Required fields are marked *. Thanks for visiting. 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. Procurement Overview page Apps. I'm looking forward for the next ones , Thanks for sharing. Generally, SAP SD processes rely upon copy controls to define how documents and data are copied from the source (i.e. Do you need to create a recipe for sub-contracting process? Please elaborate little confuse about details. 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. Delivery). Create/ Change/Display Supplier App If none, a green light will turn on near Balance fieldand the SAP system will show you accounting document which will be created. They charged the company for their services rendered. In subcontracting process, raw materials are provided to subcontracting vendor. 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. Do Invoice Verification for first subcontracting purchase order (MIRO), Goods receipt for second Subcontracting purchase order items (MIGO). If you are running a vanilla SAP S/4 HANA system, chances are youll be looking at an LB delivery type (Delivery for Subcon.). The SIM cards supplier will be instructed to deliver the raw material at the subcontractors premises. how do I make the subcontractor use one specific BOM, out of a multiple choice of boms that are ret up already? This can be doneeither manually or through the use ofa BOM. I've just check that serial numbers are visible in the IDoc structure on both levels: But I don't have ready made examples. Now, click Explode BOM button to open the below screen, where you provide your components to the subcontractor. In ME21N transaction, you need to select a Document Type and provide a Vendor as shown on the below screenshot: In the Item Overview screen, you need to use Item Category L which is used for subcontracting documents. Some components also come from our warehouses. 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? Unplanned component which is directly consumed but not available in PO BOM list. But SAP does not give here any flexibility. Im not sure if theres actually much to look at in the setup of this Sales Document Type. This is where you maintain all the components which need to be sent to the vendor. Finally, click on Post button to post the document. Standard Process Flow ME21N - Purchase order creation MIGO_TR - Send components to a subcontractor 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. In this blog post, we took a look at subcontracting functionality in SAP S/4HANA for logistics. Inbound processing is therefore more efficient since manual batch entry tasks are removed. 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). This approach requires more manual effort and accounting acrobatics than is optimal. Can we have subcontracting order without BOM/Components. Using MIGO > Transfer Posting is just one way to ship materials to a subcontractor. 2) Keep delivery address to plant as by default. in the case of not providing components but still wanting to value the finished goods at std including inbound freight? Create/Change/Display Bill of material (BOM) App If the material is managed with batches, a batch number will be shown as well. 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. A subcontracting purchase order is placed by converting the subcontracting requisition into a purchase order. View all posts by Michael. The vendor performs its service and delivers the ordered material (the end product). 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. Thx. 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: Really its very useful for content. Every organization acquires material or services to complete its business needs. 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. External subcontracting in procurement Create purchase order Approve purchase order (optional) - Approval Process not Transfer stock for subcontractor with delivery Process deliveries and picking Transfer stock for subcontractor without delivery Goods receipt for subcontract order (without WM) Record results Record usage decision Verify invoice You have the following options: If the components for the finished product are to be provided by the ordering party (plant), you can plan as follows: Subcontracting with Source Location in PP/DS, Subcontracting Without Source Location in PP/DS, Subcontracting with Scheduling Agreements in PP/DS, Subcontracting with Source Location in SNP. SAP Training Shop is not currently supported on Internet Explorer. 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. Participants will also learn about the associated customizing settings for the selected cross- application business processes. Now, during unloading you realize that 3 pallets are missing. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. Delivery of components to subcontracting vendor (ME2O) Create/Change/ Display material App 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). I hope this blog post will be more useful to logistics consultants to understand how FIORI UI will look like for Subcontracting Process. Implementation of "External Material Processing using Production Orders": Develop a process in SAP to support all efforts related to External Processing using Production Orders as the method for subcontracting. When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. The outside person or company in this arrangement is known as a subcontractor. 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. Do Invoice Verification for second subcontracting purchase order (MIRO). Easily understood and completed my Sub-contracting entry. Option- 2 User without login to each and every Individual PO -he/she can approve directly form FIORI Home page -Inbox part. Your email address will not be published. SAP Steps: 1.Create the finished goods material code. Subcontracting refers to the process of entering a contractual agreement with an outside person or company to perform a certain amount of work. Depending on the case it may be correct or not. 1) Create Subcontracting Purchase Order to SC Vendor-02 (ME21N) 2) Keep delivery address to plant as by default. SAP process: 1.Create the finished goods material code. The SAP PRESS Blog is designed to provide helpful, actionable information on a variety of SAP topics, from SAP ERP to SAP S/4HANA. Identifying the process steps of an intercompany sales process. Please also include accounting-entries screenshots. Now, during unloading you realize that 3 pallets are missing. 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. The components are then supplied to the vendor. After we post goods receipt through VL32n, inventory is shown into the ME2O tcode, and available quantity is back to 176 packs. The PPM consists of components and operations. As subcontracting Process everybody knows and it is not a new topic.. 1) Post Goods Issue according to the Purchase Order number (4500000863) above. Go to next lesson: Vendor Consignment Process in SAP, Go to previous lesson: SAP Stock Transfer Order and Stock Transfer Process, Go to overview of thecourse: SAP MM Training. Hello. In this scenario as shown in below structure, two raw materials (SUBCON-RM01 & SUBCON-RM01) are provided to first subcontracting vendor (SC Vendor-01). The process of buying materials and obtaining services from vendors or dealers is called procurement. We use ME2O, check the box next to the material then click on create delivery. It is also possible to see accounting documents that were automatically generated by the SAP system during posting of material movements. Make a request for us to schedule training around what works for you? Here in the highlighted box you provide the number of your subcontractor. Create/Change/Display Procurement Info record App 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. You require the subcontracting process in SAP when a companyoutsources parts of itsmanufacturing to subcontractors. 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. 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