Basic subcontracting

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Introduction

In manufacturing, basic subcontracting is when your business outsources the production of a product to a third-party manufacturer (the subcontractor).

With basic subcontracting in Odoo:

  • The subcontractor sources all components needed.
  • Your business only manages the finished goods once they’re produced.

This approach is ideal for UK companies looking to expand production without increasing in-house manufacturing capacity. The purchasing process is similar to buying from a normal supplier — with a few key differences in configuration and lead times.

Step-by-Step Instructions

  1. Enable Subcontracting in Odoo
  • Go to Manufacturing → Configuration → Settings.
  • Tick Subcontracting under the Operations section.
  • Click Save.
  1. Configure a Product for Subcontracting

Add the Subcontractor as a Vendor:

  1. In Inventory → Products, select or create your product.
  2. On the Purchase tab, click Add a line.
  3. Choose the subcontractor in the Vendor field.
  4. Enter the agreed price.

Set the Delivery Route:

  • Go to the Inventory tab.
  • If goods are sent back to you:
    • Select Buy and Replenish on Order (MTO) to auto-create POs when needed.
  • If goods go directly to your customer:
    • Select Dropship only.
  1. Configure the Bill of Materials (BoM)

Set the BoM to Subcontracting:

  1. On the product form, click the Bill of Materials smart button, or go to Manufacturing → Products → Bills of Materials.
  2. Select the relevant BoM.
  3. In BoM Type, choose Subcontracting.
  4. Add one or more subcontractors in the Subcontractors field.
  5. On the Miscellaneous tab, enter the Manufacturing Lead Time (days the subcontractor needs).

 

For basic subcontracting, do not list components in the BoM the subcontractor handles sourcing.

 

  1. Basic Subcontracting Workflow

Option A – Fulfilling a Customer Order

  1. Create a Sales Order (SO)
    • In Sales → Orders → New, select the customer.
    • Add the subcontracted product and quantity.
    • Click Confirm — this generates a Purchase Order (PO) if MTO is enabled and stock is insufficient.
  2. Confirm the Purchase Order
    • Click the Purchase smart button on the SO, or find it in Purchase Orders.
    • Review and click Confirm Order.
  3. Process Receipt or Dropship Order
    • If goods come to you: click Receive Products → Validate.
    • If goods go to customer: click Dropship → Validate.
  4. Process the Delivery Order (only if goods came to you first)
    • Open the SO, click Delivery, and Validate.

Option B – Increasing Stock

  1. Create a PO directly in Purchase → Purchase Orders → New.
  2. Add the subcontractor as Vendor and the product details.
  3. Confirm the PO.
  4. Receive goods into stock via Receipt → Validate.

Tips

  • Factor in lead times – subcontracted goods take longer as they need manufacturing first.
  • Use MTO for just-in-time orders – it avoids holding excess stock.
  • Set accurate manufacturing lead times in the BoM to improve delivery date predictions.
  • Dropship when possible to save storage and handling costs.
  • Regularly review vendor prices to keep margins healthy

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