[Blog]()Production # Production scrap: consumption, loss and recoverable material Unused material, defects and irreversible loss need different records; a percentage cannot explain their disposition. **[Jonathan Perez]()**Co-founder · Design, product and sales October 8, 2026 · 8 min read **Short answer** Record material entering a process, what returns unused and the outputs resulting from consumption. Separate finished product, recoverable by-product and loss using comparable units and clear disposition owners. Check that recording scrap does not deduct material already included in consumption again, and distinguish a system write-off from physical removal. ## Material balance and scrap disposition Ten tests of net consumption, by-products, losses, custody and explainable quantities at closure. [Download CSV worksheet]() In this guide - [What are you calling scrap?]() - [Example: all one hundred kilograms have a destination]() - [Can a by-product be used again immediately?]() - [How do you compare actual and standard consumption?]() - [What tests make the figures useful?]() - [Which example helps scope the system?]() ## What are you calling scrap? A usable offcut, a defective part awaiting review and destroyed material require different decisions. Giving all three the reason 'scrap' removes context from inventory and investigation. Retain order, operation, material, lot, unit, quantity, reason and destination. A photo can support an observation; it does not establish quantity, cause or authorization to reuse or dispose of material by itself. Odoo documents scrap records moving goods to a virtual loss location, and states that virtual locations are not physical spaces. [Scrap inventory](). The write-off record and actual custody therefore need different references. Rejected material may remain in a marked area until its destination is decided. ## Example: all one hundred kilograms have a destination **Synthetic balance M100** The process receives 100 kg of homogeneous material. This exercise assumes no evaporation or unrecorded additional mass inputs. Figures illustrate classification, not an expected industrial yield. | Record |Quantity |Interpretation | | --- | --- | --- | | Issued to process |100 kg |Initial raw-material issue | | Returned unused |10 kg |Returns as the same eligible material | | Net consumption |90 kg |100 minus 10; not all loss | | Finished product |70 kg |Process output | | Recoverable by-product |12 kg |Separate output awaiting authorized use | | Irrecoverable loss |8 kg |Documented destination | | Balance |10 + 70 + 12 + 8 = 100 kg |No unexplained quantity remains | The ninety consumed are explained by seventy finished, twelve by-product and eight lost. If inventory already recorded the net issue of ninety raw-material kilograms, deducting another eight of that same raw material as 'scrap' would create fictitious consumption of ninety-eight. The implementation must show the location and state affected by each record. Retrying classification D08 does not create another eight kilograms of loss. ## Can a by-product be used again immediately? Not automatically. The twelve recoverable kilograms need their own identity, location and assessment for the next use. If composition or form changed, do not record twelve of the original input without technical justification. Odoo supports by-products on the bill of materials and records their quantities at manufacturing completion. [By-products](). This depends on configuration; it neither decides material suitability nor proves a solution delivered by Nightly. In agribusiness, include moisture or the unit that actually explains the balance when relevant. In manufacturing cutting, distinguish usable remnants from offcuts without a defined use. If evaporation, mixtures or different weighing precision exist, document those differences; do not force the sum by changing original data. Uncertainty should remain visible until its owner resolves it. ## How do you compare actual and standard consumption? Use the recipe and its revision to calculate a comparable reference. A difference from actual consumption is a reason to investigate, not an automatic waste classification. It may include setup, substitutions, work still in progress or late records. Relate quantities to the same order and operation; do not compare input kilograms with finished-piece counts without a defined relationship. Cost allocation requires additional rules beyond this quantity balance. ## What tests make the figures useful? - Normal: M100 retains its four destinations and explains ninety kilograms of net consumption. - Exception: five kilograms without a destination remain under investigation; closing cannot invent a reason to balance them. - Retry: repeated D08 leaves one eight-kilogram disposition and a retrievable result. - Recovery: twelve kilograms of by-product remain blocked for the intended use until the responsible decision. - Custody: a recorded write-off shows whether material remains physically on site and who authorized its destination. ## Which example helps scope the system? Complete the [material balance and disposition worksheet]() with one closed order and another with material awaiting disposition. The [general production guide]() covers consumption and repeated closure; this guide specifically addresses by-product, loss and custody classification. [Materials revisions]() clarify the standard, and [rework]() follows recovered parts. To evaluate [production control](), bring consumption and destinations that currently disagree; that difference helps define records, permissions and closure without promising a savings percentage. ## Review a production balance that does not reconcile In a free diagnosis we can identify missing outputs and decisions before designing scrap records. - One order with material issues and returns. - Examples of remnants, defects and loss with their units. - The record of who decides reuse, rework or removal. [Book a free consultation]()[Ask on WhatsApp]() Related - [Production control]() - [Manufacturing software]() ## Frequently asked questions ### Is every difference from the recipe scrap? No. Investigate setup, work in progress, substitutions, late records and units before classifying the difference as loss. ### Does an inventory write-off prove physical removal? No. A virtual location describes record treatment. Physical removal and its owner need separate evidence. ### Can I return a by-product as the original raw material? Only if technical assessment and identification support it. Sharing a unit of measure does not establish equivalence. ### How do I avoid deducting scrap twice? Follow the initial issue, unused return and net consumption. Classify loss within that consumption or from the stock actually affected, instead of repeating the same deduction. ## Sources 1. [Scrap inventory and virtual locations]()Odoo 2. [Manufacturing by-products]()Odoo Last updated: October 8, 2026 ## Keep reading [ProductionOct 8, 2026 ### Bill of materials: revisions that preserve work already underway]()[ProductionOct 8, 2026 ### Production rework: a linked order, consumption and traceable closure]()[OperationsOct 4, 2026 ### How to know where every order stands without walking the floor]() --- Canonical: https://nightlysoftware.com/en/blog/production-scrap-accounting Updated: 2026-10-08 Description: Separate consumed material, scrap and recoverable by-products. Test a quantity balance that prevents the same loss from being deducted twice.