# Subcontracting in Sage X3: Setup, Flow, Packing and What MFGM Means > Source: https://netray.co/erp-help/subcontracting-in-sage-x3 > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: ERP Help ## Short answer In Sage X3, subcontracting means an outside supplier performs one or more operations on your material. You flag the operation as subcontracted in the routing, the work order drives a purchase document to the subcontractor, components are sent, and the processed goods are received back into stock. MFGM is generally how people refer to the manufacturing module and its records, not a separate feature. ## Kind how-to ## System sage ## Erp Sage X3 ## Module Manufacturing / Subcontracting / Packing ## Query subcontracting in sage x3 ## Alternate Queries - sage x3 packing process - mfgm in sage x3 - sage x3 subcontract purchase order ## Applies To Sage X3 Manufacturing, Purchasing and Stock modules, V7 and later; menu names vary by version and activity codes ## Steps ### A typical subcontracting flow **Items:** - Create the subcontractor as a supplier (or a BP with supplier role), with purchasing terms, currency and tax settings. - Define the subcontracted operation in the routing, mark it as subcontracted and link the supplier and the service or processing item used for pricing. - Set up the BOM so the components needed by that operation are tied to it and the operation output is the semi-finished or finished item. - Create the work order, which generates a subcontracting need for the flagged operation. - Create the subcontract purchase order from the need, with the processing price and the quantities to be processed. - Send the components to the subcontractor with a stock issue or transfer to the supplier location, so material at the vendor stays visible. - Receive the processed goods against the purchase order, which updates stock and the work order progress. - Match the supplier invoice to the receipt and review variances on the processing cost. ## Sections ### How the pieces connect **Body:** Subcontracting in X3 sits at the junction of manufacturing, purchasing and stock. The routing says which operation is outsourced, the work order schedules it, the purchase order commits the service, and stock movements show component transfer and receipt. If any link is missing, you see material that disappears or work orders that never advance. The most important control is knowing where inventory is. Components sitting at a subcontractor are still your assets. Use a dedicated supplier or subcontract stock location so quantities, costs and ageing stay visible and can be counted. ### Packing process **Body:** Packing in X3 is handled in the sales and stock flow: after picking and delivery preparation, products are grouped into packages or containers and documented on the delivery and packing documents. Your version and configuration decide how detailed packing is, for example package types, weights and serial or lot content. For subcontracting, packing is relevant when you ship goods to the subcontractor or return finished goods to customers. Keep package and lot information consistent, otherwise traceability breaks at the handoff. ### What MFGM means **Body:** MFGM is commonly used shorthand for the manufacturing module and the objects that belong to it, such as manufacturing headers, material and operation records. It is not a separate subcontracting feature. If a document or support case says MFGM, read it as manufacturing, and confirm the exact object name in the data dictionary of your folder. When people ask about manufacturing tables for reports, point them to the dictionary in the development tools rather than guessing names, because custom and version differences are common. ## Pitfalls - Not tracking components at the subcontractor, so inventory is wrong and counts do not tie. - Pricing the processing service outside the PO, so cost cannot be matched to the invoice. - Receiving without linking to the work order, so progress is not updated. - Lot and serial numbers lost between shipment and receipt. - No lead time for the outsourced step, so scheduling dates are unrealistic. ## Ai Angle Subcontract chains are hard to see because the data spans work orders, POs and stock locations. A private AI layer such as ERPray can answer questions like which components are at which subcontractor and which processed goods are overdue, showing the underlying query, read-only and inside your network. ## Faq ### Do I need a separate item for the subcontracted service? **Answer:** Often yes, because a service item gives you a price, a cost account and a clean invoice match. The exact approach depends on your configuration and costing setup, so agree it with your implementation partner before building the routing. ### How do I see stock held at a subcontractor? **Answer:** Use a dedicated stock location or supplier-owned location for subcontract material and report on it by supplier. Without it, quantities vanish from stock reports until the processed goods return. ### What does MFGM stand for in X3? **Answer:** It is generally used for the manufacturing module and its records. Check the exact table and object names in the data dictionary of your own folder, because names can differ across versions and customizations. ### Can subcontracting be handled with a plain purchase order? **Answer:** For simple outside processing, some companies do. But linking the operation to the work order gives scheduling, cost roll-up and material tracking. A plain PO is weaker for traceability when components are sent out. ## Search terms subcontracting in sage x3, sage x3 subcontract purchase order, sage x3 packing process, mfgm in sage x3, sage x3 outside processing, sage x3 manufacturing module, sage x3 subcontractor stock, sage x3 work order subcontract --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json