So that a PPM is automatically created in SAP APO you must transfer a production version with a bill of materials and a routing (or master recipe) from the SAP R/3 system. The first line corresponds to the goods receipt of the final product, whereas the second two lines correspond to the issue of components which you provided to the subcontractor earlier. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. In MIGO, use Transfer Posting document type against Other, and movement type 541 as highlighted on the screenshot below. 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). Post Goods receipt for PO & Good Movement App You require the subcontracting process in SAP when a companyoutsources parts of itsmanufacturing to subcontractors. 2.Maintain the BOM for the material. 6.MIRO to account for vendor's invoice for the service charge& material used by him. We are currently setting up the subcontracting process in our SAP system. The Latest ERP from SAP. Some components also come from our warehouses. Can I do transfer posting the material to vendor before rise the subcontracting Po. Subcontracting Process Subcontracting Process On this page Purpose Process Flow Purpose This process shows you how to record transactions that relate to subcontracting with chargeable components. Your email address will not be published. So it will automatically explode when we create purchase order. Billing the customer. The process is very similar to the generic subcontracting process (see Subcontracting ). Lets take a closer look at the handoff from Purchasing to the SD Delivery. (here material and components are MAT1 only). I hope this will be more thrill and give happiness when working in FIORI. As mentioned previously, the STO keys off of a Purchase Order. Now, when the subcontractor returned the materials after performing the workyou need to enter the received finished material back into the SAP system by using the transaction MIGO. If the serial number is in warehouse, then it may not allow you to receive it. 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. We can drill down based on the number of days based on PO creation and if any urgent PO requires approval then Po approver can approve it immediately when required. Executing an intercompany sales process. 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. If there are any additional charges required, you input them in the Conditions tab as shown on the screenshot below. The SAP PRESS Blog is designed to provide helpful, actionable information on a variety of SAP topics, from SAP ERP to SAP S/4HANA. You cannot change the transfer Activating PR & PO Approval Notification. Very easy to understand now. Adding this value will open up the Components button located on the item Material Datatab. if they are ok with the PO then they can approve it else deny the PO. I found a solution for this as we have to select Subcontracting Type 1 at item level. As the worlds leading SAP publisher, SAP PRESS goal is to create resources that will help you accelerate your SAP journey. When we hire Privacy | This is a concern to us as ME2O is used as a cockpit to manage transfers and/or external purchasing for components and we need to have accurate information on stock levels any time in the process. SAP MM - Procurement Process. its plants), or indirectly (using another of its suppliers). could you please add by product and co product scenarios in subcontracting process, If subcontractor not consumed all the components/ who need more subcomponents against same order , then how to issue additional components Posting the goods receipt for a third-party purchase order. Through VL31n tcode, we create the inbound delivery and the new batch for the material. A subcontracting purchase order is placed by converting the subcontracting requisition into a purchase order. 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 Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. Create Supplier Invoice Apps or Incoming Invoice Apps. We want to receive back MAT1-100020. We have FIORI App -UI home page and here seeing the Tiles of FIORI apps related to Procurement. It can also be done through via MIGO transaction. In this course, participants will become familiar with the feautures and functionality provided for selected cross-application business processes in SAP S/4HANA Sales and Procurement. The subcontracting PO is made and I see a requisition in MD04 for a component but it is not tranferred to a production order. Imagine the following, quite typical scenario. This can be doneeither manually or through the use ofa BOM. Get unlimited access to all SAP PRESS books! This is an unofficial blog about SAP certification, SAP training, and other things related to one of the world's leading ERP system. This approach requires more manual effort and accounting acrobatics than is optimal. Is this possible? (It is already delivered). Nice docs. The system proposes the labor charge from the info record for the subcontracting product. This is done when SC Vendor-02 sent finished product to our warehouse. That was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was released. Hello. Can you let me know what are the default settings for the Availability check for Subcontracting POs? Process flow of basic subcontracting process with deliveries 1 - ME21N - Making Subcontracting Purchase Orders In order to create a subcontracting purchase order it is necessary to choose an item type 'Subcontracting': 'L' as highlighted in the screen below. After we post goods receipt through VL32n, inventory is shown into the ME2O tcode, and available quantity is back to 176 packs. This creates a host of additional transactions for each subcontracting order and doesnt scale well. 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. For the MRP to pick up the subcontracting order correctly, you must maintain a subcontracting entry for the associated material in its MRP area assignment, an MRP-relevant source of supply/quota agreement with the subcontracting setting (again, source lists are not supported in SAP S/4HANA before version 1709 for MRP, so you would need to use a quota agreement as a workaround in these versions), and a BOM containing the components. Now, during unloading you realize that 3 pallets are missing. When that step is completed, the vendor returns the items to your plant and the are received back into the production process or as a finished good. 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. Sir, Subcontracting is one of the procurement processes available in MM. I suspect, however, that the issue is that perhaps the status of the serial number is not being updated properly. Procurement should be done in such a way that materials are ordered in correct quantity, with a proper value at the proper time. Goods issue items for the SIM cards (components). This enables you to assign information about the batches used and the component quantities in the inbound delivery. You need at least three confirmed participants to register and SAP will add it to your schedule. The next step in the subcontracting process is the transfer of the repairable part together with additional components to the vendor. In this scenario as shown in below structure, two raw materials (SUBCON-RM01 & SUBCON-RM01) are provided to first subcontracting vendor (SC Vendor-01). 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. Get step-by-step instructions to configure sourcing, invoicing, supplier management and evaluation, and centralized procurement. I am a husband and father. It brought: Subcontracting Components in Inbound Deliveries. Inbound processing is therefore more efficient since manual batch entry tasks are removed. it is more useful apps. Without knowing the error message, it is tough to diagnose the issue. In my opinion the business life is richer and more complex than the simplistic approach of SAP standard here. using Transfer posting Option and movement type 541. it again depends on the user decision. Proc 30). For each transaction requiring subcontracting, you then have to issue a PO and create multiple goods movements and accounting entries internally to support the process. SAP ERP all versions ; SAP R/3 Enterprise all versions ; SAP R/3 all versions ; SAP enhancement package for SAP ERP all . Create/Change/Display/manage/ My Purchase requisitions App How to manage serialized material for subcontracting repair? Finally, click on Postbutton to save the invoice receipt (IR). Click to share on LinkedIn (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Reddit (Opens in new window), Click to share on Pocket (Opens in new window), SAP Humor: the adventures of the new spaceship BERID, SAP Settlement Management: The Multiple Contract Condition Problem. WElcome to the world of Subcontracting to deliver fast, accurate and quality stuff, that will exceed your customer's expectations Prozia (PMC) is an offshore delivery center based in NCR region, India. Thanks a lot. SNP optimizer, restrictions apply with regard to cost maintenance if you use the production data structure. List Material document Apps Simple and in an easy language. I'm looking forward for the next ones , Thanks for sharing. We would love to hear your feedback in the comments section below. This is my first blog on SCN and I want to share my knowledge on Multilevel Subcontracting Process. Finally, click on Post button to post the document. Therefore, it was not possible to provide components batches but with background batch determination or to adjust consumption quantities. Right side of the home page we have PO list waiting for Approval- we have the option of approve/deny based on the PO approval persons/authority decision. Also, you need to provide Material, Quantity, Delivery Date, Plant, and Price. To illustrate with an example, your company manufactures lenses. Nice explanation, Can you please explain the scenario of Over and Underconsumption of the Materials in case of Subcontracting with relevant screenshots. System automatically selects movement type 101 O (GR to SC Vendor). Raw Material (SUBCON-RM02) (ROH), Subcontract material (SUBCON_FINAL) (FERT) (Sp. Upon issuing a subcontracting PO and shipping out the components to the supplier, the buyer doesnt technically receive updates on the production of the order until the final product or subassembly with the components is shipped back from the supplier to the buyer. Now, lets display thedocument that we have just created. Invoices will be entered in the system against the purchase order. Save my name, email, and website in this browser for the next time I comment. SAP Menu Path to ME21N Transaction In ME21N transaction, you need to select a Document Type and provide a Vendor as shown on the below screenshot: Create Subcontracting vendor in FIORI. You create a delivery for the lenses to be shipped to your vendor. Subcontracting is a critical process for many organizations, and from an SD consultants perspective its quite unique. If none, a green light will turn on near Balance fieldand the SAP system will show you accounting document which will be created. Im a career-long IT specialist with a focus on SAP for over 18 years. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. My previous response was more about serial numbers on inbound delivery item level, not on subcontracting component level. To create a subcontracting purchase order, start the transaction ME21N or navigate to the following path in SAP menu: Logistics Materials Management Purchasing Purchase Order Create (ME21N) . Option- 2 User without login to each and every Individual PO -he/she can approve directly form FIORI Home page -Inbox part. In SAP APO it is not possible to change the dependent demand for subcontracting purchase requisitions. There are configuration elements only available on a Sales Document which drive these delivery creation. Please explain detail steps and Tcode. Help. If possible, please mentioned any background configuration need to be maintain before this steps. Thanks for your reply. Finally Posting Invoice verification (Supplier Invoice). Steps to perform subcontracting: Create subcontracting Info record (Optional) - T Code - ME11 Im going to highlight the standard configuration as it exists within a standard S/4 HANA system. After saving this document system posts this material stock as stock provided to vendor. They charged the company for their services rendered. 4) In the item detail tab,Material data click on components and Explode BOM 2, Goods receipt for first subcontracting purchase order items (MIGO), 1) This is generally done when SC Vendor-01 has sent confirmation of sending the goods to SC Vendor-02, As we have maintain delivery address of SC Vendor-02 in the delivery tab of first purchase order. To receive material against the purchase order, SIM cards and packaging materials need to be issued to the subcontractor. The components are then supplied to the vendor. Easily understood and completed my Sub-contracting entry. Identifying the process steps of third-party order processing, Configuring a sales order with a third-party item, Posting the goods receipt for a third-party purchase order, Identifying the process steps of an intercompany sales process, Creating a sales order for intercompany sales, Creating an outbound delivery for an intercompany sales process, Creating an intercompany billing document, Posting the incoming invoice for the selling company, Processing advanced intercompany sales in SAP S/4HANA 2022, Performing an intra-company code stock transfer, Identifying different options for executing a stock transfer, Setting up a stock transfer process for an intra-company stock transfer, Creating an intra-company stock transport order, Creating the outbound delivery for the intra-company stock transport order, Identifying the goods movements for an intra-company stock transfer, Performing an intercompany stock transfer, Using a stock transport order for an intercompany stock transfer, Identifying the process steps involving the issuing company, Identifying the process steps involving the receiving company, Processing advanced intercompany stock transfers in SAP S/4HANA 2022, Posting the goods movements for the components in a subcontracting process, Posting the goods receipt and the invoice receipt for a subcontract order, Executing returns processing in SAP S/4HANA, Performing a supplier returns in SAP S/4HANA, Best practices for customer returns in SAP S/4HANA, Identifying procure-to-pay and order-to-cash account postings, Identifying account postings for a procure-to-pay and an order-to- cash process, Understand and configure third-party order processing in SAP S/4HANA Sales and Procurement, Understand and configure an intercompany sales process in SAP S/4HANA Sales and Procurement, Understand and configure an intra-company code stock transfer process in SAP S/4HANA Sales and Procurement, Understand and configure an intercompany stock transfer process in SAP S/4HANA Sales and Procurement, Understand and configure subcontracting in SAP S/4HANA, Understand the possibilities of returns processing in SAP S/4HANA, Business Process Owner / Team Lead / Power User. ; SAP R/3 Enterprise all versions ; SAP enhancement package for SAP ERP all versions ; SAP package... 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