Subcontracting: reconcile extra issues and partial returns

Keep material under control after it leaves your factory. In Optiwise, we connect subcontract service orders, delivery challans, extra issues, vendor-held balances, returned goods and quality decisions, so you can see what remains outside before closing the work.

Download the subcontract material-balance worksheet

subcontract material-balance worksheet (Excel workbook) includes a worked example and a separate sheet for your inputs. Blue cells are editable; formula cells calculate the result. Replace the illustrative figures with your factory records.

Separate the service from your material

The service order records the outside operation and vendor. The delivery challan records the material you send, including BOM-derived quantities, partial dispatches and extra issues. Service charges are separate from the quantity of material entrusted to the vendor.

Keep one balance for each relevant material and unit. When several raw materials become a finished assembly, use the BOM relationship; subtracting finished pieces directly from kilograms sent cannot produce a meaningful balance.

Reconcile an extra issue and partial return

In the illustrative worksheet, each casting becomes one machined part. You send 500 castings, then issue 50 more. The vendor returns 460 good parts, 20 rejected parts, 10 unused castings and five scrap pieces. The total returned is 495 pieces, leaving 550 − 495 = 55 still outside.

The 20 rejected and five scrap pieces are already back at your factory. Their quality and disposal decisions remain open, but they must not be deducted from the outside balance a second time. The 55 pieces need a vendor follow-up before the material account can be settled.

Keep custody separate from acceptance

Returned goods follow the inward, goods-receipt and configured inspection flow. A delivery can be physically back while still awaiting quality release. The workbook’s pending-QC field is a subset of the returned-parts column, not an extra receipt. It reduces accepted output without changing how much material remains with the vendor.

In Optiwise, follow the service-order timeline into material sent, finished goods received, inspection, rejected returns, invoices and payments. If rejected goods go back to the subcontractor, record that new dispatch and reopen the relevant outside quantity instead of silently changing the old receipt.

Close the service with the remaining decision recorded

Ask the vendor to identify whether the remaining 55 pieces are in process, unused or lost/scrapped under the agreed terms. Record the actual return or other authorised resolution against that material. Accepted output, physical returns and the vendor invoice each answer a different closure question.

ERPNext’s subcontracting documentation also separates supplied material and subcontract receipts. Continue with our material planning guide when outside work affects the next job.

Trace one outside job and its open material

Bring the service order, delivery challans, extra issues and a partial return. We will reconcile custody, quality and the next vendor action. Explore the Optiwise workflow or book a factory walkthrough. We charge ₹0 for implementation. Subscription, optional add-ons and IoT hardware are separate.