Manufacturing · Daily operations · 8 min read

Subcontract work to a vendor

Send components to a subcontractor, order their service, receive the finished goods and return unused material.

Before you begin

• The Subcontracting switch is on.
• The subcontractor exists as a partner.
• For components you send, a Released manufacturing order exists with stocked components.
• Creating and closing needs manufacturing.edit, sending and returning needs manufacturing.material.issue, the purchase order needs manufacturing.plan, and receiving needs manufacturing.production.register.

Steps

Create the subcontract order

1. Go to Manufacturing > Subcontracting > Subcontract Orders and click New subcontract order.
2. Choose the Manufacturing order, or leave it empty and choose the product the vendor makes; a new order (source Subcontract) is made. Neither: 'Choose the order or the product the vendor makes.'
3. Enter Qty if different from the order's remaining quantity.
4. Choose the Subcontractor.
5. Choose Components: We send the components or The vendor supplies everything.
6. Enter Service price per unit in AED and a Due date.
7. Save. The order is Draft with component lines taken from the order.

Send components

1. Release the manufacturing order first: 'Release the manufacturing order first.'
2. Click Send components.

Raise the purchase order

1. Click Purchase order. The price must be above zero: 'Enter the vendor's price per unit first.'

Receive

1. Click Receive.
2. Enter Good Qty, Rejected Qty and the Lot, then save.
3. Repeat for partial deliveries.

Return unused components and close

1. If components remain at the vendor, click Return unused.
2. Click Close.

What happens next

• Sending moves components from the warehouse stock to a vendor location <warehouse>/SUB-<vendor code>. They remain company stock, with no change in value. Reservations are released and the status is Components sent.
• The purchase order is a draft for the service product "Subcontract manufacturing service". Example: 10 x AED 35.00 = 350.00 plus 5 % VAT = AED 367.50. Status becomes Vendor production.
• Receiving consumes the components at the vendor into WIP, adds the service cost (10 x 35 = 350.00, with the subcontract accrual account when posting is on), registers production at full cost, and marks the purchase order line accepted for billing. The status is Partly received or Received. Incoming quality checks are raised when the product has an Incoming plan.
• Components to Vendor and Vendor WIP show what sits at each vendor; values show only with cost permission. Subcontract Cost lists the service cost.

Good to know

• 'At most 10 is outstanding.' when receiving too much.
• 'Send the components first.' on a "We send" order not yet sent.
• 'Components are still at the vendor - return them first.' when closing early.
• 'The purchase order is already raised.' when pressing the button twice.
• 'The order is finished.' when the chosen order is already completed or closed.
• The service price per unit is also visible to anyone who can view subcontract orders.