Best Practices In Contract Manufacturing - Implementing An Operational Agenda
Oracle Manufacturing enables us to include supplier-sourced components and resources in the manufacturing processes. This helps realize a number of potential business benefits that could include:
- Using specialized supplier skills in the manufacturing process to help lower engineering and manufacturing costs and increase production quality
- Using supplier capacity to increase the overall production capacity
From a configuration standpoint, one can define outside processing items that represent supplier-sourced items, resources, and services that you include in the build process. These items can be non-stockable items which represent the actual supplier contribution in the assembly build process or we can define the assembly itself as an outside processing item. The outside processing item is the item on the requisition or purchase order and the item we receive in the purchase order receipts. One should also define outside resources and associate them with these outside processing items. The outside resources are included on the routings for scheduling and costing purposes. A job or repetitive schedule in Work in Process is charged for outside processing through these outside resources.
Standard Oracle's OSP is a good fit to accomplish the Contract manufacturing scenarios for most industries and Retail, CPG and Logistics is no exception to the rule. Standard Modules like Oracle Inventory, Oracle Purchasing, and Oracle Work in Process and be appropriately configured to achieve the objectives. The closed loop system can provide for the following:
- Define outside processing resource requirements for discrete job and repetitive schedule routings
- Automatically generate purchase requisitions by moving assembly items to the Queue intraoperation step of an operation that has outside processing resources associated with it
- Receive assembly items back from outside processing suppliers and automatically charge your outside processing resource costs
- Control and track progress at outside processing operations
Standard functionality can be tweaked and customizations made, to meet specific business requirements. As each organization strives to become world class, contract manufacturing is set to rule the world. And as we have always said IT follows the business, there is an ever increasing scope of improvement for system capabilities. Best practices in contract manufacturing would involve identifying the appropriate strategic, tactical and operational agenda and implementing them. System design and implementation would fall under the purview of operational agenda. We will continue our discussions in forthcoming blogs on each aspect of these best practices.
