Odoo Product Setup Guide for Manufacturers

Practical advice for accountants interested in optimal inventory valuation concepts of manufactured inventory.


  • This post assumes you are using automated inventory valuation in Odoo.
  • This information is most applicable for Odoo V17+. It is largely accurate for previous versions as well but it was compiled using V17 for validation of outcomes.

We receive a lot of questions from our customers regarding inventory valuation and product setup. If done incorrectly, your inventory values on the balance sheet can be impacted severely, and the cleanup projects involved with it can be time consuming and costly. One of the most important pieces to the puzzle is to understand how you intend to use the products in advance of configuring Odoo. 

There are several key components to a properly configured product.

  1. Product Category - The product category tells Odoo how the product should be valued on the balance sheet, and what the requisite GL account mappings should be.
  2. Can be Sold / Can be Purchased - These settings should be closely evaluated in concert with the table below. Evaluate all of the ways that the product could move through the system before configuring the product.
  3. BOM Type - There are two BOM types in Odoo (Kit + BOM). The kit type is primarily used to sell a single item on a sale order but ship multiple items to the customer. The BOM type is used to manufacture a new finished good from a list of components that can be stored into inventory.

After you have considered how a product will be consumed (shipped, as a sub assembly, etc.) then I highly suggest a mapping exercise of the journal entries that you expect to see in the GL. By doing this incredibly simple and important step you can avoid massive mistakes. 

I have prepared the below guide to outline some of the expected outcomes of the different possible configurations. In general, I recommend avoiding the red configurations except in very specific use cases. As with everything in Odoo there are multiple ways to accomplish your desired workflow so there may be a good reason to configure your products that way but it's not very likely.

BOM + Product Type Chart


  • If the product you are configuring is a subassembly that must be sold on a sale order as well as consumed in a parent MO, it can be either a kit or a manufactured BOM, but it needs to be storable
  • If the product you are configuring is a subassembly that is only ever used in manufacturing operations (never sold), it can be a consumable product. 
  • In most cases, the product that you are configuring for use in manufacturing is best to be a storable product.
  • There are always exceptions to the above given the nature of your business and the type of products you manufacture.

If you have questions about the content of this post, or any other piece of Odoo, please do not hesitate to contact us.

Odoo Product Setup Guide for Manufacturers
Kyle Robinson June 18, 2024
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