Define Settings for Subcontracted Item

Outcome

The parameters that control subcontracting item are defined.

Subcontracting of items occurs when all operations in a structure are subcontracted.

No manufacturing order is used for this flow but the product structure (a bit more simplified) must still be defined in 'Product. Open' (PDS001).

Before you start

Settings in Define Basic Settings for Subcontracting must be fulfilled.

Follow these steps

Refer to the 'Parameters to Set' table to identify which settings element details best corresponds to the company's subcontracting needs and how they should be configured.

Create a subcontracted item

1. Here are only fields of interest for subcontracting explained.

   For more details on creating an item, see .

2. Start 'Item Type. Open' (CRS040). Create an item type with Item category 03=Subcontracted

3. Start 'Item. Open' (MMS001).

4. On the E panel select the parameter 'Make/buy code' as 'Manufactured' for finished item and 'Purchase' for the component.

5. On the G panel the 'Item Category' is defaulted with the same category as in the item type (03=Subcontracted).

Connect subcontracted item to materials & operations

In the product structure, the material and operations for the subcontracted item are described.

Here are only fields of interest for subcontracting explained.

For more details on creating a product structure, see .

1. Start 'Product Structure. Open' (PDS001).

2. On the B panel select the subcontracted item in the Product field and select enter a product structure type.

3. Fill in appropriate fields on the E, F and G panel.

4. Press Enter and start 'Product. Connect Materials/Operations' (PDS002/U).

   • Here the material lines as well as the subcontract operation are specified. The material lines should be connected to the number of the subcontract operation.
   • The operation line in the structure is connected to a work center; the work center is specified in 'Work Center. Open' (PDS010) and must be of resource type 2 =Subcontracted.
   • The supplier number of the supplier performing the operations is specified on the G panel in 'Work Center. Open' (PDS010/G). If this is done, the supplier is defaulted when adding the subcontracted operation to the product structure in 'Product. Connect Materials/Operations' (PDS002).

5. On the (PDS002/E) panel you define settings for the material line.

   • The 'Subcontract control' field on the E panel (material lines) indicates how the material issue is done, that is, through a connection to a subcontractor or by direct purchase.

     If the 'Material method - subcontracting parameter' field on (PDS002/P) is switched off, then the 'Subcontract control' field on the E panel field is not displayed. Set the parameter on by using F13 (Parameters) from the B panel in (PDS002) to call (PDS002/P).

   • The 'Issue method' field. The usual way to perform material issue for subcontracted items is through general stock transactions (= Alternative 1 or 2). Alternative 0 is usually used for subcontracted operations where a manufacturing order exists.

6. On the (PDS002/G) panel there are two fields of special interest;

   • The 'Subcontract control' parameter controls whether or not a planned purchase order and a requisition order should be created. For subcontracted items this parameter is usually set to 1= Purchase order and requisition order are created, in which case both a purchase order and a requisition order are created in the subcontracting flow. This parameter can be defaulted from the P panel
   • The 'Production day's' field, the lead time for the subcontracted operation is specified. This time is always independent of volume. The lead time is used to calculate the expected delivery date of the subcontracted goods from the supplier.

7. On the PDS002/H panel there are also two fields of special interest;

   • The supplier number predefined on the work center used for the subcontracting operation in 'Work Center. Open' (PDS010) is displayed and can be changed on the H panel.
   • If another supplier performs work on the subcontracted item, that supplier's number is specified in the Next supplier field. This supplier's address is printed as the Deliver to address on the purchase order document to the first supplier, informing the first supplier where to deliver the goods. The address is defined as address type 05 in 'Supplier. Connect Address' (CRS622).

Supplier information

The product structure, items and suppliers must exist to be able to work with subcontracting items. As for subcontracted operations, an item/supplier record must be defined in 'Supplier. Connect Item' (PPS040).

Here are only fields of interest for subcontracting explained. How to create a supplier/item connection is explained in Settings for Supplier and Items.

1. On the B1 panel choose sorting order 4, this displays subcontracted operations. Select the item number for the subcontracted product.

   • The 'Service process' (Spc) field specifies the product structure type and the Service field the number of the subcontracted operation.
   • It is very important to specify the subcontracted operation number as it is specified in 'Product. Connect Materials/Operations' (PDS002) since this field is alphanumeric. (Do not forget the leading zeros).

   An agreement with the subcontractor can be specified in 'Agreement. Open' (PPS100). The agreement lines for service processes are displayed using sorting order 2. More about agreements; Managing Agreements with Supplier [Process)

2. Open (PPS040/E)

   • The 'Record type' field indicates the type of ID for the item/supplier combination and has to be 2 for subcontracted operations.
   • 'Supplier item number', 'Supplier item name' and 'Supplier item description' are printed on the purchase order document if specified. These fields can be used to inform the supplier about the subcontracted operation. The supplier-related fields are printed according to the printout method fields on the order type in 'PO Type. Open' (PPS095).
   • The order type used for the created purchase order is specified on the panel. The order type must be of category 70. If no order type is specified, the order type defined in 'Settings – Purchasing' (CRS780) is used. See the Settings section in chapter 4.
   • The goods receiving method specifies what activities to perform in the receiving flow.

Parameters to set

Program ID/ Panel	Field	The field indicates …
(MMS001/E)	Make/buy code	…whether the item is manufactured in-house or purchased. The valid alternatives are: 1 = Manufactured 2 = Purchased.
(MMS001/G)	Item category	…item category that best represents the characteristics of each item. The valid alternatives are: 00 = Normal item 02 = Phantom item 03 = Subcontracted item 04 = Tool 05 = Fixed machine 07 = Repairable item 08 = Recyclable item. 11 = Extended Catalog Item (ECI) 12 = Non-coded Extended Catalog Item The alternatives are used for control and informational purposes. A subcontracted item refers to an item purchased as a service but recorded as a normal item after the last subcontracted operation is completed. Recyclable items can also, broadly, be considered repairable. However, repairable items require greater operational follow-up than recyclable items. ECI and Non-coded ECI are only to be used in combination with line types 1 and 2 in customer order entry. When using an ECI template item in customer order entry, a new item is created based on item master data from the template item.
(MMS002/E)	Order Type	…the order type that is planned to be in connection with procurement. The acquisition method defines which acquisition process (purchase, manufacturing or distribution) is used by the order type. The order type is a group ID for a number of rules which determine how the order is processed in the order flow.
(MMS002/E)	Supplier	…the supplier considered as the main supplier for an item.
(PPS040/B1)	Service Process	… the service process for subcontract or repair purchase orders. You can predefine service processes in (PPS040). The service process must be defined in the structure type file. Purchasing using this ID is then nearly the same as purchasing material using an item number. In other words, the predefined values can be obtained as default values.
(PPS040/E)	Record type	… the type of ID for the item/supplier combination. The valid alternatives are: 1 = Item 2 = Item, structure type and operation number. Applies to subcontract purchasing, where a structure type should be specified in the service process and an operation number should be specified left-justified. 3 = Item, service process and service number. Applies to repair orders.
(PPS040/E)	Status item/sup	… the status of an item/supplier combination. The valid alternatives are: 00 - 09 = Registration in progress 10 = Preliminary 20 = Approved 90 = Deactivated.
(PDS002/U1)	Sequence number	…the sequence number of a bill of material. This number is included in every key ID for material in a product structure or manufacturing order. The sequence number of a bill of material for a kit item may not be greater than 99. The number should contain 4 positions. It can be specified manually.
(PDS002/U1)	Component number/work center	...a component number if the line is a material line, or work center if the line is an operation.
(PDS002/E)	Quantity	…quantity of each component used in the bill of material/structure of a product.
(PDS002/E)	Subcontract control	…how the creation of stock transactions for the current item should be processed if there is a connection to a subcontractor or direct purchase. The valid alternatives are: 0 = Issue performed from manufacturing order. 1 = Issue performed through general stock transactions, without possibility to override. 2 = Same as alternative 1, but the issue can be changed in the planned order. 3 = Planned purchase order is created with direct delivery from supplier to subcontractor.
(PDS002/E)	Supplier	…indicates the unique identity of a supplier.