One of the major challenges for large companies to be ahead of their competition is by giving the large orders to subcontractors and build their network. This would reduce the cost of manufacturing and delivery timelines too. Due to this reason “Job work for Subcontractor” activities or “Subcontracting Manufacturing” has taken importance and its an integral part of AcTouch.com ERP Systems.
Many large companies gives their production order to their Subcontractors because
- They don’t have the necessary capacity to produce?
- Timeline to produce is very low.
- They don’t have the necessary skill sets /
- Internal cost of the development is more than subcontracting costs.
Subcontracting Process / Approach
Typically the large Manufacturer discusses with his vendors and agree for a Bulk Quantity to produce and its costs per pieces.
- The quantities are sent in small portions and not at one bulk go. Because of the prior contract, the rate per piece is agreed and followed by Subcontractors.
- Manufacturer will have his own Quality team that visits the Subcontractor for Checks and Audits
- Subcontractor should follow the necessary process, testing certificates.
- Once the Finished Goods are done, vendor will send them to Manufacturer with Delivery Challans
- Stores will receive the materials and inspect and accept it.
- Customer will pay the money to Vendor on acceptance of the materials and rejection would be handled appropriately.
In AcTouch.com we follow the below process
This is the process in which the Customer will send the RM to a subcontractor / vendor to convert the RM into a FG. Customer will follow the below process
- Create a Job work order – This is an agreement between Customer and a Subcontractor with clear details like unit price per work etc.
- Outward DC – Customer will make an outward DC and send the Raw materials to Subcontractor
- Here Customer will mention the FG and its Quantity to receive.
- Raw materials sent
- Inward DC – Customer will make this document when he receive the FG and scrap items, if any. This reduces the stock that’s sent to Subcontractor
- Convert the Inward DC to a Purchase order and do the payments
Note: The Job wok, Inward and Outward DC layouts, field details etc are similar to JOB WORK For Customer menus.
Job work Order – The screen is as below with Subcontractor details and FG that would be delivered.
Check the videos of Subcontracting Manufacturing