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Contract Manufacturing

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We have a new scenario where our plant will be a contract manufacturer.  The customer will provide us with a material (free) and we will use it in the manufacturing of a finished product which will be shipped back the customer.

 

Has anyone had such a scenario and if so, how was it handled.  Did you use a standard production BOM or sales BOM? 

 

How do you make the determination of when a production or sales BOM is used.

 

I am assuming we would set the customer up as a vendor and bring the customer's material  in via a purchase order (free of charge).  Is this corrcect? If so, would there be a way to link the purchase order to the sales order for the finished product?

 

Any help that could be provided would be appreciated.

 

Thanks in advance.


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