Steps Involved in Contract Manufacturing
- Create Inventory items, assembly items, and Other charge items
- Create Work Order
- It creates purchase order automatically
- Create a transfer Order to transfer components to the contract manufacturer’s location
- Receive the order(Contract manufacturer0
- Build Work Order
- Create the transfer order to transfer the finished good from the manufacturer from contractor.
1. Other Charge Item Type
it is possible to use tolling charges within NetSuite when performing a contract manufacturing process. If you intend to handle tolling charges within the system, then you will want to set up an other charge item. We use a non-inventory charge item to act as a component of the finished assembly item. This is used to represent the costs associated with the subcontracting step or the tolling charge and drives a PO to the subcontractor. Again, it is a component of the finished good part or the assembly item.
By creating an other charge item for resale as a special order item, NetSuite can automate the PO creation process for additional charges. By setting the item as special order NetSuite will automatically produce the purchase order upon release of the work order to the contract manufacturer for the tolling charges.
2. Create the work Order
A work order is a non-posting transaction. Work orders you enter list the members or components– or sometimes referred to as the recipe– of the assembly item that needs to be built.
When the status of the work order is set to planned, it means that no components are committed regardless of commit option settings. The firmed box will also be unchecked when the status is that of planned. In the scheduling section you can add values into the scheduling attribute fields. This will allow you to group the items for scheduling optimization and efficiency.
Once the work order has been finalized, then we’re ready to release it to the contract manufacturer. We will change the status from planned and unfirmed to released. When you do this, the firm box will automatically be checked. This will also give you the capability to release it to the contract manufacturer. If you have tolling charges and you have your system set up accordingly, it will also take you to another page that will show the purchase order that is automatically created for those tolling charges.
Save the work order with status planned and firmed checkbox unchecked.
Once we are ready to release the work order to our manufacturer, change the status to Released. Firmed box automatically checked. Save.
And when we do this, what you’re going to see is a processing screen, which will show us where a purchase order is automatically being created for the tolling charge.
Scheduled Attribute
You can set up whatever values you would like in these fields. You can use one or you can use all three of these options. These are simply used as filters later on so that you can produce items in the order in which you want them built. So for example, let’s say that you’re manufacturing ice cream. You may want to start producing from the lightest colored ice cream to your darkest colored ice cream so that you don’t have to clean your equipment between each run.
So you may have a scheduling attribute that is that of vanilla– or white– and then you slowly go through the different shades of different types of ice cream all the way to chocolate, which would be a dark color. That’s where scheduling attributes would most likely be used.
4. Create a Transfer Order
In order to issue the components from the warehouse to contract manufacturer’s location. This can done also by the transfer inventory.
Contract Manufacturer
We can log in as the contract manufacturer. So you may want to use this security role and provide it to your contract manufacturer so that they can log in to your instance in NetSuite and they can handle the transactions on their end accordingly.
5. Receive
Receive the order as login using the contract manufacturer role. And create the work order. And complete the process.
And after the finished good Is created, create a transfer order to transfer the finished good from the contractor location to the warehouse.
6. Build a Work Order
7. Create a Transfer Order