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Use different component supply methods in subcontracting

This article illustrates how the three component supply methods work in the Subcontracting app. Using the Contoso Coffee demo data, you set up a production BOM where different components reach the subcontractor through different channels. Then, you explore how the planning system handles each method differently.

Scenario

You produce the SP-SCM1009, Airpot at Contoso Coffee. A subcontractor handles the full assembly. Different components reach the subcontractor through different channels:

  • Housing: you transfer it from your warehouse to the subcontractor.
  • Circuit board: you order it from your supplier and have it delivered directly to the subcontractor's location.
  • Power cord: the subcontractor provides it. You don't need to plan for it.

You want to know how Business Central handles each supply method in planning and on the purchase order.

Prerequisites

To run this scenario, you need:

  • The Contoso Coffee Manufacturing demo data installed with opening balances posted.
  • The Subcontracting app installed from Marketplace. Here's a link to the app's download page.

Important

This scenario changes the routing to SP-SCM1009-SUB-F and sets different component supply methods on the BOM. If you previously ran the Set Up and Process a Subcontracting Operation scenario, you must change the routing back and clear the routing link codes before you proceed.

Set up the demo data

Assign the routing and configure the BOM

  1. Select the Lightbulb that opens the Tell Me feature. icon, enter Items, and then select the related link.

  2. Open the item card page for SP-SCM1009, Airpot.

  3. On the Replenishment FastTab, verify or set the Routing No. field to SP-SCM1009-SUB-F.

    This routing has a single subcontracting operation, which keeps the focus on component supply rather than routing complexity.

  4. On the item card page, select the Production BOM action to open BOM SP-SCM1009.

  5. In the Status field, choose Under Development.

  6. On the Lines FastTab, configure the following components:

    For SP-BOM1101, Housing Airpot:

    Field Value
    Routing Link Code 500
    Component Supply Method Transfer to Vendor

    You transfer this component from your MAIN warehouse to the subcontractor. Business Central creates a transfer order when you process the production order.

    For SP-BOM1107, Circuit board, set the following fields:

    Field Value
    Routing Link Code 500
    Component Supply Method Consignment at Vendor

    You purchase this component, but it's delivered directly to the subcontractor's location. The planning system creates purchase demand at the subcontracting location.

    For SP-BOM1108, Power cord, fill in the following fields:

    Field Value
    Routing Link Code 500
    Component Supply Method Vendor-Supplied

    The subcontractor provides this component. Exclud it from your planning.

  7. In the Status field, choose Certified.

  8. Close the production BOM.

Set the subcontracting location code on the vendor

Note

If you already completed this step in the Set Up and Process a Subcontracting Operation scenario, skip this section.

  1. Select the Lightbulb that opens the Tell Me feature. icon, enter Vendors, and then select the related link.

  2. Open the vendor card page for 82000, Subcontractor.

  3. In the Subcontracting Location Code field, enter 82000.

    This field tells Business Central where the subcontractor's facility is located. Without this information, the production order refresh fails because Business Central can't determine where to send components.

Create the production order

  1. Select the Lightbulb that opens the Tell Me feature. icon, enter Released Production Orders, and then select the related link.

  2. Select the New action, and then fill in the fields as described in the following table.

    Field Value
    Source Type Item
    Source No. SP-SCM1009
    Quantity 10
    Location Code MAIN

  3. Select the Refresh Production Order action, and then select OK.

Review how components are set up

  1. On the production order, select the Components action.

  2. Notice the differences in the Location Code column:

    Component Location Code Why
    SP-BOM1101 (Housing) MAIN Transfer from MAIN to the subcontractor
    SP-BOM1107 (Circuit board) 82000 Purchased and delivered directly to the subcontracting location
    SP-BOM1108 (Power cord) 82000 Vendor supplied, excluded from planning

    The location code shows where the component needs to be before the subcontracting operation starts.

  3. For each of these components, set the Flushing Method field to Backward. This setting ensures that component consumption posts automatically when you receive the output from the subcontractor.

Explore how planning handles each method

  1. Select the Lightbulb that opens the Tell Me feature. icon, enter Planning Worksheets, and then select the related link.

  2. Select the Calculate Regenerative Plan action.

  3. On the request page, set the Item Filter to SP-BOM1101|SP-BOM1107|SP-BOM1108 to focus on the three components. select OK.

  4. Review the results:

    • SP-BOM1107 (Circuit board): the planning system suggests a purchase order with 82000 in the Location Code field. The component is delivered directly to the subcontractor. Standard purchase planning rules (reorder policy, safety stock) apply to this location.
    • SP-BOM1101 (Housing): depending on available inventory at MAIN, a planning line might appear. The component is handled through a transfer order, not purchase planning.
    • SP-BOM1108 (Power cord): no planning line appears. The subcontractor provides this component, so your planning system ignores it.

  5. Select the planning line for SP-BOM1107 (Circuit board) and select Carry Out Action Message. This creates a purchase order for the circuit board at location 82000.

  6. Open the purchase order for SP-BOM1107 and post the receipt. This makes the circuit board available at the subcontractor's location before the subcontracting work begins.

Create the subcontracting order and process the transfer

  1. Go back to the production order and select the Routing action.

  2. Select the subcontracting operation, and select Functions, Create Subcontracting Order.

  3. Open the purchase order. On the Lines FastTab, the vendor-supplied component (SP-BOM1108) appears on the purchase order alongside the subcontracting work line.

  4. Select Create Transf. Ord. to Subcontractor in the Subcontracting action group.

    A transfer order is created only for SP-BOM1101 (Housing). The circuit board (consignment at vendor) is handled through separate purchase planning, and the power cord (vendor supplied) doesn't need a transfer.

  5. Post the transfer order.

Receive the subcontracting output

  1. On the purchase order, select the Post action, and then select Receive.

  2. To verify component consumption, select the Lightbulb that opens the Tell Me feature. icon, enter Item Ledger Entries, and then select the related link. Filter on the production order number and then choose Consumption in the Entry Type field.

    Consumption entries display for all three components, posted from location 82000 (the subcontracting location). The housing was transferred there earlier, the circuit board was purchased directly to that location, and the power cord is vendor-supplied at that location. The backward flushing method posted consumption automatically when the subcontracting output was received.

Introduction to Contoso Coffee Manufacturing
Set Up and Process a Subcontracting Operation
Set Up Subcontracting Prices and Allocate Item Charges
Subcontracting overview

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