What Is Work Order?

Work Order Explained

A work order carries a copy of the bill of materials and routing at the moment it is released, not a live pointer to the master records. This snapshot behavior is deliberate: it means an engineering change made after release does not silently alter a job already running on the floor. It also means that if you need the change applied, you must explicitly refresh or reissue the order. Teams often discover this the first time a corrected component fails to appear on an open job.

The order moves through a status lifecycle: planned or firm planned while MRP still controls it, released once material and capacity are committed and paperwork is issued, in process as operations are reported, complete when quantity is received to stock, and closed when no further cost may post. Closing matters for costing because variances are typically calculated and posted at close. Orders left open for months accumulate stray charges and misstate work in process on the balance sheet.

Cost collection is one of the work order's core jobs. Material issues debit work in process at whatever costing method the item uses. Labor reported against operations applies the work center labor rate and its overhead absorption. Outside processing receipts add subcontract cost. When the finished quantity is received, work in process is credited at standard or at accumulated actual depending on the costing method, and any difference becomes a variance. This is why job costing quality depends entirely on shop floor reporting discipline.

Variations exist for different environments. Repetitive or rate-based production may use schedules rather than discrete orders, with backflushing consuming material automatically on completion. Project or contract manufacturing may tie work orders to a project structure for progress billing and earned value. In aerospace and defense, work orders often carry lot and serial traceability requirements plus inspection hold points that block progression until quality signs off.