Subcontracting - Work Order

A single company may not deliver the entire range of services. In which case, the company may subcontract the entire service of a product to a subcontractor.

In LN, you can enter into a subcontracting agreement with the supplier to carry out the required services as specified in the work order activity.

You must define a Cost or Service item and a Subcontractor at the work order activity level to identify that the activity is subcontracted. You can subcontract different activities to various subcontractors.

When you release the work order a purchase order is generated for the subcontractor. A subcontracting cost line is created in the Work Order Other Resources (tswcs4130m000) session with the cost type set to Subcontracting to register the cost and sales related to the subcontracted work.

When the purchase order generated is received, it indicates the delivery of the required services.

Note
  • It is not required to subcontract the entire work order. For example, if a product is defective, the customer requests a repair and sends the product to the service department. The service department repairs the product, but some part of the repair is subcontracted to another repair center. A work order activity line is created for tracking the repair costs incurred by the subcontracted repair center and this internal invoice is created based on the actual material used, actual hours booked, and actual other costs such as transportation costs.
  • You can add activities to a work order during the work order's planning phase, during the work orders preparation phase, and during the execution phase. The work order status must be Free, Planned, or Released. You cannot add activities to subcontracted work orders in Released status.