Subcontracting in Business ByDesign
Many of you are already aware that sub-contracting business scenario is a part of our larger product map and we plan to release the complete scope of subcontracting in future release of ByDesign. Until the functionality is available you can use the work around mentioned here to implement subcontracting in Business ByDesign. Please note the below mentioned method is only a work around.
- Finished Good is produced at your subcontractor.
- Raw materials are supplied by the company.
Master Data Settings:
- Create a site in your system which will denote your subcontractor. I have assigned created a new org unit with ID C1100 as you can see in the screen shot below.
- Mark the Site C1100 as Logistics Relevant so that the planning area is active as well.
- Once the subcontracting site is configured create two transport lanes connecting Main Site and the Subcontracting site. One lane should have Ship-From site as Main Site(P1100) and the Ship-To site as Subcontracting site (C1100). The second lane should have Ship-From site as Subcontracting site (C1100) and the Ship-To site as Main Site (P1100). These transport lanes will be used to ship the components to the subcontracting site and to ship finished product from subcontracting site.
- The Planning tab of the Final Product should be maintained as follows. Procurement type for Planning area P1100 should be Internal Procurement and for Planning Area C1100 should be In-house Production.
- The Planning tab settings for the raw materials in the planning area C1100 should have Procurement Type as Internal Procurement. In the planning area P1100 you can have the Procurement Type as either External Procurement or In-house Production depending on your business use case. I have maintained as External Procurement in this particular example.
- Create a Production Bill of Material and Production Model for the site C1100. I have used the below configuration for the BoM in this scenario.
- Output Product: MSCM_SUB
- Input Products : SUB_RAW_MATERIAL_01 and SUB_RAW_MATERIAL_02
- We have a demand of 5 qty for the product MSCM_SUB via a sales order. The product is shipped from our main site P1100.
Business Scenario Execution:
- Execute MRP for the Product MSCM_SUB for the planning area P1100. You can see that the system will create Supply via Stock transfer proposal to be shipped from C1100.
- Now, for the product MSCM_SUB, there will be a Stock Transfer dependent demand at the subcontracting site C1100. If you execute MRP for for the MSCM_SUB in C1100, the system will create a Production Proposal. There will be dependant demand for the raw materials “SUB_RAW_MATERIAL_01” and “SUB_RAW_MATERIAL_02” .
- Execute MRP for the raw-materials SUB_RAW_MATERIAL_01 and SUB_RAW_MATERIAL_02 at the site C1100. Stock transfer proposals will be created for the products.
- If the main site P1100 has stock of the item the components/ raw materials will be supplied to the subcontractor via the above created stock transfer proposals. If not on executing MRP for the raw materials at site P1100, the system will create supply as per the Procurement Type maintained for the planning area P1100 for the above components.
- Once the components are available at the subcontractor via the stock transfer proposals, the production proposal can be executed and production completed for the finished goods MSCM_SUB.
- Once the production is completed the final product will be supplied back to the main site P1100 via the stock transfer proposal that was created at the site initially.
The above steps will take care of the logistics part of your subcontracting process.
Payment to Subcontractor:
To pay the subcontractor you will have to create a purchase order with service item with your subcontractor as the supplier. You can create a supplier invoice against this purchase order and pay the subcontractor as per your agreement.
The above steps will help you execute the work around for subcontracting business process in your ByD system. Please do reach out to me via the comments section for any more queries on the same.