Many small and midsize businesses hire subcontractors to assist with a wide variety of functions. This is done when SC Vendor-02 sent finished product to our warehouse. Alerting is not available for unauthorized users, Right click and copy the link to share this comment. Plastic boxes were provided to subcontractorsand they did required printing on these boxes. Raw Material (SUBCON-RM01) (ROH) Legal Disclosure | SAP Stock Transfer Order and Stock Transfer Process. 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. Next, click OK checkboxes as shown below. Posting Transfer Posting stock from own stock to Sub contractor . Activating PR & PO Approval Notification. Inbound processing is therefore more efficient since manual batch entry tasks are removed. Sir, Without knowing the error message, it is tough to diagnose the issue. 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). Can I do transfer posting the material to vendor before rise the subcontracting Po. Can you explain how to do this process without BOM?? The rates quoted by the vendor for labour charges are mentioned in the purchase order line items. However, there is no copy control from an STO PO to an SD Delivery. PR approval App They charged the company for their services rendered. Mapping procedure of a given scenario in SAP system. Finally, click on Postbutton to save the invoice receipt (IR). You can return it partially or full using a Purchase Order or not. Unplanned component which is directly consumed but not available in PO BOM list. Its being processed by subcontracting vendor, convert it to semi-finish material and deliver back. The bill of material refers to the end product that the vendor will deliver. 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). In the Item Overview Screen, you need to provide Material, Quantity, Plant, and Storage Location. Keep up-to-date with SAP information and training. This approach requires more manual effort and accounting acrobatics than is optimal. 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. For a premium experience please use an alternative browser. Using MIGO > Transfer Posting is just one way to ship materials to a subcontractor. For example, you can choose to create plants that are technically the suppliers locations and track your inventory as you move it to these locations for finishing. PR to PO Conversion/ Create PO/Change PO/Display PO/manage PO/My Purchase order App. Is there a process to bring components back from the Subcontractor . 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. 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. However if they have never been shipped due to a loading problem on the subcontractor side, that is definitely not ok. A subcontracting product is valued with the price of the service plus the cost of the components. 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. Double click on Accounting Document. The subcontractor converted the raw sims into finished sims well packed and returned finished product back to the company. (It is already delivered). Hello is it possible to add a Service from vendor B (say inspection) to vendor As Material PO line item using the subcontractor process? Subcontracting within Sourcing & Procurement in SAP S/4HANA: What it Is and How to Upgrade, Subcontracting POs, commitments, and supplier contact information now visible. Some components also come from our warehouses. Your usage of this website signifies your agreement with our terms and conditions. Once again thanks a lot for all your efforts. 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. Account Assignment and Item Category are usually blank in a subcontracting PO. Learn how to integrate SAP S/4HANA with SAP Ariba, SAP Fieldglass, and more. Here in the highlighted box you provide the number of your subcontractor. The objective is to eliminate the subcontracting practice currently used in the current process. When delivery papers are needed, a delivery should be created. 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). 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. 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 As mentioned previously, the STO keys off of a Purchase Order. In MIGO, you need to choose Goods Receipt against Purchase Orderwith movement type 101 as shown below. The vendor charges for his or her service. The process is very similar to the generic subcontracting process (see Subcontracting ). Post it on our FORUM here --> SAP FORUM! 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. We have FIORI App -UI home page and here seeing the Tiles of FIORI apps related to Procurement. Also it might be quite hard to spot at the first glance. Not using Migo or MB1B and 542 movement type. This enables you to assign information about the batches used and the component quantities in the inbound delivery. SAP MM - Procurement Process. Copyright | If the missing 3 pallets are stolen or lost during transportation that might be ok. The consumption of the components is posted. Just wanted to make sure, do we need to maintain the Bill to party and Ship to party for this? At the time of invoice receipt a liability is created against the vendor. We would love to hear your feedback in the comments section below. Creating Bill of Material for Subcontracting in FIORI. The good receipt and the goods issue will be done simultaneously by the SAP system. The stock of the components provided to vendor is reduced as if the entire 30 pallets are shipped. You cannot change the transfer user will convert to PO. Lets take a closer look at the handoff from Purchasing to the SD Delivery. 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. Info button. In this scenario as shown in below structure, two raw materials (SUBCON-RM01 & SUBCON-RM01) are provided to first subcontracting vendor (SC Vendor-01). Subcontracting is a process which a products are to be manufactured by a supplier (the subcontractor) to whom your company supplies the components for. Please also include accounting-entries screenshots. How to edit personnel no. 3.Create PO with item category as "L" . Abhijeet - Thanks for sharing this blog. 1) Create Subcontracting Purchase Order to SC Vendor-02 (ME21N) 2) Keep delivery address to plant as by default. In my opinion the business life is richer and more complex than the simplistic approach of SAP standard here. Subsequent goods entry is booked automatically with these entries. 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. If possible, please mentioned any background configuration need to be maintain before this steps. 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) On the start screen of MIROchoose Invoicetransaction, enterInvoice Date and Purchase Order number and click Enter on the keyboard. Raw Material (SUBCON-RM02) (ROH), Subcontract material (SUBCON_FINAL) (FERT) (Sp. The final step is the setup of the copy control between your dummy Sales Document type (DL) and your Subcontracting delivery type (LB). Delivery). Please note the movement types used: 101 for Goods Receipt and 543 for Issue of Components. the process is same as the ECC subcontracting Process. Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. Searching PR creation apps in Apps Finder in FIORI screen. We will do our best to consider your request. The system will open a window with the list of documents in accounting. The process of buying materials and obtaining services from vendors or dealers is called procurement. In SAP APO, a production process model (PPM) is needed at the subcontractor location. Am I right or wrong? To illustrate with an example, your company manufactures lenses. Proc 30) The ME2O tcode no longer shows the expected receipt to the subcontractor ! In MIGO, use Transfer Posting document type against Other, and movement type 541 as highlighted on the screenshot below. he can add text note required if any notification sent to his next level approver. Next, click OK checkboxes as shown below. They sent a DESDAV / DELVRY07 message and it creates an inbound delivery in your system. Vendor shall process the item / use the item provided & supply the final item. The components are posted to the stock of materials provided to the vendor. Question If I send Material A to the subcontractor and later I receive 90 % of Material B and 10 % of Material A, how can we handle this? Do you need to create a recipe for sub-contracting process? In this process, components are shared to vendor to get the final product. System will allow to receive same serial number after subcontracting. 3.Create PO with item category as "L" . 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. This can be doneeither manually or through the use ofa BOM. PR Created and purchase requisition sent to Approval. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. Delivery of components to subcontracting vendor (ME2O) Once your PO is saved, you can use the Vendor Stock Monitoring transaction (ME2o) to manage this inventory. 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. Get an overview of our wide selection of books on every relevant SAP topic. PR creation through FIORI Apps- Create PR apps. The procuring entity may provide these components to the subcontractor either directly (using one of the issue of components which we provided to the Subcontractor is triggered to 543 Movement type So it will automatically explode when we create purchase order. Start it and selectDisplay against Material Documentwhile inputting thedocument number as shown below and click Enter. If the material is managed with batches, a batch number will be shown as well. Again, that is not necessarily bad, depending on your accounting policies and the specific case. Create/Change/Display Procurement Info record App 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. It will open the screenshot shown below. They are summarized below: A material BOM needs to be created before any subcontracting order can be placed. The fixed quantity indicator is always set automatically for all components, so that no correlation occurs for the component quantities when changes are made to the inbound delivery quantity. 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. Also, you need to provide Material, Quantity, Delivery Date, Plant, and Price. List Material document Apps What do you think? But SAP does not give here any flexibility. What is the process to create a RMA for a subcontract purchase order? In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. Help. If none, a green light will turn on near Balance fieldand the SAP system will show you accounting document which will be created. If a purchase info record has been maintained, the service charges are defaulted into the purchase order. This purchase order shows up in the ME2O transaction. The components that the vendor needs to manufacture the end product are specified in the subcontract order. To receive material against the purchase order, SIM cards and packaging materials need to be issued to the subcontractor. 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. Some supplier relationships require you as the purchasing organization to provide the supplier with the components used in their part of the value creation. 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 Finally, it is necessary to click Post button to save the document. Now, lets display thedocument that we have just created. 2.Maintain the BOM for the material. Analytical apps related to PR, PO, GR, IV- This blog is independent and NOT affiliated with SAP SE (the company behind SAP ERP system). Thanks a lot. Essentially, this order type is the stand-in for what would be a normal order type in a standard OTC scenario. In subcontracting process, raw materials are provided to subcontracting vendor. Through VL31n tcode, we create the inbound delivery and the new batch for the material. 2. 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. Some components also come from our warehouses. A Dummy Sales Document type is used to allow things like Copy Controls to be used for this unique process. 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. 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. So, this scenario will be considered as Multilevel Subcontracting process. Once PR is approved by Purchasing department top level authority. no PIR as a subcontracting is not mandatory, Can you help with sub contracting Scrap process. 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. Thats about it. Maintain subcontracting MRP areas for all subcontracting suppliers requiring provision stocks to be planned separately from requirements. Ive been blogging about SAP and various other interests since 2013. Serial number is in warehouse only. Please explain detail steps and Tcode. Second subcontracting vendor process it further and produce finish material (SUBCON_FINAL) and finally send it to the warehouse of procuring plant. It can also be done through via MIGO transaction. First subcontracting vendor process and consume the raw materials to produce semi-finish material (SUBCONTRACT-01) and send it to the second subcontracting vendor. We only pay the prime contractor, prime pays the subs. Visit SAP Support Portal's SAP Notes and KBA Search. Post Goods receipt for PO & Good Movement App Process Flow. Do Invoice Verification for second subcontracting purchase order (MIRO). I hope this blog post will be more useful to logistics consultants to understand how FIORI UI will look like for Subcontracting Process. 2.Maintain the BOM for the material. Can we have subcontracting order without BOM/Components. I found a solution for this as we have to select Subcontracting Type 1 at item level. 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. Itd be a big help for us, and hopefully its something we can address for you in improvement of ourfree SAP MM tutorials. Therefore the 27 pallets received will be 10% more expensive than planned. using GR for Purchase order with Movement type 101. 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. Im a career-long IT specialist with a focus on SAP for over 18 years. Finally Posting Invoice verification (Supplier Invoice). You require the subcontracting process in SAP when a companyoutsources parts of itsmanufacturing to subcontractors. 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. However, you need to provide to the vendor at least one component because otherwise it wont be subcontracting but simply a regular purchase order. The subcontractors charged the company for their services rendered per box. Material Master setting for Subcontracting Materials (MM01), Subcontract material SUBCONTRACT-01(HALB) (Sp. 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. Display Material document App Really its very useful for content. Through Screen shots process is self explanatory. A typical example in manufacturing would be assembly. 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. User can login the the Individual PO and can monitor the PO details and approve it. Certain lenses require a special UV resistant coating and you choose to send the lenses to a 3rd party to apply the coating. 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). 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. View all posts by Michael. Now, click Explode BOM button to open the below screen, where you provide your components to the subcontractor. 4.Issue material to vendor with movement type 541. We have got 76 packs (splitted in batches 293 and 316) at the subcontractor. Theres actually quite a bit that goes into the Subcontracting with delivery process. As the worlds leading SAP publisher, SAP PRESS goal is to create resources that will help you accelerate your SAP journey. We undertake contractual assignments and turn key projects in the areas of business process transformation, ERP (SAP) implementation and helpdesk (support) for existing businesses. 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. Our issue is that when creating an inbound delivery on the purchase order to be delivered to the subcontractor, quantity to be delivered "disappears" from the ME2O report. 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. Later, the subcontractors returned the boxes back to the client. The SIM cards supplier will be instructed to deliver the raw material at the subcontractors premises. A subcontracting purchase order is placed by converting the subcontracting requisition into a purchase order. 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. Invoices will be entered in the system against the purchase order. -SUBCONTRACT-01(HALB) (Sp. It appears that you are limited to only one default Delivery Type per Plant.