When a business group has multiple related companies, we refer to it as intercompany transactions or relationships. These companies can be subsidiaries, affiliates, or parent companies that are part of a larger corporate structure.

If you are part of a business group, you may have noticed that intercompany transactions are common, and there is usually a significant control or influence of one company over other related entities, the parent company. These transactions can include the purchase and sale of goods and services, fund transfers, intellectual property licenses, loan agreements, among others.

Intercompany transactions allow for supply chain optimization, tax efficiency, risk management, centralized operations, or the consolidation of financial reporting.
 

Companies involved in manufacturing, distribution, and marketing commonly set up three companies: one specializing in production, another in charge of distribution, and one specializing in the marketing of their goods.
 

All the involved companies must have excellent means of connection that allow them to update relevant data for all parties and streamline the process of collecting goods and transferring financial resources for optimal operation. This can be achieved with an excellent ERP like Odoo 16, and we will show you how.

Intercompany manufacturing involves creating a centralized warehouse in the parent company, where three types of products are managed: finished products, packaging materials, and raw materials.
 

When the parent company makes a sale, the finished product generates two purchase orders, one for the raw materials and another for the packaging materials. Once these elements are supplied, the production order can proceed.
 

During this process, the movements of raw materials and the supply of finished products must be tracked. The ultimate goal is for the parent company to visualize the manufacturing process, purchases, and dispatch of finished products to other sister companies.

To carry out this workflow, it is necessary to make some configurations in the involved companies, such as establishing intercompany synchronization and defining default warehouses to handle transactions.
 

Each company must have the appropriate configuration for products, manufacturing and procurement routes, and the establishment of suppliers for each required material.

Follow these steps 

Optimizing intercompany manufacturing involves ensuring that products are correctly configured in both the parent company and the subsidiary companies.
 

It is important to establish the appropriate routes for each type of product and ensure that materials are efficiently supplied. Additionally, it is essential to have an effective communication system between the different companies, allowing information and orders to flow smoothly.

Follow these steps

Successful implementation of intercompany manufacturing brings numerous benefits to your organization. By optimizing the workflow and communication between branches or subsidiaries, you achieve greater efficiency in production and product supply. Additionally, collaboration among different companies is fostered, leading to synergies and improvements in the quality and profitability of the final products.

Linking intercompany manufacturing through an ERP like Odoo is a complex but highly beneficial process for organizations operating with multiple branches or subsidiaries.
 

By optimizing this workflow and establishing effective communication between companies, you can achieve greater efficiency and profitability. By implementing the right configurations and leveraging available technological tools, you can maximize your production capacity and achieve better coordination throughout your network of operations.