Acting as a subcontractor

Hi all,
I am aware of the subcontracting process where we are sending raw materials to vendors, however in my case, it is the other way around and we are the vendors and receiving the raw materials.
Would this process make sense?
1. Create sales order
2. Create PO with 'free item' checked so there is no accounting impact and MIGO goods into inventory
3. Make-to-Order production
4. Deliver goods
5. Invoice
My issue is with the 'free item' on the PO and whether it is the standard way of approaching this or not.
Thanks

Hi,
Have you considered using the following process:
1. Use of the MM consignment procurement process to get the raw materials from your customer. You would need to maintain a vendor record for this consignment PO process.
2.These materials would be managed as special stock in your plant, giving visibility to the partner stock lying at your locations. These would be managed as the same material number.
3. These materials would be transferred to your stock before being issued for production.
4. The settlement for these stock is done at periodic intervals and would depend on the stock withdrawn. It is possible to maintain consignment info records to help with this process.
5. The sales order is created as agreed by the customer, delivered when stock is made available and billed.
You can fine-tune this process to match your requirements. The advantage would be the visibility of stock, ability to undertake physical stock inventories and the determination of settlement amounts for stock issued.
Regards
PD

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Act as a Subcontractor

Dear All
I am aware of normal sub-contracing process in SAP when we give out the material for S/C. However how to go about the Subcontracting process when we act as a subcontractor for our customer in SAP.
Could anyone share your experiance pls?
Thanks and Regards

Hi,
1. Create customer material master in your system ( May be treatd as Non-valuated UNBW)
2. Do MIGO using goods receipt without PO with mvt type 501 , so that material will be in your stock (or)
Create PO with Free Goods tick mark in the line item and Material will not be valuated.
3. Maintain BOM for the finished material to be supplied back to customer after conversion
4. After cmpleting operations using Production order, make GR for finished product
5. Creat sales order for the finished material and make delivery and invoice to customer
Please give your feedback for further answer.
Regards
Ram
Edited by: ramachandran subramanian on Apr 6, 2009 4:57 PM

How to handle Labour Charges work scope

Hi
SAP Experts
I am getting material from my Customer for Labour Charges Processing only - we done process on it convert Raw Material in to Job and retrun back to Customer.
how should i work entire cycle
from receiving material by MIGO- other
Process Material in production and upto Invoice them for Labour Charges done
with regards
Yogesh

Hi,
You are therefore acting as a subcontractor for process.
You should raise a sales order for the finished product that you are providing, because that is basically what you are selling. The price is the cost of any materials you are providing plus your fee for the work involved.
Receive the items that the customer is providing free of charge and store these as non valuated materials. then when you have produced the finished product,consume the components (ideally with a basic PP order) your own provided components (which will be normal valuated stock) should also be listed as components required for the PP order.there are simpler ways of doing (using things like a 309 movement).
But basically you are selling a service, the fact that you are also providing some materials is merely a reason to increase the price that it relevant.
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Regards,
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