If you make what you sell, whether that's food and beverage, garments, furniture, footwear and leather, printing, or handicrafts, one of the earliest real decisions is whether to produce in-house or send production out to a subcontractor (maklon, in Indonesian manufacturing terms). Most growing businesses eventually run both at once, which is exactly where it gets hard to track.
In-house production: control, at the cost of capacity
Producing in-house means you control quality, timing, and process directly. The tradeoff is capacity: your output is capped by your own equipment and labor, and scaling up means capital investment, not just a phone call. It tends to make sense when your process is a real differentiator, when quality control needs to be tight, or when your volume doesn't yet justify a subcontractor's minimum order quantities.
Maklon: capacity, at the cost of direct control
Maklon lets you scale output without owning more machines or hiring more production staff. You supply the design and materials (or let the subcontractor source them) and pay a production fee per batch. It's common in garments, footwear, and F&B private-label work specifically because it lets a small brand compete on volume it couldn't otherwise produce. The tradeoff is that quality control, lead times, and cost consistency now depend on someone else's operation.
The part both models get wrong without the right system
Regardless of which model (or mix) you use, the same three things need to be true:
- The recipe should be versioned. A Bill of Materials defines exactly what a product is made of: quantities, unit conversions, expected yield. When you change it, past batches should still show the recipe they actually used, not the current one.
- A production run should update stock automatically. Raw materials should decrease and finished goods should increase the moment a Work Order completes, without a spreadsheet in between.
- Cost has to reach your books, either way. For in-house work, that's material, labor, and overhead rolling up into a real unit cost. For maklon, the production fee is a supplier bill tied to a specific batch, and it should flow into your accounting as COGS the same way an in-house batch's cost does.
How Ritelio tracks both
Ritelio Core's manufacturing module supports both models on the same Bills of Materials and Work Orders: run production yourself, or route a Work Order to a subcontractor tied to an existing Supplier record, where the maklon fee becomes the Supplier Bill you already use for purchasing. Either way, cost posts straight into accounting as COGS with no manual journal entry required (see our explainer on automatic double-entry bookkeeping for how that works).
Which one, right now?
It's rarely "in-house or maklon" as a permanent choice. The real question is which one, for which product line, right now, and whether you can see the true cost of both side by side. If your current setup can't answer that last part cleanly, that's the thing to fix first. Start a free trial and track both production models without losing sight of either one's real cost.