What happens when you create a purchase order using the item category of subcontracting?

When creating a purchase order using the item category of subcontracting, the correct answer is that a supplier is responsible for providing both materials and labor. This is a defining characteristic of subcontracting in procurement processes.

In a subcontracting scenario, the buyer typically provides certain raw materials to the supplier, who then uses these materials to produce finished goods or perform processing operations. The supplier not only receives the materials from the buyer but also provides the expertise, labor, and additional services necessary to transform those materials into a finished product. This arrangement allows companies to leverage specialized skills and resources that they may not have in-house.

The expectation in subcontracting is that the supplier is fully responsible for the end-to-end process of turning the buyer's materials into a completed product, which is why they must provide both the labor and any ancillary services required for manufacturing or assembly. This comprehensive nature of subcontracting distinguishes it from other procurement categories where the supplier's responsibilities may be limited to just the supply of materials.