Subcontracting Manufactured process
Odoo version 13 made it much easier
Subcontract manufacturing processes is a strategy for all sizes companies, it is a way to prevent unnecessary risks, reduce operational costs, give the opportunity to have specialized work outside of company streghs among other reasons.
Odoo 13 created a very intuitive way of subcontracting for your company, it can save a lot of time to your supply chain manager and can be used by employees with different level of expertise.
Configuration is the most important step in all proccess pay attention to don’t miss a thing or the final result will be difficulr to achieve.
To start we need to install Purchase, Inventory and Manufacturing Apps.
After Apps are installed is time to allow Subcontracting on Manufacturing Settings, also locations on Inventory settings and we can start configure the products.
Setting up the products will influence the costs and Inventory workflow, so it is important at this time to think strategical, do the counts and decide the option that suits your company the best.
The example below is the raw material of my final product “Omelet”, this is an easy example to understand how subcontracting works in Odoo.
To start make sure the Vendor, Vendor Price and Quantity are there as Sales Price and Cost on General Information.
Choosing how to resupply subcontractor's with raw materials will depend of the operational costs your company have, which pays off more between staying in your inventory and transporting only the essential to satisfy each purchase or transporting large quantities to the subcontractor's warehouse. There are three ways to resupply subcontractor:
- The first two we just need to check Buy on Routes.
- Create a delivery order to subcontractor manually, every time your subcontractor needs components you address a delivery order with the quantity you want to send.
- Create a Reordering Rule to Subcontractor, subcontractor will never be short of eggs to produce omelets, because whenever the rule is initiated, a delivery order is generated automatically with the quantities you configure.
Inventory → Master Data → Reordering Rules → Create
- Resupply subcontractor on Order, in this case you need to check the box below, and you will send automatically the same quantity you need to satisfy the purchase order to your subcontractor. Let’s use this configuration for the example below in the text.
Final Product is the one you will subcontract, and to activate subcontractor's feature, is necessary to create a Bill of Material, it is possible do it by clicking the Button below on Product page.
Make sure BoM Type is Subcontracting and you set the right subcontractors, in this example Subcontractor will need 5 Eggs to produce the Omelet.
After the creation of BoM, Vendor is automatically checked as subcontracted:
Firstly we create a Purchase Order with Subcontractor Omelet as the vendor and chose Omelet as the product:
As refered before, for this example, we will Resupply Subcontractor on Order with Eggs, and is because of that, that two Inventory moves are ctreated as soon as we confirm the Purchase Order.
The first move to validate is the Delivery of the Eggs to subcontractor's factory, here you need to have the Eggs in your stock to move them to subcontractor Stock. Also in this step you can add more or less Eggs to deliver to your subcontractor, and that is important to know because you may need to refine the perfect recipe to your final product, or just because some subcontractor inventory has broken.
When the Delivery Order is validated we can see that eggs have been transferred to Subcontractor’s location, where it is the perfect place to track the inventory you sent.
If we had chosen the other two options for resupplying, only one Inventory move would appear when confirming PO:
And that move is also the last step of this process.
The move from subcontractor to our warehouse, when we receipt the final Product, and we can find it in our stock location.
Sometimes subcontracting will benefit your company narrowly, so it is important to have ERP working perfectly and as automatically as possible. The standard module is a great base to get your company working smoothly but the possibility to customize it is what can differentiate it from a good or great choice.