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.
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:
| Date | Status | Document | Details |
|---|---|---|---|
| Sep 28 | Created | WO-7310 | 120 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 Order | Purchase Order | Sales Order | |
|---|---|---|---|
| Purpose | Make a product | Buy from a supplier | Sell to a customer |
| Created By | Production or planning | Purchasing | Sales or customer service |
| Directed To | Your own production team | A vendor | Your own fulfillment team |
| Updates Inventory | Uses components, adds finished goods | Adds purchased stock | Removes sold stock |
| Key Cost | Materials, labor, outside services | Purchase price | Revenue 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
Start with accurate bills of materials. Every component and quantity on the BOM flows into the work order, so errors multiply across jobs.
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2
Check materials before release. Confirm components are on hand or arriving in time so jobs don't start and then stall.
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3
Issue materials as they are used. Record components against the job when they leave the stockroom, not after the job is done.
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4
Log labor by operation. Capture time for each step so you can see which operations run over plan.
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5
Record scrap and rework. Note waste and rework on the work order so costs and yields reflect reality.
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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.
Related Guides
See Work Orders in Kechie ERP
Plan, track, and cost every job in the same system as your inventory.