How to print a "vendor note" in Microsoft Dynamics 365 Finance and Operations Enterprise for every shipment of subcontracted products

In many of the most basic subcontracting scenarios, we have a routing operation that is done somewhere at a subcontractor, like heat treat, sand blast, or anodize. Although we ship a physical product to the vendor, which is the part number that is  being manufactured by the production order, there is no inventory leaving our AX system. All remains Work in Process. This means, painfully, that there is no direct visibility of our product sitting in a vendor warehouse.

The fact that the subcontracting operation is ‘in process', tells us indirectly that our item is at the vendor. (See my other article on subcontracted work.) If any cycle count would occur during this time, our product is in WIP and is typically not counted.

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About Evert Bos

I am Evert J Bos, ERP consultant since 1986. I started in Europe with IMS7 (A Honeywell Bull Mainframe ERP system) and the BaaN ERP system. Since 1995 I have worked in the USA and since 2004 I have been working with Dynamics AX.  I work for Sikich and focus mostly on manufacturing companies that make complex, engineered products.

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Interesting approach...

Hi Evert, that is an interesting way of handling physical inventory movement to/from vendor warehouse. Thanks for sharing. Did you see transfer orders being used to keep track of issues and receipts for material sent to subcontractor on top of automatically created PO with service item that takes care of AP only?

subcontracting

Well, your scenario I would call "subcontracting II" where I have my materials going to the vendor and a different part number comes back. You would use a combination of subc PO and a "vendor production order" in that scenario.
This Vendor note would not apply , you would have a packing list for the transfer order that is used as a document with the shipment to the subcontract vendor. The transfer order transfers your materials to a "vendor warehouse". I realize this has to be explained more in a next blog on subcontracting.

Sounds good. Thanks.

Sounds good. Thanks.

minivan