Overview of the setup of operation subcontracting with material flow

Prerequisite

Before you can set up operation subcontracting with material flow support, you must set up the general subcontracting data discussed in General subcontracting data setup.

Items and item defaults

Each component, outgoing subassembly, incoming subassembly, and end item involved in a subcontracted operation must be defined as an individual item.

The most efficient way to define the items is by defining item groups and specifying default settings for each item group before defining the individual items.

In this way, generic item settings at the company and site levels are set as default values for the individual items.

Component defaults

The components sent from the manufacturer to the subcontractor have different settings at the production site and the subcontractor site.

At the production site, the supply source is typically Purchase, because the manufacturer purchased these items.

At the subcontractor site, the supply source is Distribution, because the components are transferred from the warehouse at the production site to the subcontractor warehouse on the subcontractor site.

Outgoing subassembly defaults

A subassembly only exists within the context of a production order. Therefore, these settings apply:

• The subassembly has no supply source of its own. The supply source is set to Not Applicable in the Item Defaults by Site (tcibd1551m000) session.

• The order system is set to Manual.

• A subassembly has no planning data. Consequently, the Clusters tab in the lines section of the Item Defaults (tcibd0502m000) session is unavailable if the Subassembly check box is selected.

A subassembly has standard costs. Therefore, the subassembly must be linked to an enterprise unit. This is done in the Enterprise Units tab in the lines section of the Item Defaults (tcibd0502m000) session.

A subassembly must have a cost component scheme. This is specified in the Enterprise Units tab in the lines section of the Item Defaults (tcibd0502m000) session.

Incoming subassembly defaults

The incoming subassembly is the completed subassembly that is received from the subcontractor. It is only defined at the production site.

The default settings are identical to the outgoing subassembly defaults, except that no default settings are needed for the subcontractor sites.

End item defaults

The end item is the item that results when all operations are completed. The end item is produced at the production site. Therefore, the supply source is Job Shop and no item default data for other sites are needed.

Define items

After defining the item defaults, define the individual component items, outgoing and incoming subassembly items, and end items. See Setting up item data for multisite for details.

Job shop BOM

In the Materials tab of the Job Shop Bill of Material (tibom3600m000) session, the components to be sent to the subcontractor must be linked to the operation that is subcontracted.

On the appropriate menu of Job Shop Bill of Material (tibom3600m000) session, to enable the use of the Bill of Materials, these options must be selected:

• Available for Planning

  The Bill of Materials can be used by Enterprise Planning.

• Use for Planning

  The Bill of Materials is used by Enterprise Planning planning.

• Use for Costing

  The Bill of Materials is used in the standard costs calculation process.

• Approve Revision

  The Bill of Materials is approved.

Reference operations

A reference operation is an essential building block of a job shop routing. Reference operations are created for both manufactured and subcontracted operations.

A reference operation for a subcontracted operation has no machine type, because the production process performed by the subcontractor is not monitored in LN and therefore machine type and other information is not needed.

The subcontracting work center is not specified for subcontracted reference operations. The subcontracting work center is specified in the job shop routing when creating the routing operation. This enhances the flexibility of the reference operation.

Operation subcontractors list

The Operation Subcontractors List (tisub2100m000) session is used to set up reference operations, subcontractors, subcontractor sites, and subcontractor warehouses by production sites.

In this way, you can specify that for a production site, an operation can be subcontracted to different subcontractors in different subcontracting sites; or subcontracted to the same subcontractor but in different subcontractor sites.

To define in-house subcontracting, specify the subcontractor and the production site and warehouse.

Prerequisite

Before you can use the Operation Subcontractors List (tisub2100m000) session, you must set up subcontracting relationships, that is, subcontractor sites by subcontractor and production sites.

These are defined in the Subcontractors (tisub0120m000) and Subcontractor Location (tisub0625m000) sessions. See To set up general subcontracting data for details.

Subcontracting rates

Subcontracting rates are specified in the Operation Subcontracting Rates (ticpr1161m000) session. See Subcontracting rates and Examples of subcontracting rates for details.

Job shop routings

The setup of a job shop routing with subcontracted operations differs in these ways from a routing without subcontracted operations:

• The Subcontracting with Material Flow check box in the Job Shop Routings (tirou4100m000) session is selected for the routing header.

• The reference operation linked to the routing operation has no work center and no machine type. See the Reference operations section in this topic for details.

• The Subcontracting check box in the Job Shop Routing Operation (tirou4601m000) session is selected for the routing operation.

• The work center specified for the routing operation is a subcontracting work center. See General subcontracting data setup for details.

If you select a subassembly for a subcontracted routing operation, this will be the incoming subassembly that is received from the subcontractor through a subcontracting purchase order. The incoming subassembly is to be used in subsequent operations.

If you select a subassembly for a routing operation and the next operation of the routing is subcontracted, this will be the outgoing subassembly that is transferred to the subcontractor.

After specifying the data and settings of the job shop routing, you must validate the routing to ensure that the setup is correct.

You must also select the Use for Planning and Use for Costing options on the Actions menu of the Job Shop Routings (tirou4100m000) session to include the routing in production planning and costing. Finally, you must approve the routing.

Standard cost calculation

When the setup of subcontracting with material flow is completed, you can calculate the standard costs of an item for which part of the production is subcontracted. To calculate the standard costs, complete these steps:

1. Select end item in the Items (tcibd0501m000) session.

2. In the Enterprise Units tab in the lines section of the Item (tcibd0501m100) session, on the Actions menu of the, select Calculate and Actualize Standard Costs. Consequently, the calculated standard costs are displayed in the Standard Cost field.

To view the details of the standard costs, in the Print Multilevel Cost Calculation (ticpr2420m000) session, select the end item and on the toolbar, click Print.

The report shows the material costs of the components and the subassembly and the costs per operation that make up the standard costs of the end item.