Introduction
Subcontracting is the process of delegating specific tasks or operations to external organizations. This approach can provide businesses with increased efficiency, allowing multiple project phases to occur simultaneously.
In Empress, the subcontracting feature provides businesses with the tools to manage and track these subcontracted processes. This guide will walk you through how to utilize this feature effectively, helping you to maintain clear visibility and control over your outsourced processes.
The Importance of Subcontracting in Business
Subcontracting is a vital tool for businesses that outsource part of their production or service processes to third-party suppliers. It allows companies to focus on their core competencies while leveraging the expertise of others for specialized tasks. In Empress, the subcontracting feature ensures you can track these processes effectively, providing transparency and control.
How to Manage Subcontracting in Empress
1. Enable Supply of Raw Materials
In the Item Master of the subcontracted item, you need to activate the “Supply Raw Materials for Purchase” option. This indicates that your business will be supplying the raw materials for the subcontracted item.
2. Create a Bill of Material (BOM)
Next, create a BOM for the subcontracted item. This BOM should include the raw materials you’ll be sending to the subcontractor for the production of the finished or semi-finished product. No operations will be included in this BOM as the activities aren’t performed at your end.
3. Create a Purchase Order
Following this, generate a Purchase Order to procure the item from the external supplier. Within this, ensure you select “Yes” for the “Supply Raw Materials” field and choose the warehouse from which the raw materials will be transferred to the vendor.
Note: The rate of the Item entered here is considered your Service Cost rate.
4. Updating the Status of the Raw Materials
Within the Purchase Order, there is an additional table that displays the status of the raw materials to be transferred. Here, you’re required to select the “Reserve Warehouse”, from which the raw materials will be transferred to the vendor’s virtual warehouse.
5. Transfer the Raw Materials
Once the Purchase Order is submitted, you can create a Stock Entry to transfer the raw materials to the vendor by clicking on the “Transfer” button. After the Stock Entry is submitted, the table in the Purchase Order will update to reflect the transferred quantity under “Supplied Qty.”
6. Receive the Finished Goods
When you receive the finished or semi-finished goods from the vendor, you can create a Purchase Receipt against this Purchase Order.
7. Create a Purchase Invoice
Finally, you can create a Purchase Invoice for this transaction, following the usual process: Purchase Order → Purchase Receipt → Purchase Invoice.
By following these steps, you can effectively manage your subcontracting processes within Empress. This will provide you with greater visibility over your outsourced processes, helping you to streamline your operations and improve efficiency. To learn more about the other features Empress offers for businesses, please visit our support page.