Outside processing is manufacturing performed by an external supplier. Typically, outside processing involves your company buying component products from one supplier, and then sending the products to another company to perform the manufacturing work. Outside processing is often used to decrease product costs.
Example Product A is manufactured from three component products. You could buy product A directly from a supplier or manufacture it within your company. However, you can save money by buying the components from one supplier, and then having another supplier manufacture product A for you.
Your company may also need to use outside processing if your internal manufacturing cannot meet demand for a product, or if a manufacturing process cannot be performed within your company (e.g., you do not have the necessary equipment).
Tracking outside processing in Apprise allows you to:
Calculate the final landed cost of manufactured products so that inventory valuation and gross profit are properly recorded and measured.
Make DRP more responsive to replenishment needs and timing of component parts required for manufactured products.
Improve visibility of expected availability of manufactured products.
Track component parts and inventory valuation at supplier outside processing sites for accounting purposes.
Reconcile and pay invoices from component part suppliers and suppliers performing assembly and packaging.
For information on setting up and using outside processing, see Setting Up Outside Processing and Using Outside Processing for Manufacturing.