41 lines
2.2 KiB
Markdown
41 lines
2.2 KiB
Markdown
Subcontracting is a type of job contract that seeks to outsource certain types
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of work to other companies. It allows work on more than one phase of the
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project to be done at once, often leading to a quicker completion.
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Subcontracting is practiced by various industries. For example, manufacturers
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making a number of products from complex components subcontract certain
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components and package them at their facilities.
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If your business involves outsourcing certain processes to a third party
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Supplier, where you buy the raw material from, you can track this by using the
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sub-contracting feature of ERPNext.
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### Setup Sub-Contracting:
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1. Create separate Items for the unprocessed and the processed product. For example if you supply unpainted X to your Supplier and the Supplier returns you X, you can create two Items: “X-unpainted” and “X”.
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2. Create a Warehouse for your Supplier so that you can keep track of Items supplied. (you may supply a months worth of Items in one go).
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3. For the processed Item, in the Item master, set “Is Sub Contracted Item” to “Yes”.
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__Step 1:__ Make a Bill of Materials for the processed Item, with the unprocessed
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Items as sub-items. For example, If you are manufacturing a pen, the processed
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pen will be named under Bill of Materials(BOM), whereas, the refill, knob, and
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other items which go into the making of pen, will be categorized as sub-items.
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__Step 2:__ Make a Purchase Order for the processed Item. When you “Save”, in the “Raw Materials Supplied”, all your un-processed Items will be updated based on your Bill of Materials.
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__Step 3:__ Make a Stock Entry to deliver the raw material Items to your Supplier.
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__Step 4:__ Receive the Items from your Supplier via Purchase Receipt. Make sure to check the “Consumed Quantity” in the “Raw Materials” table so that the
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correct stock is maintained at the Supplier’s end.
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> Note 1: Make sure that the “Rate” of processed Item is the processing rate
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(excluding the raw material rate).
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> Note 2: ERPNext will automatically add the raw material rate for your
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valuation purpose when you receive the finished Item in your stock.
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{next}
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