Mascidon, LLC

SAP Business  One Add-on Products

Outside Services

1:1 Heat Treat Service, Many : 1 Welding Service
Manufacturing firms use vendors to perform processes that are too expensive or outside of their normal manufacturing processes.  Sending machined parts to a vendor for heat treating is an excellent example.  In some instances, a manufacturer may send several components to a vendor provides assembly services.  The ERP functions involved with these types of 'Outside Services' can become complex and your staff can lose control of inventory.  Mascidon's 'Outside Service' SAP Business  One module provides the means to simplify these processes from a clerical view - thereby providing more accurate control of inventory and outside service costs.
Tracking components sent to outside service companies for processing can become a nightmare.  For instance, a heat treater may be sent 1,000 pieces.  But then they are asked to rush some of this order.  The receipts of the heat treated parts are returned in multiple batches - often overlapping with the next shipment of the same part to the service provider.  The Outside Service function:
  • Has one 'issue' screen for the clerk to enter the quantity transferred to the subcontract vendor
    • This moves the on hand of that inventory to an outside service warehouse within SAP's inventory
  • Has one 'receipt' screen for the clerk to receive items from the subcontract vendor and the system:
    • Relieves the quantity in the outside service warehouse
    • Increases the on hand of  the newly processed item in SAP's  inventory
    • Creates an A/P Goods receipt for the cost of the service - i.e. a service cost of $0.35 x quantity received
  • Provides a detailed transaction log view of the ins and outs of inventory to the subcontract vendor

In our 'weld' diagram example above, the clerk is being asked to understand and track this information:
  • Each of the 3 components needs to be sent in sufficient quantities to the subcontractor to allow them to weld the finished assembly (what if the sub-assembly consisted of 20 items - much more difficult to track inventory)
  • These components must be sent in the quantities required for the finished product - which means the clerk must do the math to determine the quantity of each item to send - assuming BOMs with quantities other than 1.
    • What does the supervisor ask the clerk to do?  - 'Send enough material to the welder to make X finished products'.  
  • With the Outside Service module, the clerk pulls up the purchase order for welding and clicks the 'Send to Sub' button.  This creates an inventory transfer document to move material from the default warehouse to the 'outside service' warehouse - (the subcontractor). 
    • The system records transfers for each of the components in sufficient quantities to the subcontract vendor  - moving the material to the 'Outside Service Vendor'. The clerk can override the quantities recommended if sending some components like screws in standard packs.
    • When products are received from the welder, the clerk creates a normal SAP Business One PO Goods receipts against the PO for the welding service.  The system will:
      • Create a Goods receipt for the welded item received
      • Issue from the outside service warehouse the quantities required for each of the components.  
      • Create a PO Goods Receipt for the cost of the service

In both of these examples, the clerical work involved is straightforward and easy to understand: Issue to sub / Receive from Sub.  An additional benefit is always having the on hand at the sub-contract vendor available for review.  And the Outside Service module has a 'Quantity at Sub' query report that shows the issues, receipts, and adjustments made to each item stored at the subcontract vendor.

Track Quantity at Sub by Transaction

This module is a SAP Business One add-on module subject to periodic updates as SAP versions change.  It does involve several user defined fields, queries, a Crystal report for the issues to sub-contractor paperwork, formatted searches and a stored procedure.  It is fully integrated with the router and cost roll-up modules.