What's new in SCM: Subcontracting

0:08 Hello and welcome. Today we will be looking at something new about subcontracting. It's not technically very very new because we are silently released it in minor update three, but in this time we did not pre-install it on new environments, neither on upgraded ones. So, up was available on App Store, available for installation, but not forced. We gathered feedback and now we are kind of reintroducing it in a different level. All right. What are we will be talking today about? Definitely demonstrations of the whole flow because original subcontracting which was present in Business Central for many years was maybe

0:51 a little bit limited. It allowed you to register fact that subcontracting happened and buy the stuff, but a lot of components were added only recently. So, and in this session we will have a lot of demos focusing about different subcontracting capabilities. Starting with a logistics of raw materials, but also with logistic of working product progress items. There's something which kind [clears throat] of assembled, but not yet, but you would like still to track how it was moved to and back from subcontractor.

1:30 And uh also we have a dramatically better integration with powerful warehouse handling which we have in the standard Business Central available for the wholesale operations and manufacturing. Now subcontracting operations can benefit from the same warehouse uh processes. So, no need to handle them differently. And we have two important nuances. We also adding more powerful price management, as well as a extra ability to allocate cost. Why? We will look at this later during the demos.

2:06 But before we will start, how can you get it? As I mentioned, for new environments in the latest version, you will get up pre-installed. But if you are upgrading from the previous versions, you have several options. Option number one, navigate to Microsoft Marketplace and find Subcontracting up there and install it. If you for very good reasons do not want to leave your Business Central environment, you can do the same right from the product. You navigate to Microsoft AppSource list there and find Subcontracting up and install it from here. If you feel that searching for and selecting among many Microsoft apps is a difficult task, we have a even easier way.

2:50 Just open the Subcontracting worksheet, the existing one, and you will get notification that Subcontracting up will be replacing this legacy Subcontracting worksheet, and you can actually install Subcontracting up right from here. Just click install and install extension. I will not do it here because I have another environment ready. Once ready, you will see Subcontracting assisted setup, which is actually allows you to populate some default values, but we are filling in them automatically. If you want, you can change something. And giving the links to uh other places related to Subcontracting.

3:34 Let's explore them one by one. Uh maybe we'll start with uh bill of materials. Let's close our setup and do a navigation the old way. Production design, production bill of material, and let's find our uh standard bill of material. So, it got one new field in the lines. Here. Component supply method. So, what I'm trying to do here, I decided to use these three

4:07 components in my subcontracting operation. And I plan to deal with them in a different way. What do I mean? I can, from logistic perspective, have them in my warehouse. Maybe I buy them in bulk, maybe I produce them locally. For any reason, they are in my warehouse. And I plan to transfer them to vendor using transfer order. So, I can uh tell about that. So, housing airport will be transferred. Reservoir assembly, contrary, I will not be transferring it.

4:42 I will get it on vendor location, like the place where subcontracting will be happening, differently. Maybe we'll just buy it there. Yeah? So, I will call it consignment at vendor. So, I will avoid extra transfer from my location to vendor location. I will just place my uh order for raw materials and ensure that they will be delivered not to my location, but to vendor location and used in the production process. And the last one, it's a special item. I cannot buy it for my warehouse, I cannot buy it for vendor warehouse for very good reason.

5:19 Probably because it's exactly the same vendor who is producing the the whole thing. They will get it for me somehow. Maybe they have a good deal with a different vendor and they can buy directly stuff from them, or maybe they are producing this component themselves. So, I'm not doing anything with it. I will specify that it's vendor supplied. I will get it from this vendor. And then, this component also needs to be consumed and included into the cost of a produced finished good. In this case, it is airport. All right, what do we do next? We certifying this bill of material.

5:57 And we could look at routing, but we will do it at later stage. Let's jump directly to the released production orders. And create a new one. For this item, some quantity. I think five will be enough. And our favorite default main location. Refresh production order.

6:28 And we got a line which are we going to produce calculated. Yeah, I'm using the uh subcontracting routing here. I already modified my item. So, what else do you want to look at? Let's start by looking at components. There are plenty of components, but we are interested in the first three because we are using them in subcontracting. So, they are linked to subcontracting operation. We will see it separately. And you can see location code is different. Why? So, right now, when I created my production order,

7:05 I created demand because I'm going to consume these components from these places at this point of time. So, I need to get them restocked. Yeah. So, transfer to vendor. Yeah. I will buying to my main location and later I will transfer. These two already pointing to the location specified in the vendor card. Yeah, so like the on vendor card, we have a new field where we will track components which are on vendor location. They still ours, but uh on different place.

7:38 So, you can see consignment and vendor and vendor supplied. All right. Next, jump to the routings. And here we can see interesting things. We can see a new fact box which is providing additional details about subcontracting. Which line is a subcontracting? In this case, it will be the first operation and you can see it says subcontracting, yes. And I get some extra details. You can see that to this line, because it has a routing link code somewhere here, three components are connected.

8:13 And everything else is basically zero because I did nothing. What do I do? In the old days, I can go to a subcontracting worksheet and do it create a subcontracting order, but not Mhm. It's still possible today if I'm doing the bulk operations and there are extra capabilities there, but for simplicity, I can also do it right from production order routing. I can just click create subcontracting order. Purchase order subcontracting purchase order is created and I can actually open it and check it. Let's explore. First of all, vendor name is called bulk assembly nowadays because we modified our demo data to include two subcontractors and they are both linked to work centers.

8:58 So, we have two separate work centers plus two locations for subcontractors. That should make demonstration easier and require less settings. But let's look into the document itself because it is unexpectedly has a lot of lines. Where are they all coming from? Let's check line by line and figure it out. Line number one, this one, is actually component, the one which we marked in the as vendor supplied in the bill of material. So, we are buying it from exactly this vendor. Yeah. Okay, first mystery is solved and we are buying it to the subcontractor location where it will be consumed

9:40 later. The next lines are all about work which subcontractor has to perform. The item line is actually the routing operation which needs to be performed. The line above says airport. It's a description copied from the production order line and usually it represents the name of the finished good. Why do we insert it here? We have a setting for this one. For this behavior. Let's go to manufacturing setup. Scroll down to the subcontracting fast tab and you can see the first toggle create production order info line,

10:21 which is on. And this one instruct system once subcontracting order is created to additionally insert comment line with information about the product order line description. Uh maybe it's a good time to look at the next field, subcontracting component transfer lead time, which says one day. We will use it in a later stage. But before we do that, we will take a look at the next three lines. All of them are type of comment and it looks like they are instructing or instructions for subcontractor about what exactly to do that.

10:59 So body assembly is a pretty short description, so we have extra ability to to put a more text. Assemble housings, perform visual inspection, refer to attachment documentation. Oh, it's interesting. It's actually not for myself, so I will remember to demonstrate you something. What do you see? Right now you see nothing because attachments are empty. But these attachments for document header. One purchase order, if it's created from subcontracting worksheet, can have a task related to multiple production orders or maybe different production order lines.

11:39 And definitely they will have a different instructions. All right. So, attachment is probably somewhere else. Well, let's select this operation and go to line attachments. So, yes, we have information about attachments per line and we here can see subcontracting description copied from some unknown source. And let's explore where it's coming from all of this. I will switch from attachment to details and scroll down to the subcontracting details fact box, which has information about connected production order, so I can easily jump to my production order to explore,

12:23 transfer orders, which are not present yet, and then production routings, production components. Let's open production order. I'm from here to the routing. So, first of all, this line uh which representing subcontracting operations, we can choose operations and we will see something new here. Subcontracting comment. And if I will choose, I can see exact text which was present in the in the purchase order. So, I can modify it as I wish and it will be copied next time.

12:59 I have access to it also from the production order routing lines. Or it can be also inherited from the standard uh standard tasks. We can also see attachments here. And if I will choose show details for attachments, you can see that I have two toggles enabled, flow to production order and flow to purchase. So, from routing to the purchase document. That's why this subcontracting description document was copied to the subcontracting purchase order.

13:32 What else should we look here at? Let's go to the very very right and we can see transfer VIP item. Work in progress item. So, yeah, maybe not very good for the first operation, but if subcontracting is like the second one, then we are probably giving to subcontractor not only raw materials. We're giving them something not finished. Something which is work in progress. So, it's not our airport because it's far far away from it, but it's also not a collection of raw materials. It's already VIP item. How would we call it? Let's call it like this way. Coffee machine frame and housing.

14:13 Where do we use it? And we will use it in transfers. Let's close routing, production order, and finally create transfer. Actions. Functions. Subcontracting. I believe you can personalize it if you do a lot of subcontractings. Create transfer order to subcontractor. All right. Transfer order is created from main location to subcontractor location and it has two lines. First of all, component which we decided to move from our main location to subcontractor location.

14:53 Remember that in the production bill of material, we had a three different ways how to ensure that components will be available for subcontractor. And one of them we decided to be to to transfer from our location. So, that's a simple one. The next line is marked as a transfer VIP item and has absolutely the same description as I uh showed before in the in the routing. So, once I will post it, the first line will indeed create item ledger entries. The second one, no. No, it will be registered in a new ledger entry called work in progress ledger entry.

15:39 Should we try to post it? Yeah, sure. All right. And let's maybe scroll to fact box. Or, we actually have a line items production with a basically the same information as we see here. And let's click on production order routing because we want to explore subcontracting details fact box. Here you can see WIP quantity at subcontractor quantity five. And we can drill down and see our ledger entries. That's actually give us a base if we will decide to transfer something back. Yeah, so we know how many we need to transfer back from subcontractor.

16:22 Okay. Back to purchase document and let's just post it. Post, receive. Should be good. Okay, I received the component. I received the operation. Uh what else do I want to do? I can explore my fact box like nothing is invoiced. But what if I want to do something different? I will go to purchase invoices.

16:56 And I already created it to to to have purchase invoice from some uh Yeah. Should be random a random vendor. And then item charges. Yes, I'm bank item charges. Should be any vendor in reality. And I'm using the large amount. Uh so, it will be more noticeable. What do I do next? I will use a line related information item charge assignment because I want to allocate this item charges to recently posted purchase uh purchase receipt.

17:30 So, let's get receipt lines. Scroll, scroll, scroll. And you can see I have two lines. One of them component and the second one is operation body assembly. You can even see production order connected to it. Used to be a not possible to select, but now you can do that. Allocate everything available. Close. Post. We don't want purchase invoice. We want to go back to production order. So, nothing happened here on routing line, but if you go back to release production order and explore statistics,

18:10 you can see actual cost is right on the subcontractor cost. Is only my item charges because I didn't post invoice for the uh from the vendor originally. All right. That's a basic demo. What we learned? Different logistic uh options. How to move raw materials differently. How to move work in progress items with a transfer orders. How to navigate between purchase, transfer, and uh production orders using fact box and actions available.

18:46 How to use item charges to increase cost for any good reason. Maybe there is a insurance, logistics, or whatever allocated to this operation. Is it it? Absolutely not. I have more demos for you. Let's start with a simple one. I have guess amount price demo. So, in this demo, I'm producing absolutely the same item. It's a clone of airport. It has a different item number, but I didn't change the name.

19:19 Same item, same routing, same location. Different quantity. Quantity 2, 22 in 222. Let's go to routing and open purchase order. All of them are in the same purchase order. For the very good reason, yeah, you can see a lot of uh valuable comments, but what we are interested in we're interested in these lines. And we'll scroll to the right, and we can see quantity 2, 22, and 222. And prices. And prices are different.

19:58 So, we have a pricing mechanism which allows you to dictate different prices. Let's explore. Let's navigate to our item and see prices defined for it. All right, I choose uh actions, purchase prices, and subcontractor prices. All right. We can see that we defined three different prices for the same item. No different criterias, like the same work center, same vendor, no standard tasks. By the way, we are now including in Dynamics 365 uh standard task codes, so it will be easy for you to demonstrate different pricing.

20:34 Why I'm not using it here? Hmm. All right, same item, same date, and different quantity. Yeah, so zero means no restrictions, 20 plus or 200 plus. And prices are different. Okay, 20 plus and I get 23. That's correct. That's like the only number which match to our purchase document. Yeah, logically. 200 use 26. That's interesting. It's not how pricing in purchase works, because in normally, we prefer to give best price.

21:08 Yeah, select the the smallest price. In subcontracting we give closest match price. So, even if you are buying 200, it sounds you should not buy 200. It sounds you need to place 10 orders by 20 and then you will get it cheaper. But apparently our vendor say like if you place a large order, you pay more. Okay, go find another vendor if you if you can for smaller sizes. So, it's a first difference with the pricing engine. So, prices are more closest ones.

21:45 Same goes to dates, tasks, unit of measure, and variants which are not visible right now. But why did we see the price 50? Because you can see it's a 25, 23, and 26. Like never mentioned 50. That's a different story. Because our vendor subcontractor wants minimum amount per deal. So, like whatever you order, not less than 100 per line. And we are only producing two items. So, 2 by 25 it's only 50. Yeah?

22:20 So, system does it differently. If it's less than 100, put amount as 100 divided by quantity and this is your price. So, yeah. We took minimum amount 100 divided by two and 50 is our price. Let's review. Exactly the story. So, quantity is 50 and the total will be 100. So, minimum rule is uh correct. 23 close match closest match 26 again closest match because 222 is closer to 200 than 20.

22:59 All right, now we understand how pricing works. Is it it? Absolutely no. I have more demonstrations for you. Let's talk about warehouse handling. I have couple of production orders configured for different warehouses. Let's start with a simple one, simple one, directed put-away and white location. I will just jump to my lines, routings and create subcontracting order. This is my subcontracting order and now I cannot post my receipt because it requires warehouse handling.

23:34 So, instead, what can I do? Create warehouse receipt, as expected. So, now I can create warehouse receipt and moreover, I can actually go here and uh add item trackings. So, I'm not receiving any random uh item, I'm receiving item with a serial and uh tracking. All right, let's give it some uh serial numbers and post receipt. I can only assign serial numbers and get put-away created if it is the last operation.

24:11 If it's not the last operation, then I just use the warehouse receipt to register a production uh fact of production. By the way, meanwhile, uh output was already posted. So, we can go back to our production order and see that finished quantity has increased. So, I can actually go navigate to ledger entries and see the related order item ledger entries. I got three outputs with the serial numbers and capacity ledger entries as well. All right, that's not something like very, very new because we already had it in minor release 28.3.

24:53 What is very new is this one. So, here I'm using location which I created and called basic. What it does, it requires put away and pick. Yeah, no warehouse receipt, no shipments. I can use it. Let's go to lines, routings, and do the same. Create subcontracting order. Oh, apparently I already had it created during the preparation. Do I want to see it? Yes, I will do. By the way, the information is right here. That's very convenient. Okay, show document.

25:32 I have my subcontracting order. Here I will be creating inventory put away. Got it. Warehouse. Put away lines. The same story. I can assign serial numbers here. I wish we have a this convenient function here as well, so it will be Okay, and auto fill quantity to handle. Done. I can post it. I can define serial numbers now on different level. I can define it in the production order and then they will be copied to uh purchase order.

26:09 I can define them in purchase document as well, and then they will populate inventory put away. So, up to you or up to your process, when do you want to define serial numbers. But, the fact is you can do it on any level and you can use any receiving method you like, either normal purchase document, warehouse receipt, or inventory put away. Done. Let's take a look at the list of uh demos and make sure I didn't miss anything. And apparently I did not. So, we definitely saw logistic flows, raw materials,

26:45 work in progress, warehouse handling, warehouse receipt, inventory put away with a transfer with a serial numbers to I don't know lot number lot numbers which we didn't see but you know it works the same. Uh price cost >> [snorts] >> very solid improvement to our subcontracting model. Thank you for watching.