Purchase Order and Material Transfers for Subcontracting
Once a subcontract manufacturing order is released, you can generate a Purchase Order for the vendor’s service charges, and track the movement of raw materials and finished goods between your organisation and the vendor.
Generate a Purchase Order for the Vendor
After you release the manufacturing order, you can create a Purchase Order for the vendor to record the service charges payable for the outsourced work.
- Navigate to Manufacturing Orders on the left sidebar.
- Select the Released subcontract manufacturing order.
- Click Create Purchase Order.
Note: The Purchase Order is generated using the Service Items configured in the manufacturing order, so only the subcontracting service charges are included, not the raw material components. The billing location for the Purchase Order is taken from the manufacturing order’s Location.
Insight: The service item prices in this Purchase Order are considered the subcontracting cost and are used to calculate the finished goods cost. See Edit Service Item Price to learn when these prices can be updated.
Track Raw Material and Finished Goods Movement
Since a subcontractor’s location is configured as a Warehouse-only location, you can use Transfer Orders to move raw materials to the vendor and bring finished goods back into your inventory.
- Raw materials sent to the vendor and finished goods received back can be tracked by manually creating a Transfer Order between your warehouse and the subcontractor’s location.
- Delivery Challans and e-Way Bills can also be generated for the outbound transfer, if required.
Pro Tip: If you work with multiple vendors, the number of Warehouse-only locations you can configure may be limited. Consider enabling bin tracking within a single subcontractor’s location and using separate bins for each vendor, so items sent to each vendor can be tracked individually.