Subcontracting entries in specifications are marked as external operations. That is, external resources are used with them.
When issuing work orders for products, part of which was produced in subcontracting, the specification structure is processed accordingly. According to the specification structure we can differentiate between three types of processing. For a detailed treatment of document types used here see Monitoring Subcontractors.
I. Unique ID of Finished Subcontracting Including Its Own Specification
Below you can observe a specification structure:
| EMO07ROTOR - a semi-finished product - an electric motor rotor 07 - 1.000 pcs |
| EMO07ROTORGRED - a semi-finished product - a rotor axle 07 - 1.000 pcs |
| JEKOPROF50 - material - steel O profile fi 50 - 0.200 m |
| KOOPSTRU - external service - cutting rendered by subcontractor - 0.172 h |
| ŽICACU11 - material - copper wire 1.1mm2 - 16.200 m |
| STONAVI - service - winding using CNC-AF4 - 0.023 h |
Two work orders are created:
| Document |
Document Type |
Item |
Name |
Released Quantity |
| 02-60-00001 |
Work order |
EMO07ROTOR |
Electric motor rotor 07 |
150.000 pcs |
| 02-6K-00001 |
Subcontractor's work order |
EMO07ROTORGRED |
Rotor axle |
150.000 pcs |
A work order was issued for subcontractor due to the fact that an external operation was found when processing a sublevel.
The following documents are created when products get delivered from subcontractor (02-1K-00001):
| Document |
Document Type |
Item |
Name |
Released Quantity |
| 02-3K-00001 |
Materials issued by subcontractors |
JEKOPROF50 |
Steel O profile fi 50 |
30.000 m |
| 02-3L-00001 |
Services rendered by subcontractors |
KOOPSTRU |
Cutting at subcontractor |
25.8 h |
Cost price of rotor axle can be calculated from warehouse price of steel profile or price of cutting including quantity. This way you include the subcontractor's added value. *
II. ID of Finished Subcontracting Is the Same as ID of Material
Otherwise, there is no difference between the ID of cut and raw axle.
| EMO07ROTOR - a semi-finished product - an electric motor rotor 07 - 1.000 pcs |
| EMO07ROTORGRED - a semi-finished product - a rotor axle 07 - 1.000 pcs |
| EMO07ROTORGRED - a semi-finished product - a rotor axle 07 1.000 pcs |
| KOOPSTRU - external service - cutting rendered by subcontractor - 0.172 h |
| ŽICACU11 - material - copper wire 1.1mm2 - 16.200 m |
| STONAVI - service - winding using CNC-AF4 - 0.023 h |
Two work orders are created:
| Document |
Document Type |
Item |
Name |
Released Quantity |
| 02-60-00001 |
Work order |
EMO07ROTOR |
Electric motor rotor 07 |
150.000 pcs |
| 02-6K-00001 |
Subcontractor's work order |
EMO07ROTORGRED |
Rotor axle |
150.000 pcs |
A work order was issued for subcontractor due to the fact that an external operation was found when processing a sublevel.
The following documents are created when products get delivered from subcontractor (02-1K-00001):
| Document |
Document Type |
Item |
Name |
Released Quantity |
| 02-3K-00001 |
Materials issued by subcontractors |
EMO07ROTORGRED |
Rotor axle |
150.000 m |
| 02-3L-00001 |
Services rendered by subcontractors |
KOOPSTRU |
Cutting at subcontractor |
25.8 h |
Cost price of the rotor axle can be calculated from warehouse price of raw axle or price of cutting including quantity. This way it includes the subcontractor's added value.* On receiving at the warehouse (02-01K-00001), the value of rotor axle will increase due to the subcontractor's services rendered. Consequently, it will affect the rotor's cost.
 |
An error is returned when external operation is not set.
This check is switched off for external operations.
|
III. Subcontracting Is Only One of the Operations at Specification Level
The third example shows a single-level specification with one of the operations set as external:
| EMO07ROTOR - a semi-finished product - an electric motor rotor 07 - 1.000 pcs |
| EMO07ROTORGRED - a semi-finished product - a rotor axle 07 - 1.000 pcs |
| KOOPSTRU - external service - cutting rendered by subcontractor - 0.172 h |
| ŽICACU11 - material - copper wire 1.1mm2 - 16.200 m |
| STONAVI - service - winding using CNC-AF4 - 0.023 h |
The program executes the following: Encountering an external operation, it looks for parent item. After determining the pair, it temporarily sets material with semi-finished product. The specification is adjusted accordingly:
| EMO07ROTOR - a semi-finished product - an electric motor rotor 07 - 1.000 pcs |
| EMO07ROTOR - a semi-finished product - an electric motor rotor 07 - 1.000 pcs |
| EMO07ROTORGRED - a semi-finished product - a rotor axle 07 - 1.000 pcs |
| KOOPSTRU - external service - cutting rendered by subcontractor - 0.172 h |
| ŽICACU11 - material - copper wire 1.1mm2 - 16.200 m |
| STONAVI - service - winding using CNC-AF4 - 0.023 h |
The following work orders are created on the basis of such "adjusted" specification:
| Document |
Document Type |
Item |
Name |
Released Quantity |
| 02-60-00001 |
Work order |
EMO07ROTOR |
Electric motor rotor 07 |
150.000 pcs |
| 02-6K-00001 |
Subcontractor's work order |
EMO07ROTOR |
Electric motor rotor 07 |
150.000 pcs |
A work order was issued for subcontractor due to the fact that an external operation was found when processing a sublevel.
The following documents are created when products get delivered from subcontractor (02-1K-00001):
| Document |
Document Type |
Item |
Name |
Released Quantity |
| 02-3K-00001 |
Materials issued by subcontractors |
EMO07ROTOR |
Electric motor rotor 07 |
150.000 pcs |
| 02-3L-00001 |
Services rendered by subcontractors |
KOOPSTRU |
Cutting at subcontractor |
25.8 h |
Cost price of rotor is a sum of production cost and the subcontractor's price for cutting.*
|
If there are multiple external operations on a single level, then it is checked which subcontractor is processing them. In case of the same subcontractors, they are grouped in the same work order.
However, when there are multiple subcontractors, the work orders will be dismantled according to them.
Whenever you want to track the progress of processing or whenever your own operations are grouped together with those of the subcontractor, you have to create a specification containing various IDs (first example).
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Special Cases of Processing Specifications Containing External Operations
Sequence of IDs
When using subcontracting specifications, you have to take care of the sequence of IDs. Let us take a look at a slightly modified example III and exclude internal service from our case:
| EMO07ROTOR - a semi-finished product - an electric motor rotor 07 - 1.000 pcs |
| EMO07ROTORGRED - a semi-finished product - a rotor axle 07 - 1.000 pcs |
| KOOPSTRU - external service - cutting rendered by subcontractor - 0.172 h |
| ŽICACU11 - material - copper wire 1.1mm2 - 16.200 m |
Observe how the subcontractor's specification gets changed from type III to I by omitting internal service - winding (a unique ID of finished subcontracting has its own specification).
No big deal you'd say, until you start thinking in terms of material movements. Trying to confirm the work order, it will be requested that you relieve inventory of all the material required in production of (a semi)finished product. But this would also mean relieving inventory of wire which you probably needn't transfer to subcontractor (using document 2K). Without transfer wire will not appear in the subcontractor's warehouse. You will be unable to confirm the work order, which at the same time means that you will be unable to process receiving from subcontractor (document 1K).
*At the same time the document 02-3L-00001 is used when receiving subcontractor's collective invoice.