It is possible to open work orders at a subcontractor’s location and track material usage there.
First decide if your relationship with the subcontractor is one of “manufacture” or “purchase”. If this company is procuring all raw materials and delivering a ready product to you or your customer, then this is not “manufacturing” from your system’s point of view; you are “purchasing”. (If product is going directly to a customer, see how back-to-back ordering and drop shipment works.) If you are procuring at least some materials for the subcontractor and there is a manufacturing operation happening, then you need to control how much of that material is available and how much has been converted to product (usually with other materials for which the contractor is responsible). You are “manufacturing”.
If you are manufacturing then consider the following:
• How are materials delivered to the subcontractor? Either by material transfer or by purchase order receipt.
• Is the subcontractor making the product for delivery directly to the customer? Then product is either coming back to your main operation by material transfer, or being shipped directly to the customer.
• Is the subcontractor making the whole product in one operation, or is multistep routing required? Is the subcontractor part of a chain of subcontractors, each responsible for a part of the process?
• What is the commercial relationship with the contractor? Are they invoicing per piece manufactured?
• Who is responsible for opening work orders and deciding the batch quantities?
Manu Online provides the following facilities to manage this process:
• Create user accounts for people at the subcontractor. These accounts can only be given rights to the Warehouse section and Production (production work orders and service work orders)
• Create an item of type “Subcontract job”. Add this item to the product structure of the manufactured item. Set the cost of this as the unit price agreed with your contractor. Typically there will be one per unit of product, but it can also be based on work hours for instance. Your subcontractor will later be able to issue you with purchase invoices that can be matched against the usage of these items in the work orders.
• Use the sales order “Deliver from” field to specify that the order is to be delivered directly from the subcontractor to the customer. When such an order is activated, the person at the subcontractor will be sent a pdf copy of the order (without pricing) so that they can be aware of the need to ship goods.
• Use the purchase order “Deliver to” field to specify that a supplier should send materials directly to the subcontractor. When such an order is activated, the person at the subcontractor will be sent a pdf copy of the order (without pricing) so that they can be aware of the need to receive the goods.
• When opening a production work order, specify the subcontractor’s location.
• When opening a service work order, specify the subcontractor’s location.
Note that for a company to be considered as a subcontractor, open the partner card for this company and select a value for the “Is a subcontractor” on the grouping tab.