Understanding Subcontracting Using PeopleSoft Manufacturing

In the shop floor environment, you may need to send components or end items to outside suppliers for end item processing, rework, inspection, or testing. PeopleSoft Manufacturing enables you to track production progress and outside processing supplier costs associated with subcontracting using production IDs.

Although managing production with subcontracted operations is similar to managing production for in-house production, there are some differences:

  • Once production has been released or started, you select production IDs with subcontracted operations and send the information to PeopleSoft Purchasing where purchase orders are created.

    You record operation completions for both in-house and, once the end items are received back from the supplier, subcontracted operations. Once the end items are complete at the final operation, they can be sent to stock or routed to another production area. If the completed end items are lot- or serial-controlled, you assign lot and serial numbers.

  • You determine how much lead time you need to generate and process a purchase order for the subcontracted operation.

    Using PeopleSoft Manufacturing, you can also optionally define a subcontracted item that is a non-inventory item that represents the outside processing services. When defining this subcontracted item you can specify the purchasing attributes for this item. You can then associate this subcontracted item to the subcontracted operation. The subcontracted purchase order will then be created with this subcontracted item. You can also define a purchasing contract, such as a blanket order, for the subcontracted item to utilize the PeopleSoft Purchasing contract functionality.

    If you are using electronic data collection or enable the subcontract streamline option for purchasing receipts, the system automatically generates the subcontracted completions transactions.

    Note: You cannot perform a production ID split if you have run the Select Subcontract Prdn for PO process.

To manage production with subcontracted operations:

  1. Record completed operations and scrap for in-house production for operation sequences prior to the subcontracted operation.

    See Manage Production Using Discrete Orders.

  2. Use the Record Completions/Scrap component to make data entry corrections if required.

  3. Use the Select Subcontract Production page to generate the file for subcontracted operations to be used by the Create Purchase Orders process (PO_POCREATE).

  4. Generate the purchase order for outside processing, and approve and dispatch the purchase order to the supplier.

    If a subcontracted item is associated with a subcontracted operation, then the purchase order will be generated with the subcontracted item and its purchasing attributes and contract information (if available) during the creation of the purchase order.

    Use the PO Stage Load, PO Calculations, PO Creation, Approve Amounts, Approve ChartFields, and Dispatch POs components in PeopleSoft Purchasing to process the subcontracted purchase order.

  5. Send end items to outside suppliers for subcontracted processing.

  6. Receive end items back from suppliers using the Receiving page in PeopleSoft Purchasing.

    See Processing Receipts.

  7. Use the Subcontracted Receipt page to record completed subcontracted operations and scrap for the manufactured end item.

  8. (Optional) Edit components.

  9. Record completions and scrap for any additional in-house operations for the manufactured end item.

    See Understanding the Process of Recording Completions and Scrap Using Electronic Data Collection.

  10. Move completed end items out of production.

  11. Run the Completions Update process (SFPDCDRV).

  12. Use the Complete Production page to indicate that production for all operations has been completed.

  13. (Optional) Record actual labor and machine hours associated with the subcontracted operations.