Item subcontracting - setup

• Subcontracting with Material Flow (manufacturer)

  If you want to perform full subcontracting, you must select the Subcontracting with Material Flow (subcontractor) check box.

• Terms and Conditions

  Select the Terms and Conditions check box to implement the Terms and Conditions module. You need this module if you want the subcontractor to be responsible for the supply of components. In LN, by default the manufacturer is responsible for component supply. In that case you do not need to set up planning data.

Consider the following check boxes:

• Inventory Management

  If you clear the Inventory Management check box, you indicate that the subcontractor carries out the warehouse's inbound activities, which is a logical choice in case of subcontracting. You must complete the inbound procedure in one of the following ways:

  • Use automatic warehousing procedures. For more information, refer to To handle warehousing orders.
  • Update the inventory based on ReceiveDelivery messages. For more information, refer to Receipt delivery messages.

  If you clear the Inventory Management check box, and select the Manual Inbound Process Allowed check box, inventory management is not carried out, but you can do a manual inbound.

  Note that if you select the Inventory Management check box, you must also use automatic warehousing procedures.

• Include in Enterprise Planning
  Select the Include in Enterprise Planning check box.

• Item Base Data
  Define the end item that you want to subcontract in the Item - General (tcibd0101s000) session. Select the Subcontracted check box.
• Item Production Data
  To send material to the subcontractor, select the Subcontracting with Material Flow check box in the Items - Production (tiipd0101m000) session.
• Item Purchase Data
  In the Items - Purchase (tdipu0101m000) session, enter the appropriate price in the Subcontracting Purchase Price field.
• Item Sales Data
  In the Items - Sales Business Partner (tdisa0510m000) session, enter the administrative warehouse defined in step 2 in the Ship-to Warehouse field.

• Order specific supply

  Order specific supply means that supply is linked to the subcontracting purchase order. The supplied quantity is the quantity required for the purchase order. To use order specific supply, the component's supply system in the Warehouse - Item (whwmd2510m000) session must be Order Controlled/Single, for the correct combination of component and administrative warehouse.

  Order specific supply can exist between manufacturer and subcontractor, or directly between supplier and subcontractor:

  Manufacturer - subcontractor

  • Select the Supply from Warehouse check box in the Warehouse - Item (whwmd2510m000) details session, for the correct combination of component and administrative warehouse.
  • Supply takes place by warehouse transfers.

  Supplier - subcontractor

  • Clear the Supply from Warehouse check box in the Warehouse - Item (whwmd2510m000) details session, for the correct combination of component and administrative warehouse.
  • Enter the supplier in the Ship-from Business Partner field and the Buy-from Business Partner field.
  • Supply takes place by purchase order.
• Bulk supply

  Bulk supply means that components are sent to the subcontractor anonomously, independent of the subcontracting purchase order. There are two ways to generate bulk supply: using a specific supply system, or by Enterprise Planning. You must choose one of these methods; you cannot use both methods to supply the same subcontracting (that is, administrative) warehouse.

  • Supply system
    In the Warehouse - Item (whwmd2510m000) details session, for the correct combination of component and administrative warehouse, you can choose Time-Phased Order Point, KANBAN, or Order Controlled/Batch to generate bulk supply. Note that the administrative warehouse and the supplying warehouse must be either belong to the same cluster, or they should not be assigned to a cluster at all.
  • Enterprise Planning
    To generate bulk supply using Enterprise Planning, the administrative warehouse must be in a different cluster than the main warehouse. Furthermore, distribution relations must be defined between the two warehouses. The supply system defined in the Warehouse - Item (whwmd2510m000) details session, must be Order Controlled/Single. For more information about clusters, refer to Clusters in Enterprise Planning.

• If components are shipped by sales orders.
• If the subcontractor is responsible for the components' planning.

1. By means of the Terms and Conditions (tctrm1100m000) session, start the Terms and Conditions (tctrm1600m000) session to define a terms and conditions agreement. The Terms and Conditions Type field must be Sales.

2. Define a terms and conditions search level for which the Search Attribute 1 field is Item Group, and the Search Attribute 2 field is Warehouse. Select the Order check box and the Planning check box.

3. Double-click the defined search level to start the Terms and Conditions Search Level - Lines (tctrm1610m000) session. In this session, define the items to which the agreement applies.

4. Double-click the defined items to start the Terms and Conditions Line (tctrm1620m000) session. On the Planning tab or in the Planning Terms and Conditions (tctrm1135m000) session, select the Responsible for Supply Planning check box. On the Order tab or in the Order Terms and Conditions (tctrm1130m000) session, select Sales Order Transfer in the Transfer Type field.