Subcontracting is a practice that is often used in manufacturing for cost purposes, load balancing of resources, or due to outside resources having special equipment or expertise. Regardless of the reason, there is a business impact as it relates to scheduling, inventory, costing, and the production process. So, how is this effort managed in Dynamics 365 for Finance and Operations (D365FO)? It can be a complicated process, but the setup and effort will be well worth your investment of time as you begin to see the true cost value of subcontracting. We have covered the options to manage it through a BOM configuration in last week’s blog. Today we will touch on the Route alternative.
Subcontracting and Route Setup
Routes are an essential piece to the production puzzle in D365FO. They are a list of the operations required to produce an item that list the resources required as well as the expected time to set up and run the production process. This aids in scheduling and costing, so of course it makes sense that subcontracting would be included in an applicable route!
Routes can be simple or complex. Simple routes tend to be sequential, following a simple step-by-step process.
Complex routes often have parallel process and can have multiple start times as well. Due to the nature of subcontracting, the routes associated with those types of orders tend to be complex. This is because your production order may be relying on a specific dependency from a vendor that can run in any sequence along with your production order.
Diagrams courtesy of Microsoft Docs: https://docs.microsoft.com/en-us/dynamics365/unified-operations/supply-chain/production-control/routes-operations
Routes and Vendors
When adding a subcontracting route to an item, you will want to specify Vendor on the Route type field for the operation or process that is tied to the vendor.
For example, on our item D0006 from the previous blog post about BOMs, the subcontracted item was X0001. On item D0006, the BOM line for X0001 is set to BOM line type Vendor. There is also a field on the BOM line where you can associate an Operation number to the BOM line. This is what ties that BOM line to the Route operation.
In our example, we have selected the Operation number 10, which is the Assembly operation on the D0006 Route.
It is important to note that the Route type is set to Vendor for the processes that should be tied to the vendor. In this instance, Operation 10, Assembly, is set to Route type Vendor. The Route type field can be set on the Route line in the General tab.
This will add the cost that you allocate for this operation to the Production order, allowing you to have visibility into the true cost of production including subcontracting.
If you are looking for more resources to help you with your subcontracting project, contact Ellipse Solutions and our team of experts will help you get started!