Subcontracted Production using Microsoft Dynamics AX 2012 R3, Part 2

Editor's Note: The following represents the second of a 2-part article. The numbering of sections and figures reflects the continuation of the article. Much of the information is drawn from Dr. Hamilton's recent book about Warehouse Management using Microsoft Dynamics AX 2012 R3.

Subcontracted production and internal production share many basic constructs in Microsoft Dynamics AX 2012 R3. They both employ bill of material (BOM) and routing information as well as production orders and picking list journals. However, subcontracted production involves significant differences and several variations. As one key difference, the BOM information identifies the supplied material in most scenarios. A second key difference stems from the AX approach to modeling subcontracted production, which requires a unique item representing the subcontracted service. This item must be identified in a BOM line for the manufactured item, where the line type indicates a buy-to-order service. As a result, a production order for the manufactured item automatically creates the associated purchase order for the subcontracted service. The dual constructs of a production order and its associated purchase order involve additional complexity in setup information and business processes in comparison to internal production.

In Part 1 of this article, we reviewed the variations in subcontracted production and described a basic model of production order processing that provides a baseline for explaining the variations. In Part 2, we'll review the setup information and provide several illustrative case studies about the variations.

3. Define an Item representing a Subcontracted Service