The problems that arise when a job is delegated to a Job Worker and when a job is received by a job worker are detailed in this topic.
Following are the problems faced when job is delegated to a Job Worker:
● No standard practice to delegate a Job
In real business scenario, the standard procedure of delegating a job-
● Raising the Job Work out Order
● Material Transfer Out (from the premises of Principal Manufacturer/directly from the supplier of Raw materials to the Job worker)
● Accounting the receipt of finished goods
● Accounting the Bill from the Job Worker
● Payment to the Job Worker is not followed by all the principal manufacturers.
The procedure of delegation of Job varies from organisation to organisation depending on the nature of the Job delegated or type of transaction (depending on the regularity) or relationship with the Job worker.
● Monitor & Analysis of Material
o Tracking Job Work wise - Raw material to be issued, actual raw material despatched, variance in quantity of raw materials as against the agreed Bill of Material.
o Tracking quantity of Finished goods to be received, actual receipt and balance.
o Ageing of Stock (Raw material /semi-finished goods) lying with the Job Worker.
o Preparing Material Movement Registers.
● Cost/Profit Tracking: Principal manufacturer can ascertain the cost of manufacture of a job delegated. These statistics can be used to compare and analyse the cost as against cost of manufacture of goods in house or by other Job workers.
● Meeting Statutory Requirements
o Annexure II - Challan for despatching the inputs, Raw-Materials, semi-finished goods to the Job Worker.
o Annexure IV - Register for Material tracking (by Principal company if excise applicable).
Following are the problems faced when a Job is received by the Job worker from the Principal Manufacturers:
● No standard practice for receiving a Job
o In real business scenario, the standard procedure of receiving a job -
o Receipt of Job Work In Order
o Material Transfer In (from the premises of Principal Manufacturer/directly from the supplier of Rawmaterials of Principal Manufcturer)
o Accounting Delivery of finished goods
o Raising Invoice for billable work/stock
o Receipt of Payment from the Principal Manufacturer is not followed by all the Job workers.
The procedure of receiving Job varies from organisation to organisation depending on the nature of the Job or type of transaction (depending on the regularity) or relationship with the Principal Manufacturer.
● Monitor & Analysis of Material Received
o Tracking Job Work wise - Raw material to be received, actual raw material received, variance in quantity of raw materials as against the agreed Bill of Material
o Tracking quantity of Finished goods to be despatched, actual Quantity Delivered and balance
o Preparing Material Movement Registers
● Job Worker Invoice
o Tracking of own material consumption by the Job Worker for a job
o Billing for the own material consumed for the Job
● Cost/Profit Tracking: Job Worker can ascertain the cost of manufacture of a job received. These statistics can be used to compare and analyse the cost/profit of job work carried out for different Principal Manufacturers .
● Meeting Statutory Requirement
o Annexure V - Register for Material tracking (by Job Worker if excise applicable).