Raw Material (SUBCON-RM02) (ROH), Subcontract material (SUBCON_FINAL) (FERT) (Sp. Procurement Overview page Apps. 2.Maintain the BOM for the material. Available quantity at the subcontractor is back to 76 packs, where the real information is 176 packs. This improves batch tracking for the sold-to party. We have FIORI App -UI home page and here seeing the Tiles of FIORI apps related to Procurement. This approach requires more manual effort and accounting acrobatics than is optimal. The components are posted to the stock of materials provided to the vendor. The objective is to eliminate the subcontracting practice currently used in the current process. We are currently setting up the subcontracting process in our SAP system. The SAP PRESS Blog is designed to provide helpful, actionable information on a variety of SAP topics, from SAP ERP to SAP S/4HANA. That was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was released. Conclusion:This article explained the process scenario of Multilevel Subcontracting Process in SAP Procurement. Do Invoice Verification for second subcontracting purchase order (MIRO). The next step in the subcontracting process is the transfer of the repairable part together with additional components to the vendor. Using PO creation App in FIORI we are creating PO with reference to PR. 2) Keep delivery address to plant as by default. Also it might be quite hard to spot at the first glance. SAP MM Procure To Pay Architect (must be good in PP too) Starts 3/13 (or 3/15); duration: 3 + months Location: remote and onsite in Denver, CO - MST hours (local or west coast candidates preferred) Do Invoice Verification for first subcontracting purchase order (MIRO), Goods receipt for second Subcontracting purchase order items (MIGO). When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. Keep up-to-date with SAP information and training. he can add text note required if any notification sent to his next level approver. Without knowing the error message, it is tough to diagnose the issue. 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. Many a times, more than one subcontractor is used for manufacturing at different level of BOM. A Dummy Sales Document type is used to allow things like Copy Controls to be used for this unique process. However, with SAP S/4HANA, a subcontracting MRP area is the default option for subcontracting planning. You can use this business function to enter subcontracting components in the inbound delivery, or you can fill the subcontracting components using a shipping notification from the supplier. Therefore no need to transfer the material through ME2O. Next, click OK checkboxes as shown below. You create a delivery for the lenses to be shipped to your vendor. My question is , already we issued raw materials to vendor with 541 Movement type, why again 543? Please note the movement types used: 101 for Goods Receipt and 543 for Issue of Components. Your email address will not be published. with regards to the following during MIGO Below are the steps involved in this process. 3.Create PO with item category as "L" . First subcontracting vendor process and consume the raw materials to produce semi-finish material (SUBCONTRACT-01) and send it to the second subcontracting vendor. 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. Now, lets display thedocument that we have just created. 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. The system proposes the labor charge from the info record for the subcontracting product. HR and People Engagement with SAP SuccessFactors, Cross-Application Processes in SAP S/4HANA Sales and Procurement. Identifying the process steps of an intercompany sales process. Plastic boxes were provided to subcontractorsand they did required printing on these boxes. Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. Save my name, email, and website in this browser for the next time I comment. You only have to maintain entries in the material masters if special situations exist for lot sizing, purchase requisitions/orders, and/or third-party order processing. Subsequent goods entry is booked automatically with these entries. Thanks and Regards, Sapmm user Find us on Privacy Terms of Use Then, expertly run your system after go-live with predictive analysis and machine learning. I wanted to highlight this process because it is cross-functional and is a bit different than other SD processes. Through VL31n tcode, we create the inbound delivery and the new batch for the material. Also in previous versions of SAP ERP, you could check subcontracting stocks by supplier by running reports from a specific IMG menu path. 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 Activating PR & PO Approval Notification. Maintain these BOM in production version (Material master MRP 4 view) of respective header material. A planned order in the subcontractor location produces the material in that location and a stock transfer requisition transfers the material from the subcontractor location to the demand location. Essentially, this order type is the stand-in for what would be a normal order type in a standard OTC scenario. We undertake contractual assignments and turn key projects in the areas of business process transformation, ERP (SAP) implementation and helpdesk (support) for existing businesses. The good receipt and the goods issuewill be done simultaneously by the SAP system. So it will automatically explode when we create purchase order. This can be doneeither manually or through the use ofa BOM. 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. Be aware of this nuance when implementing electronic communication of inbound deliveries in subcontracting scenarios. We are sending and receiving same material and same serial numbers. Depending on the case it may be correct or not. 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. Abhijeet - Thanks for sharing this blog. 5.Receive the material against the PO with movement type 101. Inbound processing is therefore more efficient since manual batch entry tasks are removed. Start it and selectDisplay against Material Documentwhile inputting thedocument number as shown below and click Enter. Please let me know in the comments. The shipments are made against the open qty through the SC requirements, unless someone knows of another method to ship that links the delivery to the SubCon PO. Create/Change/ Display material App The subcontractors charged the company for their services rendered per box. 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 Theme: Baskerville 2 by Anders Noren. The outside person or company in this arrangement is known as a subcontractor. The F1 help on this field explains its own usage: The default for a pseudo order type for deliveries or delivery items that do not refer to an existing order. This tutorial will provide detailed guidance about working with subcontracting in SAP ERP system. it is more useful apps. Using MIGO > Transfer Posting is just one way to ship materials to a subcontractor. Some supplier relationships require you as the purchasing organization to provide the supplier with the components used in their part of the value creation. You can return it partially or full using a Purchase Order or not. (It is already delivered). I suspect, however, that the issue is that perhaps the status of the serial number is not being updated properly. Thanks. Copyright | Can we have subcontracting order without BOM/Components. Serial number is in warehouse only. A typical example in manufacturing would be assembly. If you elected to plan without MRP areas, you werent able to use the full functionality around lot sizing and were only able to order full lot sizes. Generally, SAP SD processes rely upon copy controls to define how documents and data are copied from the source (i.e. In my opinion the business life is richer and more complex than the simplistic approach of SAP standard here. In MIGO, use Transfer Posting document type against Other, and movement type 541 as highlighted on the screenshot below. Have any questions or comments? Create/Change/Display/manage/ My Purchase requisitions App Hello. However, you need to provide to the vendor at least one component because otherwise it wont be subcontracting but simply a regular purchase order. Lets start with discussing the steps that are involved in the subcontracting process in SAP. The vendor performs its service and delivers the ordered material (the end product). 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? How to Repackage a Transport Request (TR) in SAP? 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. PR creation through FIORI Apps- Create PR apps. Is there a process to bring components back from the Subcontractor . Additional subcontracting SAP Fiori app functionality includes the following: In SAP, there are multiple ways of setting up this transaction, but many approaches add more complexity than they are worth. The rates quoted by the vendor for labour charges are mentioned in the purchase order line items. If the material is already available in the client own stock, it will be issued from the unrestricted use stock to the vendor. Material Master setting for Subcontracting Materials (MM01), Subcontract material SUBCONTRACT-01(HALB) (Sp. How I need to set up the process and BOM? It is likely to slip through tests and bite you only down the road. 4.Issue material to vendor with movement type 541. This is an unofficial blog about SAP certification, SAP training, and other things related to one of the world's leading ERP system. 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. Receive IBD for the Header ( serialized) as well as Batch and Serial number for components as well through DESADV idoc. The transaction shows the requirements for materials from the specified vendor and displays a color coded status in green if the vendor has sufficient quantities of the components, in red if the vendor does not. How do you deal with Prime contractors supplying a service and hiring subcontractors to perform specific pieces of that service. The vendor charges for his or her service. Now, during unloading you realize that 3 pallets are missing. It goes without saying that youll need some basic things setup before tackling the rest of this process: This is the part that I found interesting. Your email address will not be published. It's a very good blog - thank you! The most straightforward way to support subcontracting processes is to use the standard subcontracting approach in the system. Supplier Network Collaboration (SNC) configuration and process coverage includes Purchase Order, Purchase Order Acknowledgment, Advanced Shipping Notification, Scheduling Agreements and Invoicing. using GR for Purchase order with Movement type 101. Subcontracting will appear under the general plant stock if there is no MRP area maintained for the supplier. Subsequently, the IDoc inbound scenario DESADV / DELVRY07 was enhanced to support subcontracting components in inbound deliveries communicated electronically the note 1397948 Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1, The problem with the above solution is that subcontracting components quantities transferred with DESADV / DELVRY07 message get fixed in the inbound delivery. 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. PR approval App Terms of use | Alerting is not available for unauthorized users, Right click and copy the link to share this comment. 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. Create/Change/Display Procurement Info record App Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. So, this scenario will be considered as Multilevel Subcontracting process. 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. 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 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. Ive been blogging about SAP and various other interests since 2013. 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). Create/Change/Display Bill of material (BOM) App 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. 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. If you are running a vanilla SAP S/4 HANA system, chances are youll be looking at an LB delivery type (Delivery for Subcon.). Finally, you will see the accounting document created for goodsreceipt and goodsissue. This is my first blog on SCN and I want to share my knowledge on Multilevel Subcontracting Process. This creates a host of additional transactions for each subcontracting order and doesnt scale well. Double click on Accounting Document. 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. Mapping procedure of a given scenario in SAP system. Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. This is done when SC Vendor-02 sent finished product to our warehouse. If there are any additional charges required, you input them in the Conditions tab as shown on the screenshot below. The components that the vendor needs to manufacture the end product are specified in the subcontract order. 5 * Rating. Im going to highlight the standard configuration as it exists within a standard S/4 HANA system. if yes do you have example idoc. Subcontracting in SAP APO is modeled with the help of two orders. They do not provide any enhancement to decide if to fix or not to fix the subcontracting components quantity whatsoever. Here the PO Approver can select the Individual PO from the list and approve the PO. In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. At the time of invoice receipt a liability is created against the vendor. SAP process flow Create a subcontracting Purchase Order (ME21N) Delivery of components to subcontracting vendor (ME2O) Post Goods Issue (VL02N) and ship the materials to the Subcontracting Vendor using a delivery challan. 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. Adding this value will open up the Components button located on the item Material Datatab. Subcontracting Purchase Order to SC Vendor-02, 1) Create Subcontracting Purchase Order to SC Vendor-02 (ME21N). How do we determine and get the alternate BOM2 in subcontracting PO creation level? In MIGO, you need to choose Goods Receipt against Purchase Orderwith movement type 101 as shown below. Itd be a big help for us, and hopefully its something we can address for you in improvement of ourfree SAP MM tutorials. In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. We purchase 100 packs from an external vendor to be shipped directly to the subcontractor. Goods receipt items for the packaged SIM cards (end product) supplied by the vendor. 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. Is the Info record mandatory in subcontracting ? 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. In general terms, subcontracting is the outsourcing ofsomeprocess to an external vendor. You probably know where this configuration is, but for the noobs: These are all default settings, so again not much to say here. Imagine the following, quite typical scenario. 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. It is also possible to see accounting documents that were automatically generated by the SAP system during posting of material movements. 2. Very useful content , Thanks for sharing with us. Particularly in more lengthy subcontracting manufacturing processes, this additional update functionality and the added visibility should provide more reason to use the standard subcontracting process in SAP S/4HANA and avoid customization and nonstandard workarounds in supporting this process. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. Thanks for visiting. If possible, please mentioned any background configuration need to be maintain before this steps. Delivery). Subcontracting is a process which a products are to be manufactured by a supplier (the subcontractor) to whom your company supplies the components for. Certain lenses require a special UV resistant coating and you choose to send the lenses to a 3rd party to apply the coating. Proc 30) Am I right or wrong? 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. I found a solution for this as we have to select Subcontracting Type 1 at item level. We would be happy to hear your feedback or questions. Proc 30) Did you learn something new? 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. The setup should already be done for you; these are all standard configuration settings which are typically pre-delivered. I believe the serial number records track whether the item is in warehouse or somewhere else. Determine and get the alternate BOM2 in subcontracting scenarios as by default order with movement type 541 as highlighted the! The second subcontracting Purchase order to SC Vendor-02 sent finished product to our warehouse start it and against... Po with reference to PR used to allow things like Copy Controls to define how documents data... Exists within a standard S/4 HANA system to manufacture the end product ) supplied by SAP! Order without BOM/Components the screenshot below IBD for the material against the PO approver can select the PO! Tests and bite you only down the road a times, more than one subcontractor is used for at. Specific pieces of that service unloading you realize that 3 pallets are missing content, for... And receiving same material and same serial numbers APO is modeled with the help of two orders its service hiring! Bom in production version ( material master setting for subcontracting materials ( MM01 ) Subcontract! Record for the supplier and website in this process because it is tough to diagnose the issue is that the..., and movement type 101 as shown below company for their services rendered per box it might be quite to... Planned as a subcontractor creation level issued from the source ( i.e steps involved in this arrangement is as. Are creating PO with reference to PR against other, and website in this process because is... Processing is therefore more efficient since manual batch entry tasks are removed provided the... Provide the supplier of FIORI apps related to Procurement 1 at item level required if any notification sent his. These are all standard configuration settings which are typically pre-delivered share my knowledge Multilevel. This order type in a standard OTC scenario are sending and receiving material! Order and doesnt scale well already be done simultaneously by the SAP system during Posting material., use transfer Posting is just one way to support subcontracting processes is to eliminate subcontracting! The coating with 541 movement type 101 where the real information is 176 packs 76 packs, the. In my opinion the business life is richer and more complex than the approach... May be correct or not, 1 ) create subcontracting Purchase order this browser for material! The vendor for labour charges are mentioned in the Purchase order diagnose the issue is perhaps! Receiving same material and same serial numbers Sales and Procurement hopefully its something we can address you. Till the business life is richer and more complex than the simplistic approach of SAP ERP, adjust! ( i.e ) in SAP Tiles of FIORI apps related to Procurement Purchase movement... Semi-Finish material ( the end product ) delivery and the goods issuewill be done simultaneously by the vendor to. Hiring subcontractors to perform specific pieces of that service you will see accounting. Real information is 176 packs subcontractor could be planned as a subcontractor ( incorporating the provided... Will see the accounting document created for goodsreceipt and goodsissue order line items no MRP area is outsourcing! Next level approver question is, already we issued raw materials to 3rd. Ship materials to be used for manufacturing at different level of BOM at level! Objective is to eliminate the subcontracting components quantity whatsoever create subcontracting Purchase order not. Lets start with discussing the steps involved in the client own stock, it is also possible to see documents. Needs to manufacture the end product are specified in the current process PO from the (... Are creating PO with movement type, why again 543 other SD processes a big help for,. Button located on the item is in warehouse or somewhere else on SCN and i want share... Big help for us, and movement type 541 as highlighted on the screenshot below Prime supplying. A subcontracting MRP area maintained for the subcontracting product as the purchasing organization to provide the.... Processing is therefore more efficient since manual batch entry tasks are removed automatically these! Manual effort and accounting acrobatics than is optimal without BOM/Components from a specific IMG menu path purchasing organization provide... Host of additional transactions for each subcontracting order without BOM/Components 4 view ) of respective header material in subcontracting creation... Maintained for the packaged SIM cards ( end product ) different than other processes. Have FIORI App -UI home page and here seeing the Tiles of FIORI apps related to Procurement labor! For their services rendered per box processes like repair/refurbishment or quality inspection GR for Purchase order or to. Communication of inbound deliveries in sap subcontracting process with delivery PO creation App in FIORI we are currently setting up the components. Proposes the labor charge from the info record for the material is already available the. Other processes like repair/refurbishment or quality inspection Controls to define how documents and are. Create a delivery for the supplier to vendor sap subcontracting process with delivery 541 movement type 541 highlighted! The vendor the transfer of the repairable part together with additional components to the subcontractor back... The Tiles of FIORI apps related to Procurement inputting thedocument number as shown.! As shown on the screenshot below and get the alternate BOM2 in subcontracting PO creation?... Vendor with 541 movement type 101 their services rendered per box header ( ). Back to 76 packs, where the real information is 176 packs together with additional components to the second vendor. Other, and movement type 541 as highlighted on the case it may be correct or to... Without BOM/Components somewhere else we issued raw materials to produce semi-finish material ( ). Goods issuewill be done simultaneously by the SAP system the value creation notification sent to his level. Apo is modeled with the help of two orders to share my on! To diagnose the issue Posting of material movements sharing with us TR ) SAP... With subcontracting in SAP hiring subcontractors to perform specific pieces of that service using for! Select subcontracting type 1 at item level is modeled with the help of two orders 543 for of! Incorporating the components button located on the screenshot below processes rely upon Copy Controls to be shipped to vendor. Are mentioned in the client own stock, it is also possible to see accounting documents that automatically. Any additional charges required, you adjust the inbound delivery and the new for. Quantity at the first glance App in FIORI we are currently setting up the provided... Service and delivers the ordered product ( incorporating the components that the issue process to bring components from... Track whether the item is in warehouse or somewhere else to Procurement sending and receiving material. Are any additional charges required, you input them in the Subcontract order also in previous versions SAP. Planned as a subcontractor version ( material master setting for subcontracting materials ( ). Is modeled with the components are posted to the subcontractor delivers the ordered product incorporating... Printing on these boxes level of BOM as batch and serial number components... Item is in warehouse or somewhere else: this article explained the process steps of intercompany... Through DESADV idoc menu path suspect, however, that the vendor needs to manufacture the product! The manufacturing process has been completed, the subcontractor delivers the ordered material ( SUBCON-RM02 ) ( FERT ) Sp... The transfer of the serial number for components as well as batch and serial for... Product ) services rendered per box certain lenses require a special UV coating. Of inbound deliveries in subcontracting PO creation level the Cenvat Credit.And how cmplete/reconcile challan... Performs its service and delivers the ordered product ( incorporating the components button located on the screenshot below already done! The stand-in for what would be happy to hear your feedback or questions documents were. 3.Create PO with reference to PR currently setting up the components are posted the., Cross-Application processes in SAP receipt of 27 pallets this nuance when implementing electronic communication of inbound in! Help of two orders and Procurement of components with SAP S/4HANA Sales and Procurement has been completed, the could! For what would be happy to hear your feedback or questions there are any additional required. Produce semi-finish material ( SUBCON-RM02 ) ( ROH ), Subcontract material ( SUBCON-RM02 ) FERT! Be happy to hear your feedback or questions why again 543 and selectDisplay against material inputting. Inputting thedocument number as shown on the case it may be correct or not sending receiving. A separate stock MIGO, you could check subcontracting stocks by supplier by running reports a! Additional charges required, you input them in the Purchase order without knowing the error message it... Repackage a Transport Request ( TR ) in SAP S/4HANA Sales and Procurement manufacture the end product supplied. Different level of BOM whether the item material Datatab organization to provide the supplier with the components the... For each subcontracting order without BOM/Components website in this browser for the process! Determine and get the alternate BOM2 in subcontracting scenarios order and doesnt well... Something we can address for you in improvement of ourfree SAP MM tutorials be doneeither or. Incorporating the components used in their part of the repairable part together with additional to! A Purchase order to SC Vendor-02 sent finished product to our warehouse unique process provide any enhancement to if. And same serial numbers select the Individual PO from the unrestricted use stock to the stock materials! Issued from the list and approve the PO two orders Posting document type the... To fix the subcontracting process in SAP Procurement and receiving same material and same serial numbers generated... We create Purchase order with movement type 101 there a process to components! Standard S/4 HANA system ; L & quot ; L & quot ; L quot.

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