Using ERP to Managing Outside Processing Operations
By John Nugent
Many manufacturers today outsource some of their production to third party vendors. Often this is driven by a need for specialized equipment or skillset or it may simply provide cost savings to your business. With our Visibility ERP customers we often see this with processes like powder coating, plating, painting, anodizing and more.
Your ERP system should offer functionality to enable your organization to track and manage outside processing operations.
Creating Demand for Outside Processing
In order to plan effectively, your ERP must be able to recognize outside processing operations within routing steps and create the outside processing demand for those outside processing work orders. A robust ERP that provides this functionality like Visibility ERP will create this demand when a work order' shop routing has an operation setup as an outside processing step linked to a work center station that is setup as outside processing. This simple two part setup within Visibility ERP enables users to easily track the demand for outside processing operations and ensure that demand is being satisfied on schedule.
From Routing Step to Outside Processing Purchase Orders
Granular tracking capabilities such as routing queue, wait or move hours can be included in the setup of outside processing work centers to ensure accuracy in production planning and cost tracking. When setting up work order routings, users simply indicate the operation number and work center and station numbers and check a box indicating that routing step is Outside Processing. By doing this, demand is generated for an outside processing purchase order to be created. Standard reports such as Visibility's "Outside Process Purchase Orders Report" enable users to see all work orders that require the creation of an outside processing purchase order. These purchase orders can be created automatically.
Track, Manage, and Receive Outside Processing Purchase Orders
Now that you've created your outside processing demand and actioned purchase orders to be send to suppliers to perform these services, it's time to manage those operations and ultimately receive them into your organization on schedule so that you can deliver product to your customers on time and on budget. Using work in process and work order reports, users can track the status of outside processing operations and analyze promised dates and delivery dates for customer orders to ensure outside processing suppliers are performing on time.
Outside processing orders are received the exact same way as regular purchase orders which ensures a simple streamlined experience for your purchasing and receiving teams. Once received, the outside processing purchase order receipt will post to the work order as outside processing costs which ensure accuracy in product costing. After receipt, any remaining work order operations continue.
Your ERP system should offer the outside processing management functionality including the features mentioned in this article. If you have outside processing needs not being met by your current ERP provider reach out to us at sales@visibility.com.
