How to use the vendor production order in Dynamics 365 for Finance & Operations, Enterprise

The following business scenario is common: I send my materials to a subcontractor, he assembles, tests, paints, etc. and returns a completed assembly to me. The emphasis is on "My materials" and "Vendor labor". This scenario can be called a form of contract manufacturing. It is more than likely that this assembly is my design, so the vendor gets a drawing and work instructions.  This could be a permanent situation or it could be triggered by an overloaded shop floor that needs to outsource some of the work.

How would we handle this scenario in Microsoft Dynamics 365 for Ops (D365FOE) or any older AX version? I think the basic setup is described in the 2012 and older production manuals. It is not hard, although it seems unusual doing it the first time. Two versions of the scenario exist.


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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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Hi Evert...

So there is no functionality differences between standard and vendor production orders? Just a reporting/sorting field.

vendor production orders

Yes, I have not found anything different in the behavior and it is hard to imagine what that other behavior should be.
I am just mimicking what the vendor did, material-wise. Routing is irrelevant because that was the vendor's labor.
Sorting is all it does