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To use subcontracting, you must configure several settings. This article describes how to configure the basic subcontracting settings and work center groups.
Configure general settings
You can specify which information from a subcontracting order to transfer to your purchase documents.
- Choose the
icon, enter Manufacturing Setup, and then choose the related link. - On the Subcontracting FastTab, in the General section, fill in the fields as described in the following table. Hover over a field to read a short description.
| Field | Description |
|---|---|
| Create Prod. Order Info Line | Specifies whether to create an additional information line with the production order description in the subcontracting purchase order. When turned on, the description from the production order line is automatically added as an extra text line. This helps identify which production order item the subcontracting work relates to. |
| Subcontracting Inbound Whse. Handling Time | Specifies the time for calculating the receipt date in the transfer line. The calculation follows the formula: Receipt Date = Due Date of Subcontracting Component - Whse. Handling Time. This formula enables realistic planning of material provision at the subcontractor. |
Configure other subcontracting settings
On the Subcontracting FastTab, in the General section, you can also configure the following fields.
| Field | Description |
|---|---|
| Subcontracting Journal Template Name | Specifies the name of the subcontracting journal template to use for direct creation of subcontracting from a released operation. |
| Component Direct Unit Cost | Specifies which direct unit cost of a production order component to use in the subcontracting purchase order. The following options are available: Standard - Uses normal price finding based on purchase prices and discounts. Prod. Order Component - Uses the calculated direct unit cost from the production order component line. This setting influences cost calculation and should be chosen according to your calculation strategy. |
| Item Charge to Subcontracting Purch. Receipt Lines | Specifies whether to activate item charge assignment for purchase receipt lines with subcontracting. When you turn on this toggle, an extra option becomes available in the charge assignment in purchasing. |
Set up work center groups for subcontracting
To use a work center group for subcontracting, you must assign it to a vendor number.
Choose the
icon, enter Work Center Groups, and then choose the related link.Open the work center group.
On the Posting FastTab, in the Subcontractor No. field, enter the vendor number. Learn more in Set up work and machine centers.
Choose the
icon, enter Vendors, and then choose the related link.Open the vendor card.
On the Shipping FastTab, in the Subcontracting Location Code field, specify the subcontracting location.
This setting specifies the subcontracting location. Component items provided to the vendor are posted from this location by default after execution of the subcontracting. The Linked to Work Center Group No. field shows whether a vendor is connected to a work center group.
Note
We recommend that you define a separate location for each vendor.
Set up subcontract work center fields
Subcontract work centers are set up the same as regular work centers, but have more fields. They're assigned to routings in the same manner as other work centers.
The Subcontractor No. field designates the work center as a subcontract work center. Enter the number of a subcontractor who supplies the work center. You can use this field to administer work centers that aren't in-house but perform processing under contract.
If you subcontract with the vendor for a different rate for each process, select the Specific Unit Cost field. This setting lets you set up a cost on each routing line and saves the time of reentering each purchase order. The cost on the routing line is used in processing instead of the cost on the work center cost fields. When you select Specific Unit Cost, costs are calculated for the vendor by the routing operation.
If you subcontract at a single rate per vendor, leave the Specific Unit Cost field blank. Instead, set up costs by filling in the Direct Unit Cost, Indirect Cost %, and Overhead Rate fields.
Routings that use subcontract work centers
You can use subcontract work centers for operations on routings in the same way as regular work centers. You can set up a routing that uses a subcontract work center as a standard operational step, or modify the routing for a particular production order to include a subcontracted operation. Learn more in Create Routings.
Important
On routing lines for subcontracting operations, the Type field must be set to Work Center (not Machine Center). Machine centers don't support subcontractor assignments, so automatic location changes, pricing, and purchase order creation don't work for machine center operations.
Related information
Set up work and machine centers
Manufacturing
Setting Up Manufacturing
Work with Business Central