Manufacturing subcontracting

Hi Experts,
Please suggest me the flow for manufacturing subcontracting. Below is the scenario ( requirement ).
Header - Flange, component - plate.
4 operations.,
10 - in house - component allocated and issue ( plate )
20 - subcontracting - CNC drilling which needs to be performed externally
30 - in house
40 - in house
Kindly explain me in detail about BOM, Routiing and automatic PR creation.
Appreciate your help!
Thanks,
Kavin

>
Kavin Kumar wrote:
> Hi Experts,
>
> Please suggest me the flow for manufacturing subcontracting. Below is the scenario ( requirement ).
>
> Header - Flange, component - plate.
>
> 4 operations.,
>
> 10 - in house - component allocated and issue ( plate )
> 20 - subcontracting - CNC drilling which needs to be performed externally
> 30 - in house
> 40 - in house
>
> Kindly explain me in detail about BOM, Routiing and automatic PR creation.
>
> Appreciate your help!
>
> Thanks,
> Kavin
BOM:
Header - Flange, component - plate.
Routing
maintain operation 20 with control key pp02
Automatic PR
In OPL8 for that order type
IN general valid setting Check Purchase requisition 3 automatic .
Check the below thread for more detail
Re: operation wise subcontracting
Re: Sub-Contarcting External Operation Process
Re: operation subcontracting

Similar Messages

Repetitive manufacturing:subcontracting

Dear experts
              In repetitive manufacturing scenario, I have subcontracted my 4 of operations.
           Now the requirement is I want to create Automatic PR for those operations.
          So please guide me what are the necessary settings to be done.
Regards,
Sameer

Dear Sameer,
I doubt whether operation sub-contratcing is possible in REM scenario,i have not tried this,but in my understanding if you are
using a reporting point backflush this may be achieved.
In one of my project in REM scenario we used direct sub-contracting where this is possible.
Also refer this thread to explore more,
Re: Subcontracting in REM
Correct me if I'm wrong.
Regards
Mangalraj.S

Possible to to Prod subcontracting with REM

Hi,
Like we do for Production order , is there a control key for Repetitive mfg plan order to sendout operation for subocntracting.
if yes , what are difference with Production order flow.
Thanks much in advance for help,
Jatin

Hi Jatin,
There is no any separate control key as such for REM subcontracting even I have doubt that operation sub-contracting is possible in REM scenario. I have never worked on such but in my understanding if you are using a reporting point backflush then this may be achieved.
You can use direct sub-contracting where this is possible means keep subcontracted incoming SF material as procurement type F and take the help of MM expert to show the consumable raw material if any in the PR created. In this type of scenario PR is created for subcontracting material and you can track it like a separate subcontracting material.
Also for more info refer below threads,
Operational level subcontracting in repetitive manufacturing
Repetitive manufacturing:subcontracting
Re: Subcontracting in REM
Regards,
Narresh

Internal Subcontracting (Toll Manufacturing)

Dear SAP Expert,
We have requirement that our sister company is doing subcontracting to us (toll manufacturing).
Basically our sister company is supplying us the main raw material and then
we add our company own material plus some overhead.
The problem is we need our company to recognize the COGS during we produce
in the same period.
Example: in April we produce 1000 CTN, we dispatch the goods to customer (sister company) 800,
we want to recognize the COGS on April based on 1000 CTN (not based on 800). The remaining
200 we just need to record quantity.
My question is:
- What is SAP best practice of internal subcont (toll manufacturing)?
- Any idea how to recognize COGS in produced quantity?
something cross in our mind is we sell all right after we produced and receive remaining qty in virtual Plant non valuated.
That means once 1000 CTN is produced we sell it immediately (to recognize 1000 CTN as COGS),
then remaining stock of 200 CTN (physical dispatched 800 CTN) we need to GR again in different plant (which is non valuated)
or
Is there any idea to simplify this process?
Moreover we implement material ledger
Thanks in advance,
Subur

Hi Subur
Dont worry.. Its quite a common scenario and I have myself implemented it in the past...
The main challenge in this case is that for your Company its a Non valuated stuff.. however, for the Sister Company, its a valuated stuff.... With right kind of settings, you can achieve it....
The way I have implemented is as below
1. Use MTO scenario where Sales Order is the CO object...
2. IMG Settings
a. Create a requirement class in IMG > CO > Prod Cost Contr > Cost Obj Contr > Product cost by Sales order > Control of Sales-Order-Related Production/Product Cost by Sales Order > Check Req Class
Assign Account Assignment Catg = E; Valuation Field = Blank; And a Settlement Profile
b. Assign this requirement class to your requirement type and hand it over to your SD guy... The SD guy needs to assign this Req Type to his item category and always determine this Item category in the Inter Company Sub contracting Sales order...
Its advisable you create a separate sales order type for it
3. Process
a. Create a Sales order in Company A (Company B is the Sister Concern)
It may have 2 materials i.e. One material will be the FG and another will be service material for Sub contracting charges
b. Receive the raw material supplied by Company B against the sales order... Mvt Type 501 E.... (This would receive the stock in your books as Non valuated i.e. @ Zero value)
c. Create a Production order for the FG associated with the Sales order.. (CO08)
d. Issue the goods to the prod order / Confirm the operations
e. Do the GR from prod order... The GR will be Non valuated in Company A.... Only Qty will be updated in the stock.. No Value
f. At period end, settle the Prod order upon sales order.... With this, the total cost of 1000 will be settled to Sales order
g. Do the billing, which will also post to the Sales order....
h. Settle the sales order from VA88... This will settle the total cost of 1000 CNT to COPA....
4. Ensure that the Item Category / Req Class you use in this process for Company A, should not be used for Company B.. Else, it would also be treated as Non valuated GR in Company B as well
br, Ajay M

Subcontracting

Hi
How to trasport material from Sale order stock to Subcontractor?
Raju

How to trasport material from Sale order stock to Subcontractor?
Materials assigned to sales order or project (that are located in sales order or in project special stock segment) are not "transported" in SAP to the subcontractor.
Please check SAP online help:
http://help.sap.com/erp2005_ehp_04/helpdata/EN/4d/2b90b043ad11d189410000e829fbbd/frameset.htm
Subcontracting is also possible in conjunction with sales order stocks and project stocks. The subcontracting orders are account-assigned to a sales order or a WBS element. Thus, the components are not transferred (using a transfer posting) to the "stock of material provided to vendor" but are directly withdrawn from the sales order stock or the project stock at the time of the goods receipt. The material manufactured is also posted to the sales order stock or to the project stock. The cost of subcontracting is then debited to the sales order or WBS element.
Since the components are not transferred to the "stock of material provided to vendor", we recommend that you use a transfer posting to transfer the provided components to a new storage location (for example, 9999). This enables you to obtain an overview of those stocks that are physically located at the subcontractor. This information is particularly important when you carry out a physical inventory of the sales order stocks and project stocks.
Regards,
Csaba

Account postings in GR & IR for Subcontracting

Hi Experts,
I need to know the account postings for both GR & IR during Sub contracting.
Let us take the scenario . .
PO price - 1000(Gross) + 200(Tax) = 1200 (Net) for 1 Qty
GR - PO Net Price due to Moving Average price.
IR - 1200(Gross) + 240 (Tax) = 1440
Please explain the accounting entries during Goods Receipt and Invoice Receipt.
By
Prabhu

If Material has Price Control as "V" (MAP)
(BSX) Stock A/c of Assembly - Dr
(BSV) Change in Subcon Stock - Cr
(FRL) Subcontracting Charges - Dr
(WRX) GR/IR Clearing A/c - Cr
(BSX) Stock A/c of Components - Cr
(GBB-VBO) Consumption A/c of Components - Dr
If Material has Price Control as "S" (Std. Price)
If Material is having Price Control as "S" then Price Difference A/c will also in picture.
This depends on configuration; SPRO > MM > Inventory Management and Physical Inventory > Goods Receipt > Price Differences for Subcontract Orders at Goods Receipt
Price Differences for Subcontract Orders at Goods Receipt
In this step, you configure for each valuation area whether price differences are generated for a Subcontract order at the time of a goods receipt if the manufactured material is managed at standard price and the standard price varies from the receipt value (externally performed service + value of components + delivery costs).
Example
Finished product: $400 (value at standard price)
Subcontract order:
o Ext. service : $250
o Components : $100
Posting schema without price differences:
Stock account FERT : 400 +
Stock change : 400 -
GR/IR clearing acct : 250 -
External service acct : 250 +
Compon. stock account : 100 -
Consumption account : 100 +
Posting schema with price differences:
Stock account FERT : 400 +
Stock change : 350 -
Price difference : 50 -
GR/IR clearing acct : 250 -
External service acct : 250 +
Compon. stock account : 100 -
Consumption account : 100 +
hope it help

Excise Invoice Selection Vs assessable value in Subcontracting Challan

Hi,
I have maintained the Assessable Value for my subcontracting components and also there is Excise Invoice exists for this components. While creating Subcontracting challan, system is displaying information message that Material XXXXXX has an assessable value, but I would like to refer the Excise Invoice.
Hence, when I click the Excise Invoice selection, there is no effect. As per SAP message "The message is for information purpose only. Go ahead with the option selected" system should ignore this message and allow me to select Excise Invoices but it is not happening.
Is this bug or any other config setting to be done to overcome this issue?.
Your replies to resolve this issue is highly appreciated.
Thanks,
Babu.

Hi,
For every excisable material (whether you procure, manufacture or sale) has to be declared as excisable material in table J1ID with appropriate chapter ID, assessable value & CENVAT declaration.
When you send the excisable material to the sub-contractor the material needs to be returned back to your plant within 180 days. If this is not done, then you will have to pay back the excise duty on the material with base value as assessable value. Hence it is required to maintain the assessable value.
Hope this clears your query.
Regards,
Prashant

MTO-Subcontracting

Hi
Scenerio:
1. Against saleorder MRP will be done, output will be PR with account assignment cat "M"
2. Subcontracting PO will be created w r t PR (Sucontracting PO will a/c assignt cat "M" and Item cat "L" )
3. Compoents will be shown at "Sale order stock" using tcode MMBE
4. Transfer posting using tcode MB1B. with movement type 411 + E (Saleorder stock to Unrestricted stock)
5. Transfer posting using tcode MB1B with movement type 541 (Unrestricted stock to Subcontractor)
with reference to PO
Here am geeting error as "PO XXXXXX has no items"
How to resolve this issue? or any alternative solution ?
Your immediate suggestions will be appreciated
Raju

Hi,
Please check SAP online help where it is explained how to manage this situation:
Subcontracting is also possible in conjunction with sales order stocks and project stocks. The subcontracting orders are account-assigned to a sales order or a WBS element. Thus, the components are not transferred (using a transfer posting) to the "stock of material provided to vendor" but are directly withdrawn from the sales order stock or the project stock at the time of the goods receipt. The material manufactured is also posted to the sales order stock or to the project stock. The cost of subcontracting is then debited to the sales order or WBS element.
Since the components are not transferred to the "stock of material provided to vendor", we recommend that you use a transfer posting to transfer the provided components to a new storage location (for example, 9999). This enables you to obtain an overview of those stocks that are physically located at the subcontractor. This information is particularly important when you carry out a physical inventory of the sales order stocks and project stocks.
http://help.sap.com/erp2005_ehp_04/helpdata/EN/4d/2b90b043ad11d189410000e829fbbd/content.htm
Regards,
Csaba

Scheduling agreement in subcontracting.

Hi,
what are the advantages of using a Scheduling agreement in "Subcontracting"?
A <b>scheduling agreement</b> for subcontracting and a <b>purchase order</b> with material that will be send to the vendor to manufacture the end product are two different steps in subcontracting?
Best regards

Hi,
If you have already maintained the BOM in CS01, you need not have to maintain the seperate BOM in Scheduling Agreement, because, the already existing BOM will get copied. The only thing you will have to do is that, define special procurement category as 30 (Sub-Contracting) in MRP2 view of the material master & then create the SchedulingAgreement with item category as L (Sub-Contracting).
Hope this clears.
Regards,
Prashant
- Pl. reward points if the answer is helpful to you

What are the accounts generated in subcontracting in MM module?

I want the account transactions which are debitd and credited in subcontracting transaction from MM point of view?

Hi Srinivas
Here is the Complete Sub Contracting Cycle and Accounts
(1) You have a material that can be procured externally, and you have maintained BOM with components. Any waste generated and received during subcontracting process can be maintained as component with negative quantity.
(2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Record for Subcontract category for material and subcontractor.
(3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material remains under your ownership, system does not make any value entry. But quantity is shown as "Material Provided to Vendor"
(4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting by-products. There are three events, so three accounting entries are generated:
DR FG Stock/ SC By-Product Stock
CR Change in Stock (FG/ SC By-Product )
(for finished goods received)
DR Subcontracting Charges
CR GR/IR Clg
(for moneys payable to Subcontractor)
DR Consumption (Components)
CR Change in Stock (FG/ SC By-Product )
(material provided to Vendor is now charged to expense)
(5) You do the IV for SC Invoice, and the process is complete.
Thanks

Batch determination in Subcontracting order

Hi,
Can any one of you explain me the steps for doing batch determination for subcontracting orders. i am facing the same issue, but i dont know what steps to follow.
our scenario is: we do a GR against a Sub contracted PO using 101 mvt type and when i am trying to post the document, it's asking me to enter the batch for few components which are maintained as vendor consigned stock and in batches.
is it possible to automate the process? can any body explain how to setup the customization for batch determination?
thanks in advance,
Kanth

Follow the below steps.
01. For movement type 543 "O" assign your search procedure T code : OMCG
02. Maintain conditions record or strategy record.
A1) Normaly we use batch determination at delivery level, because at the time of order material may or may not be created.for this material should be configured with batch and batch determination should be checked in sales views of material.
A2) Batch Determination during order Creation.
For this you need to maintain a Classes d for you Material. Depending on the Manufacturing process you can define the characteristics for your material.
Ex: Purity for Medicines, Resistance for Electric Items.
You need to create a class (You might have to create a new class type) which incorporates the characteristic.
First Create the Characteristic Using Ct04 and then using Cl02 create the Class including this characteristic.
Then in your material master Classification View Enter this class.
Then Create a Batch for the particular plant and Stor Loc using MSC1N.Give the value of the characteristics in this batch.
Then go to SPRO ->Logistics General ->Batch Management and maintain the Condition Technique (Procedure, Strategy Types and assignment to sales docs etc).
Then Create the Batch Determination Record using VCH1.

Problem while returning the subcontracting materials.

Dear All,
i have received finished material A (10 pcs) from subcontractor (BOM maintained B- 200 pcs and c- 300pcs to manufacture A).
Due to quality rejection i am returning 1 pc of finished material "A" to the subcontractor. When i return through MIGO with 122 mvmt type system will display entire quantity ,ie 10 pcs, against the material document number. Now i reduce the returned quantity of finished material as 1 pc, but subsequently BOM materials (components) are not getting reduced.
please advise how to reduce the components propotionate with finished product while returning the subcontracting items.
Eg : A received 10 pcs ( BOM- B=200& C= 300)
returned 1 pc of A, then system should show the components B =20 & C=30. but system shows B=200& C=300.

Hi,
As per your suggestions, system does not allow to do Component reversal 542 movement. How ever system will check the special stock provided to vendor 0. All the component from vendor side consumed and recived GR already for the components B and C.
The following Error message occurs while doing 542 MVMT:
Deficit of Stock w. vendor unr. 20,000 PC : B1 TEST O
Message no. M7021
Diagnosis
Shortfall below the specified stock level or quantity amounting to 20,000 PC.
System Response
If the message is an error message (E), the above is not allowed.
If the message is a warning message (W), the system will allow your input, but the warning is intended to prevent you entering a wrong quantity.
Procedure
In the case of a warning message, check the quantity entered.
In the case of an error message, change the quantity or terminate processing.
Other Possible solution, I have simulated
Return delivery and refer material document number
Manually change the Material A ( With 122 mvmt - qty as 1 ) With Reason for movement
And Sub component as B ( 544 O + GI receipt subc.stck ) with qty 20, similarly Sub component C ( 544 O + GI receipt subc.stck ) with qty 30)
Finally you can check with MMBE ( Finished product A- 9 qty) MBLB - Stock provided to vendor Component B -20 and C-30 qty
I hope this with return the Finished product and consumed subcomponents respectively.
While doing Return delivery for against Material document system always with full qty and BOM qty only, We will manually change returnable qty to the vendor and Reason for the return in any business process flow.
I hope this solution resolved your issues on Return process subcontracting
Even after the Returned the goods to the Vendor ( due to damaged - reason ) ( with 122 and 544 O+) . Later supplier finished his re -work for the returned goods / services , you can do it regular GR against PO number with as usual subcontracting receiving process ( 101 and 543 O-)
Regards,
Thiru
Edited by: thiru on May 5, 2010 11:48 AM
Edited by: thiru on May 5, 2010 11:49 AM
Edited by: thiru on May 5, 2010 11:53 AM
Edited by: thiru on May 5, 2010 11:55 AM
Edited by: thiru on May 5, 2010 12:02 PM

PS subcontracting with external activity

Hi,
I have a couple of questions about "PS subcontracting with external activity" I have not found any information about this for PS subcon flow, I was looking for a subcon PS Wiki but no succeed.
The scenario is to use a external activity to a subcontractor and put the material components to deliver in the external activity and check the subcon check box. Then use the valuated project stock for holding the materials.
For material components there is an option in tab "Proc. Param" and fiel "Mat. Prov. Ind." = "Material Provision Indicator", do you know if this option can be use or be available in PS? This field is grey so I can not do anything with it, so my guess is that option use only by a BOM, could you confirm that for me?
Right now I have a problem in the system so I can not save a project when creating a external activity and use the subcon check box, this is at OSS right now. But I was wondering if I put the material components in a external activity, how will it be represented in the PO?
Will it be only one item in the PO, the service from the external activity? and inside this item will hold all my material components? this can be found in tab "Material data" -> "Components".
Please share if you have some information about this,
Regards
Jose
PS Note that this scenario is not a MM subcon

abdul,
I'm talking what you can do in the system, there is 3 posibilities I have in mind:
Alternative 1
Is when I will send all the parts, thats right separated parts to be one. The material which will be the final material, is not in my stock/company. It is a new material Im manufacturing with the help of a subcontractor.
In PS I want to create a subcontracting external activity, create a PR from PS, create a PO and deliver it to the receiver in other words the subcontractor who will put it together to the final material.
For this alternative I think I have to create the material which the subcontractor will put together and have it as a head material in a BOM. The BOM will represent the parts Im sending for assembly, so when the material is deliver back to me, I will do a goods receipt of the head material.
My question is in this if I have thought this right, if you have experience of this please contact me.
Alternative 2
Is when I will send a existing material and all the parts which will be use to maintain/repair this particular material from my stock/company to a subcontractor who will do the work. This material will have the same material no. when I do the goods receipt.
In PS I want to create a subcontracting external activity, create a PR from PS, create a PO and deliver it to the receiver in other words the subcontractor who will maintain/repair the material.
For this alternative I think I can use a BOM, create a BOM of this existing material which will be maintain/repair with the parts I will send.
My question is in this if I have thought this right, if you have experience of this please contact me.
Alternative 3
This alternative is almost the same as alternative 2 with the exception that the material Im sending will change the material no when its back from the subcontractor. So I will send a existing material and all the parts which will be use to maintain/repair this particular material from my stock/company to a subcontractor who will do the work. This material will get a new material no. when I do the goods receipt.
In PS I want to create a subcontracting external activity, create a PR from PS, create a PO and deliver it to the receiver in other words the subcontractor who will maintain/repair the material.
For this alternative I think I can use a BOM, create a BOM of this existing material which will be maintain/repair with the parts I will send. Then I have to put the new material in my external activity as a material component with negative quantity as part of the subcontracting delivery
My question is in this if I have thought this right, if you have experience of this please contact me.
I hope my question is now clear for you, we are using the defence and aero solution so what I know I do can use the subcontracting with valuated project stock

Issue in mapping Operation subcontracting scenario

Hi all,
I will explain my scenario of subcontracting, i am getting issue when mapping the scenario in SAP.
Scenario: For manufasturing 1 SF my client require 4 operations. All the raw materials required will be issued in the first operation. After first operation he will send the product manufactured to outside vendor and again he receives it after some value additiion. He continues the next two steps and finally manufactures SF which inturn will be used to manufacture his FG.
Configuration: I have assigned a purchase info record in the operation detail. I have not given any WC to that operation because the cost should be captured only from the purchase order during the GR from vendor. After the confirmation of the first operation i am getting a purchase requisition for operation without a material.
Issue: I am not able to show the material which he is sending to the vendor as my purchase requisition doesnot contain any materials.
Please suggest me any possible solution to outcome this scenario.
Thanx in advance
Regards,
Krishna Chandra

Hi all,
i got my the answer for my scenario by this link
http://forums.sdn.sap.com/thread.jspa?threadID=1805266
Regards,
Krishna Chandra

Cross company production with subcontracting

Hello Experts,
I have two company codes say C1 & C2. When I get the requirement of 1000 nos of FG X, all material will be procured in C1 & 1st operation will be performed in C1. Due to capacity issue, 2nd operation have 1 production line in C1 & 1 production line in C2. So the 2nd operation for 700 nos will be carried out in C1 & 300 nos will be carried out in C2. All materials required on prod line in C2 will be send by 57F4.
How to go for this scenario?
Regards,
Sagar

Hi Sagar,
Create 2 level of BoM in C1 like FG = X and SFG = Y.
Here, the output of SFG = Y will be called Input for FG in Plant C1 and as an Input again for Plant C2.
Say you need 1000 SFG to manufacture 1000 FG. You have got capacity constraints for producing 1000 FG in Plant C1, the please follow the below process,
1. Create, Release, Issue RMs and GR a Production/ Process order for SFG for 1000 in Plant C1.
2. Create, Release, Issue SFG and other required RM and GR a Production/ Process order for FG for 700 in Plant C1. Here you will consume 700 SFG.
3. Create a subcontracting PO for 300 FG. With the Subcontracting PO transfer 300 SFG to Plant C2. You need to show Sales Purchase for SFG 300.
4. Create, Release, Issue SFG and other required RM and GR a Production/ Process order for FG for 300 in Plant C2. Here you will consume 300 SFG.
I think the decision of how much to be transferred to Plant C2 is totally depedant upon capacity available in Plant C1. The Production Planner or the Line Scheduler is the right person to decide how much quantity to be subcontracted to Plant C2.
The SD and MM processes are pretty straight but as far as Excise configuration and requirements are concern the composite meetings and decision by PP, MM, SD and CO team would really help you.
Regards,
Shoyeb
Edited by: Shoyeb A on Dec 12, 2011 12:55 PM
Edited by: Shoyeb A on Dec 12, 2011 1:03 PM

Manufacturing subcontracting

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