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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. In trade365, you can use transfer orders to ship both to the vendor and print shipment notes based on the transfers you posted.

When you later post the subcontracted work as received, each item consumed during the completion of requested operations is then taken from the vendor’s warehouse instead of your own.


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 the subsections of this chapter.

Production BOMs and BOM versions#


You must fill in the Routing Link Code field for the relevant production BOM (or version), to specify parts as raw materials supplied to a vendor. You also need to fill in the Type of Part Provided field (see the following table).

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 The material or item is shown on the BOM in a FactBox, for informational purposes. As all materials and items are purchased by the vendor, their costs are included in the total subcontractor price.

This option is also used if the materials or items needed to finish subcontracted work are provided by one of your customers, as no inventory or warehouse postings must be made in this case.
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. Like in the standard app, you must first enter the operation before you can link the part to 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#


Field Description
Task Code
Fill in this field if a subcontractor takes over multiple operations, each with its own price tag. The code is then used to separate tasks on the purchase order created for the vendor.

You do not need to fill in this field if only one operation is subcontracted per item.
Routing Link Code Specify a code for the routing link.

Work center card#


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.

As for taxation, you might need two groups, one for subcontractors who charge the full tax and another for those whose work is subject to a reduced rate.


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.

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 trade365, 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 can be stored in combination with:

  • 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

To have ending dates assigned to subcontractor prices automatically when a new price is created, you need to turn on the Auto Close Subcontractor Prices toggle in Manufacturing Setup. The ending date that is filled in will be one day before the new price becomes valid.

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 should also set up a transfer order type called Subcontract Transfer. For more information, see Order Types.

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, 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.

Change a vendor#

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

Carry out 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 will be printed as well.

The relevant order type is also set automatically if purchases originate with a subcontracting worksheet, although the type can be changed, if necessary. It is used to prefill certain order data, 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.

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 shipment#

After you post the purchase order, a warehouse receipt containing the items manufactured is posted. At the same time, the inventory level at the vendor’s location is reduced by the component quantity provided (and then consumed) during manufacturing.

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


With the Check Rcvd. Not Invd. Subcontrd. Orders toggle in Manufacturing Setup turned on, a production order cannot be finished before all subcontractor invoices related to the order have been posted in full. We recommend that you turn on this toggle so that a unit cost statement always includes the subcontractor prices you specified and isn’t readjusted.


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 you don’t receive separate receipts from a subcontractor, you can turn on the Auto Post Shpt. as Receipt toggle on the same FastTab; else, the goods supplied to the vendor would remain in the specified in-transit location, and you would need to post the inventory put-away for the vendor separately.

If an actual item, that is, a semi-finished product, is sent along, the amount shipped isn’t shown in the Quantity but the Subcontractd. Qty. field. This is because the item hasn’t been put into inventory yet.

Materials provided to the vendor, on the other hand, are shown in the Quantity field, as they must be taken from the subcontractor’s warehouse (with Type of Parts Provided set to For Order).

You can then ship the relevant components to the subcontractor via transfer.


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.

Subcontracting and auto posting#

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 data with the components.


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.

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