In subcontracting, you employ an external party to carry out tasks for your organization, especially manufacturing.

Subcontracting is a type of job contract that seeks to outsource certain kinds of work to other companies. It allows work on more than one phase of the project to be done at once, often leading to quicker completion.

Subcontracting is practised by various industries. For example, manufacturers who make several products from complex components subcontract certain components and package them at their facilities.

If your business involves outsourcing certain processes to a third-party Supplier where you supply the raw materials and the third party does the labour/production, you can track this by using the subcontracting feature of ERPNext.

1. How to Set up Subcontracting

  1. Create a Service Item (Non-stock Item). It represents the service cost of the subcontracted operation.

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  2. 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”.

  3. Create a Warehouse for your Supplier so that you can keep track of Items supplied. (you may supply a month's worth of Items in one go).

  4. For the processed It