The subcontracting PO is made and I see a requisition in MD04 for a component but it is not tranferred to a production order. Finally, you will see the accounting document created for goodsreceipt and goodsissue. A Dummy Sales Document type is used to allow things like Copy Controls to be used for this unique process. 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. The most straightforward way to support subcontracting processes is to use the standard subcontracting approach in the system. Lets take a closer look at the handoff from Purchasing to the SD Delivery. 2.Maintain the BOM for the material. Procurement should be done in such a way that materials are ordered in correct quantity, with a proper value at the proper time. Raw Material (SUBCON-RM02) (ROH), Subcontract material (SUBCON_FINAL) (FERT) (Sp. How I need to set up the process and BOM? Vendor shall process the item / use the item provided & supply the final item. The Latest ERP from SAP. Subcontracting with multiple production versions is supported. Post Goods receipt for PO & Good Movement App They sent a DESDAV / DELVRY07 message and it creates an inbound delivery in your system. 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. This purchase order shows up in the ME2O transaction. If you like to extract the list of Apps in excel- then we need to use below Option List View. 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. In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. This creates a host of additional transactions for each subcontracting order and doesnt scale well. Make a request for us to schedule training around what works for you? . The subcontractor converted the raw sims into finished sims well packed and returned finished product back to the company. Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. The outside person or company in this arrangement is known as a subcontractor. For example, assume you create a subcontract order for the assembly of 10 engines. What is S/4HANA? 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. I'm a career-long IT specialist with a focus on SAP for over 18 years. Creating a sales order for intercompany sales. 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 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. Did you like this SAP MM tutorial? 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. 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. How to Configure SAP S/4HANA Asset Maintenance Subcontracting. 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. user will convert to PO. We would be happy to hear your feedback or questions. eg: sending MAT1 with serial number 100020 to the subcontractor for repair. Post Goods Receipt (MIGO) on receipt of the finished product E from the Subcontractor 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). The most straightforward way to support subcontracting processes is to use the standard subcontracting approach in the system. Creating Bill of Material for Subcontracting in FIORI. 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. Have you had to do much with your default SAP STO Delivery Setup configuration? Creating a third-party purchase order. In general terms, subcontracting is the outsourcing ofsomeprocess to an external vendor. I've been blogging about SAP and various other interests since 2013. 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. 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. Now, lets display thedocument that we have just created. If none, a green light will turn on near Balance fieldand the SAP system will show you accounting document which will be created. Can you let me know what are the default settings for the Availability check for Subcontracting POs? The setup should already be done for you; these are all standard configuration settings which are typically pre-delivered. Your usage of this website signifies your agreement with our terms and conditions. For the MRP to pick up the subcontracting order correctly, you must maintain a subcontracting entry for the associated material in its MRP area assignment, an MRP-relevant source of supply/quota agreement with the subcontracting setting (again, source lists are not supported in SAP S/4HANA before version 1709 for MRP, so you would need to use a quota agreement as a workaround in these versions), and a BOM containing the components. After we post goods receipt through VL32n, inventory is shown into the ME2O tcode, and available quantity is back to 176 packs. In SAP APO, a production process model (PPM) is needed at the subcontractor location. Later, the subcontractors returned the boxes back to the client. Finally, click on Post button to post the document. 4.Issue material to vendor with movement type 541. 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. You cannot change the transfer Posting the goods receipt for a third-party purchase order. 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. Sir, Vendor Subcontracting Process, Accounting, and Demo on SAP S4HANA Abdullah Galal - SAP, CMA 46.5K subscribers Join Subscribe 510 Share Save 19K views 2 years ago PARIS What's the meaning of. Every organization acquires material or services to complete its business needs. Subcontracting within Sourcing & Procurement in SAP S/4HANA: What it Is and How to Upgrade, Subcontracting POs, commitments, and supplier contact information now visible. Next,click on Check button to check whether the document is OK. Serial number is in warehouse only. Proc 30) 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. Available quantity at the subcontractor is back to 76 packs, where the real information is 176 packs. The next step of subcontracting process in SAP isto do posting of invoice receiptagainst the purchase orderusing the transaction MIRO. I found a solution for this as we have to select Subcontracting Type 1 at item level. Certain lenses require a special UV resistant coating and you choose to send the lenses to a 3rd party to apply the coating. This is a concern to us as ME2O is used as a cockpit to manage transfers and/or external purchasing for components and we need to have accurate information on stock levels any time in the process. Depending on the case it may be correct or not. SAP Steps: 1.Create the finished goods material code. As the components quantities are fixed by SAP standard DESADV processing logic, the goods receipt of 27 pallets consumes the components of the entire 30 pallets!!! SAP MM - Procurement Process. 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). You can return it partially or full using a Purchase Order or not. Posting an incoming supplier invoice. 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. It would have been nice if SAP had provided a BAdI enhancement here. Some supplier relationships require you as the purchasing organization to provide the supplier with the components used in their part of the value creation. Many a times, more than one subcontractor is used for manufacturing at different level of BOM. 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. 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 the worlds leading SAP publisher, SAP PRESS goal is to create resources that will help you accelerate your SAP journey. Not the perfect solution but better than nothing. 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. Through VL31n tcode, we create the inbound delivery and the new batch for the material. It can also be done through via MIGO transaction. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. 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. 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. 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