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Let's assume I want to process a MO in Warehouse 1 but the raw material used in the BoM is located in Warehouse 2. How to set up so that when this MO is confirmed it is automatically generate a transfer of RM from W2 to W1?

I find it success using MTO only to generate purchase and Child / Source MO. And I find it success resuplly from another warehouse for SO / DO but not MO.

Any answer is much appreciated

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By standard you set it up with routes and pull rules, and Odoo can help you to quick set up the routes and pull rules you need:

In the warehouse where you process manufacturing, in the tab Warehouse configuration, just flag field 'Resuplly from' warehouse.  Then on upper right corner, press "Routes". The default routes and rules will be generated. 

Result is that when you have a manufacturing order in W1, and you don't have stock in W1, an outbound  transfer to an intermediate location from W2 and a receipt will be created in W1.  

This should work also with MTO. But I have not tested if you also flagged MTO on the components.

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Finally did it yey, the RM routes needs to be checked on the
1. Resupply from warehouse x
2. MTO
The FG MTO doesn't need to be ticked fyi
Thank you so much for your answer
Cheers!

The setup in Odoo is quite tricky. There is a logic connecting: WH setup, Locations, Operation types, Routes, Rules and product masterdata.
I created a video, that shows my setup of all this. First masterdata and then the process from create a manufacturing order and the transfer from WH2 -> WH1. Hope this helps you.
It is Odoo V16 EE.
https://drive.google.com/file/d/140acfNeYFEj_hReFuIsP4R_nO3sOG19l/view?usp=sharing

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Sorry for the late reply, being very busy lately with new client. Thank you so much for your effort to explain how to do it for me. Gonna try it soon, cheers!

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If this route is always true for all the manufacting operations, an alternate solution could be to enable 2 step manufacting in W1 and modify source location on the component picking operation

Pull from W2/Stock to W1/Pre-production

Since this route is triggered from MOs, you wouldn't need to specific routes selected for products or product categrories. 

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Thanks for the answer, I've tried it but find it hard to success, the transfer isn't created when the MO is confirmed even though I already set the routes in the Operation Type...

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