Analytical apps related to PR, PO, GR, IV- Creating Bill of Material for Subcontracting in FIORI. The process is as follows: Select PO type L when creating the purchase order for a subcontracted item. Imagine the following, quite typical scenario. We use ME2O, check the box next to the material then click on create delivery. 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. Process Flow. In previous versions of SAP ERP, component materials to be provided to the subcontractor could be planned as a separate stock. Its being processed by subcontracting vendor, convert it to semi-finish material and deliver back. Finally, click on Postbutton to save the invoice receipt (IR). (It is already delivered). Once PR is approved by Purchasing department top level authority. 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. The bill of materials (BOM) is a formally structured list of the components that make up a product. Please explain detail steps and Tcode. Sales Order) to the destination (i.e. This blog is independent and NOT affiliated with SAP SE (the company behind SAP ERP system). Is the Info record mandatory in subcontracting ? System automatically selects movement type 101 O (GR to SC Vendor). Read on for more about the SAP Subcontracting PO Delivery Setup. The system proposes the labor charge from the info record for the subcontracting product. 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). So that a PPM is automatically created in SAP APO you must transfer a production version with a bill of materials and a routing (or master recipe) from the SAP R/3 system. In subcontracting process, raw materials are provided to subcontracting vendor. 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? SAP MM - Procurement Process. 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) Subcontracting refers to the process of entering a contractual agreement with an outside person or company to perform a certain amount of work. 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. 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. This provides improved integration of all the master data necessary for the process. If the serial number is in warehouse, then it may not allow you to receive it. In this video you can see a complete SAP Subcontracting process (Subtitles available) with following steps:- Planning Finish Good (MRP Run)- Automatic conver. Now, during unloading you realize that 3 pallets are missing. Easily understood and completed my Sub-contracting entry. Get step-by-step instructions to configure sourcing, invoicing, supplier management and evaluation, and centralized procurement. Some components also come from our warehouses. My question is , already we issued raw materials to vendor with 541 Movement type, why again 543? However, with SAP S/4HANA, a subcontracting MRP area is the default option for subcontracting planning. The bill of material refers to the end product that the vendor will deliver. 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. This enables you to assign information about the batches used and the component quantities in the inbound delivery. So, you adjust the inbound delivery quantity and post goods receipt of 27 pallets. Ive been blogging about SAP and various other interests since 2013. Subcontracting within Sourcing & Procurement in SAP S/4HANA: What it Is and How to Upgrade, Subcontracting POs, commitments, and supplier contact information now visible. This is where you maintain all the components which need to be sent to the vendor. Im a career-long IT specialist with a focus on SAP for over 18 years. The components are then supplied to the vendor. 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. In our process, it happens that some components (raw materials) are being purchased from an external vendor to be directly shipped to the subcontrator. If none, a green light will turn on near Balance fieldand the SAP system will show you accounting document which will be created. Finally, you save the subcontracting purchase order. Thanks for visiting. using Transfer posting Option and movement type 541. I have a question. Procurement Overview page Apps. The invoice is posted. We purchase 100 packs from an external vendor to be shipped directly to the subcontractor. 4.Issue material to vendor with movement type 541. if yes do you have example idoc. You need at least three confirmed participants to register and SAP will add it to your schedule. External subcontracting in procurement Create purchase order Approve purchase order (optional) - Approval Process not Transfer stock for subcontractor with delivery Process deliveries and picking Transfer stock for subcontractor without delivery Goods receipt for subcontract order (without WM) Record results Record usage decision Verify invoice Here, the manufacturer places an order with an assembly provider for a certain number of finished goods, then provides the parts that the assembly supplier is to use for putting the finished product together. Thank you, helped a lot. Is there a process to bring components back from the Subcontractor . (here material and components are MAT1 only). I am a husband and father. First, well start with. Get unlimited access to all SAP PRESS books! Identifying the process steps of an intercompany sales process. The procuring entity may provide these components to the subcontractor either directly (using one of 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 If you chose the MRP area route, material data on an MRP area was required for all components. To access this piece of configuration, youll want to navigate to the IMG node below: Theres not much more here than assigning the plant to the Delivery Type. So, how does SAP know when and how to copy data between these two objects? 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. I am a husband and father. Configuring intercompany sales. Thats about it. 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. Make sure to implement the note 1397948 - Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1 if you work with subcontracting components in DESADV IDocs. 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. 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) I suspect, however, that the issue is that perhaps the status of the serial number is not being updated properly. Using PO creation App in FIORI we are creating PO with reference to PR. The vendor performs its service and delivers the ordered material (the end product). Procurement Info record created in FIORI using Create Procurement Info record FIORI Apps. Use transaction MIGO to provide components to the subcontractor. 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. it again depends on the user decision. Sir, That is confirmed by the note 1397948 Subcontracting: Components cannot be provided using IDoc /SPE/IDOC_INPUT_DESADV1. ERProof SAP MM SAP MM Training Subcontracting Process in SAP. Posting an incoming supplier invoice. The requisition for subcontracting must contain the item category L which is used for subcontracting in the SAP system. Many small and midsize businesses hire subcontractors to assist with a wide variety of functions. Try to test the IDocs with WE19 transaction. Using MIGO > Transfer Posting is just one way to ship materials to a subcontractor. HR and People Engagement with SAP SuccessFactors, Cross-Application Processes in SAP S/4HANA Sales and Procurement. The next step of subcontracting process in SAP isto do posting of invoice receiptagainst the purchase orderusing the transaction MIRO. Not the perfect solution but better than nothing. Creating a third-party purchase order. The customizing entry in the supplier master is sufficient to trigger stock transfers and reservations from the plant to the subcontracting MRP area. 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. Can you explain how to do this process without BOM?? The subcontracting requisition lists the finished material that is to be procured in a subcontract item. I wanted to highlight this process because it is cross-functional and is a bit different than other SD processes. Next, click OK checkboxes as shown below. The components are posted to the stock of materials provided to the vendor. 5.Receive the material against the PO with movement type 101. In this process, components are shared to vendor to get the final product. Do Invoice Verification for second subcontracting purchase order (MIRO). My previous response was more about serial numbers on inbound delivery item level, not on subcontracting component level. Additional subcontracting SAP Fiori app functionality includes the following: In SAP, there are multiple ways of setting up this transaction, but many approaches add more complexity than they are worth. Steps to perform subcontracting: Create subcontracting Info record (Optional) - T Code - ME11 Lets start with discussing the steps that are involved in the subcontracting process in SAP. 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. Inbound processing is therefore more efficient since manual batch entry tasks are removed. Searching PR creation apps in Apps Finder in FIORI screen. Against each subcontracted item the system copies the material components that are to be provided to the vendor from the bill of material (BOM). user will convert to PO. Post Goods Receipt (MIGO) on receipt of the finished product E from the Subcontractor SAP Steps: 1.Create the finished goods material code. As the worlds leading SAP publisher, SAP PRESS goal is to create resources that will help you accelerate your SAP journey. This approach requires more manual effort and accounting acrobatics than is optimal. Also in previous versions of SAP ERP, you could check subcontracting stocks by supplier by running reports from a specific IMG menu path. 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. Maintain these BOM in production version (Material master MRP 4 view) of respective header material. The PPM consists of components and operations. You order the end product using a subcontract order. ME2O after purchasing and before inbound delivery creation. Itd be a big help for us, and hopefully its something we can address for you in improvement of ourfree SAP MM tutorials. Now, lets display thedocument that we have just created. Post Goods receipt for PO & Good Movement App Many a times, more than one subcontractor is used for manufacturing at different level of BOM. The process is very similar to the generic subcontracting process (see Subcontracting ). Abhijeet - Thanks for sharing this blog. Create Subcontracting vendor in FIORI. Please let me know in the comments. PO Approval App. There are configuration elements only available on a Sales Document which drive these delivery creation. Available quantity at the subcontractor is back to 76 packs, where the real information is 176 packs. Very easy to understand now. We will do our best to consider your request. if they are ok with the PO then they can approve it else deny the PO. Can we have subcontracting order without BOM/Components. In general terms, subcontracting is the outsourcing ofsomeprocess to an external vendor. Does this sound familiar? A subcontractor provides a product on pallets and they notify a shipment of a full truck load, of say 30 pallets. This creates a host of additional transactions for each subcontracting order and doesnt scale well. List Material document Apps What is S/4HANA? Below are the steps involved in this process. How do we determine and get the alternate BOM2 in subcontracting PO creation level? Creating a sales order for intercompany sales. Participants will also learn about the associated customizing settings for the selected cross- application business processes. Your email address will not be published. As subcontracting Process everybody knows and it is not a new topic.. SAP ERP all versions ; SAP R/3 Enterprise all versions ; SAP R/3 all versions ; SAP enhancement package for SAP ERP all . 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. Another example of the subcontracting process in SAP is whena company provided raw sims and packaging materials to a subcontractor. They sent a DESDAV / DELVRY07 message and it creates an inbound delivery in your system. We have got 76 packs (splitted in batches 293 and 316) at the subcontractor. Tracking the materials and valuations, which technically still belong to the buying organization, becomes difficult using the standard process. To do it, click on Doc. The subcontractors charged the company for their services rendered per box. Finally, click on Post button to post the document. How to Configure SAP S/4HANA Asset Maintenance Subcontracting. You probably know where this configuration is, but for the noobs: These are all default settings, so again not much to say here. Sub contracting Info Record Created in FIORI. The system will open a window with the list of documents in accounting. Procurement should be done in such a way that materials are ordered in correct quantity, with a proper value at the proper time. It is also possible to see accounting documents that were automatically generated by the SAP system during posting of material movements. That was so, till the business function LOG_MM_OM_1 Outsourced Manufacturing was released. 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? It would have been nice if SAP had provided a BAdI enhancement here. 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. 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. in the case of not providing components but still wanting to value the finished goods at std including inbound freight? 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. To receive material against the purchase order, SIM cards and packaging materials need to be issued to the subcontractor. This improves batch tracking for the sold-to party. Post it on our FORUM here --> SAP FORUM! Therefore no need to transfer the material through ME2O. ME2O, Subcontracting PO, VGPOS, VGBEL, RM06ELLB , KBA , LE-SHP-DL , Delivery Processing , Problem. 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. Proc 30) They charged the company for their services rendered. Your comprehensive guide to SAP S/4HANA sourcing and procurement is here! Subcontracting process is generally used in most of manufacturing industries. Material Master setting for Subcontracting Materials (MM01), Subcontract material SUBCONTRACT-01(HALB) (Sp. 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. 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). In MIGO, you need to choose Goods Receipt against Purchase Orderwith movement type 101 as shown below. Delivery Basics like logistics defaults, pricing for freight, and partner determination have to come from somewhere. Next, click OK checkboxes as shown below. 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. Do Invoice Verification for first subcontracting purchase order (MIRO), Goods receipt for second Subcontracting purchase order items (MIGO). How do you deal with Prime contractors supplying a service and hiring subcontractors to perform specific pieces of that service. Subcontracting is a critical process for many organizations, and from an SD consultants perspective its quite unique. We are sending and receiving same material and same serial numbers. 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: Create/Change/Display Bill of material (BOM) App 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. Do you need to create a recipe for sub-contracting process? When the subcontractor receives the raw SIM cards at his premises, he will inform the client and a goods receipt will be posted with reference to the purchase order increasing the subcontractor stock in the system. ( here material and same serial numbers on inbound delivery, RM06ELLB KBA! Sap had provided a BAdI enhancement here for the selected cross- application business processes by. Purchase orderusing the transaction MIRO by supplier by running reports from a specific IMG menu path configure,... 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