Direct labour is the work that goes directly into making a product, and it is part of what the product costs. Tracking it is part of knowing the true cost of production. This piece is about tracking direct labour in Odoo manufacturing.
What direct labour is
Direct labour is the work directly involved in producing a product: the operators carrying out the operations that turn components into finished goods. It is distinct from indirect labour, supervision, support, the work that keeps the operation running but is not the direct making of a particular product. Direct labour is a real, and often significant, part of the cost of a manufactured product, and tracking it is what lets that cost be captured.
How direct labour is tracked in Odoo
In Odoo manufacturing, direct labour is tracked through the work orders. A work order is an operation carried out, and the time spent on that operation, the direct labour time, is recorded on the work order. When operators record the time they spend on the work orders they carry out, the direct labour going into production is captured. So tracking direct labour is, in large part, the tracking of operation time on work orders, the time operators spend doing the work being recorded as production happens.
Direct labour and product cost
Tracking direct labour matters because it feeds product cost. The cost of a manufactured product is its components plus the operations that produce it, and the operations cost is, substantially, the cost of the direct labour and the resources involved. The work center cost rate, which a work order's time is costed at, is where the cost of the work is expressed, and it should reflect the genuine cost of the operation, including the direct labour. When direct labour time is tracked on work orders and costed through the work center rates, the direct labour going into a product becomes part of the product's cost. A manufacturer that does not track direct labour cannot include it accurately in product cost, and so understates what production really costs.
What tracking direct labour reveals
Tracking direct labour does more than feed cost; it also reveals how labour is being used. The recorded direct labour time shows how much labour is going into which products and operations, whether operations are taking the labour time expected or more, where labour effort concentrates. Compared against the expected times from the routings, recorded direct labour shows where production is taking more work than planned, which is a signal worth investigating. So tracking direct labour gives a manufacturer both a cost input and a window onto how production labour is genuinely being used.
It depends on faithful recording
Tracking direct labour rests entirely on the time being recorded faithfully by operators as they work. If operators record their time accurately and promptly, the direct labour data is real, and the cost and the insight built on it are sound. If the recording is rough, late, or skipped, the direct labour data is unreliable. So tracking direct labour well depends, like so much in connected manufacturing, on the recording being made quick and easy and established as a normal part of the job, so that operators record their time honestly. The shop floor interface that operators use to run and record their work orders is where this happens.
The takeaway
Tracking direct labour in Odoo manufacturing captures the work that goes directly into producing products, through the time operators record on work orders. It matters because direct labour is part of product cost, and tracking it, costed through the work center rates, lets that cost be included accurately rather than understated. Tracking direct labour also reveals how production labour is being used and where production takes more work than planned. It depends on operators recording their time faithfully, which means the recording must be quick, easy, and habitual. For how we approach Odoo for manufacturers, see our manufacturing work.