Subcontract services such as painting, plating, and heat-treating are performed on work orders devoted solely to performing an outside service or during the course of multi-sequence work orders. POs for subcontract services are generated as needed through the Work Order - Subcontracting screen.
There are two methods for setting up subcontract services:
Let’s say you fabricate a part that needs to be sent out for painting. There are two basic methods you can use for setting up the subcontract service.
The most flexible method is to set up the subcontract service with its own Item and BOM/Routing. The Item will consist of one routing sequence for the subcontract service and one component on the BOM for the unpainted part that gets sent to the subcontractor. The Subcontract Item is added to all higher-level BOMs that use the painted part as a component. The unpainted part can be a manufactured item with its own BOM or it can be a purchased item. With this method subcontract service work orders are purely for subcontracting with no mixing of in house and outside processes. The painted part and unpainted part can also be given their own MRP settings for maximum planning flexibility.
With this method you add the subcontract service routing as a routing sequence within each BOM that requires the painted part. In this case, the routing will mix in-house processes with the outside process.
If you do not want a separate work order for the subcontract process, then use this method by adding the subcontract routing to the upper level manufactured item along with the in-house processes.
In both methods described above, you will be creating a subcontract work center and adding that to a routing on an item.
Subcontracting Work Center
To create the subcontract work center you will need to go into the Setup – Manufacturing – Work Centers screen and create a work center. Check the “Subcontract” option, then enter the name of the subcontracting process (Painting, Plating, Heat Treat, etc), the default Vendor associated with the service and an estimated price per unit/process.
If you do not have a standard price for the process you can leave the price zero in the subcontract work center. It’s recommended that when you add the subcontract work center to the routing of an item, you enter the vendor price for costing purposes. Also, when the PO is created, make sure that the PO has a reasonable vendor price because it is used as the unit cost that will be applied to the job. The vendor price is maintained in the BOM routing sequence and flows through to the job routing sequence.
NOTE: Be aware that the price on the vendor invoice, which can arrive well after the PO is received, does not flow back to the job. Instead, the PO price is used for job costing and therefore must be given a realistic value.
The subcontract work center will need to be added to a routing on the subcontract item/BOM or upper level manufactured item.