Subcontracting is an integral part of the manufacturing industry such as machine manufacturing, basic metal manufacturing, etc. It is a process whereby a Company hires the services of another Company for the accomplishment of certain specific tasks. This not only helps businesses in managing large projects within the stipulated timeframe but also in optimizing their costs and mitigating risks.
In this blog, we look at how businesses can effectively manage their Subcontract Manufacturing Processes using Microsoft Dynamics 365 Business Central (formerly known as Microsoft Dynamics NAV).
Microsoft Dynamics 365 Business Central provides businesses with various tools for the effective management of Subcontract work:
WORK CENTERS WITH ASSIGNED VENDORS
Microsoft Dynamics 365 Business Central allows businesses to set up Work Centers, known as Subcontract Work Center, associated with a particular vendor. Subcontract Work Centers can be set up like the regular work center but require additional details. Businesses can also specify a Work Center on a routing operation. And it can be assigned to the routings in the same manner as the other work centers. Moreover, the cost of the operation can be designated both at the routing or the work center level.
SUBCONTRACT WORK CENTER FIELDS
Subcontractor No. field. allows businesses to enter the number of a subcontractor associated with the Work Center. It is an important component that helps businesses in effectively administering the work centers and the subcontracting operations.
WORK CENTER COSTS BASED ON UNITS OR TIME
With Microsoft Dynamics 365 Business Central, businesses can stipulate whether the costs related to the work center are based on a flat charge per unit or the production time. Even though the subcontractors usually use a flat charge per unit to charge for their services, Microsoft Dynamics 365 Business Central enables businesses to deal with both these scenarios i.e., production time and flat charge per unit.
Besides, businesses can choose specific unit cost field if they subcontract with the vendors for different rates for each of their processes. With this, they can set up a cost on each routing line & accordingly save the time of re-entering each purchase order. Not only this, if businesses subcontract at a single rate per vendor, they can make use of features like Direct Unit Cost, Indirect Cost %, and Overhead Rate fields.
With Microsoft Dynamics 365 Business Central, businesses can easily locate the Production Order with material ready for sending to a subcontractor. By using Production order routings, they can automatically create purchase orders for subcontracting operations. Not only this, but they can also automatically post the purchase order charges to the production order during the posting of the purchase order. However, “only production orders with a status of release can be accessed & used from a subcontracting worksheet.”
In a nutshell, Microsoft Dynamics 365 Business Central streamlines the subcontracting operations, boosts manufacturing efficiency and empowers businesses to effectively manage their production & supply.
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