If you make what you sell, whether that's food and beverage, garments, furniture, footwear and leather, printing, or handicrafts, one of the first big decisions is whether to produce in-house or send production out to a subcontractor (maklon, in Indonesian manufacturing terms). And most growing businesses eventually end up running both at once, which is exactly where tracking gets hard.
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, so scaling up means investing capital, not just making a phone call. It usually makes sense when your process is what sets you apart, when quality control needs to be tight, or when your volume isn't big enough yet to meet a subcontractor's minimum order quantities.
Maklon: capacity, at the cost of direct control
Maklon lets you scale output without buying more machines or hiring more production staff. You supply the design and materials (or let the subcontractor source them), then pay a production fee per batch. That's why it's so common in garments, footwear, and F&B private-label work, since 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
No matter which model (or mix) you use, these three things need to be true:
- The recipe should be versioned. A Bill of Materials defines exactly what a product is made of, including quantities, unit conversions, and expected yield. So 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 means material, labor, and overhead roll 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, just like the cost of an in-house batch.
How Ritelio tracks both
Ritelio Core's manufacturing module supports both models on the same Bills of Materials and Work Orders. You can run production yourself, or route a Work Order to a subcontractor linked to an existing Supplier record, so the maklon fee becomes the Supplier Bill you already use for purchasing. Either way, the cost posts straight into accounting as COGS, with no manual journal entry (see our explainer on automatic double-entry bookkeeping for how that works).
Which one, right now?
It's rarely a permanent choice between "in-house or maklon." The real question is which one fits 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 clearly, that's the first thing to fix. Start a free trial and track both production models without losing sight of either one's real cost.