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Define Outside Resources

Autocharge

Use this attribute to determine how you charge a resource to a job or repetitive schedule. For outside resources you want to automatically requisition, you choose either PO Move or PO Receipt. Purchasing charges these resources to jobs and repetitive schedules when you receive against purchase order lines linked to the resources.

In addition, Purchasing enters move transactions when you receive against purchase order lines linked to PO Move resources. Purchasing moves the outside processed assemblies to Queue of the next operation unless you're at the final operation. In this case, Purchasing moves the assemblies to the To Move step of the last operation. You should choose PO Move and/or PO Receipt based on your physical flow. You can have only one PO move resource per operation. You can override the autocharge of a resource when you assign the resource to a routing.

You can manually link a purchase order line to a job or repetitive schedule and charge any PO Move or PO Receipt resource on the routing.

Outside Processing Item

Use this attribute to associate an outside resource with the outside processing item you are buying from a supplier. When you enter a move into Queue of an operation with an outside resource, Work in Process automatically requisitions the outside processing item associated with the outside resource.

You may not necessarily want to link an outside processing item with every outside resource. As discussed earlier in the "Chemical Analysis" resource example, you might want to charge a resource to a job or repetitive schedule but not create requisitions with each move transaction.

UOM

Use this attribute to specify the UOM associated with a resource. In general, the UOM of the resource would be quantity based such as EA for each plated item since this is the likely unit of measure for items on purchase orders. However, you can use a time based UOM if you purchase a quantity of time, such as plating machine hours. If your resource UOM is time based, you can also schedule the resource and include the resource in capacity plans. If the UOM is quantity based, you can define a separate resource for scheduling your jobs or repetitive schedules and for including outside resource load in capacity plans.

Purchasing always purchases items linked to outside resources using the outside processing item's UOM. Purchasing always charges items to jobs or repetitive schedules using the resource's UOM.

Standard Rate

Use this attribute to control whether you charge an outside resource to a job or repetitive schedule at the standard rate of the resource or whether you charge the job or repetitive schedule at the actual purchase order line price. If you charge at standard, then Purchasing writes any variance between the purchase order actual and the resource standard cost to the purchase price variance account of the resource at purchase order receipt. If you charge at actual, then Work in Process writes any variance to the outside processing elemental variance account associated with the job or repetitive schedule you are charging at job or period close. You can override whether you charge a resource at standard when you assign the resource to a routing.

Absorption and Variance Accounts

You must define a purchase price variance account for each outside resource you define. This account defaults from the organization's purchase price variance account. You must also define an absorption account for each outside resource. The absorption account defaults from the organization's receiving account, which Purchasing debits when it receives an outside processing item and subsequently credits when it delivers the item to work in process. Purchasing debits the outside processing account associated with the accounting class of the job or repetitive schedule when it delivers the item to work in process.

Cost Element

When you define a resource with an Autocharge of either PO Move or PO Receipt, Bills of Material automatically defaults Outside Processing as the cost element. However, you can also charge PO Move and PO Receipt resources to any of the other cost elements, including Material, Material Overhead, Resource, and Resource Overhead.

Assuming you use the Outside Processing cost element, the assembly cost rollup inserts the outside resource standard cost into the outside processing cost element for the assembly. Purchasing charges the outside processing cost element when you receive against purchase orders. Work in Process credits the outside processing cost element at standard when you complete assemblies. See: Overview of Work in Process Costing.

Costed

Enter Yes to include an outside resources in your cost rollup. You can enter No if you want to use a resource for other purposes such as scheduling. You cannot override this attribute on the routing.

Default Basis

You can define a default basis of either Lot or Item, which you can then override on the routing. Enter Lot if you schedule or charge the resource once for each job or repetitive schedule. Enter Item if you schedule or charge a resource based upon the job or repetitive schedule's assembly quantity.

You might enter Lot for outside resources that represent services such as setup and teardown. Other services for which a supplier charges based on the assembly quantity should have a basis of Item.

Resource Unit Cost

Use the resource unit cost to define the standard cost per UOM for a resource. Bills of Material uses this standard along with the standard lot size, usage rate or amount, and basis on the routing when it calculates the outside processing elemental standard during an assembly cost rollup. Purchasing also charges jobs and repetitive schedules using this cost when you receive against outside processing items linked to outside resources that charge at standard.

As your buyer negotiates price changes with your suppliers, he maintains the List Price attribute in the Items window. Purchasing defaults this price when it creates requisitions and purchase orders (except if you set up a blanket, in which case Purchasing defaults the price on the blanket.). As the actual purchase price varies from the standard resource cost, you create variances. You can reduce these variances by keeping the resource's unit cost in line with the list price for the outside processing item in the Items window. See: Defining Items and Defining a Resource.

Define Departments with Delivery Locations

Work in Process passes the department location to Purchasing as the Deliver-To location when requisitioning outside processing items. Purchasing requires a Deliver-To location when you receive outside processing items and deliver them to the shop floor. See: Defining a Department

Define Routings

Calculating Requisition Quantities for Outside Processing Unit Type of Resource

When Work in Process requisitions an outside processing item with a Outside Processing Unit Type of Resource, it uses the outside resource's usage rate or amount and basis to calculate the requisition quantity.

If the basis is Item, Work in Process requisitions the usage rate or amount times the move quantity each time you move into Queue of the outside operation. For example, if you have an outside resource with a UOM of HR and a usage rate or amount of 10, and you move five assemblies into the outside operation, Work in Process requisitions 50 HR of the outside processing item linked to the outside resource.

For outside resources with a basis of Lot, Work in Process requisitions the usage rate or amount of the resource when you move the first assembly on the job or repetitive schedule into Queue of the outside operation.

Calculating Requisition Quantities for Outside Processing Unit Type of Assembly

When requisitioning items with an Outside Processing Unit Type of Assembly, Work in Process does not extend the assembly move quantity by the usage rate or amount.

For outside resources with a basis of Item, Work in Process requisitions the move quantity each time you move into Queue of the outside operation.

For outside resources with a basis of Lot, Work in Process requisitions a quantity of 1 when you move the first assembly on the job or repetitive schedule into Queue of the outside operation.

Job/Schedule Assembly		Outside Processing Item			Outside Resource				Transaction Quantities
Move Qty	UOM	Outside Processing Unit Type	List Price	UOM	Basis	Usage Rate or Amount	Standard Rate	UOM	Req, PO, Receipt Quantities	Job/Schedule Charge Amount
50	EA	Assembly	$1	EA	Item	10	$1	EA	50 EA	(50 x 10) @ $1 = $500
50	EA	Assembly	$1	EA	Lot	10	$1	EA	1 EA	(1 x 10) @ $1 = $10
50	EA	Resource	$1	HR	Item	10	$1	HR	500 HR	(500 HR @ $1) = $500
50	EA	Resource	$1	HR	Lot	10	$1	HR	10 HR	(10 HR @ $1) = $10
Table 1 - 29. (Page 1 of 1)

Work in Process Scheduling

Work in Process schedules all resources in a routing with Scheduling set to Yes and with a time based unit of measure. If you are requisitioning outside processing items for outside operations with units of measure that are not time based, you may want to add resources with time based units of measure to the routing to accurately schedule the outside processing work. You can also include time based outside resources in capacity planning. See: Overview of Work in Process Scheduling and Creating a Routing.

Define Supplier-Sourced Components

Whether you associate a standard cost with these supplier-sourced components in the item master depends on how your supplier charges you for the item. If your supplier includes the component costs in the price of his service (the outside resource), then you would not want to also include the cost in the assembly's bill. For example, if your plating supplier provides zinc as part of his plating service, then you might include zinc on your bill at the outside operation but include the cost of zinc in the plating resource. See: Creating a Bill of Material

Cost Rollup