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Outsourcing or subcontracting certain operations, in particular finishing and assembly, is a common practice in many industries, for example, to prevent capacity shortages or to let in-house staff focus on core business functions.

To complete a job, a subcontractor is often supplied with materials, or semi-finished products even. For this reason, medtec365 provides you with a way to post transfers from subcontract purchase orders so that you can ship supplies to vendors and have the system print receipt documents based on these transfers.

When you later post this kind of order as received, the items supplied and consumed for the completion of requested operations are then removed from the site set up for subcontracted work.


You need a separate license before you can use this functionality.


Before you can subcontract work on components and products, you must set up the manufacturing area. For more information, see the Microsoft Dynamics 365 Business Central1 Helpsite. Only the differences to standard functionality will be explained in this article.

Production BOMs and BOM versions#


Before you can subcontract work on components and products, you must set up the manufacturing area. For more general information about this subsection, see Create Production BOMs - Business Central | Microsoft Learn.

Option Description Note
(blank) Standard functionality will be used (no materials will be supplied to the vendor).
In Advance Parts will be provided to the vendor when a production order or operation is subcontracted. Requires a routing link code.
General The vendor will receive an item quantity regardless of whether work has been subcontracted.

When it is, only the production order document will be sent, as the required parts have already been delivered.

To able to use this option, the subcontractor’s site must be entered as the outbound location on the related work center card (see Source Locations).
Requires a routing link code.
By Vendor All materials and items are purchased by the vendor.

They’re therefore shown on the BOM page only in a FactBox, for informational purposes.

This option is also used if the materials or items required for subcontracted work are provided by customers, considering you don’t need to post to inventory or the warehouse then either.
Does not copy information to manufacturing.


You can use a routing link code to tie a component supplied with an item BOM to a manufacturing operation. The code specifies the operation the item is needed, that is, consumed for. You must first enter this code on the operation before you can set up the component on the BOM. Otherwise, you see an error message when you try to certify the bill of materials.


We recommend that you use a separate routing link code for each subcontractor.

Routing and routing versions#

Before you can subcontract work on components and products, you must set up the manufacturing area. For more general information about this subsection, see Create Routings - Business Central | Microsoft Learn.


Field Description
Task Code
The code from the standard app is used in this field.
Routing Link Code Specify a code for the routing link.

Work center card#

Before you can subcontract work on components and products, you must set up the manufacturing area. For more general information about this subsection, see Set Up Work Centers and Machine Centers - Business Central | Microsoft Learn.


In the Department Code field, fill in the Subcontracting department.


In the Vendor No. field, fill in the vendor to whom you subcontract work. If work is performed in the unit of measure Piece, you also must set the Unit Cost Calculation field to Units.


Product business posting groups are used to specify G/L accounts that you post to in sales and purchasing. For an easier overview of the postings made in the system, we recommend that you specify another group for subcontracted work.

Additionally, turn on the Special Unit Cost toggle if you’ve agreed with the subcontractor on a special price for each operation.


Set the Unit of Measure Code to Day unless the contract between you and the vendor says otherwise. Typically, you also create a new company calendar for subcontracted work.

Ribbon functions#

To store subcontractor prices and source locations, choose Related > Work Ctr. on the ribbon.

Calculate subcontractor prices#

In the standard app, the price for subcontracting, that is, the cost later used on a purchase order, can only be entered on this card. You therefore cannot enter different prices per vendor, quantity, operation (standard task code), or period.

In medtec365, subcontracted work has its own price table, for which data can be specified in various parts of the system. These entries then replace the values stored for the work center. You can set prices by period, piece, or specific unit cost.

Subcontractor prices

Prices (and, potentially, block prices) for subcontracted work are specified for:

  • Work centers (required)
  • Items (required)
  • Vendors (required)
  • Standard task codes (subcontracted operations)
  • Starting and ending dates
  • Minimum quantities (block prices)
  • Price units (conversion factors based on weight)

You can filter for them on the following pages:

  • Item Card or Items
  • Work Center Card or Work Centers
  • Vendor Card or Vendors

Source locations#

The Source Locations feature is used to designate the locations that should be used for the goods supplied for an order. You can specify items per work center or select All Items on a source location line. You can open the Source Locations page from a work center card or the work center list.

  • Source Type: Choose Work Center.
  • Source Code: Enter the code of a work center.
  • Type: Select All Items or Item.
  • Code: Enter an item number if Type = Item.
  • Location Code: Enter the code of a storage site.

Transfer routes#

With the help of a transfer route, you can link a warehouse owned by a vendor (subcontractor) to your own. To set up a route:

  1. Choose the Search icon, enter Transfer Routes, and then choose the related link.
  2. On the Transfer Routes Matrix, go to the line containing the warehouse that you want to remove items from, and then click the site (highlighted in blue) that the items should be moved to.
  3. On the Trans. Route Spec. page, enter your warehouse in the In-Transit Code field. You must fill in this field. The other fields can remain blank if no shipping agent has been specified.

You can then exit the Trans. Route Spec. and Transfer Routes pages.


You schedule production and release the production order. For tracked items, you also link the relevant tracking lines to the components and the order itself.

Subcontracting worksheet#

Calculate subcontracted work#

Afterward, open you open the Subcontracting Worksheets page.

To see the released order, set a filter on, for example, the work center, vendor, or production order number. The worksheet then lists all pending subcontract work. The vendor is retrieved from the work center, whereas prices are shown based on how you’ve set them up in the system.

The vendor is retrieved from the work center, whereas prices are shown based on how you’ve set them up in the system.

If subcontracted work already exists for a production order, another work order will not be calculated.

Change a vendor#

On the worksheet, you can change the vendor on each (order) line. The subcontractor prices that you specified for this vendor are then retrieved automatically.

Carry out an action message#

To copy a subcontracting worksheet line to a purchase order, you can use the Carry Out Action Message and Accept Action Message functions. Both can be found on the ribbon.

You can create the necessary transfer order by selecting the Create Transfer Order field on a line. Lines for which the field isn’t selected remain.

Released production order#

Track subcontracted work#

You track subcontracting on production order lines as follows:

  1. Open a production order.
  2. Select a line. On the ribbon, choose Line > Track Subcontracting.

You can then see and open the documents linked to the line.

Purchase order#

When you create a purchase order for subcontracted work, the components for production are provided by transfer. This also means that the description of an item on a purchase line doesn’t include the name of the product but of the subcontracted service.

Moreover, you can unhide the following production-related fields on purchase lines:

  • Subcontrd. Items
  • Subcontrd. Qty. at Subcontractor
  • Production Order No.
  • Production Order Line No.
  • Work Center No.
  • Operation No.

Item tracking information assigned to production is also printed on the purchase order.

Additionally, the relevant order type is set automatically if purchases originate with a subcontracting worksheet, although the type can be changed, if necessary. It is used to fill in certain order data automatically, including the terms of payment.


You need to set up a purchase order type called Subcontrd. Purchase Order for this purpose. For more information, see Order Types.

The associated operation is then reported when an order quantity is received.


With the last operation completed on the production order, the order itself might be completed as well.

Subcontractor reference#

When you print a purchase order, the components provided on transfer lines to a vendor for completing operations are referenced on the document. You also see the total price for the subcontracted work as specified earlier (see Calculate Subcontractor Prices).

If a block price is assigned to the relevant work center, this price will be used (and updated) automatically.

Post a shipment from a purchase order#

After you post the purchase order, you need to post a warehouse receipt containing the manufactured items. At the same time, you need to reduce the inventory level at the subcontracting location manually or automatically by the component quantity provided (and then consumed) during manufacturing and store the tracking codes specified for the items.

You can see on a released production order when each associated purchase was received. After all of them have been, the progress bar on the order is set to 100%.

Post a warehouse receipt#

As an alternative to posting directly to a purchase order or via a purchase invoice, you can set up and post subcontract purchase orders like other orders created for vendors provided you’re using the warehouse functionality.


In this context, the color used to code the quantity isn’t relevant to item tracking. Tracking data for subcontracted work also isn’t shown on printouts of posted warehouse receipts.

Because the standard app tracks items on production but not subcontract purchase orders (receipts), an action called Prod. Order Item Tracking has been added to the Lines FastTab on purchase orders and warehouse receipts so that you can open the relevant item tracking cards from there.


On the General FastTab of a transfer order, in the Transfer Order Type field, you can see if an order is being used to move items for subcontracting.

If a subcontractor doesn’t provide you with receipt documents, you can turn on the Auto Post Shpt. as Receipt toggle on the same FastTab; otherwise, the goods supplied to the vendor would remain in transit and you would need to repost the inventory put-away.

If the (semi-finished) product is also shipped, its quantity is shown in the Subcontrd. Quantity field, not the standard Quantity field, as the transfer is only being simulated and the item isn’t in inventory yet.

The number of supplied materials, on the other hand, is shown in the Quantity field, as they must be taken from the subcontracting location (if the Part Provided field is set to In Advance).

Afterward, you can enter the materials you want to move by transfer and send them to the subcontractor.


Turn on the Auto Post Shpt. as Receipt toggle if you don’t expect a subcontractor to send a separate receipt. This is because when a transfer order is posted, quantities are first posted to a transit warehouse along the specified route. If you don’t turn on the toggle, you need to then post the receipt. For components that must be provided, you can create warehouse and inventory documents, such as a warehouse receipt or shipment, from the transfer order.


For direct transfers, the medtec365 functionality requires that you’ve configured the Direct Transfer Posting and Direct Transfer Setup fields in Inventory Setup. For more information, see Post Shipments as Receipts: Transfer Orders.

Auto post consumption#

To be able to use automatically generated consumption postings, you need to set up the feature. You can also post consumption manually, if necessary.


Set the posting method on the production BOM, and—consequently—the component, to Backward.


If item tracking is turned on, store the tracking codes on the components.


This feature is only supported if you turn on the Allow Any Flushing Method for Tracked Comp. field in medtec365 Setup.


When the items are shipped, consumption is now posted automatically.

Post consumption manually#

In the production journal, you can see all consumption lines and post them manually, if necessary. The output line linked to a subcontracted operation, however, isn’t shown here, as it must be posted through the purchase order.

You can fill in the consumption journal manually or have it filled in by the system.

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