It is common to find food and beverage and pharmaceutical businesses that outsource or subcontract part or all of their production processes to a third party.
The brand owner owns the R&D phase of recipe and formulation development and management, and possibly quality assurance and control, while the subcontractor manages the inventory and production process.
There are many reasons for using a third party to produce and pack goods, but compliance and regulatory requirements still exist, for example batch traceability, quality testing, and inventory segregation.
So how does CompuTec ProcessForce manage this?
Part 1: Master Data
- The recipe is marked as “External”.
- The warehouse of the free issue materials is the subcontractor’s warehouse location.
- Materials can be consumed via backflush (in a traceable world, batches are backflushed on a FIFO or FEFO basis) or manually picked.
Part 2: Process and Material Flow
- A Manufacturing Order is created to manage the subcontract production cycle.
- A purchase request or Purchase Order is created to manage the purchase-to-accounts-payable cycle.
- Free issue materials are stock-transferred from the brand owner’s warehouse to the subcontractor’s warehouse with the selected batch numbers (or the material is purchased and sent directly to the subcontractor).
- The consumption of the free issue material is recorded, with the subcontractor entering the quantity and batch record data directly into the ERP system (or by barcode scanning), or paper records are passed to the brand owner.
- Quality control tests for the batch are performed and recorded against the Manufacturing Order.
- The quantity of the finished product is recorded with the corresponding batch number details.
- The system automatically deducts backflushed free issue materials (even batch-controlled items).
- The system automatically creates a Goods Receipt PO for the Purchase Order.
- Financial postings are made for inventory and external work in progress.
The result: batch traceability is intact!
