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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Outsourced Services - ...
Small and medium business | Business Central, N...
Answered

Outsourced Services - Production BOMs & Routings

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Posted on by Flynn.Fr 63
Hello,
 
I am researching how to add the cost of outsourced services for a manufactured product. Here are the current steps taken to manufacture the product.
 
1. Our company purchases materials as a dropship for the company we outsource the work to. This material is it's own Item Number in our system.
2. The outside manufacturer receives the product - service the items, and we then /purchase/ the custom material with the cost being that of their services. This then becomes another Item Number in our system. 
3.  Once the custom material has been received, we customize the size and weight of those custom materials and the product is ready for sale. (Becoming another Item Number..)
 
I am wondering if there is a way to connect these operations in a single Production BOM/Routings where Dynamics will be relieving the proper inventory as we finish a Production Order for this item. 
 
We are including any transport charges in the cost of the item using Item Charges.
 
What we want to get away from is having to manage multiple Production Orders for the manufacturing of a single item. 
 
Our company is new to utilizing Production BOMs/Routings so any and all feedback is appreciated. 
 
Thanks.
Categories:
Business Central
  • Ben Baxter Profile Picture
    Ben Baxter 4,915 Super User 2024 Season 2 on at
    Outsourced Services - Production BOMs & Routings
    Yes, I think you are stating it correctly.
     
    The receiving of the subcontractor PO is treated as Output posted for that Operation.  The posting of Output will consume backflushed raw materials that have a Routing Link Code associated with the Operation.  If you have a secondary process to finish the Item, your second Operation's Output will trigger backflushing of any raw material components associated with your process and place the finished good into Inventory.
     
    The net result is you have an Item defined for the raw material that gets shipped to the subcontractor, and an Item defined for the final Output from the Production Order.
     
    P.S. In the case where no secondary step is required, the receiving of the sub-PO will put the finished good Item into Inventory.
     
    Glad this helped, be sure to test this thoroughly in your Sandbox before deploying in your Production environment.
     
    Best Regards,
    Ben Baxter
    Accent Software Inc
  • Flynn.Fr Profile Picture
    Flynn.Fr 63 on at
    Outsourced Services - Production BOMs & Routings
    Thanks Ben! I think this will get us exactly where we need to be. After speaking with our subcontractor, I have one more question for you - if we were to cut this process down to these steps: The Production BOM is created, the PO is created for the dropship order to the subcontractor, once their step is completed and we've received the material, the finished product is created in our system, consuming the inventory of the materials we drop shipped and positively adjusting the finished product quantity. Would this updated process automatically adjust inventory levels for the material and the finished product? Essentially, I am trying to cut down from 3 Item Numbers to 2. Let me know if I can give more information. Again, your response is greatly appreciated.
  • Verified answer
    Ben Baxter Profile Picture
    Ben Baxter 4,915 Super User 2024 Season 2 on at
    Outsourced Services - Production BOMs & Routings
    Yes, and you would be eliminating the need for an Item Number on #2.  Below is the setup.
     
    Setup a Work Center with a Vendor listed in the Subcontractor field, this lets the system know this WC is outsourced.  (Solves #2) When this WC is used on a Production Order Routing it will trigger a suggestion in the "Subcontracting Worksheet" to make a Purchase Order for that service.
     
    (Solves #1): Set the Location for the WC to a Location setup as the Vendor.  This way the material will be required at the Vendor Location and your Purchase Order for the raw material will be shipped to your Vendor.
     
    I strongly encourage setting a Routing Link Code on the Subcontract Operation and related BOM components, which will auto-consume those raw materials at the Vendor's Location when the Purchase Order is Received.
     
    Just know in the scenario above, no "Item" is received into Inventory from the subcontract.  If you needed this to be tracked in Inventory, it will need to be Output from the Production Order at that time.  This would cause the need for a second Production Order or a nested Production Order Line (using Make-To-Order Manufacturing Policy).
     
    (Solves #3) You can have internal operations before or after your subcontract operation, to complete manufacturing the final Item prior to Outputting to inventory.
     
    There is a lot going on to accomplish this and get the process correct.  Hopefully this helps point you in the right direction.  I would reach out to your partner if you needed further training on accomplishing this process.
     
    P.S. If this was helpful, please mark it as a solution to help other forum users.
     
    Best Regards,
    Ben Baxter
    Accent Software Inc

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