Incoming Subcontracting work

ERPNext
1

Can someone customize the process/module for subcontracting. In ERPNext there is a module for material which can be given to vendor on subcontracting basis for further processing.

There is also possibilities in many Industries that they are processing material which is send by customers to process since that particular has gt facilities and capabilities to take such subcontracting work. So there is out going subcontracting process as well as incoming subcontracting process.

With this ERPNEXT’s subcontracting module will be fullproof.

2

Can you detail out the specs?

3

I mean create a BOM. Take the incoming Material that your customer sends you and set it up as Raw Material. Take the item that you bill your customer and set it up as a Sales Item. The BOM now adds on the materials you consume during the subcontract process. If it is just job work, then there are no materials added.

If you do the same work for multiple customers, you can either turn on Batch at the Item Master level, so that you can distinguish between Customer’s raw materials, or you can create customer specific warehouses. Or you can have different Item Codes for different customers.

Or am I missing some of the details?

Thanks

Jay

4

JayRam
[1] ERPNext Foundation
August 22

I mean create a BOM. Take the incoming
Material that your customer sends you and set it up as Raw Material. Take
the item that you bill your customer and set it up as a Sales Item. The BOM
now adds on the materials you consume during the subcontract process. If it
is just job work, then there are no materials added.

If you do the same
work for multiple customers, you can either turn on Batch at the Item
Master level, so that you can distinguish between Customer’s raw materials,
or you can create customer specific warehouses. Or you can have different
Item Codes for different customers.

Or am I missing some of the details?

Thanks

Jay Dear Sir,
Yes, this is also subcontracting process
called as a ( incoming subcontracting) and if the customer provides
material and processed then only labour charges are billed. Yes, there can
be BOM for this incoming subcontracting work. This is happening for many of
the engineering companies especially who are undertaking heavy fabrication
work, Laser cutting jobs etc.
In pharma or chemical companies (process
Industries) the process is called as a loan licensing and all the QC tests
and parameters are applicable for this.
I will try to prepare a write up
on this and can send you later on.
I can also send mock up for this
process and for QC test, parameters process.
Only thing is that I am new
on ERPNext and do not have full version.
I have got total 36+ years of
experience - out of that I was in Industries(Engineering, Automobile,
Process, Consumer Products) for 20 years in their computer/software
department and developed all functional modules that time as a homegrown
S/w development and then I was there in IT company like Patni Computers and
IBM for 13 Years. Right now I am a consultant for ERP and worked mainly on
Microsoft Dynamics and SAP Business One products.
I liked ERPNext and it
is growing and making good pace with latest technology with fulfillment of
needs of business. Great Going!! Hence would like to contribute something
or suggesting some gaps for the ERPNext ERP. Since I was using old
technology so trying to learn new technologies also.
Thanks ">Shrikrishna
Ozalkar

5

Business Case:-

Story :- Company will receive material from “Customer” and do some Operations on the material and send it back to the Customer and get paid for the operation performed.

Story Break down:-

1:- Company Receives Material from Customer “X”
2:- Company performs Operation let’s say “Surface Finishing” on received items
3:- Once Operation is performed Company will send the finished products to “X”
4:- Customers will pay the Company for the Operation once they receive the finished goods.

ERPNext Solution:-

Step 1 :- Go to “Item List” and Create Items as follows for an example

  • Unsurfaced Item
  • Surfaced Finished Item

Step 2 :- Go to Workstation & Workstation type and create
“Customer Subcon - Surface Finishing” - Workstation
“Incoming Subcontracting Works - Customer” - Workstation type

Step 3 :- Go to Operation and Create Operation as below and tag the Workstation
Surface Finishing

Step 4 :- Create a BOM for “Surfaced Finished Item” with Unsurfaced Item as raw material and tag the surface finishing operation in the BOM

Step 5 :- Go to Supplier and Create a Supplier Name same as Customer Name who is sending the materials to Company to do surface finishing Operations.

Step 6 :- To receive a Unsurfaced item either we can create a “Purchase Receipt” against the Supplier (who is indirectly our Customer) or We can create a Warehouse with that Customer name and directly do “Stock Entry” of type “Material Receive” to increase the stock of that Unsurfaced Item.

Step 7 :- Create Sales order for the “Surfaced Finished Item” with required Qty

Step 8 :- Create Work Order from Sales order for the “Surfaced Finished Item”

Step 9 :- Complete the Work order cycle to produce the “Surfaced Finished Item”

Step 10 :- Create “Delivery Note” against sales Order and proceed with Invoice for billing and payments.

I’m simply sharing my workaround approach for Customer Subcontracting. I understand that with development support, we can replicate the same feature as the existing Subcontracting for Supplier in ERPNext. However, for the time being, the following solution should suffice for all our needs. If anyone can offer suggestions to enhance it further or if I’ve overlooked anything, I would greatly appreciate it. Thank you!

6

how to handle the valuation rate? it should be 0 valiation

if we do purchase receipt, how to close it as no payment needed.

7

Hi @szufisher ,thanks for valuable questions and the above business case will have no accounting impact , its used only for those who have only inventory impacts…this may not be suitable for those who need to track all details of inventory and accounting hence i have not mentioned anything about valuation rate and payment entries…

  1. how to handle the valuation rate? it should be 0 valiation
    Ans . it may be Zero or we can provide the rate of that unsurfaced item before the subcon process as a valuation rate

  2. if we do purchase receipt, how to close it as no payment needed?
    Ans . If we submit and received all the PR items then system will mark status of the PR as completed (i.e all materials have been submitted and received completely) or we can mark the status as “Closed” manually.