Ask a manufacturer how much material is currently with job work vendors and watch what happens. Usually there is a pause, then a phone call, then a number that nobody is willing to sign. Job work is the single largest blind spot in most Indian manufacturing businesses, and it is invisible precisely because the material has left your premises.
How the loss actually happens
Nobody steals it. It leaks, in small quantities, through gaps that each look reasonable on their own:
- You send 500 kg for heat treatment. 480 kg comes back. Nobody records the 20 kg because the challan was signed weeks ago.
- A vendor rejects 30 pieces. The rejection is verbal. Your books still show 30 pieces coming back.
- Material for three different jobs goes to the same vendor in one trip, on one challan, and comes back on three different days.
- The vendor holds your material for two months. It is not on your floor and not in your stock ledger, so for planning purposes it does not exist — and you buy it again.
- Job work charges arrive as a bill at month end with no link to the challans, so nobody can verify the quantity being billed.
None of these is dramatic. Together, in a business doing a few crore a year, they are worth real money.
What a correct job work flow looks like
The flow itself is simple. Getting the system to hold it is the part most software fails at.
Material issue → job work challan → vendor process → return → QC → back into stock. Every step recorded against the same challan, with quantities that must reconcile.
The four numbers that matter
- Sent — quantity and weight issued against the challan, per item, per job.
- Returned — what actually came back, entered at the gate, not at month end.
- Rejected — what came back but failed inspection, with a reason recorded.
- Pending with vendor — sent minus returned, live, per vendor and per item.
That last number is the one that changes behaviour. When the storekeeper can pull up “material lying with each vendor” on a screen, conversations with vendors change tone very quickly.
Process loss should be a policy, not a surprise
Some processes genuinely lose material. Plating, machining and heat treatment all have expected losses, and a good vendor will tell you what theirs is. Record that as an expected percentage per process, and then flag returns that fall outside it. The point is not to eliminate loss — it is to notice when a vendor quietly moves from three per cent to nine.
Charges belong on the job, not just in payables
Job work charges are a cost of that specific job. If they only ever land in a vendor bill at month end, your job costing is wrong by exactly that amount, and the jobs you think are profitable may not be. Post them to both: the cost of the work order, and the payable to the vendor.
If you send material out, this is not optional
For most fabrication shops, machine shops and auto component suppliers, subcontracting is not an edge case — it is a third of the process. It deserves the same rigour as your own shop floor. DigiLite handles it as a first-class module rather than a workaround: see job work and subcontracting, or how it fits together for CNC and machine shops.
Want to see it against your own vendors and processes? Book a walkthrough.