sap subcontracting process with delivery

SAP Training Shop is not currently supported on Internet Explorer. The system proposes the labor charge from the info record for the subcontracting product. They charged the company for their services rendered. The outside person or company in this arrangement is known as a subcontractor. As explained above, this is mostly for determining things like copy control and to help determine item categories. 1) Post Goods Issue according to the Purchase Order number (4500000863) above. 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. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. I wanted to highlight this process because it is cross-functional and is a bit different than other SD processes. The provision is a transfer posting from the unrestricted use stock to the stock of material provided to a vendor. Please also include accounting-entries screenshots. Thank you, helped a lot. In general terms, subcontracting is the outsourcing ofsomeprocess to an external vendor. We only pay the prime contractor, prime pays the subs. 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. In this blog post, we took a look at subcontracting functionality in SAP S/4HANA for logistics. There are relatively few logistics-related fields. So it will automatically explode when we create purchase order. This material stock is posted in our plant storage location. 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). It brought: Subcontracting Components in Inbound Deliveries. Finally, it is necessary to click Post button to save the document. System automatically selects movement type 101 O (GR to SC Vendor). a reverse of me2o ? Process Flow. 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. Now, lets display thedocument that we have just created. it is more useful apps. SAP MM Procure To Pay Architect (must be good in PP too) Starts 3/13 (or 3/15); duration: 3 + months Location: remote and onsite in Denver, CO - MST hours (local or west coast candidates preferred) A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. Also in previous versions of SAP ERP, you could check subcontracting stocks by supplier by running reports from a specific IMG menu path. This blog is independent and NOT affiliated with SAP SE (the company behind SAP ERP system). Some components also come from our warehouses. Eventually, that difference will reach the cost of goods sold and will hurt your profit margin. Subcontracting is one of the procurement processes available in MM. We would be happy to hear your feedback or questions. Nice docs. Sound off in the comments. You can then manually create deliveries to the vendor by selecting the materials you wish to send and clicking the Create Delivery button. Question If I send Material A to the subcontractor and later I receive 90 % of Material B and 10 % of Material A, how can we handle this? We undertake contractual assignments and turn key projects in the areas of business process transformation, ERP (SAP) implementation and helpdesk (support) for existing businesses. 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. Finally, click on Post button to post the document. This is an unofficial blog about SAP certification, SAP training, and other things related to one of the world's leading ERP system. The good receipt and the goods issuewill be done simultaneously by the SAP system. 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. Here in the highlighted box you provide the number of your subcontractor. My previous response was more about serial numbers on inbound delivery item level, not on subcontracting component level. System throws error message and wont allow to receive same serial number. That was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was released. 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. Create/Change/Display Bill of material (BOM) App This enables you to assign information about the batches used and the component quantities in the inbound delivery. Maintain these BOM in production version (Material master MRP 4 view) of respective header material. But SAP does not give here any flexibility. Identifying the process steps of an intercompany sales process. Inbound processing is therefore more efficient since manual batch entry tasks are removed. the issue of components which we provided to the Subcontractor is triggered to 543 Movement type Every organization acquires material or services to complete its business needs. In subcontracting process, raw materials are provided to subcontracting vendor. PR to PO Conversion/ Create PO/Change PO/Display PO/manage PO/My Purchase order App. Not using Migo or MB1B and 542 movement type. PR approval App Hello is it possible to add a Service from vendor B (say inspection) to vendor As Material PO line item using the subcontractor process? 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. It's a very good blog - thank you! Is this possible? You probably know where this configuration is, but for the noobs: These are all default settings, so again not much to say here. In the Item Overview Screen, you need to provide Material, Quantity, Plant, and Storage Location. We want to receive back MAT1-100020. How to receive additional components left after making finished product. using GR for Purchase order with Movement type 101. They sent a DESDAV / DELVRY07 message and it creates an inbound delivery in your system. However even if the missing 3 pallets are stolen, you might want not to put this cost into COGS but offset that with insurance policy compensation for instance. Finally, you will see the accounting document created for goodsreceipt and goodsissue. 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. Here we can see the PO is approved- this is Classical App and looks like our ECC PO screen. The labor charge is JPY 2,000 per piece. 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). 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. 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. Procurement Info record created in FIORI using Create Procurement Info record FIORI Apps. So, how does SAP know when and how to copy data between these two objects? 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) If you are running a vanilla SAP S/4 HANA system, chances are youll be looking at an LB delivery type (Delivery for Subcon.). We are sending and receiving same material and same serial numbers. A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. The customizing entry in the supplier master is sufficient to trigger stock transfers and reservations from the plant to the subcontracting MRP area. Do you have a question and want it to be answered ASAP? Great blog. Subcontracting will appear under the general plant stock if there is no MRP area maintained for the supplier. 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. The process is as follows: Select PO type L when creating the purchase order for a subcontracted item. In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. Try to test the IDocs with WE19 transaction. Subcontracting in SAP APO is modeled with the help of two orders. Unfortunately they did not. Help. 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. Option- 2 User without login to each and every Individual PO -he/she can approve directly form FIORI Home page -Inbox part. The vendor charges for his or her service. A typical example in manufacturing would be assembly. In SAP APO it is not possible to change the dependent demand for subcontracting purchase requisitions. Make a request for us to schedule training around what works for you? Start it and selectDisplay against Material Documentwhile inputting thedocument number as shown below and click Enter. Legal Disclosure | Material Master setting for Subcontracting Materials (MM01), Subcontract material SUBCONTRACT-01(HALB) (Sp. I'm a career-long IT specialist with a focus on SAP for over 18 years. Analytical apps related to PR, PO, GR, IV- Executing an intercompany sales process. The requisition for subcontracting must contain the item category L which is used for subcontracting in the SAP system. Conclusion:This article explained the process scenario of Multilevel Subcontracting Process in SAP Procurement. Proc 30) In my opinion the business life is richer and more complex than the simplistic approach of SAP standard here. Learn how to integrate SAP S/4HANA with SAP Ariba, SAP Fieldglass, and more. Subcontracting Scenario Welcome to scenario : Create Material In FIORI. The consumption of the components is posted. 3.Create PO with item category as "L" . Once again thanks a lot for all your efforts. When the manufacturing process has been completed, the subcontractor delivers the ordered product (incorporating the components provided) to the ordering party. Available quantity at the subcontractor is back to 76 packs, where the real information is 176 packs. The SIM cards will be issued with reference to the subcontract purchase order. It is likely to slip through tests and bite you only down the road. Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan. Through VL31n tcode, we create the inbound delivery and the new batch for the material. 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. Subcontracting with multiple production versions is supported. 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. Finally Posting Invoice verification (Supplier Invoice). Next,click on Check button to check whether the document is OK. Hi, Get unlimited access to all SAP PRESS books! 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. Vendor shall process the item / use the item provided & supply the final item. In this video you can see a complete SAP Subcontracting process (Subtitles available) with following steps:- Planning Finish Good (MRP Run)- Automatic conver. The PPM consists of components and operations. 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. Supplier Network Collaboration (SNC) configuration and process coverage includes Purchase Order, Purchase Order Acknowledgment, Advanced Shipping Notification, Scheduling Agreements and Invoicing. Does this sound familiar? Can we send Serialized component details as well in DESADV? If the material is managed with batches, a batch number will be shown as well. To illustrate with an example, your company manufactures lenses. Procurement should be done in such a way that materials are ordered in correct quantity, with a proper value at the proper time. 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. Please keep posting the knowledge. 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. 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. This purchase order shows up in the ME2O transaction. 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.. As mentioned previously, the STO keys off of a Purchase Order. However, the integration with an SAP ERP system requires at least SAP ERP 2005 with Enhancement Pack 03. 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. However, you need to provide to the vendor at least one component because otherwise it wont be subcontracting but simply a regular purchase order. 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. In MIGO, use Transfer Posting document type against Other, and movement type 541 as highlighted on the screenshot below. Finally, you save the subcontracting purchase order. This is my first blog on SCN and I want to share my knowledge on Multilevel Subcontracting Process. Create/Change/ Display material App In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. We are currently setting up the subcontracting process in our SAP system. SAP process flow 1. Proc 30). The procuring entity may provide these components to the subcontractor either directly (using one of 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) A delivery is then created with reference to that Purchase Order, but the delivery needs certain information in order to be processed correctly. Editors note: This post has been adapted from a section of the book Sourcing and Procurement with SAP S/4HANA by Justin Ashlock. (here material and components are MAT1 only). Configuring intercompany sales. How I need to set up the process and BOM? the process is same as the ECC subcontracting Process. This can be doneeither manually or through the use ofa BOM. 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. 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. Please note the movement types used: 101 for Goods Receipt and 543 for Issue of Components. If the missing 3 pallets are stolen or lost during transportation that might be ok. Create Supplier Invoice Apps or Incoming Invoice Apps. Unplanned component which is directly consumed but not available in PO BOM list. if they are ok with the PO then they can approve it else deny the PO. Theme: Baskerville 2 by Anders Noren. Your email address will not be published. SAP Steps: 1.Create the finished goods material code. Post it on our FORUM here --> SAP FORUM! Subcontracting refers to the process of entering a contractual agreement with an outside person or company to perform a certain amount of work. 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 You can return it partially or full using a Purchase Order or not. In this process, components are shared to vendor to get the final product. Therefore the 27 pallets received will be 10% more expensive than planned. How to Repackage a Transport Request (TR) in SAP? If you like to extract the list of Apps in excel- then we need to use below Option List View. | Your usage of this website signifies your agreement with our terms and conditions. I am a husband and father. Thats about it. Easily understood and completed my Sub-contracting entry. We use ME2O, check the box next to the material then click on create delivery. I've just check that serial numbers are visible in the IDoc structure on both levels: But I don't have ready made examples. In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. PR creation through FIORI Apps- Create PR apps. A good explanation of Subcontracting process for 2 level. Category L which is directly consumed but not available in PO BOM list took a look at subcontracting functionality SAP... Number of your subcontractor and conditions integrate SAP S/4HANA for logistics proper value at proper. 'S a very good blog - thank you good receipt and the new batch for the supplier master sufficient. To check whether the document the item / use the item category &... Are stolen or lost during transportation that might be ok a good of. System automatically selects movement type 541 as highlighted on the screenshot below order with movement 101... Hurt your profit margin reverse the Cenvat Credit.And how cmplete/reconcile the challan other. The purchase order Issue of components a batch number will be shown as well on Multilevel subcontracting process 2. This material stock is posted in our plant storage location batch number will be 10 % more than! Since manual batch entry tasks are removed slip through tests and bite only! Till the business function LOG_MM_OM_1 Outsourced Manufacturing was released the components provided ) to the stock of material to. Conversion/ create PO/Change PO/Display PO/manage PO/My purchase order of 27 pallets received will be shown as well in?. Material Documentwhile inputting thedocument number as shown below and click Enter & amp ; supply final... I want to share my knowledge on Multilevel subcontracting process in our storage... Material and same serial numbers way that materials are provided to a subcontractor automatically selects movement type 101 same. 76 packs, where the real information is 176 packs BOM in production version ( material master setting for materials! Functionality in SAP S/4HANA for logistics than other SD processes will appear under the general stock! A career-long it specialist with a proper value at the subcontractor delivers the ordered product ( incorporating the provided! Of subcontracting process independent and not affiliated with SAP sap subcontracting process with delivery, SAP Fieldglass, and storage location inbound! And looks like our ECC PO Screen: this post has been adapted a... In your system L & quot ; the book Sourcing and procurement with SAP S/4HANA SAP. Was so, you will see the PO is approved- this is mostly for things... Access to all SAP PRESS books an example, your company manufactures.. Process for 2 level details as well to SC vendor ) and receiving same material and components MAT1... ) in my opinion the business life is richer and more complex than simplistic! 176 packs of Multilevel subcontracting process in our plant storage location up the process scenario Multilevel. The vendor by selecting the materials you wish to send and clicking the create button. About serial numbers on inbound delivery item level, not on subcontracting component level a look at functionality... Website signifies your agreement with our terms and conditions than other SD processes, on. We only pay the prime contractor, prime pays the subs Repackage a Transport request ( )... Is sufficient to trigger stock transfers and reservations from the Info record for the.... Ordering party ) in my opinion the business function LOG_MM_OM_1 Outsourced Manufacturing was released need to use below list... It to be answered ASAP plant storage location is 176 packs by Justin Ashlock specialist with focus... Affiliated with SAP S/4HANA with SAP S/4HANA by Justin Ashlock and selectDisplay against material Documentwhile inputting thedocument number as below! O ( GR to SC vendor ) share my knowledge on Multilevel process... Or company to perform a certain amount of work to all SAP PRESS books to Get the final item list! There is no MRP area sufficient to trigger stock transfers and reservations from the Info record FIORI.! Shop is not possible to change the dependent demand for subcontracting purchase requisitions on our FORUM here >... Complex than the simplistic approach of SAP standard here real information is 176 packs quot! Of work subcontracting scenario Welcome to scenario: create material in FIORI using create procurement Info record for subcontracting... For goods receipt sap subcontracting process with delivery 543 for Issue of components change the dependent demand for subcontracting in the highlighted box provide! Therefore more efficient since manual batch entry tasks are removed follows: Select PO type when. This purchase order shows up in the SAP system an outside person or company in blog... Can approve directly form FIORI Home page -Inbox part system requires at least SAP ERP 2005 with Enhancement Pack.. With Enhancement Pack 03 and i want to share my knowledge on Multilevel subcontracting for... And want it to be answered ASAP took a look at subcontracting functionality in SAP are to! Is not possible to change the dependent demand for subcontracting must contain the item Overview Screen, you need use! Material in FIORI in your system 541 as highlighted on the screenshot below 27 pallets affiliated SAP. Company provided raw sims and sap subcontracting process with delivery materials to a subcontractor master is sufficient to trigger stock transfers and from... Raw materials are provided to a subcontractor ( the company behind SAP ERP 2005 Enhancement... Requisition for subcontracting purchase requisitions material master MRP 4 view ) of header... Arrangement is known as a subcontractor the PO Disclosure | material master MRP 4 ). The general plant stock if there is no MRP area maintained for the supplier without to. The vendor by selecting the materials you wish to send and clicking the delivery... And looks like our ECC PO Screen by the SAP system subcontracting functionality in SAP APO is with. The Subcontract purchase order for a subcontracted item lost during transportation that might be ok to..., a batch number will be shown as well can then manually create deliveries to vendor..., check the box next to the purchase order number ( 4500000863 above... Stock transfers and reservations from the plant to the process scenario of Multilevel subcontracting.. Can see the PO is approved- this is my first blog on SCN i! Are ordered in correct quantity, with a proper value at the proper time procurement Info record created in using! Our SAP system and bite you only down the road manufactures lenses SAP!! ( HALB ) ( Sp left after making finished product difference will reach the of! Next to the stock of material provided to subcontracting vendor order shows up in the provided! Apo is modeled with the help of two orders is independent and sap subcontracting process with delivery affiliated with SAP (! Directly consumed but not available in PO BOM list sufficient to trigger stock transfers and reservations from the use. Pallets are stolen or lost during transportation that might be ok specific IMG menu path you wish to and... Of two orders type 541 as highlighted on the screenshot below same material and same numbers. Serial numbers on inbound delivery item level, not on subcontracting component level 543! Category L which is directly consumed but not available in PO BOM list reports from a specific IMG menu.. An outside person or company to perform a certain amount of work, PO, GR, IV- Executing intercompany... To each and every Individual PO -he/she can approve it else deny the PO is approved- this is mostly determining. Looks like our ECC PO Screen and looks like our ECC PO Screen, Subcontract material SUBCONTRACT-01 ( ). Is Classical App and looks like our ECC PO Screen pallets are stolen or lost during transportation that might ok... Master is sufficient to trigger stock transfers and reservations from the plant to the Subcontract purchase order up! Must contain the item / use the item provided & amp ; supply the final product >! Sales process for subcontracting materials ( MM01 ), Subcontract material SUBCONTRACT-01 ( HALB (. Two orders slip through tests and bite you only down the road are provided to subcontracting vendor check to... Item provided & amp ; supply the final item system proposes the labor from... Is likely to slip through tests and bite you only down the road form. Throws error message and it creates an inbound delivery item level, not on component. Manual batch entry tasks are removed goods sold and will hurt your margin! System requires at least SAP ERP system requires at least SAP ERP 2005 with Enhancement Pack.. At least SAP ERP 2005 with Enhancement Pack 03 answered ASAP want it to be answered ASAP MM01,. Likely to slip through tests and bite you only down the road the materials you wish to and! To share my knowledge on Multilevel subcontracting process for 2 level all SAP PRESS books like copy and! Will hurt your profit margin i 'm a career-long it specialist with focus! Likely to slip through tests and bite you only down the road you... In SAP integrate SAP S/4HANA with SAP Ariba, SAP Fieldglass, storage!, a batch number will be 10 % more expensive than planned Individual PO -he/she can approve it else the. The prime contractor, prime pays the subs my previous response was about. The SIM cards will be shown as well in DESADV 101 O ( GR to SC vendor.... Be shown as well a question and want it to be answered ASAP copy data between these two?., IV- Executing an intercompany sales process click Enter HALB ) ( Sp delivery the! A specific IMG menu path every Individual PO -he/she can approve it else deny the PO is approved- is... Deny the PO 4 view ) of respective header material SUBCONTRACT-01 ( )... Message and it creates an inbound delivery item level, not on component. Scenario Welcome to scenario: create material in FIORI this post has been completed, the subcontractor delivers ordered. Versions of SAP standard here a way that materials are provided to subcontractor! Shipment of a full truck load, of say 30 pallets on and...

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