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Which procurement method should be chosen for sub-components?

Jeff Beidler
on 1/9/15, 5:27 PM 875 views

For finished goods with a procurement method of "Make to Stock", having sub-components which are both manufactured and purchased, which procurement method should be chosen for the sub-components?  Or does it matter?  Does the parent item drive the purchase/manufacture of all the sub-components, regardless of how their individual procurement method is set?

Pierre Gault
On 1/9/15, 5:40 PM

Hello Jeff,

The procurement method is important for finished goods and sub-components.

As your finished good is in MTS, the production will be launch when the stock level goes below minimum stock. Then, the manufacturing order will put request of procurement of all sub components needed.

So, if the sub component is in MTS, it will look at the stock level before asking the supply (buy or manufacture. But if the subcomponent is in MTO, it will create a PO or MO automatically.

In conclusion, the procurement method of a sub component does not depend on his parent finished good's procurement method.

Okay, I *think* I get it . . . If I want to make 100 of my finished product, and the sub-components are set to "Make to Order", the system will generate MO/POs for all the sub-components without first checking to see if there are any in stock? And if the sub-components are "Make to Stock", the system will use what's available in stock before generating additional MO/POs for the remaining balance needed? Is that right?

Jeff Beidler
on 1/9/15, 5:49 PM

Yes, that is right.

Savoir-Faire Linux, Pierre Gault
on 1/12/15, 10:21 AM

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Asked: 1/9/15, 5:27 PM
Seen: 875 times
Last updated: 3/16/15, 8:10 AM