Reduce costs and get total inventory control with contract manufacturing software

Contract manufacturing can involve partially or fully outsourcing manufacturing orders to scale operations and maintain efficiency. Learn more about common outsourced manufacturing workflows and how an ERP for contract manufacturing can help.

Different ways to outsource manufacturing and how ERP software can help

Contract manufacturing involves having another company manufacture products or components on your behalf. This manufacturing process is often used when a company does not have the internal resources to produce a certain product or component, or when it makes sense to outsource production in order to focus on other core areas of the business. When it comes to managing inventory and production in supplier locations as well as your own, contract manufacturing software can be a huge help.
Worker managing orders and packaging goods into a parcel.

Fully outsourced manufacturing and its benefits explained

There are advantages and disadvantages to outsourcing manufacturing. One advantage is that it can free up resources within the company so that they can be used elsewhere. For example, if a manufacturing company outsources fully, it will no longer need to allocate funds or personnel to that particular area. This allows manufacturers to invest more in other areas, like research and development or marketing.

Another advantage of outsourcing manufacturing is that it can often lead to increased efficiency. This is because third-party companies that specialize in manufacturing tend to have more efficient processes and better technology than most companies. They may also be able to scale up production more quickly if demand for a product increases. A disadvantage of this approach is a lower level of control — unless you are using contract manufacturing software that supports this workflow and allows you to track raw materials across supplier locations.

With contract manufacturing ERP software you can:

  • Use priority-based material requirements planning to avoid stockouts for your and your suppliers’ locations
  • Track on-hand, committed, and expected stock amounts in real-time and address supplier shortages
  • Scan a range of barcodes, including supplier item codes, internally registered barcodes, and batch barcodes
  • Integrate with shipping and e-commerce platforms to manage your entire supply chain
Contract manufacturing is the process of hiring another manufacturing company to produce an aspect of your product.

The hybrid approach — partially outsourced manufacturing

Having a full-contract manufacturing model has its benefits, but some manufacturers prefer to split their manufacturing process between contractors and in-house teams. Partially outsourcing production involves contracting with another company to handle some or all of the manufacturing process, which can involve manufacturing certain components or completing different stages of the production process.

There are benefits to partially outsourcing manufacturing, there are also some drawbacks. For example, it can create logistical challenges, such as coordinating production and delivery schedules between the two companies involved. Additionally, it may require companies to develop new relationships with suppliers in order to ensure quality control of the manufacturing process. However, some ERP software solutions centralize manufacturing order data in order to maintain better control over production and inventory, regardless of who or where items are produced.

ERP software features that make it easy to outsource manufacturing:

  • Track manufacturing costs based on your bill of materials (BOM) and production operations
  • Create multilevel BOMs with subassemblies for accurate cost analysis
  • Make precise pricing decisions based on your product margins
  • Get total inventory control as your items move between your and your supplier warehouses

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Integrate your contract manufacturing software with the services you know and love

Connect Katana to third-party software or create your own workflows via API

Choose from a range of e-commerce, accounting, CRM, reporting, and automation integrations to streamline your key business operations. Katana’s manufacturing software is built to fit with the software you need, whether you are fully or partially outsourcing your manufacturing. Take a look at Katana’s growing list of integrations to learn more.

Katana integrates everything, making for effective company-wide resource planning and inventory control.”

It’s great to be able to see where inventory faults happen and being able to fulfill orders and where the turnaround happens.”

We chose Katana because it presents our manufacturing business information in the easiest possible way.”

We also wanted an accurate inventory system for batch planning, warehousing, and sales. Katana fulfills all our needs in a simple, easy solution.”

Contract manufacturing software FAQs
What is contract manufacturing software?

Contract manufacturing software is designed to help you manage your business relationships with your contract manufacturers. It allows you to effectively coordinate all aspects of these relationships, including scheduling the production of new products, tracking costs and payments with the manufacturer, and managing all of the documentation associated with the contract.

Why do I need contract manufacturing software?

The biggest advantage you gain when adopting contract manufacturing software like an ERP system is the ability to automate many processes that would otherwise be very time-consuming, such as tracking costs and payments, creating new orders, coordinating shipping schedules, and updating customer records. This automation helps to minimize errors and ensure that everything runs smoothly with your contract manufacturer.

Can ERP solutions support contract manufacturing workflows?

Contract manufacturing workflows can be complex, with many different moving parts that need to be coordinated in order to ensure a smooth and efficient process. This is where an ERP system can come in handy, as it can provide a central repository for all of the data and information related to a contract manufacturing project. This makes it easier to track deadlines, deliverables, and other important details, while also providing a full audit trail that can help with compliance. Another advantage of using an ERP system or manufacturing ERP solutions for contract manufacturing workflows is that it provides real-time insights into manufacturing order statuses.

I am new to ERP software. How do I get started?

Katana is a manufacturing ERP that gives you a live look at your business, including live inventory and manufacturing management, batch tracking for end-to-end traceability, a Shop Floor App for total floor-level control, open API, and a growing channel partner network. Real-time master planning features automate resource allocation based on prioritized sales orders and integrations with e-commerce, accounting, CRM, and reporting services to centralize your operations in one visual platform.

You can also get started for free — sign up for your free 14-day trial here.

Which companies use Katana's ERP software?

Katana is industry-agnostic, meaning thousands of customers all over the world from a broad range of industries use our ERP software to get a live look at their manufacturing business. To learn more about our customers and how Katana helps them improve their business, read our customer success stories here.

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