It should be the case that, in manufacturing, having an abundance of work is a good thing. Labor and machinery are running at full capacity, finished goods are moving through the plant as fast as new work orders are being generated, and production efficiencies are enhancing the bottom line.

However, when abundance turns to overloading, labor and machinery often have a hard time keeping up. Sure, fresh work orders are coming in fast, but the ability to produce product is exceeded by the time available to actually manufacture the goods and adhere to quality standards.

There is only so much time available in the day, and if machines are running full capacity all the time, then there will inevitably be an ongoing backlog of work orders waiting to be undertaken on the shop floor. And when anything is waiting in the manufacturing process, delays in finished goods will soon follow. This is one way that on-time delivery is compromised to the detriment of customer service.

When a manufacturer has the desirous problem of too much work and not enough capacity to meet due dates, subcontractors can provide the needed relief to the burdened manufacturing plant. The resulting effect is the optimization of the total plant load, while increasing through-put in the manufacturing system. Of course, once a production element of a work order is taken out of the hands of the manufacturer and given over to a subcontractor, a whole other world of problems can arise—timing issues, quality issues, and tracking issues.

In order to maintain as much possible control over the process while using subcontractors, a centralized point of contact is needed to coalesce all of the real-time data and provide a picture of how the subcontracted pieces are progressing. For this, enterprise resource planning software (ERP) is well suited to giving the manufacturer the ability to monitor every step of the process when using a subcontractor.

When used in tandem with a graphical user interface (GUI), ERP systems will centralize and control all aspects of the subcontracting process. Through the GUI, shop floor personnel can produce purchase orders for subcontracting processes (machining, heat treating, etc.), with the resulting PO’s going either directly through to the vendor or through the in-house purchasing manager for review.

As well, the GUI can provide an easy to read tracking and managing of the subcontracted production, all the while monitoring progress as it relates to the promised delivery date of the client’s finished good. Without such real-time data concerning the subcontracted job, manufacturers are often left in the dark and caught off-guard when the subcontracted piece goes behind schedule.

To remain efficient in today’s increasingly hectic global economy, it is important that manufacturers remain flexible for changes in their work order quantities. Subcontractors who offer quality production are valuable resources when economies rise and fall, with simultaneous peaks and valleys in production. The primary rule to keep in mind when outsourcing work is to remain diligent about the quality of work being produced by the subcontractor. For in the end, it is the manufacturer who must answer for the overall quality of a finished good that includes a subcontracted part.

This entry was posted on Thursday, October 25th, 2007 at 8:30 am and is filed under Accounting, Labor and Payroll, Quality, Shop Floor. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.