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Multiple Levels and Warehouse Location at Vendor

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Posted on by DG-09071510-0

Hello,

We are complete beginners with BC after switching from an old NAV system.

We are having problems setting up the following situation: We sell from main location /A/ final assemblies to order. We have a warehouse location at our vendor's /B/ which we stock with parts from other vendors. Vendor B uses these parts to assemble subassemblies, assembled to order. We buy the subassemblies from them, stock them in main location /A/ and use them for final assemblies. Therefore, I am unsure if this is a transfer, as the vendor invoices us for their work.

There are SKU's for replentishing items to location B. There are SKU's for replentishing subassemblies to location A. When we create an assembly order from location A, directly from a customer purchase order the demand for the subassembly does not trigger an action in the planning worksheet for the subassembly at location B or the raw material. I can make it suggest an assembly order for the subassembly at main location, but I think I would want to create a PO or TO for A from B, and the subassemly needs to be at B anyway.

What is a satisfactory method of configuring this supply chain?

Many thanks in advance!

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Valentin Castravet 31,439 Super User 2025 Season 2 on at

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If the warehouse location at vendor B is stocked with parts from other vendors, I am guessing you still own parts? i.e. they're sitting on your balance sheet and you only pay vendor B for the assembly service? In that case I would use a transfer order to transfer the subassembly from B to A. You would of course have to first post assembly orders to create the subassembly at B. On the subassembly BOM, in addition to the typical parts, I would include a resource, to account for the cost you will have to pay vendor B.

There are multiple ways to keep track of the cost you will have to pay vendor B: counting the completed subassemblies, counting the number of entries for the resource used on the BOM, etc. When vendor B invoices you for the work you can book the invoice against the same resource that's included in the BOM.

For the SKUs, I would try the following:

Finished Good at Warehouse A

Replenishment System: Assembly
Assembly Policy: Assemble-to-Order
Reordering Policy: Order

Subassembly at Warehouse A
Replenishment System: Transfer Order
Transfer-from Code: B

Subassembly at warehouse B: Assembly
Replenishment System: Assembly
Assembly Policy: Assemble-to-Order
Reordering Policy: Order

Parts at Warehouse B:

Replenishment System: Purchase
Reordering Policy: Order, or really depends on how you want to stock these

Valentin Castravet

Zander ERP Services

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Ben Baxter 6,616 Super User 2025 Season 2 on at

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Valentin's suggestions are spot on for creating the Items and moving them around. However, it won't create any Purchase Documentation to your Vendor who assembles the Sub-Assembly. This may be okay as you could send them the Transfer Documentation, and simply enter their services invoice as a Purchase Invoice. Staying within the Assembly Management also allows you to stay with the Essentials License type.

You could do the same process in Manufacturing via Production Orders, which would also give you the ability to create Sub-Contracting Purchase Orders. However, I would only suggest this if you are already using Production Orders for other aspects of your business. This would also require the Premium License type.

Best Regards,

Ben Baxter

Accent Software Inc

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DG-09071510-0 38 on at

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Hello Valentin and Ben,

Many thanks for your helpful insight. We are on the licence type without production capabilties. We do own the parts at location B (our balance sheet) and use fixed order qty planning. Currently we create a purchase order for the sub-assembly and an assembly order to location B. This books the sub-assembly in stock at B and consumes their raw parts. Then we have a custom function which allows us to include on the purchase order a negative quantity from location B which essentially transfers the goods and balances the value of the goods accounting for the cost of the assembly. What we don't have is a planning method which suggests ordering/assembling sub-assemblies.

I have setup a supply chain in our sandbox as you suggested and played around with the different planning tools.

When I input a customer's purchase for the finished product, our system will automatically generate an assembly order at location A, coupled to this customer's order.

If I run the order planning, it will suggest a transfer order from location B, for the quantity in the finished product assembly order. If I run requisition worksheet it will suggest purchasing items for location B based on my fixed order qty. (all good.) The planning worksheets do not generate any suggestions.

If I execute the order planning suggestion and create the transfer order, then re-run the order planning and/or planning worksheet- it will not suggest creating an assembly order at location B. I think this is what you both mean; that this remains a manual step. Why does the transfer order not create a demand at the source location B? What is the function of an SKU at warehouse B if this does not generate a planning suggestion?

Furthermore, we would want to stock the sub-assembly at warehouse A based on a lot-for-lot planning policy to reduce the total lead time. If my SKU at warehouse A includes lot for lot planning policy, the transfer suggestion remains only for the quantity of the customer's purchase.

Thanks again for your time, and sorry for so many questions.

Darrell

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Ben Baxter 6,616 Super User 2025 Season 2 on at

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Darrell,

None of the planning would be manual. The manual aspect would be entering the Purchase Invoice for the Vendor's service to assemble the sub-assembly (I don't have your PO customization, which may be your issue).

Below are my results in the Planning Worksheet:

I created a Sales Order for Location MAIN for Item T-FG, which created an Assembly Order (set to Assemble-to-Order; so not shown above). The Assembly Order triggers demand for Item T-SUB, which will be transferred to the MAIN warehouse from my SILVER warehouse. The Transfer Order triggers the need for an Assembly Order at my SILVER Location. The Sub-Assembly requires two components, which are the two Purchase Suggestions to the SILVER Location.

Based on your latest reply, I would switch T-FG to Assemble-to-Stock with a Lot-for-Lot policy, and I would switch the Components to either Stock policy. This would mean I don't ALWAYS get suggestions for all Items in the process, as some may have enough stock inventory to cover the demand.

I think you should review your customization as it could be the cause of your Planning not making suggestions.

P.S. I have a disdain for all things "Order Planning", and I recommend to everyone to hide that option in the system. Stick to the Planning Worksheet. The Req. Worksheet is okay too if you need a second set of eyes on the Purchases before executing the plan.

Best Regards,

Ben Baxter

Accent Software Inc

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DG-09071510-0 38 on at

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Ben,

You're absolutely right. I don't know what was hanging me up, but I cleared out everything and re-ran the planning worksheet. It works exaclty like yours, regardless of the customization. Furthermore, I wanted to have the sub-assembly in A stock, not just to sales order. I achieved this by adding a planing stock policy to the SKU assembly at location B. The transfer order sees this and adjusts the transfer amount according to the assembly amount. Fantastic!

We had a meeting with a consultant yesterday about this, and he adamantly told me not to use a resource for external work like this, insisting it would somehow screw-up the bookkeeping. He suggested using an item cost to handle the charges of the external assembly work. Do you have an opinion on the two options? We still need to look closer at the process on the bookkeeping side. He also wanted us to use order planning rather than worksheets.

A general question regarding the books: when creating the subassembly and components and their SKU's I'm asked to choose an inventory posting group. We have internal and external (A or B). Sub-assembly A and Components B?

Thanks,

Darrell

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