Odoo Subcontracting: How to Manage Job Workers and External Manufacturing
Category: Applications
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When a manufacturing business outsources part of its production to job workers, subcontractors, or external manufacturing partners, managing materials, production quantities, costs, and finished goods can quickly become complicated.
Businesses often rely on spreadsheets, emails, and manual stock transfers to track which materials were sent to subcontractors, what work was completed, and how much finished product was received.
Odoo Subcontracting provides a structured way to manage these external manufacturing operations while keeping purchasing, inventory, manufacturing, and accounting processes connected.
What Is Subcontracting in Manufacturing?
Subcontracting is a manufacturing arrangement where a company sends materials or components to an external supplier who performs a specific manufacturing operation and returns the finished or semi-finished product.
For example:
Company → Raw Materials → Subcontractor → Processing → Finished Product → Company
A footwear manufacturer might send:
- Leather
- Soles
- Fabric
- Accessories
to an external job worker for stitching or finishing.
The subcontractor performs the required operation and returns the completed product to the manufacturer.
Why Businesses Use Subcontract Manufacturing
Companies may outsource production activities for several reasons:
- Limited internal production capacity
- Specialized machinery requirements
- Skilled labor availability
- Cost reduction
- Seasonal production demand
- Access to specialized manufacturing processes
- Faster production capacity expansion
Instead of investing heavily in additional machines and employees, businesses can use qualified external manufacturers.
How Odoo Helps Manage Subcontracting
Odoo can connect the major processes involved in subcontract manufacturing:
Sales → Manufacturing → Purchase → Inventory → Subcontractor → Receipt → Accounting
This provides better visibility into:
- Materials sent to subcontractors
- Quantities processed
- Finished products received
- Subcontracting costs
- Supplier performance
- Inventory movements
- Production requirements
1. Create the Subcontracted Product
The first step is to configure the product that will be manufactured by the subcontractor.
For example:
Product: Powder-Coated Metal Frame
The product can be configured with its relevant inventory and manufacturing information.
The business can then define how the product is produced and which components are required.
2. Create a Bill of Materials
The Bill of Materials (BoM) defines the components required for the subcontracting process.
For example:
Product: Metal Frame
| Component | Quantity |
|---|---|
| Steel Tube | 4 units |
| Metal Bracket | 8 units |
| Screws | 16 units |
| Paint | 0.5 kg |
When the subcontracting process is triggered, Odoo can use this information to determine the required components.
3. Send Components to the Subcontractor
One of the biggest challenges in subcontracting is tracking inventory that physically leaves your warehouse but still belongs to your business.
For example:
Warehouse Stock
Steel Tube: 500 units
You send:
100 units → Subcontractor
The system should clearly track that these materials are now at the subcontractor location.
This prevents confusion between:
Warehouse Stock
and
Components at Subcontractor
4. Subcontractor Performs the Manufacturing Operation
The external job worker performs the required operation.
For example:
Cutting → Welding → Painting → Finishing
Depending on the business process, the subcontractor may perform one operation or the complete manufacturing process.
The manufacturer can then track the expected output and received quantity.
5. Receive the Finished Product
Once the subcontractor completes the work, the finished product is returned.
For example:
100 Metal Frames sent
↓
95 Metal Frames received
↓
5 units pending
This provides visibility into production completion and outstanding quantities.
Businesses can also use quality checks where required before the finished goods are made available for sale.
6. Manage Subcontracting Costs
Subcontracting costs are an important part of production costing.
For example:
Raw Materials: $5,000
Subcontracting Service: $1,000
Transportation: $300
Total relevant production cost = $6,300
Accurately capturing subcontracting costs helps businesses determine the actual cost of their finished products.
7. Manage Multiple Job Workers
Manufacturers often work with multiple subcontractors.
For example:
| Job Worker | Operation |
|---|---|
| Vendor A | Cutting |
| Vendor B | Stitching |
| Vendor C | Painting |
| Vendor D | Final Assembly |
Odoo can help organize supplier and subcontracting workflows so management can determine which vendor is responsible for each external manufacturing activity.
8. Track Subcontractor Inventory
Inventory visibility is especially important when materials are physically located outside your warehouse.
A manufacturer may have:
Main Warehouse: 10,000 units
Job Worker A: 1,000 units
Job Worker B: 750 units
Job Worker C: 500 units
Without proper tracking, it becomes difficult to know the company's actual available inventory.
Odoo's inventory locations can provide a more structured way to track these movements.
9. Handle Partial Deliveries
Subcontractors don't always return everything at once.
For example:
Order: 1,000 units
First delivery:
600 units
Second delivery:
300 units
Remaining:
100 units
A structured Odoo workflow makes it easier to track received quantities and outstanding quantities rather than relying on manual spreadsheets.
10. Quality Control for Subcontracted Products
Quality problems from subcontractors can directly affect your customers.
Businesses can introduce quality checks for:
- Dimensions
- Material quality
- Color
- Finishing
- Packaging
- Functional testing
- Defects
For example:
Received Product → Quality Inspection → Pass → Stock
or
Received Product → Quality Inspection → Fail → Return/Rework
This creates a stronger quality-control process around outsourced manufacturing.
Example: Footwear Subcontracting
Consider a footwear manufacturer.
The company has the following process:
Raw Material Warehouse
↓
Leather + Sole + Accessories
↓
Job Worker
↓
Upper Stitching
↓
Internal Manufacturing
↓
Lasting
↓
Finishing
↓
Finished Shoes
In Odoo, the business can structure the process so that materials, external operations, manufacturing activities, inventory movements, and costs are connected.
This is particularly useful when different production stages are handled by different vendors.
Example: Textile Manufacturing
A textile company may outsource:
Fabric → Dyeing → External Vendor → Dyed Fabric
The business can track:
- Fabric sent
- Quantity processed
- Quantity received
- Vendor
- Processing cost
- Pending quantity
- Finished material
This gives management much better visibility into outsourced production.
Subcontracting vs In-House Manufacturing
| Feature | In-House Manufacturing | Subcontracting |
|---|---|---|
| Production location | Own facility | External vendor |
| Labor | Internal | External |
| Machines | Own equipment | Vendor equipment |
| Material tracking | Internal warehouse | Warehouse + subcontractor |
| Production cost | Internal resources | Vendor/service cost |
| Vendor management | Limited | Important |
| Quality control | Internal | Supplier + receiving inspection |
Businesses can use either model depending on their production strategy.
Common Subcontracting Challenges
Without a proper ERP system, companies may face:
❌ No visibility of materials at job workers
❌ Difficulty tracking pending quantities
❌ Incorrect production costing
❌ Manual supplier communication
❌ Duplicate data entry
❌ Difficult reconciliation of materials sent and received
❌ Poor visibility into subcontractor performance
❌ Delayed production updates
Odoo can help bring these activities into a connected workflow.
Best Practices for Odoo Subcontracting
To get the most from Odoo, businesses should:
1. Maintain accurate BoMs
Ensure components and quantities represent the actual production process.
2. Create proper inventory locations
Separate internal warehouse stock from materials held by subcontractors.
3. Define supplier processes clearly
Document what each subcontractor is responsible for.
4. Track partial receipts
Don't wait until the complete order is finished to update inventory.
5. Monitor subcontracting costs
Include relevant external processing costs in product costing.
6. Implement quality checks
Inspect outsourced products before moving them into available stock.
7. Monitor supplier performance
Track delivery times, quantities, quality issues, and costs.
Odoo Subcontracting Workflow
A typical workflow can look like this:
Sales Order
↓
Manufacturing Requirement
↓
Bill of Materials
↓
Purchase/Subcontracting Order
↓
Components Sent to Subcontractor
↓
External Manufacturing
↓
Finished Goods Received
↓
Quality Inspection
↓
Inventory Update
↓
Production Costing
↓
Accounting
This connected workflow reduces manual work and improves production visibility.
Conclusion
Subcontracting can provide manufacturers with greater flexibility and production capacity, but managing external manufacturing manually can create significant operational challenges.
With Odoo Subcontracting, businesses can organize the movement of materials, manage job workers, receive finished products, track costs, monitor quality, and connect subcontracting activities with their broader manufacturing and inventory processes.
Whether you operate in footwear, textile, metal fabrication, electronics, furniture, food processing, or another manufacturing industry, Odoo can be customized around your specific subcontracting workflow.
ERP Harbor Consulting Services helps manufacturers implement and customize Odoo for manufacturing, subcontracting, inventory, purchasing, costing, quality, and accounting workflows.
Looking to manage your job workers and subcontractors more efficiently with Odoo? Contact our Odoo experts to discuss your manufacturing process.
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Meta Title:
Odoo Subcontracting: Manage Job Workers & External Manufacturing
Meta Description:
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Focus Keywords:
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