Subcontracting Purchase
Purchase integration with subcontracting
The MRP Subcontracting Purchase module tightly integrates Purchase and MRP Subcontracting. This module allows creating purchase orders for subcontracted products, automatically calculating lead time, managing component resupply to subcontractors, tracking subcontracting and material costs, linking PO, MO and pickings, and reporting BOM structure for subcontracting.
Key benefits
Key points
• Automation: Automatically creates component resupply
• Transparency: Full tracking from PO to MO
• Accuracy: Calculates lead time combining vendor and manufacturing
• Accounting: Correctly calculates subcontracting costs
Installation and configuration
This module is automatically installed when you have MRP Subcontracting and Purchase MRP.
Steps
1. Go to Purchase → Vendors to configure subcontractors.
2. Check Is a Subcontractor and select Subcontracting Location.
3. Set Delivery Lead Time.
4. Configure product with Routes: Resupply Subcontractor on Order.
5. Create BOM with BoM Type: Subcontracting.
Integration workflow
The workflow starts with creating a Purchase Order, then the system automatically creates a Manufacturing Order and Resupply Pickings for components. Materials are sent to the subcontractor, the subcontractor manufactures, and finally finished products are received with cost recording.
Order types
Purchase order types
| Type | Description | Example |
|---|---|---|
| Standard PO | Purchase finished products | Buy from supplier |
| Subcontracting PO | Purchase subcontracting service | Hire a subcontractor for manufacturing |
| Resupply PO | Purchase materials for subcontractor | Send components |
Create subcontracting purchase order
You can create a subcontracting PO manually or let the system generate one from reordering rules. After confirmation, the purchase order becomes the starting point for the whole resupply, manufacturing, and receipt flow.
Steps
1. Go to Purchase → Purchase Orders.
2. Click Create.
3. Select Vendor (subcontractor).
4. Add Product (subcontracted product), Quantity, and Unit Price.
5. Click Save and then Confirm Order.
6. Review the automatically created Manufacturing Order, Resupply Pickings, and Receipt.
Manage component resupply
The system automatically creates outgoing pickings to send materials to the subcontractor. From the PO, you can open the Resupply smart button to inspect pickings, check availability, and choose between full or partial shipment.
Steps
1. Open the Purchase Order and click the Resupply smart button.
2. Check the Operations tab for components, quantities, and source location.
3. Click Check Availability so the system reserves stock.
4. If components are missing, create a replenishment PO or transfer stock from another location.
5. Click Validate to ship the full quantity or create a backorder for a partial shipment.
6. Track subcontractor stock in Inventory → Locations through the subcontracting location.
Lead time calculation
Subcontracting lead time is calculated from the vendor Delivery Lead Time, the BOM Manufacturing Lead Time, Days to Prepare MO, and purchasing processing time. This makes Expected Arrival and Production Start Date more realistic for outsourced production.
Key points
• The general formula is max(Vendor Lead Time, Manufacturing Lead Time + Days to Prepare MO) + Days to Purchase.
• Example: if Vendor Lead Time is 10 days, Manufacturing Lead Time is 7 days, Days to Prepare MO is 2 days, and Days to Purchase is 1 day, the total lead time is 11 days.
• You can inspect the lead-time breakdown from the Replenish flow to review Receipt Date, Vendor Lead Time, Manufacturing Lead Time, and Production Start Date.
| Fields | Trường dữ liệu | Description |
|---|---|---|
| Delivery Lead Time | Thời gian giao hàng | Vendor delivery time from vendor info. |
| Manufacturing Lead Time | Thời gian sản xuất | Subcontractor manufacturing time from the BOM. |
| Days to Prepare MO | Thời gian chuẩn bị | Preparation time before manufacturing from the BOM. |
Cost tracking and accounting
Subcontracting cost usually combines the service cost on the PO, the component cost already sent to the subcontractor, and any additional overhead. When the receipt is validated, the system records stock valuation, journal entries, and the movement of value from the subcontracting location into finished goods.
Key points
• For Standard Cost products, the subcontracting service cost is often the difference between standard cost and component cost.
• Open the Purchase Order to review subcontracting cost, components cost, and total cost in the related information.
• Check valuation entries when the total cost or inventory value does not match expectations.
Smart buttons and document links
Smart buttons on the PO and related pickings let you move through the full document chain without manual searching.
Common navigation links
| Location | Button | Purpose |
|---|---|---|
| Purchase Order | Resupply | Open pickings that send components to the subcontractor |
| Purchase Order | Manufacturing | Open manufacturing orders created from the PO |
| Purchase Order | Receipt | Open the finished-goods receipt |
| Stock Picking | Source PO / Manufacturing | Trace back to the source PO or related MO |
BoM structure reporting
The BoM Structure & Cost report helps analyze component trees, lead-time breakdown, resupply routes, and cost structure for subcontracted products.
Key points
• Review Component Cost, Subcontracting Cost, and Total Cost in one place.
• Check Manufacturing Delay, Days to Purchase, and Total Lead Time to validate your lead-time setup.
• Use the report when you need to explain why a subcontracted product has a higher cost or longer replenishment time.
Common issues
Key points
• If resupply picking is not created, verify BoM Type = Subcontracting, component routes, and the subcontracting location on the vendor.
• If lead time looks wrong, update Delivery Lead Time on the vendor and Manufacturing Lead Time plus Days to Prepare MO on the BOM, then recreate the PO.
• If costs look incorrect, check the product Cost Method, valuation entries, and whether all components were shipped and recorded properly.
• If smart buttons are missing, confirm that the PO actually generated resupply, manufacturing, or receipt records and that the user has access to them.
Practical tips
Key points
• Create templates for recurring subcontracting POs to reduce repetitive data entry.
• Set reordering rules and lead-time buffers for products with volatile vendor performance or production duration.
• Track KPIs such as on-time delivery rate, lead-time accuracy, and cost variance by subcontractor.
• Combine monthly reconciliation with vendor performance reviews to detect stock or cost discrepancies earlier.