Subcontracting a vendor
In Supply Chain Management, you can create purchase agreements and associate them with production flows. The purchase agreement contains all the pricing information for the associated service, which is provided by the subcontractor.
Release orders will be created from the purchase agreement to signal demands, manage confirmations, report receipts, and pay for the subcontracting service.
For cost calculation of the products, a standard cost of the service must be defined. You can define the cost by selecting Standard cost in the Inventory model field of the item model groups that the manufactured products are going to be assigned to.
You must have a purchase agreement with the vendor before they can be made available for activity-based subcontracting.
For more information regarding purchase agreements and the procure-to-purchase process, see the links in the Summary unit at the end of this module.
Resource group acts as a work cell
To configure a work cell as subcontracted, a resource of the vendor type needs to be created and associated with the work cell (resource group). The vendor that is defined in the purchase agreement must also be the vendor that is connected to the work cell.
Production control > Setup > Resources > Resources
A runtime cost category with a "direct outsourcing" cost group type should be assigned to the work cell. The cost categories for setup and quantity are not needed.
In Supply Chain Management, locations and work cells can be modeled as vendor-managed by assigning the vendor account to a warehouse or to a resource of a resource group.
Set up resources for subcontracting
Supply Chain Management allows you to schedule kanbans on alternate resources. This functionality allows the value stream manager to use alternate resources to balance the workload throughout the organization.
To optimize the throughput in any process, the Production control > Kanban > Kanban job scheduling board has a function called Use alternative kanban rule. This function allows the planner to reschedule a kanban that was originally created for one work cell to an alternative work cell. This cell could be an alternate in-house resource or a subcontracting resource; the process for the planner is the same for both.
The planner can assign an alternate kanban rule to the kanban job straight from the Kanban schedule board. This task is completed by selecting the kanban job and then selecting the Use alternative kanban rule button.
For more information on Subcontracting of route operations, see Manage subcontracting work in production.
Open kanban
The planner can go to Production control > Kanban > Kanban schedule board, right-click the kanban, and then select Open kanban to change the kanban rule.
The Plan > Use alternative kanban rule button can then be used to assign an alternate kanban rule to the kanban job.
Alternate kanban functionality
To use the alternate kanban functionality, certain prerequisites must be met in the kanban rules.
Alternate kanban rules only work with scheduled or event kanbans, not with fixed quantity kanbans.
Alternate kanban rules must have similar functions:
Product selection
Replenishment strategy (scheduled or event)
Supplied location (site, warehouse, location)
Type of event (sales, BOM, kanban, minimum stock)
The kanban rule of a kanban can be changed to an alternative kanban rule in the following situations:
The kanban has a handling unit status of Not assigned
The kanban jobs are not planned
The kanban has a replenishment status of Scheduled or Event
When you change a kanban rule, the conversion will perform the following tasks:
Delete old kanban jobs and kanbans
Create new kanban jobs and kanbans
Preserve the kanban quantity and due date
Transfer the event pegging to the new kanban for events