Subcontract Order – An overview

Airline operators and MROs may require services such as cleaning, painting, supply of ad hoc items and upholstery work from third party service providers. Such services could also be for conversion, or plain services through a Sub Contract Order (SCO).

Subcontracting refers to a business scenario in which an enterprise decides to off-load all or part of its operations to an outside agency at an agreed price, terms and conditions. The reasons for subcontracting could be strategic consideration of core competency, economic make or buy consideration, supply side market condition or capacity constraints of the enterprise.

Currently, two types of Sub Contract Orders can be created. They are ‘Normal’ and ‘Ad hoc’. Normal Orders refer to procurement of services from the suppliers. Ad hoc Orders refer to the procurement of non-codified items from the supplier.

Supply of ad hoc items

Supply of ad hoc items (one-time purchase items, where there is no assigned code for items and such items are identified by their nomenclature)

Supply of normal items

Supply of normal items can be fullfilled with the following types of services:

• Regular Type: Supply of cleaners, crane services and transport services. – Regular Type

• Activity Type: Boroscope inspection of an engine compressor blades during engine servicing by an operator

• Conversion Type: Order for a structural member such as stringer and angle according to standard procedure and taking raw materials from an operator – Conversion Type

The basic process is to identify the service provider and list of service items to be ordered. Parts issued to the supplier can be specified in the issue list. Parts to be received from the supplier can be specified in the receipt list. The advance payment details too can be recorded along with the payment terms and conditions. The delivery terms too can be specified in case non-codified items are being procured. Taxes, charges applicable and discounts offered can be recorded both at the document level and individual item level.

The component is workflow-enabled and the document can be routed to various people for authorization using the workflow configuration.

The document may be returned, instead of being authorized, by the authorizer if he/she feels that some corrections are required. In this case, the document can be edited to make the necessary corrections.

After authorization, if some corrections are necessitated, the document can be modified via amendment of the same. It is possible to make amendments as long as all the items ordered are not acknowledged as received. After amendment, the document has to go through authorization again.

In case of some dispute with the supplier, the order can be suspended via the Hold/Release activity. On settlement of the same, the order can be released.

It is possible to shortclose the order without full receipt of the services ordered, should the need arise. In this case, the pending services cannot be received. The order is considered as closed.

Getting familiar with the activities