Subcontracting Process in Easy Way

subcontracting process

Ordering sub-contracted services like powder coating, painting, electronic assembly, etc. is a common practice used in companies any size.

However, typically big companies have more services done in-house and small to medium manufacturers more often have to order some services from sub-contractors since having these services in-house might just not be feasible.

Several hardships arise in subcontracting process, especially in tracking information and planning production flows:
– Tracking stock accurately and timely;
– Planning manufacturing, when one or more steps in production are subcontracted services;
– Issuing subcontracting purchase orders;
– Issuing parts to vendors and creating shipping documents; and
– Receiving products and tracking their history.

Generally, issuing a purchase order is a simple process. However, if you need to issue parts, it gets more complicated. Besides issuing a purchase order, you need to take issued components out of stock. As you ship them, you need to create shipping documents and picking lists. Only then you can accept the new goods back and be sure that everything is correct.

This might sound simple, but in reality, it is likely to be much more complicated. Typically the subcontracted service is only one step in production. A simple scenario is sending an assembled item to painting and receiving back the final product ready to be sent to the customer.

In this example, if you want to have a clear overview of production status, all the steps need to be in the production plan. At one step the production manager has to hand the job off to the procurement staff who need to see this coming early on to plan efficiently. And at the same time, the sales person wants and needs a clear overview of what’s happening.

In many situations, the workflows can get even more complicated, such as parallel processes can be done at subcontractors’ and these converge to an in-house production step, after which the product could go traveling even more. Without specialized tools for help it is nearly impossible to accurately schedule production, have a clear overview of what’s happening, and even guess what is physically in stock.

Next week MRPEasy will roll out an update that will make this easy, it will simplify everything related to subcontracted services, i.e. issuing purchase orders to subcontractors, free issuing parts, creating shipment documents etc. What is even better, it will help you plan and track accurately and reliably production operations done at subcontractors’.