Manufacturing
Working with the customer's own material
The material arrives without an invoice and leaves as parts. While it is here it belongs to someone else, and whoever holds it answers for it.
Your customer sends the material and you provide the work. **That material was not sold to you**: it enters your premises, is stored alongside yours, is cut, transformed, and part of it becomes swarf or offcut. Throughout all of that it belongs to someone else, and its value can be several times your invoice for working it.
What must be answerable at any moment
| The question | When it arrives | What answers it |
|---|---|---|
| How much of mine do you hold? | When the customer takes stock | Your goods-in and goods-out record |
| Which heat is this from? | About a specific part | What was recorded on receipt |
| Where is the leftover? | At the end of the order | What was agreed, if it was |
| **What happened to the missing amount?** | **In a discrepancy** | **The record, or nothing** |
Important
**Someone else's material needs the same goods-in and goods-out control as your own, and almost never has it — precisely because it was not bought.** It does not come through purchasing, it generates no invoice, it does not appear in the accounting inventory. It arrives at the bay on the customer's lorry and, from then on, exists only if somebody chose to record it. When the discrepancy arrives, there is nothing to compare.
What to agree and record
- 1
What comes in, when and with what identification
Using the customer's reference, not an internal one they will not recognise.
- 2
What counts as acceptable wastage
Agreed beforehand. Arguing at the end is arguing over someone else's money.
- 3
Who owns the leftover and what happens to it
It is the awkward conversation and it belongs at the start.
- 4
And what is returned at the end
With evidence of the return, not only of the parts shipped.
Watch out
The point that generates most friction, almost always without bad faith on either side, is **the offcut that stays in the workshop**. To you it is a remnant taking up space that might serve another job; to the customer it is material they paid for and have not had back. Both are right from where they sit, and the only way it does not end in an argument is having decided it in writing before the first order, while nothing is yet at stake.
Worth knowing
Who owns material held on deposit, what custody liability you assume, how it is treated for accounting and insurance purposes and what happens to leftovers **is determined by the contract and the applicable rules, and settled by your adviser**. Here we cover the operational part: how to record receipts, consumption and returns of something not in your inventory.
›Must I inventory material that is not mine?
It is what lets you answer when the customer asks. And they will.
›Can I use the leftover for another job?
The contract decides. What does not work is deciding it unilaterally afterwards.
›How do I document a return?
Like a delivery: with evidence of what was returned and when.
A real case
The situation
The customer takes stock and asks how much of theirs you hold.
What you do
- Records receipts, consumption and returns per customer
What you get
You answer with a figure rather than an estimate.
The situation
A discrepancy appears and there is no record of the receipt.
What you do
- Captures the receipt at the loading bay itself
What you get
What came in is documented from day one.
The situation
There is an argument over who keeps the leftover.
What you do
- Keeps what was agreed with the customer's file
What you get
The conversation is settled by the agreement.
The situation
A part needs to be traced to the consignment it came from.
What you do
- Ties the customer's identification to what was made
What you get
Tracing runs back to the material received.
The situation
Leftover material is returned and nothing is recorded.
What you do
- Records the return the way a delivery is recorded
What you get
The return is demonstrable.
The situation
Third-party material is stored with your own and gets confused.
What you do
- Records the location of each consignment received
What you get
Each customer's material stays identifiable.
This article answers
- customer-owned material in my workshop liability
- what to do with offcuts of someone else's material
- documenting incoming customer material
- customer claiming material that cannot be found