Subcontracting in Manufacturing: Process and ERP Control

Subcontracting becomes risky when material leaves the factory but the system no longer knows where it is, how much is left and what came back accepted. Optiwise handles subcontracting as a controlled manufacturing workflow, not a loose supplier note.

Direct answer

Subcontracting sends material or work outside your factory while keeping custody, quantity, cost and quality visible. For a manufacturer, the useful version is the one that names the record, owner, status and exception. That is how the team acts without turning every shortage or supplier issue into a WhatsApp chase.

Worked manufacturing example

A machining vendor receives 500 castings, returns 460 accepted parts, 20 rejected parts and keeps 20 in process.

Step	Record	Quantity example	Control
Issue material	Delivery challan/vendor stock	500 castings issued	Vendor-held balance begins
Outside process	Subcontract service order	Machining service	Service cost separate from material
Partial receipt	Inward/GRN	480 received	Open balance remains 20
Quality check	QC disposition	460 accepted, 20 rejected	Accepted stock separated from rejected
Reconciliation	Vendor balance	20 still outside	Follow-up before closure

How Optiwise handles this workflow

• Track supplied material separately from subcontractor service charges.
• Do not close subcontracting until accepted, rejected and still-outside quantities reconcile.
• Keep extra material issues and partial receipts visible.
• Inspect returned goods before they become usable inventory.

Optiwise connects inventory, purchasing, production, quality checks, role approvals and AI-assisted actions around the same operating records. The result is not a loose dashboard; it is a workflow your buyer, planner, storekeeper and supervisor can check.

Implementation checklist

• Define the exact trigger that creates or updates the record.
• Name the owner who approves the next action.
• Separate planned, received, accepted, rejected and closed quantities.
• Keep missing data visible instead of converting it into a false score.
• Review one real order or item before rolling the rule across every product.

Related Optiwise pages and source checks

• Optiwise production
• Optiwise purchase
• Optiwise inventory
• Optiwise optiwise-agents
• docs.frappe.io

FAQs

What is subcontracting in manufacturing?

It is outside processing where a vendor performs part of production, often using material supplied by your factory.

What should subcontracting ERP track?

Material issue, vendor-held stock, service order, receipt, rejection, open balance, cost and payment status.

Does Optiwise support subcontracting?

Yes. Optiwise supports service orders, vendor assignments, BOM-derived delivery challans, partial/extra material issues, vendor-held stock, receipt, QC and rejected returns.