Cost Estimate and Accounting in ERP
February 12, 2025
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Production Order Subcontracting - In the age of production outsourcing and the organizational focus on their core competency, subcontracting of production orders is assuming greater importance. In addition to the business functionality necessary for producing goods in house, sub contraction operations necessitates some additional business process such as generation of sub contracting purchase order.
Sub contracting is normally planned, but sometime may be unplanned to meet exigency of a situation, such as breakdown of a plant. Normally, an ERP system treats subcontracting similar to procurement of a service.
A typical flow chart of subcontracting production order is as follows:
Procedure for subcontracting production orders: A few details of the process (in addition to normal procedure of production order control), as shown in the flow chart, is given below:
Materials Issue - When a production order is carried out, required materials from warehouses is needed to be issued. There are various ways of releasing materials for a production order, as detailed below.
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