Contract manufacturing - also called outsourced manufacturing - lets you send part or all of your production to external partners. Katana supports this workflow using outsourced Purchase Orders (OPOs) to track ingredient availability, stock flows, and costs.
When do you need contract manufacturing?
Katana supports two main contract scenarios:
Fully outsourced
You do not manage raw materials—your contract partner handles everything. No need to track materials in Katana; just purchase finished goods.Partially outsourced
You buy and send materials, and the partner only does some operations (e.g., assembly). Katana tracks both your materials and the outsourced steps.
Full outsourcing workflow
Enable tracking
On your product card, check I make and I buy to track ingredients via OPOs.Create an OPO
Go to global + → Outsourced Purchase Order and select your contractor as the supplier.Prepare materials
Transfer existing stock to the contractor’s location
Or create a regular PO to buy materials for that location
Send OPO document
Choose from default templates (e.g. PO, RFQ, BOM list, pick list, barcode) or use your custom layout.Receive the OPO
When finished goods arrive, receive the OPO. Your stock is updated automatically.Track costs
Each OPO line combines a purchase fee and ingredient costs. The total cost reflects both.Sync with accounting
Send OPOs as Bills to QuickBooks Online or Xero, just like POs.
Partial outsourcing workflow
Create subassembly
On a partially outsourced product, plan sub-assemblies in the BOM and mark them as both make and buy.Make in-house
Run a manufacturing Order (MO) up to the point of outsourcing.Replace MO with OPO
Cancel the MO, then create an OPO to handle the final steps with your contractor. Add service fees and due dates.Stock transfer (if tracking location)
Move the unfinished product to the contractor's location for processing.Receive the final product
Once parts return, receive the OPO and complete final assembly with a production order. Cost tracking remains accurate—covering materials, labor, and outsourcing.
What you can do with OPOs
Use multiple print templates and choose which to send.
Use alternative UoMs—Katana handles the conversion.
Track additional costs (e.g., shipping, duties) on the OPO.
Track batches/serials if enabled.
Best practices & tips
Assign each contractor their own stock location for clarity.
Enable I make and I buy on relevant product cards prior to workflow.
For partial or multiple shipments, manually adjust OPO quantities, as partial receive isn’t automated yet.
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