Manufacturing processes such as painting, plating, and heat-treating are commonly performed by outside suppliers. In DBA, Subcontract costs are handled through special Subcontract Routings that generate Subcontract Purchase Orders.
Subcontractors are a special kind of Work Center
You define your subcontractors in the BOM > Subcontractors screen. From a workflow perspective, you can think of a Subcontractor as a Work Center that is located off site.
Subcontract services are handled through BOM Routings
In the BOM > Bill of Manufacturing > Routings tab, you add a special routing for Subcontracting Processes.
•Supplier Price is in Supplier UM and used for the Subcontract Purchase Order
•Estimated Cost is reflected as the total cost per unit of output of the parent manufactured item. This is used for Cost Rollups for Subcon costs.
•PO Notes can be used for special instructions to the Subcontract Supplier
•Job Notes can be used for special instructions to the Job Traveler
Assign components to the Subcontract Routing Sequence in BOM
The materials that you will be sending to the subcontractor should be defined as BOM components and assigned to the Subcontract routing sequence.
Subcontracting Workflow
Issue Material to be sent to Subcontractor to the Job
The Job is released to production and you will perform Job Issues to issue the material cost to Work in Process.
Generate the Subcontract PO to send with the materials you issued to the Job
In Jobs > Job Subcontracting, you will generate a PO for the subcontract services. Any PO notes defined against the Subcontract routing will flow through to the PO. You can use the Job Issues batch issue report as a supporting document to the PO for the materials that are sent out. Make sure to verify your Subcontract pricing when sending out the PO to the Subcontract Supplier.
Receive PO when subcontract services are completed an items are returned
When the items are returned the PO is receipted. The PO receipt will absorb the Subcontract costs from the PO into Work in Process. It is important to note that it is the PO Receipt costs that are absorbed into Work in Process and not the Invoice Costs. It is therefore essential to always verify your PO prices prior to sending out the PO.
Complete processing of Job and receipt finished good output with complete costs
Finish processing any remaining Job elements. When you perform the Job Receipt of the finished good output, the system will credit Work in Process and debit Inventory. The Inventory Value now includes the material costs for the components sent out and the subcontract service costs for services provided.
Close to Job to reconcile Work in Process
After you have finished the Job it is imperative to Close the Job in a timely manner. Finished jobs are formally closed within the Job Control Panel screen. If there is any variance between total job costs issued and the total job receipt cost to inventory, the program automatically adjusts your Work in Process account by the variance amount, with an offset to WIP Adjustments, so that net WIP for the closed job is always zero. This job close balancing adjustment is what makes the Work in Process account self-adjusting and always in balance with the underlying jobs.
Enter PO Invoice for Subcon Services
Enter the PO Invoice from the Subcontractor and this will reconcile the PO receipt costs with the Invoice costs and any differential will booked to the Received Not Invoiced Adjustment account. This ensures that all costing involved is self balancing. PO Invoice costs do not affect inventory value.
