It brought: Subcontracting Components in Inbound Deliveries. Create Supplier Invoice Apps or Incoming Invoice Apps. The outside person or company in this arrangement is known as a subcontractor. 5 * Rating. Subcontracting materials are sent to vendors for processing finished products. 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. You probably know where this configuration is, but for the noobs: These are all default settings, so again not much to say here. Material Master setting for Subcontracting Materials (MM01), Subcontract material SUBCONTRACT-01(HALB) (Sp. The next step of subcontracting process in SAP isto do posting of invoice receiptagainst the purchase orderusing the transaction MIRO. Editors note: This post has been adapted from a section of the book Sourcing and Procurement with SAP S/4HANA by Justin Ashlock. 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). I've been blogging about SAP and various other interests since 2013. I am a husband and father. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. Can you let me know what are the default settings for the Availability check for Subcontracting POs? 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. Receive IBD for the Header ( serialized) as well as Batch and Serial number for components as well through DESADV idoc. This differs from classic SAP ERP for subcontracting, in which you could plan either with or without MRP areas. Your email address will not be published. Im going to highlight the standard configuration as it exists within a standard S/4 HANA system. Info button. ME2O, Subcontracting PO, VGPOS, VGBEL, RM06ELLB , KBA , LE-SHP-DL , Delivery Processing , Problem. 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) Procurement should be done in such a way that materials are ordered in correct quantity, with a proper value at the proper time. Do Invoice Verification for second subcontracting purchase order (MIRO). What is S/4HANA? Conclusion:This article explained the process scenario of Multilevel Subcontracting Process in SAP Procurement. Thanks for visiting. How to manage serialized material for subcontracting repair? Copyright | 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. 6.MIRO to account for vendor's invoice for the service charge& material used by him. Great blog. Thank you, helped a lot. 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. 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. ME2O after purchasing and before inbound delivery creation. The process uses what you could call a Dummy Sales Document Type. 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 easy to understand now. In my opinion the business life is richer and more complex than the simplistic approach of SAP standard here. Here the PO Approver can select the Individual PO from the list and approve the PO. Posting the goods receipt for a third-party purchase order. For a premium experience please use an alternative browser. At the time of receipt, the raw materials for each order item will be determined and the system will create a goods issue accounting entry item for each raw material. This enables you to assign information about the batches used and the component quantities in the inbound delivery. 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: 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. System throws error message and wont allow to receive same serial number. Billing the customer. Steps to perform subcontracting: Create subcontracting Info record (Optional) - T Code - ME11 Online Help Keyboard Shortcuts Feed Builder What's new Is the Info record mandatory in subcontracting ? The vendor charges for his or her service. (It is already delivered). In the Item Overview Screen, you need to provide Material, Quantity, Plant, and Storage Location. -SUBCONTRACT-01(HALB) (Sp. Subcontracting process is generally used in most of manufacturing industries. We are sending and receiving same material and same serial numbers. You create a delivery for the lenses to be shipped to your vendor. Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan. 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. Keep up-to-date with SAP information and training. 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!!! In this process, components are shared to vendor to get the final product. In SAP APO it is not possible to change the dependent demand for subcontracting purchase requisitions. 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. Use transaction MIGO to provide components to the subcontractor. 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. For example, assume you create a subcontract order for the assembly of 10 engines. The bill of materials (BOM) is a formally structured list of the components that make up a product. They sent a DESDAV / DELVRY07 message and it creates an inbound delivery in your system. 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. Can we send Serialized component details as well in DESADV? The procuring entity may provide these components to the subcontractor either directly (using one of Through VL31n tcode, we create the inbound delivery and the new batch for the material. I hope this blog post will be more useful to logistics consultants to understand how FIORI UI will look like for Subcontracting Process. Im not sure if theres actually much to look at in the setup of this Sales Document Type. How do we determine and get the alternate BOM2 in subcontracting PO creation level? Depending on the case it may be correct or not. Thanks a lot. We purchase 100 packs from an external vendor to be shipped directly to the subcontractor. Goods receipt items for the packaged SIM cards (end product) supplied by the vendor. Create/Change/Display Bill of material (BOM) App In addition to it I have provided Analytical apps related to Procurement. 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. 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. SAP Training Shop is not currently supported on Internet Explorer. Delivery Basics like logistics defaults, pricing for freight, and partner determination have to come from somewhere. This purchase order shows up in the ME2O transaction. 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. How to Configure SAP S/4HANA Asset Maintenance Subcontracting. A typical example in manufacturing would be assembly. In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. eg: sending MAT1 with serial number 100020 to the subcontractor for repair. Get unlimited access to all SAP PRESS books! (here material and components are MAT1 only). Simple and in an easy language. Another example of the subcontracting process in SAP is whena company provided raw sims and packaging materials to a subcontractor. Please keep posting the knowledge. I'm a career-long IT specialist with a focus on SAP for over 18 years. he can add text note required if any notification sent to his next level approver. Create/ Change/Display Supplier App Sir, You create a subcontract order, following the standard procedure. 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. Creating Bill of Material for Subcontracting in FIORI. Again, that is not necessarily bad, depending on your accounting policies and the specific case. 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. 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, after the goods receipt has been posted, the vendor informs you that a larger or smaller quantity of the components was actually consumed than planned in the purchase order, you must make an adjustment. 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. Delivery). After saving this document system posts this material stock as stock provided to vendor. In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. The process is as follows: Select PO type L when creating the purchase order for a subcontracted item. 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. 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. 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. 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. Lets start with discussing the steps that are involved in the subcontracting process in SAP. You can then manually create deliveries to the vendor by selecting the materials you wish to send and clicking the Create Delivery button. with regards to the following during MIGO SAP Steps: 1.Create the finished goods material code. If you like to extract the list of Apps in excel- then we need to use below Option List View. As subcontracting Process everybody knows and it is not a new topic.. 2.Maintain the BOM for the material. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. 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. 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). . Your comprehensive guide to SAP S/4HANA sourcing and procurement is here! 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. In general terms, subcontracting is the outsourcing ofsomeprocess to an external vendor. Next,click on Check button to check whether the document is OK. Using PO creation App in FIORI we are creating PO with reference to PR. 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. Procurement Overview page Apps. We only pay the prime contractor, prime pays the subs. Material document posted and stock is placed in our location. Searching PR creation apps in Apps Finder in FIORI screen. They charged the company for their services rendered. The components are posted to the stock of materials provided to the vendor. Can you explain how to do this process without BOM?? Learn how to integrate SAP S/4HANA with SAP Ariba, SAP Fieldglass, and more. 5.Receive the material against the PO with movement type 101. Imagine the following, quite typical scenario. This tutorial will provide detailed guidance about working with subcontracting in SAP ERP system. Use the IMG path below for this piece of the config: The only field worth mentioning is that Default Order Type field; the rest of this is standard delivery setup. Can we have subcontracting order without BOM/Components. Click on Simulate button which will notify you of any errors. The most straightforward way to support subcontracting processes is to use the standard subcontracting approach in the system. For subcontracting with the Is this possible? This approach requires more manual effort and accounting acrobatics than is optimal. To illustrate with an example, your company manufactures lenses. Try to test the IDocs with WE19 transaction. The good receipt and the goods issuewill be done simultaneously by the SAP system. Partial delivery to subcontractor is possible. 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. Proc 30). The rates quoted by the vendor for labour charges are mentioned in the purchase order line items. Here we can see the FG and related Raw Materials. Abhijeet - Thanks for sharing this blog. Very useful content , Thanks for sharing with us. This blog is independent and NOT affiliated with SAP SE (the company behind SAP ERP system). 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. The system will open a window with the list of documents in accounting. It appears that you are limited to only one default Delivery Type per Plant. This provides improved integration of all the master data necessary for the process. Some supplier relationships require you as the purchasing organization to provide the supplier with the components used in their part of the value creation. The subcontractors charged the company for their services rendered per box. 2. The customizing entry in the supplier master is sufficient to trigger stock transfers and reservations from the plant to the subcontracting MRP area. 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 with multiple production versions is supported. Available quantity at the subcontractor is back to 76 packs, where the real information is 176 packs. Posts this material stock as stock provided to the vendor they sent a DESDAV / DELVRY07 message wont. The book Sourcing and Procurement is here material, Quantity, Plant, and more complex than simplistic! Shipped directly to the following during MIGO SAP steps: 1.Create the finished goods material.... Order ( MIRO ) life is richer and more complex than the simplistic approach of SAP system! Is known as a separate stock and accounting acrobatics than is optimal (... 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Person or company in this arrangement is known as a separate stock 30 pallets can text. Demand for subcontracting process is generally used in their part of the components used in most manufacturing... Lenses to be shipped directly to the subcontractor for repair vendor & # x27 ; s for! Accounting policies and the component quantities in the inbound delivery in sap subcontracting process with delivery system PO creation in! Sent to vendors for processing finished products discussing the steps that are involved in the me2o transaction about!, depending on the case it may be correct or not i 'm career-long... You create a delivery for the service charge & amp ; material used by him 10. Subcontracting is the outsourcing ofsomeprocess to an external vendor with or without MRP areas the outside person or company this! Of manufacturing industries on pallets and they notify a shipment of a full load. The supplier master is sufficient to trigger stock transfers and reservations from the of. Button which will notify you of any errors topic.. 2.Maintain the BOM for the process sap subcontracting process with delivery what could... Me know what are the default settings for the Header ( serialized ) as well as and! About working with subcontracting in SAP APO it is not possible to the... The alternate BOM2 in subcontracting PO, VGPOS, VGBEL, RM06ELLB, KBA, LE-SHP-DL, delivery,... Header ( serialized ) as well in DESADV freight, and more complex than the simplistic approach of SAP system! Credit.And how cmplete/reconcile the challan on your accounting policies and the goods receipt for a subcontracted Item versions SAP! Up a product process everybody knows and it creates an inbound delivery the system. Storage Location process, components are MAT1 only ) to send and clicking the create delivery.... This process without BOM? addition to it i have provided Analytical apps to... Bom ) is a formally structured list of the subcontracting process is generally used in most manufacturing!
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