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How to set up and use the outsourcing features in Manufacturing in Microsoft Dynamics GP and in Microsoft Great Plains

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This article describes how to set up and use the outsourcing features in Manufacturing in Microsoft Dynamics GP and in Microsoft Business Solutions - Great Plains.

Applies to:   Microsoft Dynamics GP
Original KB number:   857209

To set up and use the outsourcing features in Manufacturing in Microsoft Dynamics GP and in Microsoft Great Plains, follow these steps:

  1. Identify a cost bucket to use for tracking outsourcing costs. To do this, follow these steps:

    1. On the Tools menu, point to Setup, point to Manufacturing, point to System Defaults, and then select WIP to open the WIP Preference Defaults window.

    2. In the Cost Bucket Used for Outsourcing Costs area, select the bucket that you want to use to track outsourcing costs. Generally, this will be one of the buckets that you are not already using for another purpose.

    3. Select the Rename Selected Cost Bucket as "Outsourcing" check box.

      Note

      This step is optional.

    4. Select OK.

  2. Create an outsourcing work center. To do this, follow these steps:

    1. On the Cards menu, point to Manufacturing, point to Work Centers, and then select Setup to open the Work Center Setup window.

    2. In the Work Center ID box, type your work center ID.

    3. Select Add if you receive the following message:

      This site ID doesn't exist. Do you want to add it? The Site Maintenance window opens. Add the site information, and then select Save.

    4. In the Outsourced list, select Yes. The Outsourced Work Center Setup window opens.

    5. In the Vendor ID box, type your vendor ID.

      Note

      When you create a purchase order, the vendor ID can be changed.

    6. Select OK.

    7. In the Service Item Number box, type the number of a service item, or leave the box empty. If you type the number of a service item, you will be able to use the Item Vendor Maintenance window to set a different cost for the service item for each vendor.

    8. In the PO Release Offset Days box, type the number of days by which the purchase order for the vendor's services should be offset from the required date for the items.

    9. Select OK.

    10. In the Work Center Setup window, type a date in the Display Date box. This date will become the effective date for the work center.

    11. Select OK.

  3. Set up a labor code or a machine ID to track the outsourcing costs. To do this, use one of the following methods.

    Method 1. Set up a labor code

    If you chose a labor bucket in step 1b, you must set up a labor code. To do this, follow these steps:

    1. On the Cards menu, point to Manufacturing, and then select Labor Codes to open the Labor Code Definition window.

    2. In the Labor Code box, type your labor code.

    3. In the Description box, type the description of your labor code.

    4. In the Primary Pay Code list, select the primary pay code for this labor code.

    5. In the Shop Rate box, type the shop rate.

    6. If you are using fixed overhead, type information in the Fixed Overhead area.

    7. If you are using variable overhead, type information in the Variable Overhead area.

    8. In the Labor Costing Accounts area, type the account numbers of the applicable accounts.

    9. Select Save.

    Method 2. Set up a machine ID

    If you chose a machine bucket in step 1b, you must set up a machine ID. To do this, follow these steps:

    1. On the Cards menu, point to Manufacturing, and then select Machines to open the Machine Definition window.

    2. Type information in the following required boxes:

      1. Machine ID
      2. Machine Applied

    3. In the Vendor ID box, type the vendor ID that is associated with the machine ID.

    4. In the Operating Cost box, type the cost per hour if applicable.

    5. In the Piece Cost box, type the cost per piece if applicable.

    6. If you are using fixed overhead, type information in the Fixed Overhead area.

    7. If you are using variable overhead, type information in the Variable Overhead area.

    8. In the Machine Costing Accounts area, type the account numbers of the applicable accounts.

    9. Select Save.

  4. Add an outsourced sequence to your existing routing for the applicable finished good. To do this, follow these steps:

    1. On the Cards menu, point to Manufacturing, point to Routings, and then select Routing Entry.

    2. In the Routing Sequence Entry window, select the applicable item number and routing name.

    3. In the Sequence Number box, type a new sequence number.

    4. In the Description box, type a description.

    5. In the Work Center ID list, select the work center that you created in step 2, and then select Select.

    6. In the Time and Costing area, type any additional information that is required.

    7. Select Save.

    8. Select OK if you receive the following message:

      You might want to update the previous sequence's WIP Output per MO Start Quantity because this sequence is outsourced.

  5. Use outsourcing together with a new manufacturing order. To do this, follow these steps:

    1. On the Transactions menu, point to Manufacturing, point to Manufacturing Orders, and then select Entry to open the Manufacturing Order Entry window.

    2. In the MO Number box, accept the default manufacturing order number.

    3. In the Item Number box, type the item number for which you created the outsourced sequence in step 4.

    4. Type information in the following required boxes:

      • Routing Name
      • Scheduling Preference
      • Ending Quantity
      • Draw Inventory From Site
      • Post Finished Goods To

    5. In the MO Status list, select Open.

    6. In the Start Date box, type your start date.

    7. Select Schedule MO.

    8. In the MO Status list, select Released.

    9. In the Outsourcing area, select the right arrow button next to Purchasing to open the Manufacturing Order/Purchase Order Link window.

    10. Select the Outsourced Sequence check box, and then select Create PO to create a purchase order. The Purchase Order Entry window opens.

    11. Select Save.

    12. Close the Manufacturing Order/Purchase Order Link window. You are prompted to print the MO/PO Links Report Sort by MO report.

    13. In the Outsourcing area, select the right arrow button next to Shipping to open the Manufacturing Order Shipments window. Use this window to record the fact that you have shipped the item to the outsourced vendor.

    14. Select the Ship From Sequence check box, and then select Record Shipment.

    15. Close the Manufacturing Order Shipments window. You are prompted to print the Manufacturing Shipment Report.