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Setting Up Inventory

Use the Items window to define and maintain outside processing items. These items can be non-stocked items which represent the actual supplier contribution in your build process or you can define the assembly itself as an outside processing item. You must define and maintain these outside processing items across all organizations that use them, including the inventory organization you define in Purchasing. See: Defining Items.

Define Outside Processing Items

When you define outside processing items for outside processing, you must define certain item attributes in the Items window. (See: Purchasing Attribute Group.) These attributes let you link outside resources to the outside processing items and then include the items on outside processing requisition and purchase order lines. For each outside processing item, you must define the following:

Outside Processing Item

Set this attribute to Yes to link an outside processing item with an outside resource and to include an item on an outside processing purchase order line.

Purchasable

Set this attribute to Yes to include an item on a purchase order line.

Outside Processing Unit Type

You can requisition outside processing items from Work in Process in two ways. You can requisition them based on the number of assemblies you are moving into the outside operation. Or, you can requisition them based on the extension of the number of assemblies times the usage rate or amount of the resource. In either case, you always charge the job or repetitive schedule using the extended quantity for the associated outside resource.

If you want to requisition one outside processing item for each assembly you ship to a supplier, then you should set the Outside Processing Unit Type to Assembly.

For example, suppose your frame assemblies each require one plating service. You would set up a "Plating" outside resource and a corresponding "Plating" outside processing item to represent this outside service. You should also set the unit of measure of the frame assembly and the "Plating" outside processing item to be EA for each. Finally, you need to assign the "Plating" outside resource to the frame assembly routing and enter the appropriate usage rate or amount and a basis of Item.

When you move one EA of the frame assembly into the outside operation, Work in Process automatically requisitions one EA of the "Plating" outside processing item. Later, when you receive one EA of the plated assembly back from the supplier, Purchasing relieves the purchase order for one "Plating" item. Purchasing charges the job or repetitive schedule one frame assembly times the usage rate or amount of the "Plating" outside resource using the outside resource's unit of measure.

If you want to requisition the usage rate or amount of the outside resource for each assembly you move to an outside operation, you should set the Outside Processing Unit Type to Resource.

For example, suppose your frame assemblies each require three hours of plating machine time. You would set up a "Plating" outside resource and a corresponding "Plating" outside processing item to represent this outside machine time service. You should also set the unit of measure of the outside resource and the outside processing item to HR for hours. Finally, when you assign the "Plating" outside resource to the frame assembly routing, you should set the usage rate or amount to three for three HR of plating machine time per assembly.

When you move one EA of the frame assembly into the outside operation, Work in Process automatically requisitions three HR of the "Plating" outside processing item. Later when you receive the plated frame assembly back from the supplier, Purchasing relieves the purchase order for three "Plating" outside processing item HR and charges the job or repetitive schedule for three "Plating" outside resource HR.

  Outside Processing UOM Type = Assembly Outside Processing UOM Type = Resource
Outside Processing Item UOM Equals the job or repetitive schedule assembly UOM. Equals the outside resource UOM.
Req/PO/Receipt * Equals the assembly move quantity using the outside processing item UOM. Equals the assembly move quantity times the outside resource usage rate or amount using the outside processing item UOM.
Charge work in process job or repetitive schedule Charge the receipt quantity times the outside resource usage rate or amount using the outside resource UOM. Charge the receipt quantity using the outside resource UOM.

Table 1 - 28. (Page 1 of 1)

* Assumes the outside resource associated with the item has a basis of Item

Maintain Outside Processing Items in Multiple Organizations

You must maintain each outside processing item you define across all organizations that use the item in outside processing. This includes the Purchasing inventory organization that you establish in the Financials Options window (See: About Financials Options.) as well as each of the work in process organizations you use for building your assemblies. Each of these organizations should be part of the same master organization for ease of maintenance.

When you requisition and purchase an outside processing item, Purchasing validates the item attributes for the item definition in the inventory organization. For example, purchasing makes sure the item is an outside processing item and that it is purchasable. Purchasing then enters the work in process organization for the job or repetitive schedule as the Ship-To organization on the purchase order line shipment. When you receive against the purchase order line shipment you must be logged into the Ship-To organization.

Define Units of Measure (UOM)

When you define outside resources in Bills of Material and outside processing items in Inventory, you must also define a primary UOM for each entity. See: Defining Units of Measure.

Purchasing always purchases an outside processing item in the item's UOM and charges the job or repetitive schedule in the resource's UOM. Purchasing can optionally receive an item in an alternate UOM. See: Creating a Routing.

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