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The current post is not about something new in 365 but a full tutorial that aims to explain the subcontracting process from start to end. It’s very common to have some part of production orders that are done by a subcontractor (a vendor). MSDyn365FO manage this quite well, here is a quick tutorial that could make you earn some time if you need to setup it.
I will focus on the assembly of an electric motor : R-MOT002.
That product is composed by a main part called motor and also a reductor as you can see on the bill of materials below. The assembly of the 2 components is done by an external supplier, meaning we need to setup a subcontract process in our production order.
As you can see, I’ve setup a logical warehouse 11-SST for tracking the semi finished product when he’s sent to the supplier. When the product is at the supplier’s warehouse, it’s usefull in your system to keep a tracking on what is sent there, that’s why this logical warehouse is setup.
Basically, I’ve setup the 11-SST warehouse to be refilled by the 11 one.
The setup of this logical warehouse is obviously not mandatory, it’s more a common way to process it but you can for sure manage a full subcontracting process without a specific warehouse for the supplier.
Then, the bill of materials is setup in a traditional way for the 2 components : the line type is setup to item. You can notice the line is linked to the operation route number 10, that’s important for what’s next.
For the service done by the supplier, the subcontracting line is setup with the value Vendor, and also linked to the route operation 10. When the supplier has finished to assembly the motor, this will end the whole operation as the checkbox is setup to yes.
Having a quick look on the R-AssemblageMoteur item that represents the service done by the supplier. It’s setup as a service item.
Now let’s have a look on the setup of the route. First I needed to setup one vendor resource (in the Production Control module) linked to the supplier R-SSTRAITANT for managing the assembly.
Regarding the route, I’ve only one operation, and specified as a Vendor route type.
From the Resource requirements tab, I’ve made the link with the previous resource created.
Let’s go fro the demo. I’ve created a sales order for a quantity of 1, on the R-MOT002. Then, by running the master plan I’ve got this result :
- One planned production orders for R-MOT002 (I had currently no stock available).
- One planned purchase orders for the subcontracting operation.
- 2 planned transfer for the 2 components : I have indeed some stock on hand for both items but available only on the 11 warehouse, I need to transfer them on the 11-SST warehouse for the supplier to be able to assemble it.
By firming the main planned production order on the R-MOT002, it has firmed automatically the planned purchase orders. I had to firm as well the 2 planned transfers.
Then, I’m starting the production order, without posting any journal at that stage.
The next step is to deal with the 2 transfer orders :
So, I’ve done here the picking list generation and confirmation, the shipping and receiving. After that the 2 component were available on the 11-STT warehouse. In other words the components are now at the vendor warehouse ready to be assembly by him.
Going now on the purchase order module, to process the purchase order firmed previously.
When receiving it, meaning posting the product receipt (also meaning the vendor has done his job regarding the operation), I’ve got this message :
That’s it. The receipt has posted the journals and ended the current operation directly on the production order.
Now you can move on to the next operation, or finish the production order. Here is the end of the subcontracting process.
- Intercompany processes are not well managed within MSDyn365FO for subcontracting :if you want to internally subcontract an operation in company A, and manufactured this operation in company B, you cannot deal with a unique service item so receiving a purchase orders intercompany will not update automatically the operation in that case.
- If you setup a bill of material line with a Vendor line type for a non service item (a physical item), it means a purchase order will be generated for fullfiling this specific production orders when running the estimate process (the purchase order will be directly linked to the production order). Additionnaly, receiving the purchase orders won’t update the operation route. This is usefull if you need to schedule in a detailed way every tasks of your production order including the purchase order, through job sechduling. You cannot do that when running a planned purchase order from master planning.
That’s all !