Create Subcontract Request – A Summary of the Activity

This activity allows you create a Subcontract Request. The items needed for the business need not be necessarily manufactured in the organization. In case it needs to be outsourced, the subcontract request document is created. This is used to request the purchase department for manufacturing subcontract items from a subcontractor that is handled as a normal procurement process. The subcontract request document is used to initiate the procurement process of a subcontracted item or service for an organization.

The subcontract request document is classified as three types:

Conversion: In such cases some input material (defined as items in the system) is issued to a supplier under the terms of a contract to get it converted to some other item, based on agreed conversion ratios between input and output.  The converted item is defined as sub-contracted item in the system. The conversion process may result in some form of by-products or scrap, which can be modeled in the system, if these are defined as items in the system

Service: Service subcontracting refers to the situation where the supplier performs a service. Material may be required for performance of the service. Material required for servicing may get issued to the supplier, depending on terms of contract.  In other words, it is necessary to record some material flow in the system in order to use a sub-contracting for service. A variation of service sub-contracting could be repair of an item, in which the item is issued to the supplier who returns the same item after performing repair job. Activity: Activity subcontracting refers to the situation where the supplier performs one or more activities of a job/work. An Item may get processed in a production operation by performing a set of activities. Consider a case where 5 activities are supposed to be performed on an Item. Activity-1 & Activity-2 may be done in-house, Activity-3 & Activity-4 can be subcontracted and again Activity-5 can be done in-house. This type of subcontracting where one or more activities are subcontracted is envisaged for this type of subcontracting. Some material may get issued to the supplier, depending on terms of contract.

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