Tip 50 from 100 Things You Should Know About Controlling with SAP (2nd Edition) by John Jordan:
Process orders provide you with extra functionality, such as phases and process instructions for process industries.
If you use production orders, the system transfers a routing and a bill of material (BOM) into the master data of the order header. If you’re manufacturing on the basis of process orders, the system uses the master recipe and associated materials list. The difference occurs because process industries manufacture in phases, converting initial liquid batches into consumable batches, which are then bottled and packaged.