How to print a "vendor note" in Microsoft Dynamics 365 Finance and Operations Enterprise for every shipment of subcontracted products

In many of the most basic subcontracting scenarios, we have a routing operation that is done somewhere at a subcontractor, like heat treat, sand blast, or anodize. Although we ship a physical product to the vendor, which is the part number that is  being manufactured by the production order, there is no inventory leaving our AX system. All remains Work in Process. This means, painfully, that there is no direct visibility of our product sitting in a vendor warehouse.

The fact that the subcontracting operation is ‘in process', tells us indirectly that our item is at the vendor. (See my other article on subcontracted work.) If any cycle count would occur during this time, our product is in WIP and is typically not counted.

To better manage the subcontracting process, some organizations find it helpful to create the standard vendor note in Dynamics AX or 365 Finance and Operations Enterprise. It provides a type of shipping document that can go with the product while no actual physical shipping is taking place.

Setup required

Create a vendor resource group

A vendor Resource group and a vendor resource are mandatory if one wants to produce that vendor note. Getting a subcontracted PO works fine without having a subcontracted operation. But the vendor note needs a routing step to be linked to the BOM line in order to produce that Vendor Note.

The resource group should get almost the same ID as the vendor resource, maybe by adding -G at the end. We need this 1-1 relationship. And don't forget the calendar, even though we don't do capacity planning for subcontracting (that is the subcontractor's problem).