the link below to read about their journey with
ERPNext.
Case Study
8.3 Union Home Appliances

Union is one of the leading brands for home appliances in the Philippines for more than 50
years having started in 1960. Click on the link below to read about their ERPNext experience.
Case Study



9. FAQs
9.1 Can I customize a form and add new fields to it?
You can create custom fields with great ease in ERPNext. For detailed instructions, please
refer to our documentation by clicking here.
9.2 Can I create a custom DocType to map a unique aspect of my process into ERPNext?
Yes, you can create your own DocTypes in ERPNext. Click here to know more!
9.3 How do I create reports to analyze my data effectively?
ERPNext has several standard reports available by default which can be edited and saved for
subsequent usage. However, if you would like to create a custom report, you can do that too
by using the Report Builder, Script Reports, or Query Reports depending on your
requirements. Click here for more information.
9.4 What are the ways through which I can restrict a User’s access to data in my
instance?
Assigning the relevant permissions to your Users is a vital step while setting up your instance.
ERPNext allows for several ways to restrict access to your data, details of which can be found
here.
9.5 I want an email to be sent to a particular Employee for approval when a record is
created. How can that be configured in the System?
This scenario and other similar ones can be set up using Workflows in ERPNext. For
step-by-step instructions, click here.
9.6 How do I set up reminders, status change, or other types of notifications

(Email/SMS/Slack) in my System?
Email and Slack notifications can be configured via the Notifications DocType in ERPNext and
SMS notifications by the SMS Center and SMS Settings DocTypes.
Documentation regarding setting up Notifications can be found here and for SMS Settings
click here.



9.7 Is it possible to customize the formats used to print a document in ERPNext?
Almost every DocType in ERPNext has a standard print format already created for it. However,
if you would like to further customize this, you can create multiple print formats for each
DocType by either using the Print Format Builder or Custom Script. More information about
this can be found here.
9.8 How do I import my data into ERPNext?
ERPNext has a very robust and user-friendly data importing tool called ‘Data Import’ which
can be utilized to insert new records or update existing records. For step-by-step instructions,
please click here.
We’re here to help
Check out the ERPNext documentation to find help on what you’re looking for.
If you need more assistance, reach out to us using in-app support from your ERPNext
account.
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2.1 Items and Pricing 5

2.6 Bill Of Materials 8

3. Manufacturing Transactions 10

3.1 Work Order 10

3.2 Job Cards 11

3.3 Production Plan 11

3.4 Stock Entry 12

4. Purchase Transactions 13

4.2 Material Request 14

4.3 Purchase Order 14

4.4 Purchase Receipt 15

4.5 Purchase Invoice and Payment 15

5. Sales Transactions 16

5.1 Customers 16

5.2 Sales Order 17

5.3 Delivery Note 18

5.4 Sales Invoice and Payment 18

6. Advanced Features 19

6.1 Shop Floor Management 19

Frappe Technologies Private Limited Page 1

6.2 Production Status Tracking 19

6.3 Item Variants 19

6.4 Automatic Reordering 20

6.5 Subcontracting 20

6.6 Material Resource Planning 20

6.7 Serialized Inventory 21

6.8 Batched Inventory 21

7.1 Manufacturing Reports 22

7.2 Stock Reports 22

7.3 Accounts Reports 23

8. Case Studies of Manufacturing Companies using ERPNext 24

8.1 Eso-Electronic 24

8.2 Sapcon Instruments 24

8.3 Union Home Appliances 24

Frappe Technologies Private Limited Page 2

The manufacturing flow in ERPNext looks like this:

Frappe Technologies Private Limited Page 3

● Track Bills of Materials

● Plan Production Orders

● Monitor the operations for manufacturing the item

● Keep an account of the warehouse locations of your stock

● Track fulfillment of orders

● Oversee inventory procurement

● Control stock levels

● Track serialized and batched inventory

Frappe Technologies Private Limited Page 4

2.1 Items and Pricing

To access Item in ERPNext, go to:

Home > Stock > Items and Pricing > Item

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A warehouse is a commercial building for storage of goods. The terminology of 'Warehouse'

To access Warehouse in ERPNext, go to:

To learn more about Warehouses, visit:

Frappe Technologies Private Limited Page 6

To access Workstation in ERPNext, go to:

Learn more here:

To access Operation in ERPNext, go to:

Learn more about Operations:

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To access Routing in ERPNext, go to:

Home > Manufacturing > Bill of Materials > Routing

Learn more about Routings:

2.6 Bill Of Materials

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