Create/Change/Display/manage/ My Purchase requisitions App Total available inventory at the subcontractor is 176 packs, which is correct. When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. You probably know where this configuration is, but for the noobs: These are all default settings, so again not much to say here. They sent a DESDAV / DELVRY07 message and it creates an inbound delivery in your system. Lets start with discussing the steps that are involved in the subcontracting process in SAP. SAP Ariba Supply Chain Collaboration for Buyers provides an extra layer of visibility that has been sought in the subcontracting process, including component receipt and consumption notices from the supplier, as well as full business-to-business-level manufacturing visibility into the suppliers progress. Finally, click on Post button to post the document. -SUBCONTRACT-01(HALB) (Sp. At the time of receipt, the raw materials for each order item will be determined and the system will create a goods issue accounting entry item for each raw material. Subcontracting process is generally used in most of manufacturing industries. It brought: Subcontracting Components in Inbound Deliveries. Please elaborate little confuse about details. 543 movement is use for reconciliation with vendor account- if we do not do 543 movement, Material stock always showing at vendor end in SAP system and it effects in MRP also- at the time of MRP run all components will consider, so its necessary to consume material from vendor location at the tome of subcontract GRN. Great blog. For subcontracting with the ME2O, Subcontracting PO, VGPOS, VGBEL, RM06ELLB , KBA , LE-SHP-DL , Delivery Processing , Problem. Steps to perform subcontracting: Create subcontracting Info record (Optional) - T Code - ME11 Anyway I have got a question: how do we proceed when we have to PRODUCE a component that need to be sent to a Vendor to get the final good? SAP ERP all versions ; SAP R/3 Enterprise all versions ; SAP R/3 all versions ; SAP enhancement package for SAP ERP all . This transaction is now available as an app, Display Subcontracting Stocks by Supplier, in SAP S/4HANA, as shown here: In SAP S/4HANA, MRP areas have to be created for every subcontractor; if MRP areaspecific material master records dont exist, MRP uses default planning parameters. Here we can see the PO is approved- this is Classical App and looks like our ECC PO screen. Really its very useful for content. Legal Disclosure | Again, that is not necessarily bad, depending on your accounting policies and the specific case. demand for the finished item in the subcontractor location, nor can you change the component demand in the subcontractor location. 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. he can add text note required if any notification sent to his next level approver. Is the Info record mandatory in subcontracting ? In this blog post, we took a look at subcontracting functionality in SAP S/4HANA for logistics. If, after the goods receipt has been posted, the vendor informs you that a larger or smaller quantity of the components was actually consumed than planned in the purchase order, you must make an adjustment. 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) SAP Stock Transfer Order and Stock Transfer Process. It is also possible to see accounting documents that were automatically generated by the SAP system during posting of material movements. user can view the list of the transactions he/she used recently in left side of the home page.using Edit option they can customize i mean arrange the FIORI apps tiles based on their requirement. Using MIGO > Transfer Posting is just one way to ship materials to a subcontractor. This purchase order shows up in the ME2O transaction. We have FIORI App -UI home page and here seeing the Tiles of FIORI apps related to Procurement. You cannot change the transfer Invoices will be entered in the system against the purchase order. Not the perfect solution but better than nothing. Subcontracting purchasing with inbound deliveries used to be a paint due to problems with components provided to vendor processing see the notes: That was mostly for batch managed components as their consumption is not executed in a dialog mode during goods receipt posting to a subcontracting inbound delivery. Nice docs. PO Approval App. My previous response was more about serial numbers on inbound delivery item level, not on subcontracting component level. The bill of material refers to the end product that the vendor will deliver. 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. 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. The vendor will be billed only for items delivered. Posting Transfer Posting stock from own stock to Sub contractor . . Another example of the subcontracting process in SAP is whena company provided raw sims and packaging materials to a subcontractor. Our 3 to RUN initiative empowers you to schedule our chosen classroom training course or virtual SAP Live Class on a date that suits you. The SIM cards supplier will be instructed to deliver the raw material at the subcontractors premises. During the Subcontracting process there is no Delivery and Purchase Order link Using ME2O transaction to create an Outbound delivery there is no direct link between the subcontracting Purchase Order and the delivery note. Account Assignment and Item Category are usually blank in a subcontracting PO. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. Trademark, SAP ERP Central Component all versions ; SAP ERP all versions ; SAP R/3 Enterprise all versions ; SAP R/3 all versions ; SAP enhancement package for SAP ERP all versions ; SAP enhancement package for SAP ERP, version for SAP HANA all versions, During the Subcontracting process there is no Delivery and Purchase Order link, Using ME2O transaction to create an Outbound delivery there is no direct link between the subcontracting Purchase Order and the delivery note, SAP Enhancement package for SAP ERP, version for SAP HANA. Goods issue items for the SIM cards (components). Thanks a lot!!!! The outside person or company in this arrangement is known as a subcontractor. Your email address will not be published. The vendor performs its service and delivers the ordered material (the end product). 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. Now, during unloading you realize that 3 pallets are missing. Subcontracting Purchase Order to SC Vendor-01, 1) Create Subcontracting Purchase Order to SC Vendor-01 for material (ME21N), 2) Indicate SC Vend in Item Detail Delivery tab to SC Vendor-02 (also tick the check box), 4) In the item detail tab,Material data click on components and Explode BOM 1. The list contains the object number of each component, together with the quantity and unit of measure. the process is same as the ECC subcontracting Process. In SAP Advanced Planning and Optimization (SAP APO), you can plan the subcontracting process in Production Planning and Detailed Scheduling (PP/DS) and in Supply Network Planning (SNP). The labor charge is JPY 2,000 per piece. You can then manually create deliveries to the vendor by selecting the materials you wish to send and clicking the Create Delivery button. Without knowing the error message, it is tough to diagnose the issue. The system will open a window with the list of documents in accounting. Proudly powered by WordPress The good receipt and the goods issue will be done simultaneously by the SAP system. We will do our best to consider your request. 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: Created a OSS message for the same and SAP confirmed that Serial number can't be added through IDOC for Inbound delivery created for sub-con PO , only Batches can be added. In general terms, subcontracting is the outsourcing ofsomeprocess to an external vendor. (Movement TYpe 101). Subcontracting with multiple production versions is supported. Display Material document App The process uses what you could call a Dummy Sales Document Type. In this scenario as shown in below structure, two raw materials (SUBCON-RM01 & SUBCON-RM01) are provided to first subcontracting vendor (SC Vendor-01). if yes do you have example idoc. Post Goods receipt for PO & Good Movement App List Material document Apps Please also include accounting-entries screenshots. In SAP APO, a production process model (PPM) is needed at the subcontractor location. In subcontracting process, raw materials are provided to subcontracting vendor. How to Configure SAP S/4HANA Asset Maintenance Subcontracting. Against each subcontracted item the system copies the material components that are to be provided to the vendor from the bill of material (BOM). Have you had to do much with your default SAP STO Delivery Setup configuration? The SAP PRESS Blog is designed to provide helpful, actionable information on a variety of SAP topics, from SAP ERP to SAP S/4HANA. 2) Keep delivery address to plant as by default. Now, click Explode BOM button to open the below screen, where you provide your components to the subcontractor. Use the IMG path below for this piece of the config: The only field worth mentioning is that Default Order Type field; the rest of this is standard delivery setup. I hope this blog post will be more useful to logistics consultants to understand how FIORI UI will look like for Subcontracting Process. At the time of invoice receipt a liability is created against the vendor. Procurement Overview Page- here we can see the overview of all the activities and we can track the process and expectation business will look for. Not using Migo or MB1B and 542 movement type. They do not provide any enhancement to decide if to fix or not to fix the subcontracting components quantity whatsoever. They are summarized below: A material BOM needs to be created before any subcontracting order can be placed. Your comprehensive guide to SAP S/4HANA sourcing and procurement is here! The rates quoted by the vendor for labour charges are mentioned in the purchase order line items. You need at least three confirmed participants to register and SAP will add it to your schedule. The procuring entity may provide these components to the subcontractor either directly (using one of | 3.Create PO with item category as "L" . How do we determine and get the alternate BOM2 in subcontracting PO creation level? It's a very good blog - thank you! In the Item Overview Screen, you need to provide Material, Quantity, Plant, and Storage Location. 5.Receive the material against the PO with movement type 101. Participants will also learn about the associated customizing settings for the selected cross- application business processes. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. 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. There are 4 key areas: The STO configuration starts with the assignment of a Delivery Type to the Delivering Plant for use in the STO process. Configuring intercompany sales. For a premium experience please use an alternative browser. Can you explain how to do this process without BOM?? What is S/4HANA? Delivery of components to subcontracting vendor (ME2O) 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) . 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. Required fields are marked *. Start it and selectDisplay against Material Documentwhile inputting thedocument number as shown below and click Enter. 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. I found a solution for this as we have to select Subcontracting Type 1 at item level. Searching PR creation apps in Apps Finder in FIORI screen. What do you think? One of the workarounds was to decouple subcontracting goods receipt and components consumption with the modification from the note 654613 Batches and goods receipt for inbound delivery for provision of materials for subcontract order. 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. In SAP APO it is not possible to change the dependent demand for subcontracting purchase requisitions. To access this piece of configuration, youll want to navigate to the IMG node below: Theres not much more here than assigning the plant to the Delivery Type. We are currently setting up the subcontracting process in our SAP system. Its being processed by subcontracting vendor, convert it to semi-finish material and deliver back. Activating PR & PO Approval Notification. 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. Click on Simulate button which will notify you of any errors. If none, a green light will turn on near Balance fieldand the SAP system will show you accounting document which will be created. user will convert to PO. Alerting is not available for unauthorized users, Right click and copy the link to share this comment. 3.Create PO with item category as "L" . No matter which process is utilizing subcontracting, it will always involve a Purchase Order. Many a times, more than one subcontractor is used for manufacturing at different level of BOM. I can not see the images Any idea why or how could I see them? Next,click on Check button to check whether the document is OK. If possible, please mentioned any background configuration need to be maintain before this steps. Please let me know in the comments. The components are posted to the stock of materials provided to the vendor. When the vendor delivers the ordered packaged SIM cards (the end product), the goods will be received against the finished product with reference to the purchase order. Inbound processing is therefore more efficient since manual batch entry tasks are removed. Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan. Did you like this SAP MM tutorial? 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. When delivery papers are needed, a delivery should be created. Is there a process to bring components back from the Subcontractor . What is the process to create a RMA for a subcontract purchase order? To upgrade MRP subcontracting processes in SAP ERP to SAP S/4HANA, you need to take stock of your existing subcontracting suppliers and processes and identify any gaps, execute a standard upgrade to SAP S/4HANA, and then at post-processing proceed as follows: The standard subcontracting process in SAP entails a leap of faith to a degree, which some MRP controllers and their ilk are unwilling to make. The subcontracting requisition lists the finished material that is to be procured in a subcontract item. If you like to extract the list of Apps in excel- then we need to use below Option List View. it is more useful apps. How to receive additional components left after making finished product. Therefore no need to transfer the material through ME2O. Some supplier relationships require you as the purchasing organization to provide the supplier with the components used in their part of the value creation. As subcontracting Process everybody knows and it is not a new topic.. To create a subcontracting purchase order, start the transaction ME21N or navigate to thefollowingpath in SAP menu:Logistics Materials Management Purchasing Purchase Order Create (ME21N). Here, the manufacturer places an order with an assembly provider for a certain number of finished goods, then provides the parts that the assembly supplier is to use for putting the finished product together. 5 * Rating. Editors note: This post has been adapted from a section of the book Sourcing and Procurement with SAP S/4HANA by Justin Ashlock. Get step-by-step instructions to configure sourcing, invoicing, supplier management and evaluation, and centralized procurement. but here the difference we are using FIORI UI instead of GUI Interface. Please keep posting the knowledge. Capable-to-Match planning (CTM)supports subcontracting with source location in PP/DS and in SNP, and subcontracting with third-party provision of components in PP/DS and in SNP. 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. Make a request for us to schedule training around what works for you? If you chose the MRP area route, material data on an MRP area was required for all components. The PPM consists of components and operations. User can login the the Individual PO and can monitor the PO details and approve it. 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. Is this possible? Explore ABAP, FICO, SAP HANA, and more! Once PR is approved by Purchasing department top level authority. The setup should already be done for you; these are all standard configuration settings which are typically pre-delivered. The requisition for subcontracting must contain the item category L which is used for subcontracting in the SAP system. The subcontractor converted the raw sims into finished sims well packed and returned finished product back to the company. Here in the highlighted box you provide the number of your subcontractor. 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. using GR for Purchase order with Movement type 101. Therefore the 27 pallets received will be 10% more expensive than planned. System will allow to receive same serial number after subcontracting. Thanks a lot. The subcontractors charged the company for their services rendered per box. Im going to highlight the standard configuration as it exists within a standard S/4 HANA system. 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. Below are the steps involved in this process. You order the end product using a subcontract order. Finally Posting Invoice verification (Supplier Invoice). Have any questions or comments? 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. The most straightforward way to support subcontracting processes is to use the standard subcontracting approach in the system. Use transaction MIGO to provide components to the subcontractor. In this process, components are shared to vendor to get the final product. 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. Thanks. In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. To illustrate with an example, your company manufactures lenses. The consumption of the components is posted. SAP PRESS is the world's leading SAP publisher, with books on ABAP, SAP S/4HANA, SAP CX, intelligent technologies, SAP Business Technology Platform, and more! Subcontracting is a form of procurement in which the product to be procured is manufactured by a supplier (the subcontractor) to whom the procuring entity supplies components for the purpose. Thats about it. Any one help me to this query ASAP? Thanks for visiting. First, well start with. Therefore, it was not possible to provide components batches but with background batch determination or to adjust consumption quantities. As explained above, this is mostly for determining things like copy control and to help determine item categories. Dear Experts, In Subcontracting process if the subcontracting period of 180 days is completed and if material is still with Vendor, how to complete the process. The next step in the subcontracting process is the transfer of the repairable part together with additional components to the vendor. Theme: Baskerville 2 by Anders Noren. As a result, the material document will consists of the following items: The goods receipt will be valuated at the subcontract price plus the value of the SIM cards consumed. Create Supplier Invoice Apps or Incoming Invoice Apps. SAP MM - Procurement Process. It can also be done through via MIGO transaction. Many small and midsize businesses hire subcontractors to assist with a wide variety of functions. Analytical/ Report related Apps in FIORI. The ME2O tcode no longer shows the expected receipt to the subcontractor ! For example, one company that manufactured batteries needed specialized printing services which were outsourced to subcontractors. Very useful content , Thanks for sharing with us. I'm a career-long IT specialist with a focus on SAP for over 18 years. For example, assume you create a subcontract order for the assembly of 10 engines. We purchase 100 packs from an external vendor to be shipped directly to the subcontractor. Material Master setting for Subcontracting Materials (MM01), Subcontract material SUBCONTRACT-01(HALB) (Sp. ME2O after purchasing and before inbound delivery creation. You create a subcontract order, following the standard procedure. A Dummy Sales Document type is used to allow things like Copy Controls to be used for this unique process. We are sending and receiving same material and same serial numbers. Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. There are relatively few logistics-related fields. Sir, Once again thanks a lot for all your efforts. 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). Do Invoice Verification for first subcontracting purchase order (MIRO), Goods receipt for second Subcontracting purchase order items (MIGO). System throws error message and wont allow to receive same serial number. And, of course, your Master Data must be setup: Assignment of the STO Delivery Type (LB) to the Delivering Plant, Assignment of the Default (Dummy) Sales Order Type (DL) to the STO Delivery Type, Configuration of the Default Order Type Setup (DL), Assignment of Copy Control Settings between the Sales Order (DL) and the Delivery (LB). Thanks for the question, Kumar. (here material and components are MAT1 only). Unfortunately they did not. 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.. I wanted to highlight this process because it is cross-functional and is a bit different than other SD processes.