ERPNext for Manufacturing in India: BOM, Production & Subcontracting

Implementation cost depends on plant count, BOM depth, subcontracting flows and the data you migrate. Estimate your price. To watch a plant's flow run live, see manufacturing ERP in India.

Manufacturing is a full module in every ERPNext installation. There are no add-on tiers or per-seat charges for production planning or subcontracting. For Indian manufacturers who mix in-house and outsourced production, run multi-level BOMs and have to keep job work right for GST, that changes what the ERP costs to grow.

Which manufacturing DocTypes matter, and what do they do?

Here is a map of the ERPNext documents you will use every day in production.

Why is the BOM the foundation of your production data?

Manufacturing in ERPNext begins at the BOM. Every work order takes its material list and routing from a BOM, so getting the BOM structure right is the setup task that matters most.

Single-level vs multi-level BOMs

A single-level BOM lists the direct raw materials for one finished good. A multi-level BOM nests sub-assemblies: each sub-assembly has its own BOM, and ERPNext explodes every level when you work out material requirements. For an engineering or auto-component maker with complex assemblies, you need this.

Set a BOM as the default BOM for an item and production and purchase planning use it. You can keep several BOMs per item, for alternate formulations, seasonal packs or customer variants, and change the default without touching history.

Scrap, yield and operation costs

A BOM carries scrap items and process loss, so the planned output and the material you issue reflect what really happens. If a process always loses 3 percent of a raw material, you plan for it from the start instead of finding it as a variance at month-end.

Operations on a BOM set the routing: which workstation, how long, at what hourly rate. The BOM cost adds raw-material cost and operation cost, so you have a cost per finished unit before production starts.

How does a production plan turn sales orders into a schedule?

The Production Plan connects demand and production. It pulls open sales orders or material requests, explodes the BOMs to work out material requirements, checks stock, and raises work orders, or material requests for anything short.

How to use a production plan

1. Open a new Production Plan and pick the horizon: a week, a fortnight or a month.
2. Pull in sales orders (or a forecast quantity) for the items you want to plan.
3. Get the items and the raw materials. ERPNext explodes the selected BOMs and works out the net requirement after stock on hand and stock on order.
4. Review the material plan and raise material requests for what is short.
5. Make the work orders: one per item and BOM, ready to schedule against workstations.

That turns "do we have enough stock to run next week?" from a spreadsheet exercise into a system action. For a manufacturer with both make-to-stock and make-to-order items, the production plan is usually where the most time comes back.

How do work orders and job cards run the shop floor?

A work order is the document for one production run. It carries the BOM, the planned quantity, the planned start and end dates, and the warehouse the finished goods go to.

Work order statuses

• Draft: created from a production plan or by hand; not yet released to the floor.
• Not Started: submitted; material can move from stores to the production floor.
• In Process: material has been transferred or production has started.
• Completed: finished goods posted to stock.
• Stopped / Closed / Cancelled: production halted, closed short or aborted.

Job cards for operator-level tracking

Each operation on the work order makes a job card for its workstation. The operator opens the job card, starts it, works and completes it. ERPNext records actual time against planned time, who did it, and the quantity made at that operation.

That is shop-floor visibility: which work orders are running on which machines, how long each operation is taking, and where a batch sits when a delivery is at risk.

How do capacity planning and workstations work?

ERPNext capacity planning runs through workstations. Each workstation has:

• Working hours, and a holiday list for the days it doesn't run.
• An hourly operating cost (electricity, consumables, rent, wages).
• How many jobs it can run at once.

Unless capacity planning is disabled in Manufacturing Settings, ERPNext schedules job cards into each workstation's working hours and pushes later operations out when a machine is full. Reports such as Job Card Summary and Work Order Summary show where time went, so the planning team sees a bottleneck before it becomes a missed delivery date.

If you run two or three shifts, enter each shift as working hours on the workstation, so planning uses the capacity you really have.

How does subcontracting work: material out, goods back?

Subcontracting is one of the most India-relevant flows in ERPNext. You send raw material or part-finished goods to a job worker, they process them, and you receive finished or part-finished goods back, with the job worker billing you for the work.

How ERPNext handles the cycle

1. Raise a purchase order for the job-work service, then a subcontracting order from it. ERPNext works out the raw materials to send from the BOM.
2. Make a stock entry (Send to Subcontractor). It moves the raw materials from your store to the job worker's warehouse. They are still your stock, at the job worker.
3. Receive the goods with a subcontracting receipt. ERPNext posts the finished goods in and the raw material consumed in the same step.
4. Book the job worker's purchase invoice for the job-work charges.

The Work sent out and back demo runs this flow on a demo company, with no sign-up.

GST on job work

This is where an Indian setup needs care. Under section 143 of the CGST Act, inputs you send to a job worker on a challan are generally not a supply, provided they come back to you, or are supplied straight from the job worker's premises, within one year. Capital goods have three years; moulds, dies, jigs, fixtures and tools have no limit. Past the limit, unless the Commissioner has approved an extension, the goods are treated as supplied on the day they first went out, and GST and interest are due.

The movements are reported on Form ITC-04: half-yearly when last year's aggregate turnover was over ₹5 crore, once a year otherwise, unless a notification extends the date. An e-way bill is needed whatever the value when the job worker is in another state; within a state the central threshold is a consignment value over ₹50,000, and your state's own limit and exemptions apply. Check your own case with your CA.

What ERPNext gives you for this:

• The subcontracting order and receipt track the quantity sent and returned per job worker, which is the data ITC-04 needs.
• E-way bills and GST reports come from the India Compliance app; check which subcontracting documents it covers on your ERPNext version.
• The job worker's invoice for the work is a normal taxable purchase, and the GST on it is booked as input tax.

For a manufacturer with a lot of outsourced processing, this replaces a separate job-work register. How we set it up during an implementation is on the ERPNext implementation page.

How does quality inspection work at each stage?

Quality inspection in ERPNext is not a separate product. You switch it on per item ("inspection required before purchase" or "before delivery") or per operation, and set a Quality Inspection Template listing the parameters to check (dimensions, colour, hardness, pH) and the acceptance criteria.

Where inspections happen

• Goods receipt: inspect incoming raw material before it goes into stores.
• In process: inspect part-finished goods at critical operations, from the job card.
• Finished goods: inspect before the goods move to saleable stock.
• Outgoing: inspect before dispatch, from the delivery note.

Each inspection records the readings, an accepted or rejected status and the inspector. On a purchase receipt, the rejected quantity can go to a rejected warehouse. The data is reportable, which helps supplier quality reviews and the records an ISO or BIS audit asks for.

Which reports give you shop-floor visibility?

ERPNext ships manufacturing reports that shop managers use day to day.

• Production Analytics: work orders by status and item over a period.
• Work Order Summary: status of all work orders in a date range, by item or warehouse.
• Job Card Summary: time booked per workstation and operation.
• BOM Stock Report: for one BOM, the stock you have against what a target quantity needs.
• Subcontracted Item To Be Received and Subcontracted Raw Materials To Be Transferred: what is still out with each job worker, and what is still to be sent.

These export as they are, so a customer reporting pack or a delivery dashboard needs no custom work to start.

Where can you go deeper on specific manufacturing setups?

This guide is the overview. For the areas manufacturers most often need set up in detail:

• How to set up subcontracting and job work in ERPNext: the full flow, with challans, ITC-04 and the return limits.
• Multi-level BOM in ERPNext: nested sub-assemblies, make-or-buy, and how cost rolls up across levels.
• How to calculate finished-goods cost in ERPNext: material, labour, machine and overhead in one cost.
• Scrap, wastage and by-products in the BOM: scrap items, scrap warehouses, and how saleable scrap lowers cost.
• How to show BOM cost on a finished-goods item: where a manufactured item's cost lives, valuation rate and the Update Cost action.

The manufacturing page shows each of these steps running live on a demo company.

Frequently asked questions