What You Need to Know About Subcontracted Manufacturing in Business Central
Subcontracted manufacturing is very important today. You can use the skills of outside vendors to improve your production. This way, you can concentrate on what you do best. You also get special skills and resources. It is important to know how to set up and manage subcontracting well. Doing this can help you work better, save money, and be more flexible in your business.
Key Takeaways
Subcontracted manufacturing helps businesses use outside skills. This can make production faster and cheaper.
To set up subcontracting in Business Central, you need to carefully configure work centers, routing, and bill of materials. This helps operations run smoothly.
Good vendor management is very important. Clear contracts and checking performance often can improve teamwork and quality.
Using automated systems for paperwork and inventory management can make processes easier and cut down on mistakes in subcontracting.
Keeping raw materials at vendor locations can help production flow better. It also helps with inventory control, making sure you have materials when needed.
Understanding Subcontracted Manufacturing
Definition and Importance
Subcontracted manufacturing means hiring others to do some production tasks. For instance, you might ask a vendor to do painting or coating. This lets you add these services to your production process. The vendor works on your materials but does not own them.
Knowing about subcontracted manufacturing is very important today. It helps you improve production without spending a lot on new buildings. This flexibility helps you quickly adjust to changes in demand and control costs. By using outside resources, you can stay ahead of your competitors.
Benefits of Subcontracting
Subcontracting has many benefits that can greatly help your manufacturing. Here are some main advantages:
By using subcontracted manufacturing, you can focus on what you do best while outside vendors take care of special tasks. This plan not only makes things run smoother but also improves your production quality.
Also, using outside resources can give you better data visibility. Better data analysis helps you predict demand accurately and plan production well. This smart approach lowers uncertainty and helps you see problems early, which increases your output.
Setting Up Subcontracting in Business Central
Setting up subcontracting in Business Central needs some important steps. You must make sure your work centers, routing, and bill of materials are set up right. This helps everything run smoothly. Here’s how to do it:
Configuring Work Centers
To set up work centers for subcontracting, do these steps:
Work Center General FastTab Setup:
Change the work center number to the vendor number doing the subcontracting.
Make a work center group just for subcontracting. This helps you keep subcontractor work centers together.
Work Center Posting FastTab Setup:
Link the subcontractor number to the vendor.
Change the Unit Cost Calculation field to Units. This shows that the cost is for each unit.
Make sure the General Product Posting Group has the right accounts for buying and subcontracting.
Work Center Scheduling FastTab Setup:
Set the unit of measure for lead time to Days.
Change the capacity to 100%.
Usually, set the Shop Calendar to 24 hours a day, 5 or 7 days a week.
These setups help you manage subcontracted manufacturing well. They make sure you can track costs and schedules correctly.
Routing Setup
Routing setup is very important for subcontracted manufacturing. It shows how products move through the production steps. Here are some good tips for routing setup:
Following these tips makes sure your routing is effective and fits your subcontracting needs.
Bill of Materials Configuration
Bill of materials (BOM) setup is different for subcontracted manufacturing than for in-house production. Here’s what you should know:
By knowing these differences, you can set up your BOM well for subcontracted manufacturing. This makes sure you include all materials and processes involved.
Processing Subcontract Orders
Creating Subcontract Orders
To make subcontract orders in Business Central, do these steps:
Run the Calculate Subcontracts function in the subcontract worksheet. You can filter by one order, vendor, or many orders/vendors.
Review the messages in the worksheet. These messages are like those in the planning worksheet. Accept certain messages to create purchase orders.
Edit the details if needed. You can change the description, price (Direct Unit Cost), and vendor before moving on.
Select the lines for which you want to create purchase orders. Check the accept action messages box and run the Carry Out Action Message Function. You can choose to print the orders during this step.
Remember that you cannot create subcontract purchase orders by hand. They must be processed through the subcontract worksheet to connect them to the production order operation.
Create Production Orders before making the related Purchase Order for subcontract items. This helps manage demand and use of supplied raw materials.
Consume materials ideally when sending them to the vendor, but you can also do this later in the process.
Following these steps helps you manage subcontract orders well and keep a smooth workflow.
Required Paperwork
Good documentation is very important for processing subcontract orders. Here’s a summary of the required paperwork:
This table shows the essential paperwork needed to ensure a smooth subcontracting process.
Receiving Finished Goods
Receiving finished goods from subcontractors can have challenges. Here are some common issues you might face:
Inconsistent work quality can lead to rework and delays, affecting your project timelines and budgets.
Poor communication often leads to misunderstandings about project scope and responsibilities, causing confusion and delays.
Scope creep happens when extra tasks are added without formal agreements, increasing workload without changing timelines or payment.
To make receiving easier, think about using automated systems. Automation can cut down manual data entry errors and speed up payment processing. This keeps your projects on time and reduces costly interruptions.
E-sourcing tools can also help match material delivery schedules with production needs. These tools organize supplier information and automate document creation, making the whole process more efficient.
By knowing these steps and challenges, you can manage subcontract orders well and ensure a successful subcontracted manufacturing process.
Advanced Subcontracted Manufacturing Topics
Stocking Raw Materials at Vendor Locations
Keeping raw materials at vendor locations can make your production easier. Here are some steps to manage this well:
Make a location for the vendor and use their number as the code.
Set up how to track inventory for that location.
Create transfer routes between your main site and the vendor's site.
Make a new SKU for the finished product and set the parts at the vendor's site.
Pick a way to restock raw materials, either by buying or transferring, based on what you need.
Use the planning worksheet to get messages for restocking raw materials based on the SKU settings.
These steps help you keep track of your inventory while making sure your vendors have what they need.
Modifications for Efficiency
To make subcontracted manufacturing work better, think about these changes:
These changes can help your workflow and cut down on delays in production.
Also, managing vendor relationships is very important. Here are some good strategies for vendor management:
By using these strategies, you can make your subcontracted manufacturing process more efficient and effective.
In conclusion, good subcontracted manufacturing is very important for your business success. You can improve how you make things, keep quality high, and follow rules by using outside help. Here are some important points to remember:
By using best practices in your work, you can stay strong in the global market. Look for more resources to learn more about subcontracted manufacturing and think about how these strategies can help your business.
FAQ
What is subcontracted manufacturing?
Subcontracted manufacturing means hiring outside vendors to do certain production tasks. This helps you use special skills and resources without needing more buildings or equipment.
How do I set up subcontracting in Business Central?
To set up subcontracting, you need to configure work centers, routing, and bill of materials in Business Central. Make sure everything matches your production processes for smooth operations.
What paperwork is needed for subcontract orders?
You must keep accurate documents, like work center setups, routing details, and production orders. Good paperwork helps you follow rules and track subcontracted tasks well.
How can I ensure quality when receiving finished goods?
To ensure quality, keep clear communication with your subcontractors. Check their performance regularly and use quality control steps to fix any problems quickly.
What are the benefits of stocking raw materials at vendor locations?
Stocking raw materials at vendor locations can make your production easier. It cuts down lead times, improves inventory management, and makes sure vendors have what they need for your production.