Subcontracting is a critical process for many organizations, and from an SD consultants perspective its quite unique. Finally, click on Post button to post the document. 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. PR Created and purchase requisition sent to Approval. The first line corresponds to the goods receipt of the final product, whereas the second two lines correspond to the issue of components which you provided to the subcontractor earlier. Creating Bill of Material for Subcontracting in FIORI. Thanks for your reply. Delivery Basics like logistics defaults, pricing for freight, and partner determination have to come from somewhere. As the worlds leading SAP publisher, SAP PRESS goal is to create resources that will help you accelerate your SAP journey. Later, the subcontractors returned the boxes back to the client. 1) Post Goods Issue according to the Purchase Order number (4500000863) above. Im a career-long IT specialist with a focus on SAP for over 18 years. Standard Process Flow ME21N - Purchase order creation MIGO_TR - Send components to a subcontractor 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. PR to PO Conversion/ Create PO/Change PO/Display PO/manage PO/My Purchase order App. We would love to hear your feedback in the comments section below. Now, press to display the components provided to the subcontractor for the finished material as shown on the screenshots below. Subcontracting process is generally used in most of manufacturing industries. However, with SAP S/4HANA, a subcontracting MRP area is the default option for subcontracting planning. The vendor performs its service and delivers the ordered material (the end product). 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) Is there a process to bring components back from the Subcontractor . it again depends on the user decision. I'm looking forward for the next ones , Thanks for sharing. I've been blogging about SAP and various other interests since 2013. We have FIORI App -UI home page and here seeing the Tiles of FIORI apps related to Procurement. 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. SAP Stock Transfer Order and Stock Transfer Process. Therefore no need to transfer the material through ME2O. Against each subcontracted item the system copies the material components that are to be provided to the vendor from the bill of material (BOM). Is this possible? 2.Maintain the BOM for the material. Finally, click on Postbutton to save the invoice receipt (IR). The rates quoted by the vendor for labour charges are mentioned in the purchase order line items. Im not sure if theres actually much to look at in the setup of this Sales Document Type. Thanks a lot. It will open the screenshot shown below. VL561, And after observation i found that there is no shippinpoint detemeined when i pressed the Create Delivery, Cheked the loading groups, and shipping conditon in the Customer Master Record all settings are OK, Shipping Point is Greyed , i have checked all shipping settings through SD(OVL2), But still the error continues can any body share their experiences on this error, Edited by: deepak goura on Nov 9, 2009 10:08 AM. Very useful content , Thanks for sharing with us. When that step is completed, the vendor returns the items to your plant and the are received back into the production process or as a finished good. Start it and selectDisplay against Material Documentwhile inputting thedocument number as shown below and click Enter. This approach requires more manual effort and accounting acrobatics than is optimal. Another example of the subcontracting process in SAP is whena company provided raw sims and packaging materials to a subcontractor. In SAP HR after hiring Hi, There's no e-books or any course materials about the QM module. using GR for Purchase order with Movement type 101. Abhijeet - Thanks for sharing this blog. Create/Change/Display Bill of material (BOM) App Proc 30). 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. I wanted to highlight this process because it is cross-functional and is a bit different than other SD processes. Depending on the case it may be correct or not. Post Goods Receipt (MIGO) on receipt of the finished product E from the Subcontractor The invoice is posted. The liability created will only be of the amount charged by the vendor for processing and does not include the material component value. (ls_comp-fmeng = abap_true). 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. The components are then supplied to the vendor. the process is same as the ECC subcontracting Process. There are relatively few logistics-related fields. In MIGO, use Transfer Posting document type against Other, and movement type 541 as highlighted on the screenshot below. 2.Maintain the BOM for the material. Available quantity at the subcontractor is back to 76 packs, where the real information is 176 packs. 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. if yes do you have example idoc. 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 provision is a transfer posting from the unrestricted use stock to the stock of material provided to a vendor. 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. 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. 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. However, you need to provide to the vendor at least one component because otherwise it wont be subcontracting but simply a regular purchase order. In the Item Overview Screen, you need to provide Material, Quantity, Plant, and Storage Location. In this scenario as shown in below structure, two raw materials (SUBCON-RM01 & SUBCON-RM01) are provided to first subcontracting vendor (SC Vendor-01). Finally Posting Invoice verification (Supplier Invoice). Create/ Change/Display Supplier App Thanks for visiting. The good receipt and the goods issue will be done simultaneously by the SAP system. Billing the customer. 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 Generally, SAP SD processes rely upon copy controls to define how documents and data are copied from the source (i.e. 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. 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. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. How I need to set up the process and BOM? Please contact in case of any queries and clarifications. But SAP does not give here any flexibility. 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. 2) Keep delivery address to plant as by default. Great blog. List Material document Apps Adding this value will open up the Components button located on the item Material Datatab. For subcontracting with the The ME2O tcode no longer shows the expected receipt to the subcontractor ! If the missing 3 pallets are stolen or lost during transportation that might be ok. How to Configure SAP S/4HANA Asset Maintenance Subcontracting. View all posts by Michael. Creating a sales order for intercompany sales. Procurement Overview page Apps. When the subcontractor receives the raw SIM cards at his premises, he will inform the client and a goods receipt will be posted with reference to the purchase order increasing the subcontractor stock in the system. System automatically selects movement type 101 O (GR to SC Vendor). If the serial number is in warehouse, then it may not allow you to receive it. | 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? The consumption of the components is posted. Lets start with discussing the steps that are involved in the subcontracting process in SAP. Mapping procedure of a given scenario in SAP system. You probably know where this configuration is, but for the noobs: These are all default settings, so again not much to say here. I suspect, however, that the issue is that perhaps the status of the serial number is not being updated properly. Really its very useful for content. Partial delivery to subcontractor is possible. 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. Sir, Make sure to implement the note 1397948 - Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1 if you work with subcontracting components in DESADV IDocs. 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: Finally, you save the subcontracting purchase order. The vendor will be billed only for items delivered. Thank you, helped a lot. Now, when the subcontractor returned the materials after performing the workyou need to enter the received finished material back into the SAP system by using the transaction MIGO. Try to test the IDocs with WE19 transaction. (here material and components are MAT1 only). 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 we can see the PO is approved- this is Classical App and looks like our ECC PO screen. The subcontracting PO is made and I see a requisition in MD04 for a component but it is not tranferred to a production order. You create a delivery for the lenses to be shipped to your vendor. SNP optimizer, restrictions apply with regard to cost maintenance if you use the production data structure. This is my first blog on SCN and I want to share my knowledge on Multilevel Subcontracting Process. 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. PO Approval App. When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. As mentioned previously, the STO keys off of a Purchase Order. Hi, The system proposes the labor charge from the info record for the subcontracting product. The objective is to eliminate the subcontracting practice currently used in the current process. Lets take a closer look at the handoff from Purchasing to the SD Delivery. Unfortunately they did not. 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. Make a request for us to schedule training around what works for you? 6.MIRO to account for vendor's invoice for the service charge& material used by him. Very easy to understand now. Does this sound familiar? A Dummy Sales Document type is used to allow things like Copy Controls to be used for this unique process. 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. Create a subcontracting Purchase Order (ME21N) Click on "Material Data" tab under "Item details" and then click on "Components" to view the components / make changes. I am a husband and father. I've just check that serial numbers are visible in the IDoc structure on both levels: But I don't have ready made examples. Use transaction MIGO to provide components to the subcontractor. I can not see the images Any idea why or how could I see them? 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. However even if the missing 3 pallets are stolen, you might want not to put this cost into COGS but offset that with insurance policy compensation for instance. This blog post will be more useful to new consultants in S/4HANA EM -Streamlined Procurement & Sourcing. Analytical apps related to PR, PO, GR, IV- On the start screen of MIROchoose Invoicetransaction, enterInvoice Date and Purchase Order number and click Enter on the keyboard. The procuring entity may provide these components to the subcontractor either directly (using one of System will allow to receive same serial number after subcontracting. 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. 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. Goods issue items for the SIM cards (components). Privacy | 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. We will do our best to consider your request. Right side of the home page we have PO list waiting for Approval- we have the option of approve/deny based on the PO approval persons/authority decision. Can you explain how to do this process without BOM?? 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. Itd be a big help for us, and hopefully its something we can address for you in improvement of ourfree SAP MM tutorials. So, how does SAP know when and how to copy data between these two objects? SAP ERP all versions ; SAP R/3 Enterprise all versions ; SAP R/3 all versions ; SAP enhancement package for SAP ERP all . This tutorial will provide detailed guidance about working with subcontracting in SAP ERP system. The materials that are provided to the subcontractor are managed as stock provided to a vendor. Ive been blogging about SAP and various other interests since 2013. The stock of the components provided to vendor is reduced as if the entire 30 pallets are shipped. Thanks for the question, Kumar. Proc 30) (It is already delivered). 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. Maintain these BOM in production version (Material master MRP 4 view) of respective header material. 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). Plastic boxes were provided to subcontractorsand they did required printing on these boxes. Creating a third-party purchase order. The SIM cards supplier will be instructed to deliver the raw material at the subcontractors premises. This creates a host of additional transactions for each subcontracting order and doesnt scale well. How do we determine and get the alternate BOM2 in subcontracting PO creation level? Next, click OK checkboxes as shown below. its plants), or indirectly (using another of its suppliers). User can login the the Individual PO and can monitor the PO details and approve it. Have you had to do much with your default SAP STO Delivery Setup configuration? Not the perfect solution but better than nothing. Below are the steps involved in this process. demand for the finished item in the subcontractor location, nor can you change the component demand in the subcontractor location. The bill of material refers to the end product that the vendor will deliver. -SUBCONTRACT-01(HALB) (Sp. Such that the item attaches the cost of Vendor Bs service to the line item? Feedback in the item Overview Screen, you need to transfer the through. My first blog on SCN and i want to share my knowledge on Multilevel subcontracting in. Start with discussing the steps that are involved in the item material Datatab most! 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Sap publisher, SAP PRESS goal is to create resources that will help you accelerate your journey! 'M looking forward for the subcontracting process can you explain how to Copy data between these objects. Enterprise all versions ; SAP R/3 Enterprise all versions ; SAP enhancement package SAP... Create a delivery for the SIM cards ( components ) and how to do this process it... Individual PO and can monitor the PO details and approve it the that! Option for subcontracting planning vendor for processing and does not include the material component value material and are! Vendor is reduced as if the serial number is in warehouse, then it may correct... Unique process scenario in SAP is whena company provided raw sims and packaging materials to a subcontractor provides product. Because it is cross-functional and is a critical process for many organizations and! Will be instructed to deliver the raw material at the handoff from Purchasing to the subcontractor invoice...