I have a question. Unfortunately they did not. 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). So it will automatically explode when we create purchase order. Maintain subcontracting MRP areas for all subcontracting suppliers requiring provision stocks to be planned separately from requirements. a reverse of me2o ? Proc 30) 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. This transaction is now available as an app, Display Subcontracting Stocks by Supplier, in SAP S/4HANA, as shown here: In SAP S/4HANA, MRP areas have to be created for every subcontractor; if MRP areaspecific material master records dont exist, MRP uses default planning parameters. SAP process: 1.Create the finished goods material code. 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) On the start screen of MIROchoose Invoicetransaction, enterInvoice Date and Purchase Order number and click Enter on the keyboard. I believe, It will be helpful and will provide sufficient information to the readers. If anyone could help with it, maybe with something to do on our customizing and/or some OSS note it would be great. These components are usually associated with a BOM. They sent a DESDAV / DELVRY07 message and it creates an inbound delivery in your system. The Latest ERP from SAP. Post it on our FORUM here --> SAP FORUM! How do you deal with Prime contractors supplying a service and hiring subcontractors to perform specific pieces of that service. Now, during unloading you realize that 3 pallets are missing. HR and People Engagement with SAP SuccessFactors, Cross-Application Processes in SAP S/4HANA Sales and Procurement. 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). The system proposes the labor charge from the info record for the subcontracting product. using GR for Purchase order with Movement type 101. 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. 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. I found a solution for this as we have to select Subcontracting Type 1 at item level. 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. using Transfer posting Option and movement type 541. Some components also come from our warehouses. Unplanned component which is directly consumed but not available in PO BOM list. Standard Process Flow ME21N - Purchase order creation MIGO_TR - Send components to a subcontractor Again, that is not necessarily bad, depending on your accounting policies and the specific case. If you elected to plan without MRP areas, you werent able to use the full functionality around lot sizing and were only able to order full lot sizes. Create Subcontracting vendor in FIORI. 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. Here in the highlighted box you provide the number of your subcontractor. Im going to highlight the standard configuration as it exists within a standard S/4 HANA system. BOM Explosion to determine the Raw material components provided to Subcontracting vendor. 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. To upgrade MRP subcontracting processes in SAP ERP to SAP S/4HANA, you need to take stock of your existing subcontracting suppliers and processes and identify any gaps, execute a standard upgrade to SAP S/4HANA, and then at post-processing proceed as follows: The standard subcontracting process in SAP entails a leap of faith to a degree, which some MRP controllers and their ilk are unwilling to make. There are configuration elements only available on a Sales Document which drive these delivery creation. 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. Below are the steps involved in this process. If you are running a vanilla SAP S/4 HANA system, chances are youll be looking at an LB delivery type (Delivery for Subcon.). Proudly powered by WordPress 3.Create PO with item category as "L" . Invoices will be entered in the system against the purchase order. Theres actually quite a bit that goes into the Subcontracting with delivery process. See the future of sourcing and procurement! We are currently setting up the subcontracting process in our SAP system. Not using Migo or MB1B and 542 movement type. Goods issue items for the SIM cards (components). Click on Simulate button which will notify you of any errors. Finally, click on Postbutton to save the invoice receipt (IR). In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. Do you need to create a recipe for sub-contracting process? In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. This is my first blog on SCN and I want to share my knowledge on Multilevel Subcontracting Process. 1) Post Goods Issue according to the Purchase Order number (4500000863) above. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. You order the end product using a subcontract order. I hope this blog post will be more useful to logistics consultants to understand how FIORI UI will look like for Subcontracting Process. Now, click Explode BOM button to open the below screen, where you provide your components to the subcontractor. If possible, please mentioned any background configuration need to be maintain before this steps. 2.Maintain the BOM for the material. We use ME2O, check the box next to the material then click on create delivery. Subcontracting within Sourcing & Procurement in SAP S/4HANA: What it Is and How to Upgrade, Subcontracting POs, commitments, and supplier contact information now visible. Such that the item attaches the cost of Vendor Bs service to the line item? 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. The SIM cards will be issued with reference to the subcontract 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. As mentioned previously, the STO keys off of a Purchase Order. If the material is managed with batches, a batch number will be shown as well. The good receipt and the goods issuewill be done simultaneously by the SAP system. Can we have subcontracting order without BOM/Components. But SAP does not give here any flexibility. Your usage of this website signifies your agreement with our terms and conditions. For each transaction requiring subcontracting, you then have to issue a PO and create multiple goods movements and accounting entries internally to support the process. Create/Change/Display/manage/ My Purchase requisitions App Then, expertly run your system after go-live with predictive analysis and machine learning. then Subcontracting PR and PO with Approval (Release) and then issuing Raw material to Subcontracting vendor using Transfer posting (movement type 541) and once Subcon vendor manufactures FG material -he will issue back to us and intern we are receiving the FG Material using Goods reciept against PO created for FG Material. You only have to maintain entries in the material masters if special situations exist for lot sizing, purchase requisitions/orders, and/or third-party order processing. This often is used as justification by finance and other stakeholders on the buyer side for setting up phantom plants to represent the supplier and then moving and tracking the materials in these plants. 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.. Create/ Change/Display Supplier App In MIGO, you need to choose Goods Receipt against Purchase Orderwith movement type 101 as shown below. 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. Process Flow. Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan. This purchase order shows up in the ME2O transaction. You can then manually create deliveries to the vendor by selecting the materials you wish to send and clicking the Create Delivery button. The next step of subcontracting process in SAP isto do posting of invoice receiptagainst the purchase orderusing the transaction MIRO. The process is as follows: Select PO type L when creating the purchase order for a subcontracted item. You create a subcontract order, following the standard procedure. The problem we have is that we cannot link the delivery to a specific SubCon PO. Partial delivery to subcontractor is possible. Can you explain how to do this process without BOM?? They charged the company for their services rendered. The vendor charges for his or her service. We would love to hear your feedback in the comments section below. Very easy to understand now. 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? I've been blogging about SAP and various other interests since 2013. Keep up-to-date with SAP information and training. SAP PRESS is the world's leading SAP publisher, with books on ABAP, SAP S/4HANA, SAP CX, intelligent technologies, SAP Business Technology Platform, and more! Editors note: This post has been adapted from a section of the book Sourcing and Procurement with SAP S/4HANA by Justin Ashlock. SAP Steps: 1.Create the finished goods material code. In SAP APO it is not possible to change the dependent demand for subcontracting purchase requisitions. Through Screen shots process is self explanatory. First, well start with. 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 It is also possible to see accounting documents that were automatically generated by the SAP system during posting of material movements. Subcontracting materials are sent to vendors for processing finished products. Analytical apps related to PR, PO, GR, IV- 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. However, the integration with an SAP ERP system requires at least SAP ERP 2005 with Enhancement Pack 03. This creates a host of additional transactions for each subcontracting order and doesnt scale well. Through VL31n tcode, we create the inbound delivery and the new batch for the material. System throws error message and wont allow to receive same serial number. In this video you can see a complete SAP Subcontracting process (Subtitles available) with following steps:- Planning Finish Good (MRP Run)- Automatic conver. For example, one company that manufactured batteries needed specialized printing services which were outsourced to subcontractors. This approach requires more manual effort and accounting acrobatics than is optimal. user will convert to PO. Terms of use | Inbound processing is therefore more efficient since manual batch entry tasks are removed. Here we can see the FG and related Raw Materials. Required fields are marked *. Posting Invoice verification using Create Supplier Invoice Apps in FIORI. 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. 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