Outside processing refers to a step of manufacturing an item. The inventory still belongs to the manufacturer while a vendor performs a process necessary to the completion or shipment of the manufacturer’s product. During processing, the material costs and charges for the service remain a part of the manufacturer’s work in process (WIP).

There are several ways a manufacturer might use an outside processor:

• The outside process may be an imbedded step in the manufacturing process.
• Following completion of the manufacturer’s internal process, an additional external function (outside process) is required.
• The outside processing is the final process and the outside processing vendor is responsible for shipment to the customer.

The basic objectives of TCM outside processing are to:

• Allow scheduling and tracking of outside processes within Shop Floor Control.
• Allow physical tracking of the manufacturer’s inventory throughout the outside process.
• Allow tracking of outside processing costs in Job Cost and Standard Costing.

Entering and tracking an outside process involves the use of several TCM functions. Some of these are a part of normal daily activity (for example, creating a shop order), and some include specific outside processing activity (for example, setting up a outside process shipment line).