Are you just purchasing the part or are you subcontracting to them where you supply the components and they charge you the build cost?

We are subcontracting to them.  We purchase the components and receive the components in-house >> We then send the components to the subcontractor to polish and assemble the parts  >> We then receive the parts from the subcontractor in-house as a finished good part >> We then attach the printed label from the receipt to the part's container >> We then scan the serial number from the container to load the received part on a shipper >> We then ship the container to the customer.

OK, so that is what the issue is.  The way Sub contract works in QAD is that you will have a production schedule that is updated and will do the part consumption.
On the supplier schedule you would set this up as a sub contract and link it to the production schedule.
Basically the Supplier schedule is really a memo and has absolutely no direct impact in inventory.
What happens is when you so the receipt on the SS is will create the invoice for the Subcontract cost for the build/plating etc
It then links to the production schedule and will do the receipt (wo_rct) for the finished product and as long as the bom and routing is set up correctly it will then do the issue of the components (wo_iss)
There is no update done to the supplier schedule from MRP

Alex,
You need to do a couple of things to get the quantity to show on the supplier schedule releases for the subcontract operation in addition to what was suggested in prior posts.
Assuming you're using AUX
When setting up the Supplier schedule order line for the subcontract operation you also have to make sure the MRP Percentage is set up
Then you have to run Update Subcontract PO from Production to update the supplier schedule with the quantities from the production schedule

If you are using EE with AUX installed
set up 5.5.1.21 Subcontract Order MRP % Maint which will define how much of the production plan is allocated to the supplier schedule
run 5.5.3.1 Schedule Update from MRP to update the supplier schedule with the quantities from the production schedule

Bengt,Scheduled Order MRP % Browse is setup:
Ship-To: s2
Item Number: Part Number
Effective: 08/23/23
Percent: 100%
Decription: Part Description
Description: Part Description 2

We are running Standard Edition (SE).  I have ran Schedule Update From MRP and we are still seeing 0 in the Req Qty field when we print the schedule.

Phill,
 When we receive the part, the RCT-PO transaction occurs and the RCT-WO transaction occurs.   Once the part is received, it is then manually issued to a sales order.  Could this be the reason why we're not seeing any supplier demand? 

The sales Order has nothing to do with it.  Basically the PO (Supplier Schedule) is really a memo order so does not affect inventory.  If it did you would see double supply as you would have both the production schedule (WO) plus the SS.  Best way to think of this is that the Supplier Schedule is a "contract" where you agree to pay for the sub contract service.  What I did at one place was to create a really nice report for the production schedule that they would then send to the supplier.  they were making about 7 different products so they had 7 "contracts" and each week they would get a spreadsheet showing how many of each part they needed.  Of course to make this even easier we set up a W/C = Supplier  and even a production line set to the same code.  This way it was very easy to create the data required.
Not the perfect solution, but if you want to use the Supplier Schedule you WILL need to update that manually
Or as someone else suggested you will need to upgrade from SE to AUX

Sorry, I missed something else.  Because you are running SE remember that is an older version (last update was 2014)
So when you run Schedule Update from MRP it is actually not going to do anything to the Supplier Schedule because it is a Memo.
Which is why I suggested the workaround would be to print the Repetitive Schedule and create a simple version of that so you can send that each week to the vendor