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Introduction to Subcontracting Types of Subcontracting Subcontracting in Oracle Features of Oracle subcontracting Basic setups in Subcontracting Upcoming Trainings Demo Q&A
Introduction to Subcontracting
Subcontracting is a common business practice where a brand-owner or an Original Equipment Manufacturer (OEM) outsources its entire manufacturing operations or a portion of it by entering into a contractual agreement with an external manufacturing service provider commonly known as a Manufacturing Partner (MP).
Types of Subcontracting
Extent of Outsourcing: Enterprises can opt to outsource the entire manufacturing process or a portion of it by collaborating with a MP. Nature of Component Supply: Enterprises can either own and manage the components for consumption at the MP's facility, or engage a supplier to either own and consign inventory, or drop ship the components at the MP's facility. In other situations, the OEM may charge the MP by registering a sale of the components resulting in a complete transfer of Ownership Shipment of Finished Goods: Enterprises can decide to either supply finished goods directly to the customer or enter into a contractual agreement with the MP to drop ship the finished goods to the customer's facility.
Subcontracting In Oracle
Oracle supports the following types of subcontracting business practices that involve complete outsourcing of assemblies and most importantly, component sale by an OEM to a MP: Chargeable Subcontracting Chargeable Subcontracting is a practice where the OEM completely outsources the manufacturing of an assembly to an MP and makes a provisional sale of components by invoicing the MP Buy/Sell Subcontracting Buy/Sell Subcontracting is a business practice where an Original Equipment Manufacturer (OEM) completely outsources the manufacturing of an assembly to a Manufacturing Partner (MP) by buying the assembly from the MP and most importantly, selling the components to the MP that are consumed in the manufacturing of the assembly at the MP's premises. The ownership of the components is transferred to the MP immediately after the OEM ships the components to the MP unlike Chargeable Subcontracting where the OEM retains the ownership of the components throughout the subcontracting process.
OEM org is defined and OEM org location is attached from Inventory responsibility
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MP3 org is defined and MP org location is attached from Inventory responsibility
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Associate Supplier modelled from OEM org as supplier in OEM org parameters
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Associate Supplier and customer modelled from MP org as supplier and customer in MP org parameters
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Define the Transaction types in Order management which is used while creating sales order
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Define the Transaction types in Order management which is used while creating sales order
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Define shipping networks between OEM and MP org from Inventory and make sure Default order type for Internal orders are assigned
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Define shipping networks between OEM and MP org from Inventory and assign a default shipping method
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Define Items from Inventory , ensure you have checked outsourced assembly flag for Outsourced assembly
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Define Items from Inventory and ensure for the assembly you have set as Do not release for Release time fence so that planning does not release the assembly order to MP org
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Demo Creation Of PO
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Launch Interlock manager from Subcontrating super user responsibility.Make sure the paramters are correct and it refrences the correct OU
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Query in the subcontracting workbench with the OEM and MP org and you can view the subcontracted assembly purchase orders
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Also you can view components used for the subcontracting order and also the quantity required for each component and quantity allocated
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Also you can view components used for the subcontracting order and also the replenishment order for the components
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Also you can view subcontracting workoprder created in the WIP for the outsourced PO by interlock manager
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Also you can view the replenishment sales order created for the component in Order management
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