if they are ok with the PO then they can approve it else deny the PO. How to Configure SAP S/4HANA Asset Maintenance Subcontracting. I'm a career-long IT specialist with a focus on SAP for over 18 years. Finally, you save the subcontracting purchase order. User can login the the Individual PO and can monitor the PO details and approve it. 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. 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. Please elaborate little confuse about details. Subcontracting is a process which a products are to be manufactured by a supplier (the subcontractor) to whom your company supplies the components for. Info button. HR and People Engagement with SAP SuccessFactors, Cross-Application Processes in SAP S/4HANA Sales and Procurement. Did you learn something new? The materials that are provided to the subcontractor are managed as stock provided to a vendor. The good receipt and the goods issue will be done simultaneously by the SAP system. Privacy | Alerting is not available for unauthorized users, Right click and copy the link to share this comment, 645119 Problems for subcontracting using delivery, 338119 Goods receipt in inbound delivery for SC order, 654613 Batches and goods receipt for inbound delivery for provision of materials for subcontract order, 1397948 Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1, 1397948 - Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1. In SAP HR after hiring Hi, There's no e-books or any course materials about the QM module. The bill of material refers to the end product that the vendor will deliver. We use ME2O, check the box next to the material then click on create delivery. You can have it without BOM by entering all the components manually. Supplier Network Collaboration (SNC) configuration and process coverage includes Purchase Order, Purchase Order Acknowledgment, Advanced Shipping Notification, Scheduling Agreements and Invoicing. They charged the company for their services rendered. Vendor shall process the item / use the item provided & supply the final item. Next,click on Check button to check whether the document is OK. Please keep posting the knowledge. 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. Subcontracting with multiple production versions is supported. I've been blogging about SAP and various other interests since 2013. 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. Save my name, email, and website in this browser for the next time I comment. We are sending and receiving same material and same serial numbers. Later, the subcontractors returned the boxes back to the client. They do not provide any enhancement to decide if to fix or not to fix the subcontracting components quantity whatsoever. I am a husband and father. The provision is a transfer posting from the unrestricted use stock to the stock of material provided to a vendor. On the start screen of MIROchoose Invoicetransaction, enterInvoice Date and Purchase Order number and click Enter on the keyboard. The system proposes the labor charge from the info record for the subcontracting product. In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. 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. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. 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. Subcontracting will appear under the general plant stock if there is no MRP area maintained for the supplier. These components are usually associated with a BOM. Now, press to display the components provided to the subcontractor for the finished material as shown on the screenshots below. If there are any additional charges required, you input them in the Conditions tab as shown on the screenshot below. The ME2O tcode no longer shows the expected receipt to the subcontractor ! 2.Maintain the BOM for the material. PO Items relevant for Subcontracting will need an Item Category of L for Subcontracting. a reverse of me2o ? System will allow to receive same serial number after subcontracting. the issue of components which we provided to the Subcontractor is triggered to 543 Movement type 3.Create PO with item category as "L" . SAP Steps: 1.Create the finished goods material code. The most straightforward way to support subcontracting processes is to use the standard subcontracting approach in the system. View all posts by Michael. So it will automatically explode when we create purchase order. The invoice is posted. Be aware of this nuance when implementing electronic communication of inbound deliveries in subcontracting scenarios. Create Subcontracting vendor in FIORI. Legal Disclosure | 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. Therefore the 27 pallets received will be 10% more expensive than planned. Another example of the subcontracting process in SAP is whena company provided raw sims and packaging materials to a subcontractor. Delivery Basics like logistics defaults, pricing for freight, and partner determination have to come from somewhere. Hello is it possible to add a Service from vendor B (say inspection) to vendor As Material PO line item using the subcontractor process? This is an unofficial blog about SAP certification, SAP training, and other things related to one of the world's leading ERP system. SAP process: 1.Create the finished goods material code. There are relatively few logistics-related fields. Therefore no need to transfer the material through ME2O. No matter which process is utilizing subcontracting, it will always involve a Purchase Order. Eventually, that difference will reach the cost of goods sold and will hurt your profit margin. 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. When we hire I showed how the STO process has a default delivery type per plant, how that delivery type contains a default (dummy) sales document type, and how those two objects are connected through the standard Order/Delivery Copy Control. PR creation through FIORI Apps- Create PR apps. 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. Delivery). Finally, it is necessary to click Post button to save the document. ME2O after purchasing and before inbound delivery creation. We are currently setting up the subcontracting process in our SAP system. I found a solution for this as we have to select Subcontracting Type 1 at item level. Post it on our FORUM here --> SAP FORUM! Is there a process to bring components back from the Subcontractor . Alerting is not available for unauthorized users, Right click and copy the link to share this comment. The list contains the object number of each component, together with the quantity and unit of measure. 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). When delivery papers are needed, a delivery should be created. The customizing entry in the supplier master is sufficient to trigger stock transfers and reservations from the plant to the subcontracting MRP area. I am a husband and father. But SAP does not give here any flexibility. 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. The components that the vendor needs to manufacture the end product are specified in the subcontract order. The SIM cards will be issued with reference to the subcontract purchase order. Create/Change/Display Procurement Info record App When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. In my opinion the business life is richer and more complex than the simplistic approach of SAP standard here. Have any questions or comments? 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. 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. You create a delivery for the lenses to be shipped to your vendor. A subcontracting purchase order is placed by converting the subcontracting requisition into a purchase order. 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. Mapping procedure of a given scenario in SAP system. Sir, The liability created will only be of the amount charged by the vendor for processing and does not include the material component value. Create/ Change/Display Supplier App Through VL31n tcode, we create the inbound delivery and the new batch for the material. Here the PO Approver can select the Individual PO from the list and approve the PO. PR Created and purchase requisition sent to Approval. I'm looking forward for the next ones , Thanks for sharing. 1) Post Goods Issue according to the Purchase Order number (4500000863) above. (It is already delivered). Do you have a question and want it to be answered ASAP? Subcontracting Scenario Welcome to scenario : Create Material In FIORI. 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. Explore ABAP, FICO, SAP HANA, and more! Thanks for the question, Kumar. However, there is no copy control from an STO PO to an SD Delivery. Many a times, more than one subcontractor is used for manufacturing at different level of BOM. 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. 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: We would love to hear your feedback in the comments section below. The next step of subcontracting process in SAP isto do posting of invoice receiptagainst the purchase orderusing the transaction MIRO. First subcontracting vendor process and consume the raw materials to produce semi-finish material (SUBCONTRACT-01) and send it to the second subcontracting vendor. Adding this value will open up the Components button located on the item Material Datatab. This is done when SC Vendor-02 sent finished product to our warehouse. 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). Once your PO is saved, you can use the Vendor Stock Monitoring transaction (ME2o) to manage this inventory. The vendor performs its service and delivers the ordered material (the end product). 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