Subcontracting in Procurement

Operation subcontracting

For operation subcontracting, a part of the production process (one or more operations) is subcontracted.

These types of operation subcontracting are available:

• Without material flow support

  Subcontracted service items are used on purchase documents. The subcontracting purchase order only represents the administrative handling of the subcontracting process and no material is supplied to the subcontractor.

• With material flow support

  Purchased, Manufactured, or Product items, with linked material supply information, are used on purchase documents. The material supply information is retrieved from Job Shop Control based on the estimated material lines of a production order's subcontracted operation. Changes to the material supply lines can only be initiated from the estimated material lines. You cannot manually update the material supply lines.

  To supply the material to the subcontractor, supply orders or schedules must be generated from the material supply lines in the Purchase Order Material Supply Lines (tdpur4116m000) session, or in the Generate Supply Orders for Subcontracting (tdpur4216m000) session.

  Consumed materials are issued from inventory and the material consumptions are updated by Manufacturing. Financial transactions are also generated by Manufacturing.

  For more information, refer to Operation subcontracting in Procurement.

Item subcontracting

For item subcontracting, an item's entire production process is subcontracted. Therefore, it is always used with material flow support.

Subcontracted purchase order lines can be generated:

• By Job Shop Control

  See Unplanned subcontracting.

• By Enterprise Planning or manually

  When a subcontracted purchase order line is generated from Enterprise Planning or is created manually, the material supply lines are generated from the bill of material (BOM) lines.

You can always manually change the subcontracted purchase order line, purchase order line peg distribution, and the material supply lines. A material supply line's peg distribution can be updated only from the parent line, that is the purchase order line, the purchase order line peg distribution, or the material supply line.

To supply the materials to the subcontractor, supply orders or schedules are generated from the material supply lines using the Purchase Order Material Supply Lines (tdpur4116m000), or the Generate Supply Orders for Subcontracting (tdpur4216m000) sessions.

Consumed materials are issued from inventory and the material consumptions are updated by Purchase Control.

Unplanned subcontracting (operation and item)

Unplanned subcontracting is applicable when you subcontract after generating a production order.

For unplanned subcontracting, a purchase order is generated from the production order and the material supply lines are populated by Job Shop Control. They are based on the estimated material lines of the original production order's subcontracted operation, which is deleted after the subcontracting purchase order is generated.

For more information, refer to Overview of subcontracting.

Service subcontracting

For service subcontracting, work on an item to be maintained or repaired is subcontracted. This work entails the entire repair process, or only a part of it. Service subcontracting can be used with or without material flow support.

To supply material to the subcontractor, supply orders must be generated from the material supply lines in the Purchase Order Material Supply Lines (tdpur4116m000) session, or in the Generate Supply Orders for Subcontracting (tdpur4216m000) session.

Consumed material is issued from inventory and the material consumption is updated by Service. Financial transactions are also generated by Service.

For more information, refer to Service subcontracting in Procurement.

Subcontracting purchase prices

To retrieve the subcontracting purchase price, you can specify the pricing data for operation subcontracting, item subcontracting, or service subcontracting.

Price determination depends on the setting of the Source of Price for Operation Subcontracting fields in the Items - Purchase (tdipu0101m000) session.

If the Source of Price for Service Subcontracting is set to Price Book / Contract for the type of subcontracting, subcontracting-specific purchase price and discounts are retrieved for the purchase order line, based on the following search logic that LN uses to retrieve pricing information:

1. From a valid purchase contract. The price book linked to the purchase contract must have the Price Type set to Item Subcontracting, Operation Subcontracting, or Service Subcontracting.
2. From the supplier price book, for combinations that have the High Priority check box selected in the Price Book Lines (tdpcg0131m000) session. The price book must include lines for which the Price Type is Item Subcontracting, Operation Subcontracting, or Service Subcontracting.
3. From a valid price matrix, selected from the price matrices for which a matrix priority is defined. This price matrix must be of the type Purchase Price and must have the Subcontracted check box selected in the Purchase Price Matrices (tdpcg0130m020) session. If more than one valid price matrix exists, price retrieval is determined by the Price Control field in the Pricing Parameters (tdpcg0100m000) session.
4. From the Supplier Price Book for combinations that have the High Priority check box cleared in the Price Book Lines (tdpcg0131m000) session. The price book must include lines for which the Price Type is Item Subcontracting, Operation Subcontracting, or Service Subcontracting.
5. From the relevant Item Subcontracting Purchase Price field in the Items - Purchase (tdipu0101m000) session.