Managing Subcontracting in Procurement

Outcome

Subcontracting for operations and subcontracting for items will be done.

Uses

A finished product with the subcontracted operation is updated in the stock and the corresponding financial transaction is performed.

How the system is affected

Refer to the related settings instruction documents to see how the system is affected.

Before you start

The settings in these documents must be fulfilled.

• See Define Basic Settings for Subcontracting
• See Define Settings for Subcontracted Item
• See Define Settings for Subcontracted Operations

Follow these steps

Product structure with subcontracted operations

1. Manufacturing Order

   The workflow for subcontracting operations is usually administrated through a manufacturing order. A manufacturing order is created in 'Manufacturing Order. Open' (PMS100).

   Materials can be reserved on the manufacturing order in 'Material Plan. Open' (MMS080) for the component that needs to be sent to the subcontractor.

2. Planned Purchase Order

   When a manufacturing order is entered for the finished product, a planned purchase order for the subcontracted operation is created automatically in 'Planned Purchase Order. Open' (PPS170). Sorting and selection of orders is done by using sorting orders and views.

3. Release Planned Purchase Order

   The planned purchase order is released in (PPS170). See Create and Release Planned Purchase Order.

4. Requisition Order

   When the purchase order is printed and reached status 20, a requisition order is created in 'Req/Distr Order. Open' (MMS100). The requisition order is used to create freight document for the delivery of the material to the supplier and is often called a dummy requisition order.

   The created requisition order in 'Req/Distr Order. Open' (MMS100) is created automatically from 'Create GST from sub contracting proposals' (MMS117).

5. Report Stock Issue

   The stock is reported through 'Picking List. Report' (MWS420). See .

6. Purchase Order

   The planned purchase order is released as a normal order and creates a purchase order for the subcontracted operation in 'Purchase Order. Open' (PPS200).

7. Goods Receiving Method

   After the supplier has finished the work, the goods are sent back to the company. When the goods are delivered, the goods are received in the same way as normal goods by using 'Purchase Order. Receive Goods' (PPS300). The goods receiving method controls what activities are done in the receiving workflow.

   When the subcontracted item is goods-received, the manufacturing order status is updated. The subcontracted operation gets status 90, reported.

8. Invoice Matching

   You can perform the invoice matching for the purchase order in Matching Supplier Invoices to Purchase Orders in 'Supplier Invoice. Record' (APS100). See .

Product structure with only subcontracted items

1. Planned Purchase Order

   A planned purchase order for the subcontracted operation is created automatically in 'Planned Purchase Order. Open' (PPS170). Sorting and selection of orders is done by using sorting orders and views.

2. Release Planned Purchase Order

   The planned purchase order is release in (PPS170). See Create and Release Planned Purchase Order.

3. Requisition Order

   When the purchase order is printed and reached status 20, a requisition order is created in 'Req/Distr Order. Open' (MMS100). This will happen provided that the issue of material is done from the manufacturing order. The requisition order is used to create freight document for the delivery of the material to the supplier and is often called a dummy requisition order.

   The created requisition order in 'Req/Distr Order. Open' (MMS100) is created automatically from 'Create GST from sub contracting proposals' (MMS117).

4. Report Stock Issue

   The stock is reported through Picking List. Report (MWS420). See .

5. Purchase Order

   The planned purchase order is released as a normal order and creates a purchase order for the subcontracted operation in 'Purchase Order. Open' (PPS200).

6. Goods Receiving Method

   After the supplier has finished the work, the goods are sent back to the company. When the goods are delivered, the goods are received in the same way as normal goods by using 'Purchase Order. Receive Goods' (PPS300). The goods receiving method controls what activities are done in the receiving flow.

   When the subcontracted item is goods-received, the manufacturing order status is updated. The subcontracted operation gets status 90, finish-marked

7. Invoice Matching

   You can perform the invoice matching for the purchase order in Matching Supplier Invoices to Purchase Orders in 'Supplier Invoice. Record' (APS100). See .

8. Occasional Subcontracting

   Subcontracting is often used when capacity problems exist in the company's production plant. Sometimes, one of the operations for a certain manufacturing order is subcontracted and another supplier performs the operation on this special order.