Video walkthrough: Outsourcing Production Steps in Digit
Watch this video for a full walkthrough of creating an external routing step, attaching it to an item, generating a linked purchase order, and reviewing external costs in the manufacturing order.
Before you begin
To use External Manufacturing Orders, you will need a Service Item set up in Digit that represents the vendor's service, a packaging, or a processing. The service item is what gets linked to the external routing step and later appears on the purchase order.
If you have not set one up yet, see Items: Creating and Managing Items and follow the Service Items section before continuing.
📘 Digit Tip: This guide covers the partial flow, where one or more steps in a manufacturing order are outsourced while the rest remain internal. For fully outsourced manufacturing orders, see External Manufacturing Orders: Fully Outsourced Production.
Step 1: Create an external routing step
Start by creating the routing step that represents the outsourced portion of production.
Navigate to Production in the left side panel and open the Routing tab.
Click New routing step in the top-right corner.
Give the routing step a name — for example, External premium packaging.
Set the type to External.
Click the Link service item and select the service item that represents the vendor's work.
Assign a Work center. This tells Digit which internal team owns oversight of the step, even though the work happens offsite.
Click Save. You will see a confirmation that the routing step has been created.
💡 Digit Tip: Assigning a work center to an external step keeps accountability clear. Your team always knows who is responsible for coordinating with the vendor, even when the work happens outside your facility.
Step 2: Add the external routing step to an item
Next, attach the external routing step to the item that will be produced using it.
Navigate to Items and open the item you will be producing.
In the item details, go to the Production tab and then open the Routing tab.
Click Edit routing.
Select Routing steps.
You will see any existing internal steps already checked. Select your external routing step
And click Add routing step
Click Save.
Step 3: Create the manufacturing order
With the routing step in place, create the manufacturing order.
Navigate to Production and click Create MO.
Search for and select the item you will be producing.
Scroll down to the Work orders that will be created section and confirm that all routing steps are listed, including your external step. This confirms everything is connected correctly.
Set your target quantity and any other relevant details, then click Create MO.
✅ Best practice: Always verify that the external routing step appears in the work orders list before creating the MO. If it is missing, go back and confirm the step has been saved to the item's routing.
Step 4: Generate the linked purchase order
Work through the manufacturing order as you normally would — pick your materials and complete the internal work orders. When you reach the external work order, you will notice an External tag next to the work order number and a Buy button.
Click the Buy button on the external work order.
The New linked purchase order modal will appear, pre-filled with the service item. If a preferred vendor is set on the service item, the vendor field will also pre-fill; otherwise, you'll need to assign one. Both can be updated here if needed, for example, if a different vendor is completing the work this time
Click Save to generate the purchase order. The PO will now appear linked to the external work order row in the work order table.
Open the purchase order to finalize the details:
Fill in the vendor address and the Bill & Ship to fields.
The service line item will already be present. The quantity defaults to 1. Update it to match the actual quantity for this run, then enter the unit cost.
The unit cost will pre-populate based on how your service item is configured; from the preferred vendor's purchase price, if one is set, or from the item's purchase price if no preferred vendor is defined. If neither is set, the unit cost will default to zero, and you'll need to enter it manually.
You will also see the linked work order reference on the line item for easy cross-referencing.
Click Save to save the purchase order details.
ℹ️ Note: Linked POs are limited to the one service item connected to the external routing step; additional line items cannot be added.
Step 5: Review external costs in the manufacturing order
Once the purchase order is saved, the external costs will roll up automatically into the manufacturing order.
Navigate back to the manufacturing order and open the Costing tab.
The External cost column will be updated with the vendor cost from the purchase order, flowing in alongside materials and labor for a complete cost picture of the run.
💡 Digit Tip: The Costing tab gives you a full breakdown of materials, labor, and external costs in one place — so you always have a clear picture of what each production run actually costs.
Completing the external work order
Once the vendor has completed their work, use the external work order to log the confirmed quantity completed, then mark the work order as complete.
💡 Digit Tip: If you want to track how much of the vendor's output matches your target quantity, enable Show yield % on the item (in the item's Production tab). Once enabled, the yield percentage will appear on the external work order itself, giving you a quick way to spot patterns in vendor output across runs.
Once the vendor has completed their work, complete the external work order as you would any other.
Inside the external work order, you will find links to both the manufacturing order and the purchase order for easy reference.
Your outsourced production step is now fully tracked inside Digit. Vendor costs are tied directly to the manufacturing order; your internal team has clear oversight of the step, and the full cost of the run, including materials, labor, and external costs, is visible in one place.