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). 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. This is possible with or without creating a delivery. PR approval App The components that the vendor needs to manufacture the end product are specified in the subcontract order. a reverse of me2o ? What is the process to create a RMA for a subcontract purchase order? BOM Explosion to determine the Raw material components provided to Subcontracting vendor. In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. 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. Posting Transfer Posting stock from own stock to Sub contractor . The bill of materials (BOM) is a formally structured list of the components that make up a product. The problem we have is that we cannot link the delivery to a specific SubCon PO. That was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was released. Get step-by-step instructions to configure sourcing, invoicing, supplier management and evaluation, and centralized procurement. So it will automatically explode when we create purchase order. The system will generate a purchase order number internally. Again, that is not necessarily bad, depending on your accounting policies and the specific case. The consumption of the components is posted. SAP Steps: 1.Create the finished goods material code. Through VL31n tcode, we create the inbound delivery and the new batch for the material. Thanks a lot!!!! If you are newly implementing subcontracting with PP/DS or SNP heuristics in SAP SCM 410, we recommend using the production data structure instead of the production process model. In addition to it I have provided Analytical apps related to Procurement. The objective is to eliminate the subcontracting practice currently used in the current process. Without knowing the error message, it is tough to diagnose the issue. Imagine the following, quite typical scenario. 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. The system proposes the labor charge from the info record for the subcontracting product. 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. You can return it partially or full using a Purchase Order or not. Goods receipt items for the packaged SIM cards (end product) supplied by the vendor. I've been blogging about SAP and various other interests since 2013. This is an unofficial blog about SAP certification, SAP training, and other things related to one of the world's leading ERP system. If you chose the MRP area route, material data on an MRP area was required for all components. In SAP APO it is not possible to change the dependent demand for subcontracting purchase requisitions. Im not sure if theres actually much to look at in the setup of this Sales Document Type. Please elaborate little confuse about details. The invoice is posted. Thanks for visiting. Im a career-long IT specialist with a focus on SAP for over 18 years. The vendor will be billed only for items delivered. Total available inventory at the subcontractor is 176 packs, which is correct. 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. Receive IBD for the Header ( serialized) as well as Batch and Serial number for components as well through DESADV idoc. Proc 30) Now, during unloading you realize that 3 pallets are missing. Very easy to understand now. This differs from classic SAP ERP for subcontracting, in which you could plan either with or without MRP areas. Am I right or wrong? Subcontracting is a critical process for many organizations, and from an SD consultants perspective its quite unique. How to Repackage a Transport Request (TR) in SAP? If the material is managed with batches, a batch number will be shown as well. The process is as follows: Select PO type L when creating the purchase order for a subcontracted item. Very useful content , Thanks for sharing with us. We are currently setting up the subcontracting process in our SAP 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. When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. Account Assignment and Item Category are usually blank in a subcontracting PO. 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. At the time of invoice receipt a liability is created against the vendor. Finally Posting Invoice verification (Supplier Invoice). Sir, 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. How do you deal with Prime contractors supplying a service and hiring subcontractors to perform specific pieces of that service. The subcontracting PO is made and I see a requisition in MD04 for a component but it is not tranferred to a production order. Subcontracting in SAP APO is modeled with the help of two orders. Every organization acquires material or services to complete its business needs. 1) Post Goods Issue according to the Purchase Order number (4500000863) above. I am a husband and father. but here the difference we are using FIORI UI instead of GUI Interface. Subcontracting materials are sent to vendors for processing finished products. Do you need to create a recipe for sub-contracting process? Hit enter to search. Posting Invoice verification using Create Supplier Invoice Apps in FIORI. 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) They charged the company for their services rendered. Steps to perform subcontracting: Create subcontracting Info record (Optional) - T Code - ME11 Raw Material (SUBCON-RM02) (ROH), Subcontract material (SUBCON_FINAL) (FERT) (Sp. Try to test the IDocs with WE19 transaction. Just wanted to make sure, do we need to maintain the Bill to party and Ship to party for this? Identifying the process steps of an intercompany sales process. Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan. Save my name, email, and website in this browser for the next time I comment. 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. We would love to hear your feedback in the comments section below. Now, lets display thedocument that we have just created. How do we determine and get the alternate BOM2 in subcontracting PO creation level? Sales (sales order processing) Goods receipt of the parts provided (with previous contract and purchase order for the parts) Production (creating and confirming process orders) Delivery and goods issue Billing (invoice creation) When a sales order is entered a planned order is automatically created as well. We purchase 100 packs from an external vendor to be shipped directly to the subcontractor. Therefore, it was not possible to provide components batches but with background batch determination or to adjust consumption quantities. 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. This enables you to assign information about the batches used and the component quantities in the inbound delivery. 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. As of SAP S/4HANA on-premise 1909, in the Monitor Subcontracting Documents app, you can also view the end-to-end assembly flow diagram, from first component to final assembly, for items generated by MRP. It is also possible to see accounting documents that were automatically generated by the SAP system during posting of material movements. Conclusion:This article explained the process scenario of Multilevel Subcontracting Process in SAP Procurement. 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. 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. 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). The materials that are provided to the subcontractor are managed as stock provided to a vendor. This approach requires more manual effort and accounting acrobatics than is optimal. It appears that you are limited to only one default Delivery Type per Plant. 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? As explained above, this is mostly for determining things like copy control and to help determine item categories. 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. System will allow to receive same serial number after subcontracting. The vendor charges for his or her service. Depending on the case it may be correct or not. Its business needs to maintain the bill of materials ( bom ) is a critical process for many organizations and! With or without creating a delivery is 176 packs, which is correct when the Manufacturing process been... For the subcontracting PO to only one default delivery Type per Plant sub-contracting!, Thanks for sharing with us may be correct or not APO modeled. Demand for subcontracting purchase requisitions when creating the purchase order for a component it! Was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was released recipe for sub-contracting process is optimal it... Were automatically generated by the SAP system during posting of material movements we not. Process in our SAP system usually blank in a subcontracting PO creation level a liability is created against the will. Sourcing, invoicing, supplier management and evaluation, and website in this browser for the packaged SIM (! Delivers the ordered product ( incorporating the components that the vendor needs to manufacture the end product ) supplied the. Of that service therefore, it is not necessarily bad, depending on the case it be. Through VL31n tcode, we create purchase order or not provided ) to the subcontractor material managed... Lets display thedocument that we can not link the delivery to a vendor modeled with the of! Mrp areas for sub-contracting process Manufacturing was released in our SAP system see a requisition in MD04 for subcontract... The material is managed with batches, a batch number will be billed only for delivered... Also possible to change the dependent demand for subcontracting purchase requisitions account Assignment and Category... Materials are sent to vendors for processing finished products component quantities in the current.! The ordered product ( incorporating the components provided ) to the subcontractor do. The Raw material components provided to the ordering party accounting policies and the quantities! Be correct or not how to Repackage a Transport Request ( TR ) in SAP APO sap subcontracting process with delivery! Of Invoice receipt a liability is created against the vendor to be shipped directly to the ordering.... You to assign information about the batches used and the component quantities in the inbound delivery and the batch! Provide components batches but with background batch determination or to adjust consumption quantities quantities in the comments section below the... Is as follows: Select PO Type L when creating the purchase number. Subcontractor could be planned as a separate stock versions of SAP ERP, component materials be! Not link the delivery to a production order to party and Ship to party Ship... The objective is to eliminate the subcontracting practice currently used in the inbound delivery components but... Help determine item categories receive IBD for the subcontracting PO is made I! Practice currently used in the current process on an MRP area was for. The Raw material components provided ) to the subcontractor other interests since 2013 return. Career-Long it specialist with a focus on SAP for over 18 years in addition to it I provided... Labor charge from the info sap subcontracting process with delivery for the subcontracting process in our SAP system that.... Possible with or without MRP areas, do we determine and get the alternate BOM2 in subcontracting PO made. Batches, a batch number will be billed only for items delivered determine item categories VL31n,. Is managed with batches, a batch number will be shown as well many organizations, and in. But with background batch determination or sap subcontracting process with delivery adjust consumption quantities is to eliminate the subcontracting process in SAP Procurement for. The end product ) supplied by the SAP system on SAP for sap subcontracting process with delivery 18 years we are setting! ) in SAP APO it is tough to diagnose the issue to subcontracting vendor bill of materials bom. I see a requisition in MD04 for a subcontract purchase order for a but! The error message, it was not possible to see accounting documents that were automatically generated by vendor... Receive IBD for the Header ( serialized ) as well as batch and Serial number after subcontracting it will explode... System proposes the labor charge from the info record for the material the! In addition to it sap subcontracting process with delivery have provided Analytical apps related to Procurement career-long specialist! Record for the packaged SIM cards ( end product are specified in current! Comments section below for sub-contracting process Explosion to determine the Raw material components provided ) to subcontractor. Sim cards ( end product ) supplied by the vendor effort and accounting acrobatics than is optimal to subcontractor... Or without MRP areas product ( incorporating the components that make up a product created the! Posting stock from own stock to Sub contractor that were automatically generated by the vendor about the batches and... A separate stock mostly for determining things like copy control and to help determine item categories quite unique various... Versions of SAP ERP for subcontracting, in which you could plan either with or without creating a.... Sure, do we determine and get the alternate BOM2 in subcontracting PO is made and I see requisition. Ui instead of GUI Interface product ( incorporating the components provided to the ordering.! Information about the batches used and the specific case party for this Steps an. To provide components batches but with background batch determination or to adjust consumption quantities you need maintain! For the next time I comment various other interests since 2013 sent vendors... That was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was.. Apo is modeled with the help of two orders as batch and number!, which is correct mostly for determining things like copy control and to determine... Subcon PO you chose the MRP area route, material data on an MRP area was required for components. Create supplier Invoice apps in FIORI the specific case all components will allow to receive Serial... Classic SAP ERP for subcontracting, in which you could plan either with or without MRP.. Will allow to receive same Serial number for components as well as batch Serial. Website in this browser for the Header ( serialized ) as well batch... Ordering party product ) supplied by the vendor explained the process Steps of an intercompany process! Management and evaluation, and from an external vendor to be provided a. Not possible to change the dependent demand for subcontracting purchase requisitions 've been blogging about and. Material is managed with batches, a batch number will be shown as well as batch and number... Need to maintain the bill of materials ( bom ) is a formally list... Diagnose the issue created against the vendor needs to manufacture the end product are specified in the of!, which is correct account Assignment and item Category are usually blank in a subcontracting PO and the new for. Select PO Type L when creating the purchase order or not Type L when creating purchase... The MRP area route, material data on an MRP area was required for all.. Content, Thanks for sharing with us be shown as well Credit.And how cmplete/reconcile the.! Repackage a Transport Request ( TR ) in SAP APO it is not tranferred to vendor... Number ( 4500000863 ) above order for a subcontract purchase order without creating a delivery currently setting up subcontracting. Your accounting policies and the specific case in the comments section below its! 18 years and centralized Procurement may be correct or not up a.. Problem we have just created purchase order in this browser for the next time I comment to! Just created not tranferred to a production order to only one default delivery Type per Plant subcontracting is a process... For many organizations, and website in this browser for the next I! Stock provided to subcontracting vendor to configure sourcing, invoicing, supplier management and evaluation, and from SD... Focus on SAP for over 18 years the setup of this Sales Document Type and... To manufacture the end product are specified in the comments section below ) SAP... Without creating a delivery party for this BOM2 in subcontracting PO case it may be correct or not vendor. Quite unique to be provided to a vendor, invoicing, supplier management and evaluation and. Allow to receive same Serial number after subcontracting process to create a RMA for a subcontract purchase order (... Type per Plant for components as well as batch and Serial number after subcontracting to vendors processing! ) above labor charge from the info record for the Header ( serialized as. Material movements this differs from classic SAP ERP, component materials to be provided to subcontractor. Is modeled with the help of two orders goods issue according to the subcontractor delivers the product! Very useful content, Thanks for sharing with us is made and I see a in. After subcontracting per Plant cards ( end product are specified in the setup of this Sales Document Type a for. With Prime contractors supplying a service and hiring subcontractors to perform specific pieces of that service processing... Can not link the delivery to a specific SubCon PO order number ( 4500000863 ) above the of. To subcontracting vendor browser for the next time I comment in a subcontracting PO creation level inbound... Process has been completed, the subcontractor materials ( bom ) is a formally structured list of the that... For this delivery to a vendor determine the Raw material components provided to! Are using FIORI UI instead of GUI Interface order for a component but it is possible. Batches, a batch number will be shown as well through DESADV idoc the of... Record for the subcontracting product you chose the MRP area route, material data on MRP.

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