During the MRP run, the system explodes the BOM requirements and classifies dependent subcontracting elements as such. Dear Experts, In Subcontracting process if the subcontracting period of 180 days is completed and if material is still with Vendor, how to complete the process. My previous response was more about serial numbers on inbound delivery item level, not on subcontracting component level. 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. 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. That was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was released. They are summarized below: A material BOM needs to be created before any subcontracting order can be placed. Eventually, that difference will reach the cost of goods sold and will hurt your profit margin. The subcontracting PO is made and I see a requisition in MD04 for a component but it is not tranferred to a production order. So, this scenario will be considered as Multilevel Subcontracting process. Raw Material (SUBCON-RM02) (ROH), Subcontract material (SUBCON_FINAL) (FERT) (Sp. So, how does SAP know when and how to copy data between these two objects? Posting the goods receipt for a third-party purchase order. Easily understood and completed my Sub-contracting entry. 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. Itd be a big help for us, and hopefully its something we can address for you in improvement of ourfree SAP MM tutorials. Maintain subcontracting MRP areas for all subcontracting suppliers requiring provision stocks to be planned separately from requirements. I've just check that serial numbers are visible in the IDoc structure on both levels: But I don't have ready made examples. The subcontracting requisition lists the finished material that is to be procured in a subcontract item. This is possible with or without creating a delivery. (It is already delivered). Unplanned component which is directly consumed but not available in PO BOM list. Proc 30) 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. Next,click on FI Documents button to display FI document created for goodsreceipt and goodsissue. We purchase 100 packs from an external vendor to be shipped directly to the subcontractor. After we post goods receipt through VL32n, inventory is shown into the ME2O tcode, and available quantity is back to 176 packs. In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. it again depends on the user decision. 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. Very useful content , Thanks for sharing with us. Lets start with discussing the steps that are involved in the subcontracting process in SAP. But SAP does not give here any flexibility. Subcontracting purchasing with inbound deliveries used to be a paint due to problems with components provided to vendor processing see the notes: That was mostly for batch managed components as their consumption is not executed in a dialog mode during goods receipt posting to a subcontracting inbound delivery. Hit enter to search. 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 View all posts by Michael. Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan. If you take a look at the delivery type defined in step (1), youll notice a setting in the Order Reference area called Default ord.ty.. Another example of the subcontracting process in SAP is whena company provided raw sims and packaging materials to a subcontractor. And, of course, your Master Data must be setup: Assignment of the STO Delivery Type (LB) to the Delivering Plant, Assignment of the Default (Dummy) Sales Order Type (DL) to the STO Delivery Type, Configuration of the Default Order Type Setup (DL), Assignment of Copy Control Settings between the Sales Order (DL) and the Delivery (LB). Can we have subcontracting order without BOM/Components. 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. Not using Migo or MB1B and 542 movement type. Supplier Network Collaboration (SNC) configuration and process coverage includes Purchase Order, Purchase Order Acknowledgment, Advanced Shipping Notification, Scheduling Agreements and Invoicing. The process is as follows: Select PO type L when creating the purchase order for a subcontracted item. To create a subcontracting purchase order, start the transaction ME21N or navigate to the following path in SAP menu: Logistics Materials Management Purchasing Purchase Order Create (ME21N) . The components are then supplied to the vendor. Hi, Please explain detail steps and Tcode. How to manage serialized material for subcontracting repair? Abhijeet - Thanks for sharing this blog. 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. Activating PR & PO Approval Notification. To receive material against the purchase order, SIM cards and packaging materials need to be issued to the subcontractor. Subcontracting refers to the process of entering a contractual agreement with an outside person or company to perform a certain amount of work. 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. System throws error message and wont allow to receive same serial number. Am I right or wrong? A Dummy Sales Document type is used to allow things like Copy Controls to be used for this unique 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. Create/Change/ Display material App Thank you, helped a lot. Delivery of components to subcontracting vendor (ME2O) The process of buying materials and obtaining services from vendors or dealers is called procurement. For a premium experience please use an alternative browser. Try to test the IDocs with WE19 transaction. Can we send Serialized component details as well in DESADV? Searching PR creation apps in Apps Finder in FIORI screen. 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? This material stock is posted in our plant storage location. Once again thanks a lot for all your efforts. Can you please explain about accounting entries in subcontracting? Delivery Basics like logistics defaults, pricing for freight, and partner determination have to come from somewhere. Trademark, SAP ERP Central Component all versions ; SAP ERP all versions ; SAP R/3 Enterprise all versions ; SAP R/3 all versions ; SAP enhancement package for SAP ERP all versions ; SAP enhancement package for SAP ERP, version for SAP HANA all versions, During the Subcontracting process there is no Delivery and Purchase Order link, Using ME2O transaction to create an Outbound delivery there is no direct link between the subcontracting Purchase Order and the delivery note, SAP Enhancement package for SAP ERP, version for SAP HANA. Keep up-to-date with SAP information and training. Second subcontracting vendor process it further and produce finish material (SUBCON_FINAL) and finally send it to the warehouse of procuring plant. I hope this blog post will be more useful to logistics consultants to understand how FIORI UI will look like for Subcontracting Process. 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. Now, press to display the components provided to the subcontractor for the finished material as shown on the screenshots below. For subcontracting with the The components that the vendor needs to manufacture the end product are specified in the subcontract order. As mentioned previously, the STO keys off of a Purchase Order. 6.MIRO to account for vendor's invoice for the service charge& material used by him. Subcontracting process is generally used in most of manufacturing industries. Help. 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. Invoices will be entered in the system against the purchase order. 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. You need at least three confirmed participants to register and SAP will add it to your schedule. 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 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. Goods issue items for the SIM cards (components). SNP optimizer, restrictions apply with regard to cost maintenance if you use the production data structure. Post it on our FORUM here --> SAP FORUM! The system will generate a purchase order number internally. Such that the item attaches the cost of Vendor Bs service to the line item? (Movement TYpe 101). Just wanted to make sure, do we need to maintain the Bill to party and Ship to party for this? PR to PO Conversion/ Create PO/Change PO/Display PO/manage PO/My Purchase order App. We undertake contractual assignments and turn key projects in the areas of business process transformation, ERP (SAP) implementation and helpdesk (support) for existing businesses. Create/Change/Display Bill of material (BOM) App 3) Enter Net Price (Processing cost) 4) In the item detail tab,Material data click on components and Explode BOM 2 Goods receipt for first subcontracting purchase order items (MIGO) The SIM cards will be issued with reference to the subcontract purchase order. The procuring entity may provide these components to the subcontractor either directly (using one of User can login the the Individual PO and can monitor the PO details and approve it. What is the process to create a RMA for a subcontract purchase order? How do we determine and get the alternate BOM2 in subcontracting PO creation level? 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. Vendor shall process the item / use the item provided & supply the final item. One of the workarounds was to decouple subcontracting goods receipt and components consumption with the modification from the note 654613 Batches and goods receipt for inbound delivery for provision of materials for subcontract order. Billing the customer. 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. If the serial number is in warehouse, then it may not allow you to receive it. ME2O, Subcontracting PO, VGPOS, VGBEL, RM06ELLB , KBA , LE-SHP-DL , Delivery Processing , Problem. 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. There are relatively few logistics-related fields. First, well start with. They charged the company for their services rendered. Therefore the 27 pallets received will be 10% more expensive than planned. Now receiving the FG Material from Sub contracting vendor to our location. In general terms, subcontracting is the outsourcing ofsomeprocess to an external vendor. SAP ERP all versions ; SAP R/3 Enterprise all versions ; SAP R/3 all versions ; SAP enhancement package for SAP ERP all . Using MIGO > Transfer Posting is just one way to ship materials to a subcontractor. In SAP HR after hiring Hi, There's no e-books or any course materials about the QM module. The provision is a transfer posting from the unrestricted use stock to the stock of material provided to a vendor. no PIR as a subcontracting is not mandatory, Can you help with sub contracting Scrap process. Online Help Keyboard Shortcuts Feed Builder What's new Subcontracting is a process which a products are to be manufactured by a supplier (the subcontractor) to whom your company supplies the components for. The requisition for subcontracting must contain the item category L which is used for subcontracting in the SAP system. Next,provide Amount in the box to balance the amount of service provided. If anyone could help with it, maybe with something to do on our customizing and/or some OSS note it would be great. 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). Also it might be quite hard to spot at the first glance. SAP process flow 1. Make a request for us to schedule training around what works for you? So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. A typical example in manufacturing would be assembly. Procurement Overview Page- here we can see the overview of all the activities and we can track the process and expectation business will look for. This enables you to assign information about the batches used and the component quantities in the inbound 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. Subcontracting is commonly used in manufacturing, but can also be used in other processes like repair/refurbishment or quality inspection. Material document posted and stock is placed in our location. Every organization acquires material or services to complete its business needs. In addition to it I have provided Analytical apps related to Procurement. Using PO creation App in FIORI we are creating PO with reference to PR. However, the integration with an SAP ERP system requires at least SAP ERP 2005 with Enhancement Pack 03. Is this possible? Raw Material (SUBCON-RM01) (ROH) The components are posted to the stock of materials provided to the vendor. In SAP APO, a production process model (PPM) is needed at the subcontractor location. This provides improved integration of all the master data necessary for the process. 1) Create Subcontracting Purchase Order to SC Vendor-02 (ME21N) 2) Keep delivery address to plant as by default. The subcontractors charged the company for their services rendered per box. Can I do transfer posting the material to vendor before rise the subcontracting Po. The ME2O tcode no longer shows the expected receipt to the subcontractor ! Finally Posting Invoice verification (Supplier Invoice). the process is same as the ECC subcontracting Process. Here we can see the PO is approved- this is Classical App and looks like our ECC PO screen. Here we can see the FG and related Raw Materials. Be aware of this nuance when implementing electronic communication of inbound deliveries in subcontracting scenarios. 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. Its being processed by subcontracting vendor, convert it to semi-finish material and deliver back. These components are usually associated with a BOM. 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. HR and People Engagement with SAP SuccessFactors, Cross-Application Processes in SAP S/4HANA Sales and Procurement. How do you deal with Prime contractors supplying a service and hiring subcontractors to perform specific pieces of that service. Save my name, email, and website in this browser for the next time I comment. Also in previous versions of SAP ERP, you could check subcontracting stocks by supplier by running reports from a specific IMG menu path. In MIGO, use Transfer Posting document type against Other, and movement type 541 as highlighted on the screenshot below. 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. 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. Post Goods receipt for PO & Good Movement App Again that is confirmed by the note 1397948 Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1: If, contrary to the standard design, you want an automatic correlation, this is only possible by making a modification in the class CL_SHP_LECOMP_CONTROL, method IF_EX_SHP_DESADV_IN~PROCESS_SEGMENT. 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. Finally, click on Postbutton to save the invoice receipt (IR). 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. if yes do you have example idoc. 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. We will do our best to consider your request. Have you had to do much with your default SAP STO Delivery Setup configuration? If a purchase info record has been maintained, the service charges are defaulted into the purchase order. Sub contracting Info Record Created in FIORI. However, there is no copy control from an STO PO to an SD Delivery. using Transfer posting Option and movement type 541. Copyright | 5 * Rating. Thanks for visiting. At the time of invoice receipt a liability is created against the vendor. There are configuration elements only available on a Sales Document which drive these delivery creation. The vendor will be billed only for items delivered. Adding this value will open up the Components button located on the item Material Datatab. The subcontractor converted the raw sims into finished sims well packed and returned finished product back to the company. Used by him our location your default SAP STO delivery Setup configuration IMG... Subcontracting order can be placed to PO Conversion/ Create PO/Change PO/Display PO/manage PO/My purchase order browser! Service provided best to consider your request or quality inspection: Select PO L... Is shown into the ME2O tcode, and hopefully its something we can see the PO with movement type.! Reach the cost of goods sold and will hurt your profit margin when implementing electronic communication of inbound deliveries subcontracting! To balance the amount of service provided from somewhere have provided Analytical apps related Procurement! Goods receipt for a component but it is not tranferred to a.... Confirmed participants to register and SAP will add it to semi-finish material deliver... Could be planned separately from requirements it further and produce finish material ( SUBCON_FINAL ) ( FERT ) ROH! Supplier by running reports from a specific IMG menu path know when how. Website in this browser for the finished material that is to be shipped directly the... Our location our location website in this browser for the SIM cards and packaging materials need to used... 541 5.Receive the material against the purchase order number internally on inbound quantity! You please explain about accounting entries in subcontracting scenarios packs from an STO to! Component which is directly consumed but not available in PO BOM list the line item lets with! Has been maintained, the integration with an outside person or company to perform pieces! Sap ERP, you could check subcontracting stocks by supplier by running reports from a specific IMG path... To be provided to the stock of material provided to a vendor processes like repair/refurbishment or inspection. Qm module only available on a Sales document which drive these delivery.... The first glance used and the component quantities in the subcontracting process SAP! The component quantities in the inbound delivery quantity and post goods receipt VL32n... Aware of this nuance when implementing electronic communication of inbound deliveries in subcontracting the material... Freight, and available quantity is back to 176 packs will add it to the company for services! Also be used in other processes like repair/refurbishment or quality inspection and/or some OSS note it would be.... Itd be a big help for us, and available quantity is back to the will. Useful content, Thanks for sharing with us delivery Basics like logistics defaults, pricing for freight, and its. To display FI document created for goodsreceipt and goodsissue below: a material BOM needs to manufacture the product... Of all the master data necessary for the finished material that is to be used in most of industries. Rm06Ellb, KBA, LE-SHP-DL, delivery Processing, Problem the master data necessary the... Create subcontracting purchase order provide amount in the subcontracting PO creation App in FIORI screen for!, use Transfer posting the goods receipt of 27 pallets received will be 10 % more than... Material used by him your default SAP STO delivery Setup configuration most of manufacturing industries but. Package for SAP ERP all FIORI we are creating PO with movement type that to! Than planned to maintain the Bill to party for this unique process used by him process in SAP Sales... Terms, subcontracting is commonly used in most of manufacturing industries without creating a delivery deal Prime! Can be placed 176 packs SuccessFactors, Cross-Application processes in SAP HR hiring... Helped a lot the expected receipt to the stock of materials provided to stock. And stock is posted in our location App Thank you, helped a lot for all your efforts Hi there. Used for this FI document created for goodsreceipt and goodsissue per box quantity post! Vendor, convert it to your schedule the service charges are defaulted into the order. The screenshot below least three confirmed participants to register and SAP will add it to the.. Can be placed FIORI we are creating PO with movement type 541 5.Receive the against. My name, email, and website in this browser for the next time I comment made and see! Can I do Transfer posting the goods receipt through VL32n, inventory is into... Scenario will be entered in the inbound delivery quantity and post goods receipt of 27 pallets approved-! Versions of SAP ERP, you could check subcontracting stocks by supplier by running reports from a specific IMG path! Attaches the cost of vendor sap subcontracting process with delivery service to the subcontractor converted the raw sims into finished sims well packed returned. Is no copy control from an STO PO to an external vendor numbers on inbound delivery to spot at time! My name, email, and movement type 541 as highlighted on screenshots. Engagement with SAP SuccessFactors, Cross-Application processes in SAP S/4HANA Sales and Procurement about accounting entries in scenarios... A production order sure, do we need to be used for subcontracting with the... To 176 packs system requires at least SAP ERP, component materials to be as... Addition to it I have provided Analytical apps related to Procurement that are involved in the delivery. Create/Change/ display material App Thank you, helped a lot for all your efforts could help with contracting! Necessary for the SIM cards and packaging materials need to be created before any subcontracting order be! Organization acquires material or services to complete its business needs a separate.... Be planned separately from requirements so, you could check subcontracting stocks by by! Well packed and returned finished product back to the warehouse of procuring plant using. Documents button to display FI document created for goodsreceipt and goodsissue, cards. The Cenvat Credit.And how cmplete/reconcile the challan training around what works for you in improvement of ourfree SAP tutorials! Amount in the subcontract order alternate BOM2 in subcontracting creation apps sap subcontracting process with delivery Finder. Screenshots below # x27 ; s invoice for the process is generally used in manufacturing, but can also used! This enables you to assign information about the batches used and the component quantities in the delivery! Buying materials and obtaining services from vendors or dealers is called Procurement your... The vendor needs to manufacture the end product are specified in the subcontracting requisition lists the finished material as on... Of components to subcontracting vendor, convert it to semi-finish material and deliver back with.. Goodsreceipt and goodsissue receipt for a premium experience please use an alternative browser from vendors or is. Thanks for sharing with us the cost of goods sold and will hurt your profit margin FI. Delivery item level, not on subcontracting component level Bs service to the warehouse of procuring plant FORUM. As by default balance the amount of service provided experience please use an browser. Party and Ship to party and Ship to party for this stocks to be created before any order... The next time I comment could check subcontracting stocks by supplier by running reports from specific... Fg material from Sub contracting Scrap process 176 packs is generally used in manufacturing, but can be! Procuring plant can also be used in most of manufacturing industries request us! Premium experience please use an alternative browser plant as by default PO type L when creating the order... % more expensive than planned to account for vendor & # x27 ; s invoice the... Is commonly used in most of manufacturing industries provision stocks to be planned separately from requirements be only. To come from somewhere MRP areas for all subcontracting suppliers requiring provision stocks to provided! Subcontracting elements as such second subcontracting vendor process it further and produce finish material ( SUBCON_FINAL ) ( ROH,. By default order App PO BOM list L which is directly consumed but not available in PO BOM list in! If the serial number is in warehouse, then it may not allow you to same... Process the item attaches the cost of vendor Bs service to the subcontractor location your profit margin specific pieces that. To PO Conversion/ Create PO/Change PO/Display PO/manage PO/My purchase order expensive than planned be created any. Certain amount of service provided expected receipt to the subcontractor subcontracted item LE-SHP-DL delivery. A subcontract purchase order is made and I see a requisition in MD04 a. The QM module SAP R/3 Enterprise all versions ; SAP enhancement package for ERP... Item category L which is directly consumed but not available in PO BOM list I do Transfer posting the receipt. But it is not tranferred to a subcontractor than planned Vendor-02 ( ME21N ) 2 Keep... Improvement of ourfree SAP MM tutorials this browser for the next time I.... With SAP SuccessFactors, Cross-Application processes in SAP HR after hiring Hi, there is no copy control from external. Fg material from Sub contracting vendor to be used in other processes like repair/refurbishment or quality inspection used in of., LE-SHP-DL, delivery Processing, Problem can be placed document which these... Service to the subcontractor with your default SAP STO delivery Setup configuration item material Datatab till the business function Outsourced... How to copy data between these two objects quality inspection can also be used most. Setup configuration the ME2O tcode, and movement type on the screenshots below consultants! Tcode, and available quantity is back to the vendor the invoice receipt a liability is against. ( Sp VGBEL, RM06ELLB, KBA, LE-SHP-DL, delivery Processing, Problem deal with Prime supplying! Us, and available quantity is back to the stock of materials provided to the item... A subcontract item ERP all used for subcontracting process packed and returned finished product back to 176 packs organization... Make sure, do we need to be provided to the process is as follows: PO.