Introduction
Welcome to our user-friendly guide on utilizing the Subcontracting feature in Empress. This feature is designed to streamline the tracking and management of subcontracted tasks, which are commonly outsourced aspects of business operations in the manufacturing industry.
What is Subcontracting?
In a business context, subcontracting refers to the practice of delegating specific tasks or projects to third-party suppliers or vendors. These subcontractors are typically responsible for the labor and production of the assigned tasks, using raw materials supplied by your business. Empress’s Subcontracting feature allows you to effectively monitor this process, ensuring smooth operations and efficient completion of projects.
Setting Up Subcontracting in Empress
To start using the subcontracting feature, follow these simple steps:
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Create a Service Item: This is a non-stock item that signifies the service cost of the subcontracted task.
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Create Items for the Unprocessed and Processed Product: If you’re supplying an unfinished product to your supplier (e.g., an unpainted object), you should create two separate items: one for the unpainted version and one for the finished product.
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Establish a Warehouse for your Supplier: This enables you to keep track of the supplied items.
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Activate the “Supply Raw Materials for Purchase” Option: This is for the processed item and can be enabled in the Item master.
Creating a Bill Of Materials (BOM)
You’ll need to create a BOM for the finished product that includes the unfinished items as sub-items. If all the production work is subcontracted, the BOM won’t require operations.
Initiating a Purchase Order
To create a Subcontract Purchase Order for the Service Item, select the Finished Good Item and activate the “Is Subcontracted” option. The Rate field in the Purchase Order should reflect the agreed service cost with the Supplier. Once completed, save and submit the Purchase Order.
Issuing a Subcontracting Order
Next, create a Subcontracting Order for your Purchase Order. The “Raw Materials Supplied” section will update with your unfinished items based on your BOM.
Transferring Raw Materials
You can now transfer the raw materials to your Supplier by creating a Stock Entry.
Receiving Subcontracted Items
Once your supplier has completed the subcontracted tasks, you can receive the products using a Subcontracting Receipt. The Supplier Warehouse will supply the raw materials, and the finished goods will be received in the Accepted Warehouse.
Creating a Purchase Receipt
Finally, create a Purchase Receipt from the Purchase Order.
Handling Supplier-Sourced Raw Materials
In some cases, your supplier might source some of the raw materials. Empress can accommodate this within the BOM for subcontracting.
Key Notes
Remember, the “Rate” of the finished item should be the processing/service cost, excluding the raw materials cost. Empress will automatically add the raw material rate for your valuation when you receive the finished item in your stock. The “Reserve Warehouse” in the Subcontracting Order defaults from the BOM or the default Warehouse set in the Item.
Wrapping Up
The Subcontracting feature in Empress provides a comprehensive tool for businesses to manage and track their outsourced tasks effectively. It simplifies the subcontracting process, ensuring efficient operations and improved productivity. For further assistance or inquiries, please refer to our additional resources or reach out to our support team.