Alerting is not available for unauthorized users, Right click and copy the link to share this comment, Approve purchase order (optional) Approval Process not, Transfer stock for subcontractor with delivery, Transfer stock for subcontractor without delivery, Goods receipt for subcontract order (without WM). Editors note: This post has been adapted from a section of the book Sourcing and Procurement with SAP S/4HANA by Justin Ashlock. Analytical apps related to PR, PO, GR, IV- Many a times, more than one subcontractor is used for manufacturing at different level of BOM. These two options are now combined into one driven by MRP areas, but it doesnt require material data on all components and can support full-lot sizing and sourcing functionality. Can we send Serialized component details as well in DESADV? When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. it again depends on the user decision. In SAP HR after hiring Hi, There's no e-books or any course materials about the QM module. Proc 30) Plastic boxes were provided to subcontractorsand they did required printing on these boxes. You cannot change the transfer the issue of components which we provided to the Subcontractor is triggered to 543 Movement type We have FIORI App -UI home page and here seeing the Tiles of FIORI apps related to Procurement. 2.Maintain the BOM for the material. The bill of materials (BOM) is a formally structured list of the components that make up a product. We are currently setting up the subcontracting process in our SAP system. Here the PO Approver can select the Individual PO from the list and approve the PO. Read on for more about the SAP Subcontracting PO Delivery Setup. Hello. Create Supplier Invoice Apps or Incoming Invoice Apps. This improves batch tracking for the sold-to party. Available quantity at the subcontractor is back to 76 packs, where the real information is 176 packs. Using the supplier portal on the Ariba Network, a supplier can login and confirm the consumption of subcontracting components into the assembly, as shown below. Legal Disclosure | Thanks and Regards, Sapmm user Find us on Privacy Terms of Use In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. Have any questions or comments? If none, a green light will turn on near Balance fieldand the SAP system will show you accounting document which will be created. 3.Create PO with item category as "L" . We use ME2O, check the box next to the material then click on create delivery. Total available inventory at the subcontractor is 176 packs, which is correct. This often is used as justification by finance and other stakeholders on the buyer side for setting up phantom plants to represent the supplier and then moving and tracking the materials in these plants. In SAP APO, a production process model (PPM) is needed at the subcontractor location. This creates a host of additional transactions for each subcontracting order and doesnt scale well. Thanks a lot. A good explanation of Subcontracting process for 2 level. Learn how to integrate SAP S/4HANA with SAP Ariba, SAP Fieldglass, and more. If possible, please mentioned any background configuration need to be maintain before this steps. Some components also come from our warehouses. The requisition for subcontracting must contain the item category L which is used for subcontracting in the SAP system. Finally, click on Postbutton to save the invoice receipt (IR). If you are newly implementing subcontracting with PP/DS or SNP heuristics in SAP SCM 410, we recommend using the production data structure instead of the production process model. Very useful content , Thanks for sharing with us. You require the subcontracting process in SAP when a companyoutsources parts of itsmanufacturing to subcontractors. As of SAP S/4HANA on-premise 1909, in the Monitor Subcontracting Documents app, you can also view the end-to-end assembly flow diagram, from first component to final assembly, for items generated by MRP. if they are ok with the PO then they can approve it else deny the PO. At the time of invoice receipt a liability is created against the vendor. PR Created and purchase requisition sent to Approval. SAP MM - Procurement Process. The SAP PRESS Blog is designed to provide helpful, actionable information on a variety of SAP topics, from SAP ERP to SAP S/4HANA. We use the ME2O transaction to manage inventory at the subcontractor, and we use inbound deliveries on all our purchasing processes (inbound deliveries are used through VL06i to provide the subcontractor a report with incoming receptions, and to create batches). 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. Again, that is not necessarily bad, depending on your accounting policies and the specific case. The outside person or company in this arrangement is known as a subcontractor. You probably know where this configuration is, but for the noobs: These are all default settings, so again not much to say here. Sound off in the comments. We purchase 100 packs from an external vendor to be shipped directly to the subcontractor. Hi Abhijeet and all @ How do we handle the subcontracting scenario where component is not a part of BOM but consumed during finished product processing. If you take a look at the delivery type defined in step (1), youll notice a setting in the Order Reference area called Default ord.ty.. Subcontracting is a critical process for many organizations, and from an SD consultants perspective its quite unique. We would love to hear your feedback in the comments section below. Material Master setting for Subcontracting Materials (MM01), Subcontract material SUBCONTRACT-01(HALB) (Sp. then Subcontracting PR and PO with Approval (Release) and then issuing Raw material to Subcontracting vendor using Transfer posting (movement type 541) and once Subcon vendor manufactures FG material -he will issue back to us and intern we are receiving the FG Material using Goods reciept against PO created for FG Material. Thanks a lot!!!! It is likely to slip through tests and bite you only down the road. Subcontracting components in an inbound delivery via DESADV IDoc Context Subcontracting purchasing with inbound deliveries used to be a paint due to problems with components provided to vendor processing - see the notes: 645119 - Problems for subcontracting using delivery Read More LE (Logistics Execution)MM PurchasingSAP ERPSAP S/4HANA 9 Create/ Change/Display Supplier App For a premium experience please use an alternative browser. Am I right or wrong? Can any one explain me the step by step procedures of Subcontracting Out Bound Delivery, I have created the purchase order with the finished and the components, the components has to be to be moved to the subcontractor with outbound delvivery, following are the settings i have maintained, 1) In the SPRO> MM>Purchasing>set up Subcontractor order>assigning plants to the delivery documet LB, 2) I have created a Customer master record in the same sales area as Material and then assigned it to the Vendor Control data(Vice versa also setting done:cCustomer master record control data vendor assigned), 3) i am using only ME2O(NOT ZERO) Transaction for the Outbound delviery, 4)when i am pressing the create delivery in the ME2o report, Essential transfer parameters are missing in record: 000001:Message no. Creating a sales order for intercompany sales. The procuring entity may provide these components to the subcontractor either directly (using one of The good receipt and the goods issuewill be done simultaneously by the SAP system. They do not provide any enhancement to decide if to fix or not to fix the subcontracting components quantity whatsoever. The SIM cards supplier will be instructed to deliver the raw material at the subcontractors premises. They are summarized below: A material BOM needs to be created before any subcontracting order can be placed. It means that the Cost(per unit) which is reflecting in MIGO is sum of raw material and the additional cost given in condition tab in subcontract PO. Itd be a big help for us, and hopefully its something we can address for you in improvement of ourfree SAP MM tutorials. Nice docs. The first line corresponds to the goods receipt of the final product, whereas the second two lines correspond to theissue of components which you provided to the subcontractor earlier. Executing an intercompany sales process. The system will generate a purchase order number internally. The process is as follows: To flag a material master directly for subcontracting, choose a half finished (HALB) or finished (FERT) material, and in the MRP2 tab maintain the Special Procurement field with option 30 for the plant, as shown below. Sales (sales order processing) Goods receipt of the parts provided (with previous contract and purchase order for the parts) Production (creating and confirming process orders) Delivery and goods issue Billing (invoice creation) When a sales order is entered a planned order is automatically created as well. Through Screen shots process is self explanatory. Option- 2 User without login to each and every Individual PO -he/she can approve directly form FIORI Home page -Inbox part. Simple and in an easy language. Im a career-long IT specialist with a focus on SAP for over 18 years. This is where you maintain all the components which need to be sent to the vendor. Again that is confirmed by the note 1397948 Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1: If, contrary to the standard design, you want an automatic correlation, this is only possible by making a modification in the class CL_SHP_LECOMP_CONTROL, method IF_EX_SHP_DESADV_IN~PROCESS_SEGMENT. The process uses what you could call a Dummy Sales Document Type. In this blog, SAP Sourcing and Procurement consultant will be able to learn the concept and mapping procedure of Multilevel Subcontracting Process with Two Subcontractors in SAP system. Therefore, it was not possible to provide components batches but with background batch determination or to adjust consumption quantities. PR creation through FIORI Apps- Create PR apps. (Movement TYpe 101). Is the Info record mandatory in subcontracting ? it is more useful apps. So, this scenario will be considered as Multilevel Subcontracting process. However even if the missing 3 pallets are stolen, you might want not to put this cost into COGS but offset that with insurance policy compensation for instance. In SAP, subcontracting is a sub-process within the MM Purchasing module and it almost always involves the delivery of goods from inventory to the vendor. Posting Transfer Posting stock from own stock to Sub contractor . The process is very similar to the generic subcontracting process (see Subcontracting ). Proudly powered by WordPress Finally, you save the subcontracting purchase order. Be aware of this nuance when implementing electronic communication of inbound deliveries in subcontracting scenarios. However, with SAP S/4HANA, a subcontracting MRP area is the default option for subcontracting planning. Proc 30). If the components for the finished product are to be provided by another supplier, you can plan as follows: Subcontracting with Third-Party Provision of Components in PP/DS, Subcontracting with Third-Party Provision of Components in SNP. Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. Complexities include PO POA ASN file uploads, customer and supplier security role customizations, batch, serial number and quality managed orders, subcontracting, consignment and invoice tax handling. I hope this blog post will be more useful to logistics consultants to understand how FIORI UI will look like for Subcontracting Process. When the subcontractor receives the raw SIM cards at his premises, he will inform the client and a goods receipt will be posted with reference to the purchase order increasing the subcontractor stock in the system. Can approve it else deny the PO fix or not to fix or not to fix not. 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