Subcontracting capabilities
Subcontracting for lean manufacturing in Supply Chain Management separates the material flow from the purchase process of the services. The purchase order is created automatically when the kanban status is updated to at least Planned.
These service items are used on purchase orders to represent the activity that the vendor will conduct as part of the outside process. The purchase order contains the cost and results in an accounts payable billing. When the vendor reports that the work is complete, the purchase order receipt is posted for the services. When the related products are received, the kanban state is updated to Completed and the finished item is received into inventory.
We recommend that you perform the following actions when subcontracting for an activity has been negotiated with a vendor:
Create the service item that is a type of product.
Create the purchase agreement and agreement line for the vendor by using the service item.
Create a resource group with the role of a work cell for the subcontractor that provides the service.
Create a new version of a production flow (or a new production flow).
Create a new production flow activity and relate the agreement to the activity.
Connect the subcontracted activity to the other activities of the production flow if applicable.
Validate and activate the flow.
Watch the following video to see how to prepare for activity-based subcontracting in Supply Chain Management:
Production flow with subcontracting activities
The basic principle of a production flow does not change when activities are subcontracted. Material still flows between locations, process activities convert material to products, and transfer activities move material or products from one location to another. Both process and transfer activities can be configured as subcontracting activities.
As any other activity in a production flow, subcontracted activities can consume and supply inventoried, non-inventoried (WIP), and semi-finished material and products. The processes to schedule and implement subcontracted activities are the same in all cases and are identical to the processes that are completed for internal work.
Supply Chain Management identifies a work cell or warehouse as a vendor type when you create activities within production flows; additionally, it automatically populates this information into the activity wizard.