Subcontract work centers are set up the same as regular work centers with additional information. They are assigned to routings in the same manner as other work centers. When the purchase order is received, it is just like completing the operational step. Keep in mind that if the subcontractor step is the last step in the routing, the output is posted when you receive the purchase order. The fields that are important for subcontract work centers are:
This Subcontractor No. field designates the work center as a subcontract work center. Here you can enter the number of a subcontractor who supplies the work center. This field can be used to administrate work centers, which are not in-house but perform processing under contract. This field looks up to a list of vendors.
The Unit Cost Calculation field is often set to Units on a subcontract work center. The unit cost generated for a purchase order from a production order routing step is based on a unit charge rather than a measurement of time (such as per hour).
If you subcontract with the vendor for a different rate for each process, then you may place a check mark in the Specific Unit Cost field. This allows you to set up a cost on each routing line and saves the time of re-entering the information on each purchase order. The cost on the routing line is used in processing rather than the cost on the work center cost fields. Enabling Specific Unit Cost allows the system to calculate costs for the vendor by the routing operation.
If you subcontract at a single rate per vendor, leave the Specific Unit Cost field blank. The costs will be set up by filling in Direct Unit Cost, Indirect Cost %, and Overhead Rate fields.
To use the subcontract work center in a routing, you must calculate the calendar.
Subcontract work centers can be used for operations on routings in exactly the same way as regular work centers.
You can set up a routing that uses an outside work center as a standard operational step. Alternatively, you can modify the routing for a particular production order to include an outside operation. This might be needed in an emergency situation such as a machine breaking down, or during a temporary period of higher demand, where the work normally performed in-house must be sent to a subcontractor.
Using the Subcontracting Worksheet