One of the challenges unique to contract manufacturing is purchasing, kitting, and producing according to 3rd party specifications and often mixing in 3rd party provided components.  This requires tight inventory control, excellent documentation, and validation.  To be effective in this environment, kitting must allow for visibility of part manufacturers, use of consignment components, and efficient tracking and labeling,

 

 

Ideally, users are able to load multiple manufacturer part numbers under each internal part number, and maintain accurate documentation on which manufacturers are approved for each customer and assembly.  This reduces the part number count, saves space in inventory, and allows for proper configuration according to customer specifications.

 

Another common solution is to setup a separate part number for each customer part number.  While this allows kitting to pull any part from inventory under that part number (assuming purchasing purchased only approved parts, and receiving labeled it correctly) it reduces crossing and increases the number of parts in inventory.  However, this may work well for parts with low commonality and frequent usage.

 

Some would suggest creating an internal part number for each part manufacturer and list each approved part on the bill of material.  While this eliminates the crossing problem and allows kitting to pull from approved parts, it also significantly increases the number of active parts and makes it difficult to configure each bill of material to allow MRP to accurately drive demand.

Use of Consigned Components -

 

Whether the assembly is in transition from consigned to turnkey, or the customer wants to always provide a select set of components, consigned inventory is fact of life in this industry.  While the customer may pay a flat charge for handling consigned components, if the process isn't efficient, consigned components are likely to be a drain on profits. 

 

Some companies choose to not load consigned parts into their system.  This is especially true for one-time builds, or small and infrequent runs.  However, this creates a liability if the assembly is run often enough or has enough extra components for subsequent builds.

 

Without specific provisions for handling consigned inventory, it may be best to track consigned inventory on separate spreadsheets or systems outside the MRP.  This is not as efficient as built in capabilities but may be necessary to maintain accurate records.

 

Efficient Tracking and Labeling -