Subcontract services such as painting, plating, and heat-treating are performed on jobs devoted solely to performing an outside service or during the course of multi-sequence jobs. POs for subcontract services are generated as needed through the Job Subcontracting screen.
Video - Subcontracting Overview
There are two methods for setting up subcontract services
Let’s say you fabricate a part that needs to be sent out for painting. There are two basic methods you can use for setting up the subcontract service.
Subcontract BOM
The most flexible method is to set up the subcontract service with its own BOM. The BOM will consist of one routing sequence for the subcontract service and one component for the unpainted part that gets sent to the subcontractor. The BOM parent is added to all higher-level BOMs that use the painted part as a component. The unpainted part can be a manufactured item with its own BOM or it can be a purchased item. MRP will generate jobs and POs as required for the painted and unpainted parts. With th is method subcontract service jobs are purely for subcontracting with no mixing of in house and outside processes. The painted part and unpainted part can also be given their own MRP settings for maximum planning flexibility.
Subcontract Sequence
With this method you add the subcontract service routing as a routing sequence within each BOM that requires the painted part. In this case, the routing will mix in-house processes with the outside process. This method is less flexible because you must perform the subcontract service within each job it is required with no ability to make it on its own job when interdependent demand exists. It also adds to each item’s calculated Job Days with no ability to make the painted part to a forecast to reduce lead time.
The job traveler and Next WC field help initiate action
The job traveler clearly indicates when a subcontract process is to be performed and can be used as a trigger to initiate PO generation in the Job Subcontracting screen. Also, within the Work Center Schedule screen, the Next WC field clearly identifies when the next work center is an outside service process.
Generate POs for Ready status sequences
All subcontract job sequences with a status of Ready, Next, or Open are listed in the Job Subcontracting screen. Ready status sequences are ready to be sent to the subcontract supplier for processing.
A red Material icon indicates when material is needed. Click the icon to launch the Job Issues screen, which enables the material to be issued in real time. After the issue batch is updated, a dispatch list can optionally be printed and included with the PO to provide the supplier with a list of materials.
Select the Convert checkbox against each Ready status sequence and then click the Convert or Convert & Print button to generate the PO, which changes the sequence status to Started. The printed PO can then be sent to the supplier and/or included with the parts.
Make sure the PO has a reasonable supplier price
Make sure that the PO has a reasonable supplier price because it is used as the unit cost that will be applied to the job. The supplier price is maintained in the BOM routing sequence and flows through to the job routing sequence.
NOTE: Be aware that the price on the supplier invoice, which can arrive well after the PO is received, does not flow back to the job. Instead, the PO price is used for job costing and therefore must be given a realistic value.
Do not generate POs in advance
Even though Open and Next status job sequences are included in the Job Subcontracting screen, limit PO generation to Ready status sequences. This way POs are generated on a “just in time” basis consistent with all other shop control processes.
PO receiving updates the job sequence.
Receiving the PO in the PO Receipts screen updates the completed quantity against the job sequence and changes the next sequence status to Ready. When final receipt is indicated, the sequence status changes to Closed and the next sequence status changes to Ready.
Timely PO receiving is a requirement
As with all other shop control processes, subcontract service POs must be received in real time to update current sequences and downstream work centers.
