What Is a Work Order in Manufacturing?

A work order is a document that authorizes production of a specific quantity of an item by a due date. It lists the materials, operations, and labor needed, then records progress and actual cost until the job is closed.

Key Takeaways
A work order tells production what to make, how many, and by when.
It pulls materials from the bill of materials and steps from the routing.
Materials, labor, and outside services recorded on it give true job cost.
Closing work orders promptly keeps inventory and costs accurate.

How a Work Order Works

A work order moves through a clear lifecycle, collecting materials, labor, and costs along the way:

Created From Demand

A sales order, stock target, or MRP suggestion creates a work order for a set quantity and due date.

Released to the Floor

Material availability is checked, the job is scheduled, and paperwork or screens go to production.

Materials and Labor Recorded

Components are issued from inventory and labor hours are logged against each operation.

Completed and Closed

Finished goods go into stock, scrap is recorded, and the final cost is calculated.

Work Order Example

A furniture manufacturer builds 120 oak dining chairs for a restaurant group on work order WO-7310. Finishing is sent to an outside shop. This is the work order's history:

DateStatusDocumentDetails
Sep 28CreatedWO-7310120 chairs for sales order SO-42115, due Oct 16
Sep 29 Released WO-7310 Lumber, hardware, and seat fabric confirmed in stock
Sep 30 Materials issued ISS-5521 Lumber, hardware, and fabric issued from inventory to the job
Oct 1–6 Cut and assemble Labor log Two operations completed, 7 extra board feet of scrap recorded
Oct 7–12 Outside finishing PO-9184 Frames sent to a finishing vendor and received back
Oct 13 Upholstered and inspected QC-0318 120 chairs passed inspection
Oct 14 Completed and closed WO-7310 Job cost Actual $9,960 vs. planned $9,600

Planned cost was $9,600 ($6,000 materials, $2,400 labor, $1,200 outside finishing), or $80 per chair. Extra lumber scrap and a few more labor hours brought actual cost to $9,960, or $83 per chair. Because every issue, hour, and vendor charge was recorded on the work order, the team knows exactly where the $360 went.

Work Order vs. Purchase Order vs. Sales Order

All three are orders, but each one tells a different party to do something.

Work OrderPurchase OrderSales Order
PurposeMake a productBuy from a supplierSell to a customer
Created ByProduction or planningPurchasingSales or customer service
Directed ToYour own production teamA vendorYour own fulfillment team
Updates Inventory Uses components, adds finished goods Adds purchased stock Removes sold stock
Key CostMaterials, labor, outside servicesPurchase priceRevenue and margin

Benefits of Using Work Orders

Clear Instructions

Everyone on the floor knows what to make, how many, with which materials, and by when.

Accurate Job Costing

Materials, labor, and outside services charged to each job show true cost and margin.

Reliable Inventory

Components come out and finished goods go in as the job progresses, keeping stock accurate.

Full Traceability

Recording which lots went into each job links finished goods back to their materials.

How to Manage Work Orders Well

  1. 1
    Start with accurate bills of materials. Every component and quantity on the BOM flows into the work order, so errors multiply across jobs.
  2. 2
    Check materials before release. Confirm components are on hand or arriving in time so jobs don't start and then stall.
  3. 3
    Issue materials as they are used. Record components against the job when they leave the stockroom, not after the job is done.
  4. 4
    Log labor by operation. Capture time for each step so you can see which operations run over plan.
  5. 5
    Record scrap and rework. Note waste and rework on the work order so costs and yields reflect reality.
  6. 6
    Close jobs promptly. Close work orders soon after completion and compare actual to planned cost while details are fresh.

Common Work Order Mistakes to Avoid

A work order is only as useful as what gets recorded on it.

Backflushing Without Checking

Automatically deducting materials at completion hides scrap and leaves inventory wrong if usage differed.

Leaving Jobs Open

Work orders left open for weeks keep costs in limbo and make reports unreliable.

Paper Travelers Only

Handwritten notes on paper travelers get lost or entered late, so the system never matches the floor.

Ignoring Outside Processing

Not tracking goods at subcontractors makes inventory disappear and understates job cost.

Which Industries Use Work Orders?

Any business that makes, assembles, or converts products uses work orders to manage production:

Manufacturing

Discrete and process manufacturers running many jobs across shared equipment.

Food & Beverage

Producers making batches that need ingredient lots and yields recorded.

Furniture & Home Decor

Makers with outside finishing, upholstery, and many style variations.

Distribution

Distributors doing kitting, light assembly, or private labeling.

Work Orders in Kechie ERP

The Kechie Manufacturing add-on includes bills of materials, work orders, MRP, and job costing on the same data as inventory and purchasing. Materials issued to a job update stock in real time, and outside processing, such as finishing, embroidery, or printing at a vendor, is tracked in the system. Kechie AI Inventory Optimization adds AI-driven MRP recommendations that suggest when to adjust production jobs or place, delay, or cancel purchase orders, which your team reviews before they are applied.

Frequently Asked Questions

What is a work order in manufacturing?

A work order is a document that authorizes production of a specific quantity of an item by a certain date. It lists the materials, operations, and labor needed, and tracks progress and cost until the job is complete.

What is the difference between a work order and a purchase order?

A work order tells your own production team to make something. A purchase order tells a supplier to sell you something.

What is the difference between a work order and a sales order?

A sales order records what a customer bought. A work order records what you will make, which may be for a specific sales order or for stock.

What information is on a work order?

The item and quantity to make, due date, bill of materials, routing or operations, assigned work center, and, as the job runs, materials issued, labor used, quantity completed, and costs.

What are the stages of a work order?

Typically created or planned, released, in progress, completed, and closed. Materials are issued after release, and costs are finalized at close.

What is the difference between a work order and a production order?

The terms are often used the same way. Some companies use production order for the overall job and work order for individual tasks or operations within it.

How do work orders help with job costing?

Every material, labor hour, and outside service charged to the work order adds up to the actual cost of the job, which can be compared to the planned cost.

What is outside processing on a work order?

Outside processing is a step done by another company, such as plating, finishing, or embroidery. The work order tracks materials sent out, the vendor's charge, and the goods coming back.

Further reading: Work order (Wikipedia)

Related Guides

See Work Orders in Kechie ERP

Plan, track, and cost every job in the same system as your inventory.

Learn about Work Orders