Subcontracting in IFS Applications is provided through manufacturing operations related to an outside work center. The outside work center is a work center that is not owned by the company at which the manufacturing occurs. The outside work center is generally considered to be a location outside the site at which the manufacturing occurs, but can also be a supplier's work center located within the site. The material sent to and received from the supplier is tracked by an outside operation item registered on the outside operation. When the outside operation is released, a purchase requisition or order is created for the outside operation item. Work in progress (WIP) is reported as sent to the supplier and the purchase order for the outside operation item is reported as received into inventory.
The subcontracting work center is defined in the Work Center window by setting the Work Center Code to Outside Work Center. A supplier can be related to an outside work center. The supplier on the outside work center is used by default when creating outside operation items. Also, this supplier will be used instead of the default supplier of the purchase part if the outside operation item part is registered for that supplier, when generating purchase requisitions or orders.
The outside operation item is used as a proxy for the material to be moved to and from the supplier. The outside operation item is a non-inventory purchase part with a supplier of the purchase part corresponding to the subcontracting supplier. The outside operation item is entered in the Purchase Part and Supplier for Purchase Part windows. Material movement through inventory locations to and from the supplier will not be recorded. The WIP account is adjusted, and the cost of the subcontracting is accounted for with the reporting of the WIP sent to the supplier and the reporting of the arrival of the outside operation item from the supplier.
An outside operation supply type setting on the shop order operation determines how the outside operation will be released. There are three settings for the outside operation supply type. They are:
Purchase Requisition – A purchase requisition will be
created for the outside operation item when the outside operation is
released or when the shop order is released. The WIP must be reported as
shipped to the supplier, the requisition must be converted to an order and
then released before reporting the arrival of the purchase order.
Planned Purchase Order – A
planned purchase order will be created for the outside operation item when the outside operation is released
or when the shop order is released.
The WIP must be
reported as shipped to the supplier, and the purchase order must be released
before reporting the arrival of the purchase order.
Released Purchase Order – A released purchase order will be created for the outside operation item on the outside operation when the outside operation is released or when the shop order is released. The WIP must be reported as shipped to the supplier before reporting the arrival of the purchase order.
The WIP must be reported as shipped to the supplier, after the outside operation is released and before the outside operation item purchase order arrival can be reported. The WIP shipped to the supplier can be reported in the Report Shop Order Operation or the Report Work Center Operation windows. The WIP shipped to the supplier can also be reported by using the outside operation backflushing.
Outside operation backflush options can be used to automatically perform some steps in the outside operation reporting work flow. The Ship WIP to Supplier step can be performed when reporting purchase order line arrivals for outside operations. The Ship WIP to Supplier step and the reporting of released purchase order line arrivals can be performed by registering the completion of the outside operation in the Report Shop Order Operation and Receive Shop Order windows. To backflush outside operations, the Outside Operation Backflush option needs to be set before the operation has been released. There are three settings for the Outside Operation Backflush option. They are:
· Disallowed – Automatic reporting of the WIP shipment to the supplier and the purchase order arrival of the outside operation item is not allowed.
· Ship WIP to Supplier – The ship WIP to supplier can be automatically reported at purchase order receipt. If the sufficient quantity of a preceding operation has not been completely reported, or a sufficient inventory stock of the component parts related to the outside operation does not exist, a message will appear. This setting is typically used when the outside operation supplier is operating externally from the site.
· Purchase Order Arrival – The ship WIP to supplier can be automatically reported at purchase order receipt, and the purchase order receipt can be performed when reporting the outside operation. If the sufficient quantity of a preceding operation has not been completely reported, or a sufficient inventory stock of the component parts related to the outside operation does not exist, a message will appear. This setting is typically used when the outside operation supplier is operating on site, or to simplify reporting for the preceding outside operations on a routing with sequential outside operations.