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Handling Overhead Costs for Additional Outside Operations Added to a Shop Order

  • June 1, 2026
  • 1 reply
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M
Do Gooder (Employee)
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When an additional outside operation is added directly to a Shop Order and is not part of the standard routing, the operation cost can be recorded, but the associated overhead costs are not allocated. Overhead costs appear to be applied only to operations that are defined in the routing structure.

This can occur in scenarios such as one-time rework that needs to be performed by an external supplier, where creating and maintaining a separate routing is not practical. In these cases, only the direct outside operation cost is captured, while the related overhead costs are excluded from the cost calculation.

Has anyone encountered a similar requirement?

Are there any recommended approaches in IFS Cloud to ensure overhead costs are also captured for additional outside operations added directly to a Shop Order? How are such "adjusted" Shop Orders typically handled to achieve accurate cost reporting?

Best answer by Prabashwari

Based on the current system design, overhead (OH) costs for subcontracting can only be applied when they are defined for a specific outside operation in the Outside Operation Cost page. As a result, if overhead costs need to be included for a subcontracted operation, that operation must first be defined as a routing operation.

When a Purchase Order for the outside operation is received and the operation is completed, the system adds the subcontracting overhead cost to the Shop Order based on the overhead values configured in the Outside Operation Cost page.

Therefore, if an outside operation is added directly to a Shop Order and is not part of the routing, the system will not automatically apply subcontracting overhead costs. To have both the subcontracting cost and the associated overhead cost reflected, the outside operation must be included in the routing and have the corresponding overhead cost defined.

This is the current expected system behavior and not a product defect.

    1 reply

    Prabashwari
    Sidekick (Employee)
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    • Prabashwari
    • Sidekick (Employee)
    • Answer
    • June 1, 2026

    Based on the current system design, overhead (OH) costs for subcontracting can only be applied when they are defined for a specific outside operation in the Outside Operation Cost page. As a result, if overhead costs need to be included for a subcontracted operation, that operation must first be defined as a routing operation.

    When a Purchase Order for the outside operation is received and the operation is completed, the system adds the subcontracting overhead cost to the Shop Order based on the overhead values configured in the Outside Operation Cost page.

    Therefore, if an outside operation is added directly to a Shop Order and is not part of the routing, the system will not automatically apply subcontracting overhead costs. To have both the subcontracting cost and the associated overhead cost reflected, the outside operation must be included in the routing and have the corresponding overhead cost defined.

    This is the current expected system behavior and not a product defect.

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