Sub contracting Business Process

Subcontracting process involves sending raw components to a  subcontractor, or let purchase component and let vendor directly delivery component  to subcontractor for specific manufacturing processes, and receiving the value-added  finished material back into inventory

A subcontract purchase requisition is either generated via the Material Requirements  Planning (MRP) process or manually by a requestor. A buyer validates the accuracy of  the purchase requisition and converts it into a purchase order. The purchase order is  subject to approval based on predefined parameters prior to being issued to a vendor.

Component can be receipt into your own storage location or vendor can delivery to your  subcontractor inventory.

The consumption of sent components is recorded upon receipt of the value-added  finished material. The vendor sends the invoice for the services provided which is paid  during the normal payment cycle

High Level Key process flows as below

1. Create Demand
2. Create Sub Contracting PO
3. Deliver Components to Subcontractor
4. Receive Sub Contracted Goods
5. Payment to Sub Contractor

Sub process Overviwe

1.       Purchase order creation based on a scheduled purchase requisition created by last 

2.        MRP run

3.       Purchase order approval (if required)

4.       Purchase order can delivery directly to subcontractor side

5.       Outbound delivery

6.       Goods issue for delivery and shipment (if required) to subcontractor

7.       On goods receipt, Goods receipt for purchase order delivered by subcontractor

8.       Invoice receipt by line item and Pay to vendor

Finished Goods Sourcing

High Level Process Overviwe

This scenario describes both the Finished Goods Sourcing and Raw Material Sourcing functions

Purchase Order

Inbound Delivery

Goods Receipt

Invoice Document

Sub Process involve in Finished Goods Sourcing

• Determination of requirements (raising a purchase requisition)
• Outline Agreements:  Contracts or Scheduling Agreements
• Source Determination
• Vendor Selection
• Purchase Order Processing
• Goods Receiving
• Inventory Management
• Invoice Verification

External Processing in Production

External Processing in Production

During In House Production of Finished Goods , the semi finished goods (SFG) is a component of Finished Goods (FG) and the SFG is produced from a outside vendor. Production plant supplies the components require to produce the SFG to the vendor and carryout the in house production of FG.

This scenario is the production cycle for SFG from outside vendor

1. Generate MRP
2. Create PO for External Operation
3. Material Staging
4. Delivery Components
5. Receive Externally Processed Goods
6. Manufacture Goods
7. Payment to Outworker

Please refer below diagram