- How to manage manufacturing with a third party where you pay manufacturing fees and provide components.
- How to manage the locations of manufacturing spread across multiple facilities
- How to set up manufacturing work orders and sub-assemblies to accommodate third-party value-add providers such as painting, powder coating, or co-packers.
APT University: 3rd Party Manufacturing
Hello Everyone and Welcome to APTU, today we’re going to be discussing some strategies and methods for using advancepro to manage third Party manufacturing relationships and processes. This can include relationships where you order a finished product directly from a manufacturer and simply pay them a direct fee, Or situations where you own and manage some or all of the components, send them to a manufacturer or co-packer, and in turn they assemble your components, optionally procuring any additional parts, and charge you a service fee. Some examples might be if you’re doing automotive manufacturing and you send unfinished product to be painted by a contractor, another example might be a copacker situation where you send bulk product and they package it for you. ;
Just before we Dive in we will be taking any questions at the end, so if you have a question, feel free to enter it into the Live chat available if you’re watching during our live broadcast just below the video if you’re watching on Advanceprotech.com, or to the side if you’re watching Live on youtube. We do these Live videos every wednesday at 12 noon eastern time, if you want to learn more about advancepro and we do have a full archive of our past episodes available on our youtube channel, or on advanceprotech.com under the resources tab.
Now there are a lot of diverse types of third party manufacturing relationship, and what I’d like to do today is touch on some of the most common features used in these situations, you may choose to use a selection of these tools and workflows, or use them in combination with one another. Today we’ll be covering:
- Direct purchase of goods
- Manufacturing with a service Item
- Using a warehouse to track stock at a manufacturer site
- Using a Work order to create a purchase order for services or procured parts
- Using Work order stages to clarify where the product or components are and which company is currently working on the product.
- Using multi-layer work orders with sub-assemblies to manage processes that flow across multiple service providers, or internal and external procedures.
For many of these features, we do have a full video already that goes into greater detail, so I’m going to keep those points fairly light in the interest of time, For each feature I show today, we can track lot and serial numbers as well, take a look at our lot and serial tracking video for details on that
This video is intended as a sampling of features and options you can choose from to give you the level of intelligence, management capabilities, and accounting documentation that you require to succeed in your particular business, you might use all of these features, or just one. So keep that in mind as we proceed
So lets start with a direct purchase of goods, if you don’t own or manage your raw materials, this is probably all you need, if you are purchasing your components or ingredients, this is how you can go ahead an acquire your raw materials. We’ll also touch on how this same process can be used to create a PO for assembly services or parts that your manufacturing provider will procure for you automatically from stock levels at their location.
So we have components and vendors set up in AdvancePro and in this example, the vendor is going to be your provider of the components you manage, the vendor could also be your manufacturing provider
So to start a purchase order for parts, we’re going to go to vendor orders, pick out the company we’re doing business with, and click proceed, we can add the products to the order, print or email it to your vendor, and have it delivered either to our own warehouse, or we can set up the vendor location as a warehouse, and have the goods delivered directly to them, In this example we call our warehouses warehouse 1 and 2, but you can name them however you like, so this can easily be your own warehouse or your manufacturers location.
This same technique can apply with warehouse transfers, and we can also use it to ship directly from our manufacturer to our customer, if you don’t want to manage stock in your vendor location but you do want them to ship directly to your customers, take a look at our video on Drop Shipping, we do have that capability.
So we can do receiving two different ways, we can click direct bill to receive items and create a payable bill instantly – this bill will always reflect the quantities on the purchase order, Now you might also want to know exactly when you receive the order, and you want the bill to reflect what you actually received in case you get shorted, you can use our receiving function by just placing the order, now we can go to our warehouse dashboard and open up our orders to receive. We can check in and run the parts through quality assurance, and finally produce a bill.
Now lets say we’ve received some parts in our warehouse, and we need to send them out to a third party manufacturing provider, we can perform a warehouse transfer to send them the stock, you can do a direct, instant transfer – or a two stage transfer where items get shipped, and then confirmed and received Today we’re just going to touch on the instant transfer. So I’ll just go to manage inventory, click the origin warehouse, or the warehouse where the goods are currently stored, and we click the orange transfer button on the bottom right. So this is similar to the vendor order where we just add by sku or search for the item we’ll be sending to our vendor, and then we can choose picking locations and quantity, and click the transfer button to move those goods to our other location. If we want to see the stock at your manufacturer’s location, you can just navigate to their warehouse, if you are consuming components at their location, they will decrease in stock level as they complete manufacturing work orders, and it will also increase stock levels for finished goods in these warehouses if you’re using these features.
Next we’re going to talk about actually managing your production process, this might be a very simple process for you, or you might be more involved and move built objects through multiple companies hands, but in both cases, if you want to consume raw materials of some kind, and receive finished goods, you are likely going to be using our manufacturing module.
So first we’ll talk about setup, here in AdvancePro, we can set up an assembly item and give it a bill of materials that shows the items that get used to build it, so in this example we have some parts, and we have some services, these might be parts that you procure, using the vendor order process we just showed, or it could be parts that your manufacturer is going to provide for you, you can see here you can also have items that cover any manufacturing fees.
Some nice features that we can include at this point are 1) the ability to have a part name be different on a purchase order to your vendor than it is on a bill of materials – such as the Bill of materials or work order describing the service, such as painting the product, while the purchase order you send to the manufacturing service provider might read as ‘finished engines’ it allows you to be very flexible while being accurate, and 2) the ability to use a manufactured good as a component, or sub assembly, of another manufactured item. Advancepro makes no distinctions between components and finished goods when it comes to sales or making them a component in other goods, so it’s very easy to nest projects, one example of this might be in foods, where one company is doing the food production and another is doing the packaging, or another situation might be where you have a metal fabricator build a part, and another company is going to paint it. – another great feature is that we can assign a vendor to any component, sub assembly or finished good, so that means you can switch at any time from having a part made with your components, to doing a direct purchase of the finished goods.
So this area of product setup – this is initial configuration that you would do once per product, or only when your workflow changes, now that we have the product set up, we want to manufacture the item, using up the components, and raising our stock level for the finished goods,
To start a work order we’re going to go to our manufacturing dashboard, and we’re going to start a work order, we’re going to choose our product, our quanitity to build, and the warehouse, where the activity is going to happen, and where the materialsneed to be in order to build the finished good.
Advancepro thinks of manufacturing as a logistical event, manufacturing needs to happen at a real place, and it needs real materials in order to happen, and there may be scheduling around that. Our work order is the tool we use to manage that event, whether it’s on your premesis or not.
What some of our users will do is give their manufacturer limited access to advancepro itself so that they can come in and update the work order as needed. This is a communication and planning tool so that everyone has clarity about where the parts are, when they are arriving, and where the manufacturing job is at. We also have a dashboard where we can see our work orders, including how many items are being produced and what stage they’re at.
Now coming back to the work order itself, there are a number of features here that are important first is the stage label at the top, this is a custom list that you can define, that tells you where the project is in its timeline, this can also be used in place of, or alongside our multi warehouse capability, so this is another way to get intelligence about the location of the parts required, you’ll see here it shows whether its in transit to or from a third party manufacturing company.,
Another feature is the stock comparison, so when we say we want to produce a number of parts, it multiplies out our bill of matierals to show us our parts requirements for this job, and it looks at the stock levels in the warehouse we specified it will identify anything that needs to be purchased, and anything that needs to be built, and in fact, it will automatically create a purchase order for anything we’re short on, which can include the services we have listed, as well as any components that our manufacturing provider may be procuring for us.
Now we need to get those goods into the warehouse where the work order is started in order to proceed, and we can do this by purchase order, by warehouse transfer, or by fulfilling another work order in the case of a sub-assembly.
Once we start and process this work order, any goods that are in this warehouse currently that are listed on the work order will get reserved for this job.
Now once we list those goods as received we’ll get a payable. If you need some other purchase order in this process that I haven’t mentioned, reach out to your advancepro advisor or technical support, we would be happy to discuss further options.
So once we have the stock and Finalize the work order, our finished goods will be completed in the warehouse we’ve worked in, and we can even adjust our outputs here to show a yeild loss as well.
This concludes today’s tour of our features that are relevant to third party manufacturing.