Industrial Oven Subcontracting: How to Send a Batch and Cost It

Industrial oven subcontracting means a batch you still own goes to a workshop that has the oven. They run the cycle. The parts come back. You pay for the heat, the time, and the rack space.

The cycle might be a powder-coat cure, a paint bake, a dry, or a heat treatment such as hardening, tempering, annealing, or stress relief. The metal, the coating you already applied, and the lot number stay yours. You are not selling the vendor the brackets.

This page is that handoff: what to agree, how the bill is built, and what the charge does to the cost of one good piece. The general send-and-return cycle sits in what subcontracting is. Which document travels with the goods, and how the processing charge is taxed, sits in job work under GST. This page does not restate those tax rules.

What you are buying

You are not buying "an oven". You are buying one defined cycle on one defined lot.

Powder coating and paint baking usually fail as appearance: blisters, pinholes, a face that stayed raw. Heat treatment usually fails as a property you agreed to check, such as hardness on a sample piece from the same lot. Drying fails as weight or moisture that is still too high. The tracking is the same. The pass test is not.

The rate, and the cost per good piece

The oven charge follows whatever fills the oven.

Oven charge is one of these:

• kilograms loaded × rate per kilogram
• pieces loaded × rate per piece
• racks (or trays) used × rate per rack
• hours the oven is held for this lot × rate per hour

Landed oven cost = oven charge + transport both ways + any second charge if a failed lot goes back.

Cost per good piece = (cost already in the batch + landed oven cost) ÷ pieces that pass.

The cost already in the batch is the material, the labour, and the factory overhead from before the lot left. That method is the same one in how to calculate manufacturing cost per unit. The oven line is another cost on that batch. It is not a replacement for it.

If the vendor bills on weight loaded, pieces that fail still sit inside the kilograms. You do not get that charge back unless the order says so. If they bill per piece sent, the same thing is true of the pieces. Scrap reduces the divisor. It does not, by itself, reduce the bill.

Worked example: 200 brackets for a powder-coat cure

This is an illustrative batch for a small fabrication unit. The factory coats the brackets and does not own a curing oven. Every rate below is there so the arithmetic can be checked. It is not a vendor quotation, a wage survey, or a customer's result.

Cost already in the batch

₹19,000 ÷ 200 = ₹95 already in each bracket before it leaves.

What the oven vendor bills

The order says ₹18 per kilogram, on weight loaded, not on good pieces. Each bracket is 1.2 kg. Weight loaded: 200 × 1.2 = 240 kg.

Eight brackets come back blistered. The order says a recure is charged again, on the same per-kilogram rate. Those eight ride back with the next lot, so there is no second tempo in this example. 8 × 1.2 kg = 9.6 kg. 9.6 × ₹18 = ₹172.80.

Cost per piece that passes

If the recure saves all eight, saleable brackets are 200.

₹24,092.80 ÷ 200 = ₹120.464, which is ₹120.46 to the nearest paisa.

If two of the eight still fail and are scrapped, saleable brackets are 198. The money does not leave the batch. The two scrapped brackets leave only the divisor.

₹24,092.80 ÷ 198 = ₹121.6808…, which is ₹121.68 to the nearest paisa.

That is ₹1.22 more on every bracket you can sell. Dividing by the 200 you sent would hide it.

The same 240 kg can be quoted on another basis. These are alternative illustrations, not three bills for one lot:

Use the basis that matches the constraint. Weight, if the oven fills by kilograms. Racks, if a colour needs its own racks and empty hooks still occupy the oven. Hours, if the vendor holds the oven for your colour and cannot mix another job in. Write the basis on the order so the bill can be checked with a multiplication, not a phone call.

You can add a landed oven cost like this one to materials, labour, and overhead on the production cost calculator. Put the oven charge, the transport, and the recure into the cost lines for the batch, and divide by the pieces that pass.

Before the lot leaves

1. Name the cycle. Process, temperature and time or the vendor's cycle name, and the pass test. A heat-treatment lot should say which check you will both use. A powder lot should say colour and what a blister means.
2. Count and weigh. Pieces and kilograms, written before the vehicle moves. If the bill is per kilogram, weigh what you load, not what the drawing says a bracket should weigh.
3. Plan the racks. How many pieces on a rack, and which face must see the air. A bracket nested so the powder never cures is still in the kilograms.
4. Tag the lot. The lot number on the rack tag and on the paperwork that goes with the goods. A red lot and a grey lot in one oven is how a red lot comes back pink.
5. Name the return. The date you expect them, and who collects. Ovens are batched by colour and temperature. Your 200 may not be the next cycle the vendor runs.

The document that authorises the batch inside your factory is a production order or a work order. The document that follows the goods to the vendor is the one covered in the subcontracting guide. Do not close either one when the lot goes out. Close them when the pending quantity is zero.

When the lot comes back

Check three things against the order, before anyone puts the brackets into finished goods:

• Count. Sent, returned, short, and rejected. A short count is a missing piece, not a rounding difference.
• Weight, if you are billed by the kilogram. A large gap against the weight you loaded is either a weighing difference or pieces that did not come back. Write both weights on the receipt.
• The pass test you agreed. Appearance for a cure. The hardness or sample check you named for a heat treatment. A lot that fails does not get mixed with a lot that passed.

Pending quantity = pieces sent − pieces received and accepted − pieces agreed as scrap.

A partial return is normal. The vendor may cure 140 today because the rest of the oven was another colour, and 60 on the next cycle. The order stays open until pending quantity is zero. Rejection and rework is where a failed piece is recorded so it does not quietly rejoin the good count.

Mistakes that make the bill uncheckable

Agreeing "cure it" and nothing else. Without a cycle and a pass test, every blister is a dispute, and the vendor has already run the oven.

Letting the basis change on the invoice. The order said per piece. The bill says per kilogram on gross weight, including the rejects. Those are different charges. The order is the one you can multiply.

Closing the lot on dispatch. The cost and the missing pieces appear only when the lot returns. An order closed in the morning cannot show a short return in the evening.

Treating the oven charge as the unit cost. In the example, ₹4,320 of oven time is not the cost of a bracket. ₹95 was already in each one. The landed oven cost is ₹5,092.80 on top.

Dividing by the pieces you sent. Scrap leaves the divisor. It stays in the batch total unless the vendor's order actually reverses the charge.

Mixing a failed lot with a good one. If the rack tag is gone, a blistered bracket is back in the bin and the next customer finds it.

What to keep with the lot

A cost you can explain later has five lines:

• the order, with the cycle and the rate basis
• the count and the weight that left
• the vendor's bill
• the count, the weight, and the rejects that came back
• any recure charge, on its own line

Work-in-progress should show the lot as out at the vendor until that receipt is in. A bill of materials does not know the vendor's rate. The order does.

On a live production order, the same five lines belong on the batch. Factory OS is ₹2,999/month for that record. Start Free Trial when the pending quantity and the oven charge should sit with the rest of the job.

Related guides

• What subcontracting is — the send, pending, and return cycle for any outside process
• Job work under GST — documents and tax when goods go out for processing
• How to calculate manufacturing cost per unit
• Production cost calculator
• Production planning
• Rejection and rework

Frequently asked questions

What is industrial oven subcontracting?

You send a batch you still own to a workshop that runs the oven. They cure, bake, dry, or heat-treat it and send it back. You pay for the cycle. You do not sell them the parts.

How should an oven vendor charge?

On the thing that fills the oven: kilograms loaded, pieces loaded, racks used, or hours the oven is held for your lot. Write that basis on the order before the first lot leaves.

How do I cost a batch that went out for curing?

Add the cost already in the batch to the landed oven cost. Landed oven cost is the oven charge, transport both ways, and any second charge for a lot that had to go back. Divide by the pieces that pass.

What if only part of the lot comes back?

Leave the order open. Pending quantity is what you sent, minus what you received and accepted, minus what you have agreed is scrap.

Where are the GST rules for sending goods to an oven vendor?

Use the job work under GST guide for the documents and the tax. This page is the shop-floor method and the cost per good piece.