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Home Subcontracting in Odoo Manufacturing Set up

Subcontracting in Odoo Manufacturing Set up



Odoo subcontracting function allows you to manage services that are outsourced. Odoo Subcontracting or outsourcing operation used to affect all steps of operations respectively, from the definition of the operations that are required in production, forecasting, planning, costing, and scheduling the semi-finished or finished goods in the manufacturing process. Eventually, some resources need their own respective processes for accounting and cost control.

What is Sub Contracting in Manufacturing

Subcontracting is a process of contracting a part of the process to the outsider. The task or process sometimes completely outsourced or a particular amount of work is provided through agreements. The contractor specializes in that particular work, perform the work, and send back the work to the main company.

For Example :

A jeans pant manufacturer may have facilities for Jeans cutting, Designing, stitching machines, but for washing the process is outsourced to the sub-contractor. The subcontractor wash the jeans and sent back to the manufacturer further the process of labeling, the packaging is done by the main company.

sub contracting in manufacturing unitsSubcontracting in manufacturing reduces cost and the manufacturers get the specialized resources to achieve cost benefits in large numbers by sub-contractor.  This article describes how to set up subcontracting within the manufacturing of Odoo ERP software. Today many manufacturing companies hand over certain processes or tasks in the production process to an external contractor that is specialized in performing it. After the completion, the subcontractor returns back the refined product.

Step 1 -Install the Manufacturing, Inventory, and Purchase module in your Database.

installation of subcontracting module in odoo erp

Step 2– To Enable the Subcontracting method in Manufacturing module.

Go to Manufacturing module -> Configuration and tick the checkbox of the Subcontracting option.

settings for odoo sub contracting

Step 3 – Need to Create a Main Product (Ex. Lamp ) and their respective Sub Product (Ex. Bulb,Lamp body,Lamp Shade) components . Before saving the Sub Product which component want to delivered from Subcontractors every time order a subcontracted product,  need to be configured for subcontracting method by enabling checkbox  Resupply Subcontractor on Order

Products

products 3

Step 4 – Create the new Bill of Material in Manufacturing Module.

Go to Manufacturing -> Master Data -> Bill of Material then click on the Create button.

bill of material

Step 5 – Create a new Bill of Material, by selecting Main Product as Product select Subcontracting Radio button add Subcontractors and components(Sub Products) respectively and save

In odoo ,Subcontracted sub products can buy the subcontracted product from your subcontractor or directly get the subcontracted product and receive the subcontracted product respectively .

Step 6 To Buy the subcontracted product from a subcontractor

go to the Purchase Module -> Click on the Create button to create a new purchase order..

Fill the requirement fields like Vendor name, Vendor Reference, Purchase Agreement, Order date, Source Document. Company name, and filling all the required fields in the products tab. After filling all the required fields and  click on the Save button.

confirm the order

Once the order is confirmed click the Confirm Order button , Purchase Order is created and produce the general receipt of the finished product and receipt can be displayed clicking on the receipt button

receipt validation

Step 7 – To Validate the main finished product in stock and update all the product components.

validation

apply

Purchase order

If the product components( Including Main Product and Sub Product) stock is insufficient there are three ways to manage the product resupply from subcontractor

Manually :Generate a delivery order determining subcontractor as the partner, describing components to deliver.

manully confirmation

Reordering rules:By assuring the Location of Subcontracted Product delivery and updating the Minimum and Maximum Quantity of product has to be in stock. Odoo will trigger the Reordering Rule and generate the Purchase Order to respective Vendors.

re orderin rules in manufacturing

Enable the Check button of Resupply Subcontractor on Order under the Inventory tab of the product.

resupply sub contracting

The above module of sub contracting manufacturing processes in Odoo showcased the verion 13 of Odoo. For latest version the functions would be similar. The above module can be further customizable as per your requirements. We have developed more advance sub contracting module for a Mask Manufacturer who outsource many process to other countries. For more information you can email us on sales@globalteckz.com

What Benefits Subcontracting offers to Manufacturers

Subcontracting for Manufacturing industries offer various benefits and advantages. By Hiring the sbucontractors companies can attain flexibility that comes with being able to scale operations up or down during certain economic cycles, to hiring up a specialized talent for particular project. Sub contracting are used in various industries now a days. With project complexisiting and global selling there are many benefits of subcontracting for Manufacturers.

1. Economic Cycles Adaption

Business work based on maket condition every product manufactured goes into contraction and growth period every year. With subcontracting a company can manage Economic cycles based on demand for the products.

2. Lower down Labor and Overhead Costs

Another benefit of subcontracting is that it lower donw the labor and overhead costs of the company. The organization dont need to worry on hiring new staff, providing employee benefits, equipments and so on… one of the best example of furniture manufacturers who make extensive use of subcontractors due to lower cost in other countries.

3. Capital Investments can be reduced

Another benefit of sub contracting is that capital investments can be reduced, for example if a T-shirt manufacturer want to add dying and washing department internally rather outsourcing or subcontracing then the capital investment in set up will be way higher. Further hiring of employee or labour will again increase the financial investment.

4. Specialized Labor Availablity

With subcontracting you gain benefits of specialize labour who offers powerful services for particular activities. Therefore your business can concentrate on the available resource and strengthing them. It might not make sense to try to add that division to your business, especially when you can hire a subcontractor to take on those tasks on an as-needed basis only.

5. Controlled Costing

By using a subcontractor and paying on a per project basis rather than by the hour helps avoid the inevitable overruns that come with these types of projects. When you’re paying workers by the hour, this can result in drastic cost overruns. However, if you’re able to work with a subcontractor on per-project basis, rather than an hourly basis, the burden of cost and time estimation falls on the subcontractor rather than the main contracting firm.

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