External Production With Provision#

General#

Outsourcing or subcontracting certain operations, in particular finishing and assembly, is a common practice in many industries, for example, to prevent capacity shortages or to let in-house staff focus on core business functions.

The following features expand standard Microsoft Dynamics 365 Business Central functionality to provide additional options to those working in your organization’s Subcontract manufacturing. This includes subcontracting with supplied materials, flexible quantity units, as well as external labour prices.

Subcontracting with material#

To complete a job, a subcontractor is often supplied with materials, or semi-finished products even. For this reason, medtec365 provides you with a way to post transfers from subcontract purchase orders so that you can ship supplies to vendors and have the system print receipt documents based on these transfers.

When you later post this kind of order as received, the items supplied and consumed for the completion of requested operations are then removed from the site set up for subcontracted work.

The Roles Center for Production and Purchasing shows relevant date conflicts between orders and work steps. This informs you that manual adjustment of the dates is necessary.

Before you can subcontract work on components and products, you must set up the manufacturing area. For more information, see the Microsoft Dynamics 365 Business Central1 Helpsite. Only the differences to standard functionality will be explained in this article.

Production BOMs and BOM versions#

Lines#

In the production BOM (version), the fields "Connection code" (this field identifies the component as a raw material provision relevant to logistics) and "Provision type" must be set.

Routing and routing versions#

Lines#

Work Center#

Usually, the following settings are made when creating a workstation group for external work:

General#

In the Work Center Group Code field, the workstation group is assigned to a separate department (e.g. external work).

Posting#

On the Work Center, the vendor must be assigned in the Subcontractor No. field that performs the subcontracting.

The Flushing Method must be set to "Manual", as the postings are posted via the external labor order.

In the Gen. Prod. Posting Group, a separate posting group for "external labor" should be set up and assigned to better distinguish the origin of non-cash items in accounting.

You should activate the Specific Unit Cost toggle in the following cases:

• If the cost price calculation type is set to "Piece", as is usual for external labor.
• If you have agreed a different price for each process with the vendor for external work.

Planning#

The "Unit code" field is usually set to days, since external processing is usually calculated in days.

As a rule, a separate company calendar is created for external processing.

Functions on the ribbon#

In addition, the external work prices and the source location can be stored via "Belonging" > "Workplace group".

Origin camp location#

With the origin storage locations you can control which storage locations should be used for the provided components. For external processing you must use the type "all items".

The call of the origin storage locations is made from the workstation group map/list.

• Type of origin: workplace group
• Origin code: which specific workstation group
• Type: All items or a specific item
• Code: for specific article: Item number
• Storage location code: which storage location is to be controlled

Relocation routes#

With the help of the stock transfer routes you have the possibility to create the link between the vendor warehouse (i.e. the warehouse of the external processor) and your own warehouse.

To set up the stock transfer routes, call them up via the user search.

The stock transfer routes overview opens. In the info tab "Stock transfer route matrix" you can now make the assignment for your own warehouse (stock transfer from code = own warehouse (e.g. BLUE)) and the vendor warehouse (e.g. external).

By clicking on the Assist button you get to the transfer route specification on which you enter in the field "Transit Code = Own-LOG". This field must be filled with an appropriate code, the other fields can remain empty if no fixed deliverer is defined.

You can then close the Stock Transfer Route Specification and Stock Transfer Route Matrix windows.

Flexible Unit of Measure for Subcontracting#

In the standard version of Microsoft Dynamics 365 Business Central, subcontracted work can only be ordered and invoiced in the unit of the production item.

In KUMAVISION factory365, you can order and invoice subcontracted work in a Unit of Measure different from the production Unit of Measure. For this purpose, you specify the Unit of Measure in which the subcontracted work is to be obtained and invoiced.

For this, you must specify the Subcontracting Unit Of Measure Code as well as an appropriate conversion factor, which refers to quantity 1 of the unit of measure for the item to be produced.

It is assumed that each production item has its own routing. Furthermore, for the work centre group Subcontracting, the costing calculation is set to piece.

The following section explains how to set up flexible units for subcontracted work in KUMAVISION factory365. The basic manufacturing/production setup is required as a prerequisite for this configuration Microsoft Dynamics 365 Business Central1 Onlinehelp.

Routing Lines#

Subcontracting Price#

In order for a price to be determined for the subcontracting unit, the price for the subcontracting unit must be stored in the subcontracting prices.

Determination of prices for external work#

In Microsoft Dynamics 365 Business Central¹ Standard, a price for the external work (i.e. the price that will later be used in the purchase order) can only be stored on the work center group card or the operation (if the work center group is set up with "special cost price"). Different prices per vendor, per scale quantity, per activity (standard catalog code) or period-dependent prices cannot be maintained.

In KUMAVISION factory365 you have your own price table for the external work orders. The prices for the external work can be stored in different places. Thereby the entries of the external work prices override the prices of the work group card or the work operation.

Third-party work prices Prices (with the option of graduated prices) can be stored for the following combinations via the external work prices:

• Workstation group (MUST)
• Article (MUST)
• Vendor (MUST)
• Standard catalog (external work activity)
• Start and end date
• Minimum quantities (graduated quantities)
• Price units (conversion factor weight share)

The external work prices can be called from the following masks with appropriate filtering:

• Workplace group card / list
• Accounts payable card / list

Process of external production with provision#

Initial situation: Production is planned and a released FA has been created.

It is possible to start the process of subcontracting via the Subcontracting Worksheet or via E+D order planning.

Outside Work Worksheet#

Calculate external labor#

In the external work worksheets, you can calculate which released production orders are to be sent to the vendor. You can filter on the work center group, the vendor or the FA number, among other things.

The external work worksheet then lists the pending external work calculated according to the filtering.

The vendor is taken from the work center group, the price depending on the stored prices. If there is already external work for an FA, this is not calculated twice.

The external work worksheet shows that a stock transfer order (for the operation itself or for order-related provisions) is created for the respective operation.

Work in the external work worksheet#

Change of the creditor: The vendor can be changed per line (order), thus the external labor price stored in the new vendor is also used.

Perform event reporting#

The proposal line can be converted into an order using the "Execute event message" function and the "Accept event message" checkbox activated.

If the "Create stock transfer order" checkbox is activated in the external works worksheet, a stock transfer is also created. This can be several stock transfers if different storage locations are involved.

Default lines in which the "Accept event message" checkbox is not activated remain in the external work worksheet without an order being created.

E+D Order Planning#

In a released E+D order, it is possible to start the subcontracting process via E+D order planning.

Make orders#

The fields Create Subcontracting Order, Subcontracting Wksh. Template and Subcontracting Wksh. Name are relevant for the subcontracting process.

If the process is to be carried out via the subcontracting worksheet, the Copy to Subcontrac. Wksh option must be selected in the Create Subcontracting Order field. The selection in the fields Make Purch. Orders and Make Purch. Orders & Print determines in which worksheet is to be created. After confirming with "Ok", a line is created in the corresponding external work worksheet for the previously marked line ("Accept event message") and the process can be continued via the external work worksheet.

If purchase orders and stock transfer orders for external work are to be generated directly, the option "Purchase orders first" or "Purchase orders first. & print orders" must be selected. After confirming with "Ok", the stock transfer orders and external work orders required for the external work are generated for the previously marked lines ("Accept event message").

Released production order#

Pursuit of the foreign work#

The tracking of external labor is done at the line level in the production order. To do this, select the corresponding line and call up the "External work tracking" via Line.

The linked documents can be viewed and called up via the window called up by this function.

Order#

In the external work order, the activity or operation of the item is ordered. Accordingly, the description of the item line in the purchase order does not contain the name of the item, but the operation description.

The columns FA no., FA line no., work center group no. and operation no. should be shown, as they represent the reference to production.

In the respective order line, you can use the "Line" menu tab to call up the FA components assigned to the operation via the connection code.

The order type FREMD is automatically preset for orders from the external work worksheet, but can be changed manually. This can be used to preset certain data, such as payment terms and other fields.

If the purchase order is delivered, the operation is confirmed at the same time.

Book delivery#

Depending on the setup of the storage location where the production order and thus the external production order was created, the delivery of the external production is to be posted directly via the purchase order or the corresponding logistics documents. The basic process of creating logistics documents or entering delivery quantities is no different for an external production order than for an order for articles.

As already mentioned, external production is the ordering of activities or operations on an item. Therefore, only a capacity item is generated within the production order when posting. Only if it concerns the last operation an article item (item type "actual message") and thus a stock movement is generated additionally.

If FA components are assigned to the operation or order line as a provision via the connection code, they are automatically posted in the background when the delivery is posted in the corresponding quantity. A special feature here are FA components with article tracking, this must be assigned to the respective FA components. Due to this, as already mentioned, the call of the FA components is available in the purchase order as well as in the logistics documents.

Stock transfer#

In the stock transfer header, the field Stock transfer order type indicates that the stock transfer is for external production. If you do not receive a separate message from your external processor about the receipt of the provision at his storage location, you should set the switch "Outbound automatically posts inbound" in the stock transfer order, because otherwise the provision is in transit and you would have to post the stock receipt to the vendor again.

The posting of the stock transfer order issue is again done depending on the setup of the storage location either directly via the stock transfer order or the logistics documents (goods issue or warehouse picking).

If the "Order-related" provision type is set in the FA components, the item tracking is automatically inherited when the stock transfers for the provision are posted. If the "neutral" provision type is set, the supplier must report the item tracking used on their delivery documents and this must then be entered accordingly in the FA components before the external production is posted.

Workflow Contracting with flexible unit of measure#

Planning Worksheet and released Production Order#

Production is planned and a released production order is created or manually entered. In the operation for subcontracting, the setting for Subcontracting Price Source is taken into account. If this is set to Factor, the stored Subcontracting Factor is multiplied by the quantity to be produced in the base unit. Based on this quantity and the specified Subcontracting Unit, the corresponding purchase price can then be determined from the subcontracting prices.

E+D Order Planning#

If the subcontracting process is initiated via E+D production order planning, the Create Orders function takes into account the setting for Subcontracting Price Source. As previously described, the Subcontracting Purchase Price is determined and the corresponding Purchase Price is calculated.

Subcontracting Worksheet#

The Calculate Subcontracting function takes into account the setting for Subcontracting Price Source. As previously described, the Subcontracting Purchase Price is determined and the corresponding Purchase Price is calculated.

Order#

In the subcontracting order, the subcontracting price determined from the subcontracting worksheet is displayed in the subcontracting purchase price field in the order line. This price is multiplied by the subcontracting factor and displayed in the purchase price field.