PP - Subcontracting (External Processing)

Hi Techies,
I have a clarification with respect to PP External processing. For external processing in operation we need to create Purchase info records without reference to material and created with reference to material group only.
With my current scenario my client feels that though you create a purchase info records based on Material group there is no guarentee that all the material in the material groups for external processing would have the same Price. He want to convert this automatic purchase req which gets raised in the production order for external operation to purchase order and the price should be picked up by itself.
We tried to provide the following values in the external operation of the routing.
Sort Term
Material Group
Vendor
Planned Deliver. Time
Price Unit
Cost Element
Note: The subcontracting check box should not be selected and should be left unchecked.
Though we provided the price unit we could not find the price for this external processing updated in the purchase order.
How to carry on with this scenario.
Could you please guide us on this.
Thanking you in advance.
Regards,
Kris.S
Edited by: krishu100 on Nov 4, 2011 5:59 PM

Hi Bala,
Thanks for your reply.
Bala i tried with the Net Price Field
In my scenario i tried giving 15.00 GBP for Net Price and Price Unit as 1.
Its creating a purchase requistion for the external operation when i release the production order for its master material. In the purchase requistition i could see the price in the valuation tab as 15.00 GBP / 1 EA.
When i try to convert it to purchase order i m not able to find the price. Can you please guide me how to make this copy of the respective price from the purchase req to purchase order?
Regards,
Kris.S

Similar Messages

Production operation external processing goods receipt for subcontract PO

Hi PP/MM experts,
I searched for existing forum entries but no luck or final answer.
I have a question about the goods receipt for a subcontracting PO that is account assigned to an operation of a production order (external processing for operation).
The following situation:
Production order type PP02 - external processing
There is only one operation in the production order with control key PP02 - external processing. I marked the control key PP02 in configuration for 'Automatic goods receipt'.
I created a PO for the PR is the operation
When I'm doing the goods receipt of the subcontrating PO a 101 posting is triggered for the finished product and components are consumed by 543 O movements. So far so good. But the inventory for the finished style is not increased. In MIGO I even see that even a batch number for the finished product is determined. Looks like that only the service is posted but not the inventory. I assumed when I mark the operation contol key for 'goods receipt' that the MIGO will also post the inventory for the finished style.
Reason for PP order and not only subcontract order is that we want to manage capacities of external suppliers with PP capacity planning.
Is that a bug in our system or normal behaviour? We use SAP ERP 6.5 with IS AFS.
Thanks in advance for your answers.
Best Regrads,
Harry

Hi Rizzi and all others,
thanks for your replies.
I'm using a production order for the following reasons:
We want to use capacity planning for external suppliers. At least to have some overview of work they have to do in a month
The external assembly can also be changed to internal assmebly and for that reason we will start always with the same kind of document -> production order.
But one more thing what is really confusing. In the materials document list MB51 the 101 movement for the service is listed even if the inventory was not increased. That is really confusing for the users.
Best Regards,
Harry

External processing other than subcontracting

Dear Experts.
My scenario is as follows:
In our routing there are 2 processes:
Internal - Activity Types ( Planned Price KP06/KP26)
External - Purchase requisition/ Purchase order - Directly maintaining in Routing itself under "Net Price Tab" it is under external processing.
We are actualizing the Activities through KSII. (Internal process)....It is ok.
For External Process we are doing the following:
Price per unit directly maintained in routing as plan.
When we create/ Confirm the Production order Automatically Purchase Requisition will be Generated.
Then we are Arriving the Purchase order from PR.
MIGO - Goods Receipt.
MIRO - Payment.
After this process how to Actualize the production order.
I ran MFN1, by doing this activity prices get replaced with actuals.
how to actualize the external processing maintained in routing.............?
Thanks

Hi,
Please check below SPRO settings
Plant Maintenance and Customer Service -> Maintenance and Service Processing -> Maintenance and Service Orders -> Functions and Settings for Order Types -> Control Key->Maintain Control Key
Use Control Key PM03 and Pm02 will not create any PR
For PM03 control Key-->Ext. processing field should be marked with Sign +
Also
Plant Maintenance and Customer Service -> Maintenance and Service Processing -> Maintenance and Service Orders -> Functions and Settings for Order Types -> Define Change Docs, Coll. Purch. Req Indicator, Operation No Intervals
For That Order Type PM04
CollReqstn check box should be marked & Res/PurRq set to From Release or Immediately
Regards,
Rakesh

External Processing with material Provided to Vendor

Dear All,
I have a problem in external processing of Maintenance Order.
When i have created external processing operation.
I have assigned one component for that external operation which i have to send to vendor.
After saving the Maintenance order, system is generating Purchase Requisition for that operation.
That purchase requisition is having account assignment category F. But it is not picking the item category L and the component assigned for this external operation is not flowing to the purchase requisition.
Please guide me to solve this issue.
Thanks & Regards
Bala

Hi
For external service we can use PM03, for that we have to create service sheet and proceed further.
But here my requirement is, just like PP external processing they are doing one operation outside.
If you look at PP routing, Operation overview there is given external processing data and there will be subcontracting tick.
If we tick the sub-contracting button, then system will pick the component assigned to that operation to the Purchase requisition.
If we don't tick that button, system will not copy the component to PReq. .
Is there any option available here in PM?
Please guide me.
Thanks & Regards
Bala

External processing in the plant as vendor under same company code

Hi friends,
In our project under implementation we have following scenario.
we have 4 plants under one company code. one of the plant does powder coating as manufacturing activity. Other 3 plants sends components to the powder coating plant for coating purpose.
In IDES Standard scenario of external processing, a purchase requisition is raised thro info record maintained for the external operation. This scenarion works if the vendor is external.
In our case, the vendor is one of the other plant under same company code/client. Also the powder coating needs to be done without any profit margin for internal customers.
Our FICO guys have the opinion that, intra plant can't be a vendor; because raising invoices among plants under the same company codes is against accounting standars.
If anybody has faced this type of scenario nd found the solution, Please share it here.
Thanx in advance

Hi Shiva
STO scenario
You can not create only STO as you need to send the unpainted components to another plant through SAP & have them painted back with only payment of paining charges without margin.
Subcontracting scenario
You can not create the Subcontracting PO as this is not your external vendor.
Does this involves excise?
Then the PR/PO ctreated should be of combination of STO and subcontracting. If so this is not possible, as item category is the only field in PR/PO that identifies it as STO and subcontracting. obiviously it cann't have 2 values.
My suggesion on this as...
Create a BOM for painted component with sp procurement key as produced in another plant(paining plant). this will have STO cretaed for paining plant. This will inturn cretae a production order in painitng plant.
The BOM in painting plant will have the unpainted component with sp procurement key as produced in another plant ( fabricated plant) this will have STO created for unpainted components.
I hope I am clear & not confused you much.
Regards
Mahesh
Regards
Mahesh

Tracking of wip material in externally processed operation

Hi All,
As part of production process, most of the operations would be processed internally in the manufacturing plant and some of the operations would be
performed by vendor at his own premises (outside the manufacturing plant). Material will be called as WIP (work in process) material if it completes some of the operations (two operations completed out of four operations) in production process without forming its final product shape
WIP (work in process) material will be sent out to vendor against externally processed operation in production order. We’ve a business requirement to track the WIP (Work in Process, No inventory yet in system) material status details such as when was the WIP material shipped out to service provider by purchasing department or returned back to production floor from stores after receiving from vendor for externally processed operation in production
order
The scenario is explained below and the process in SAP would be as follows.
1. Production order would be created for
respective header material (semi-finished/finished) with required quantity with five operations to be processed, for example: OP10 (turning), OP20 (drilling), OP30 (milling), OP40 (shaping), OP50 (powder coating). OP10, OP20, OP40, OP50. would be processed internally in the shop floor of the manufacturing plant
2.After finishing the internal processing at OP10 and OP20, Operation no 30 (OP30-milling) for the respective header
material would be processed externally by sending the partially processed part(WIP) to vendor outside the manufacturing plant. In SAP, the partially processed part doesn't have any material code and will not be updated in the inventory and will be treated as WIP (work in process) and automatic purchase requisition for external processing through production order is generated as follows
For OP30 Milling (Externally processed operation), from PP module perspective, we would be maintaining a control key which supports external
processing in the Operation 30 (OP30, external processed operation - An externally processed operation is not carried out within own organization, but is assigned to a vendor, who then does the work) with relevant information such as material group, purchase group, description of operation, cost element to track costs in the production order.
When the respective production order is saved, system creates a purchase requisition for external processed operation 30. We can see
the number of the purchase requisition on the external processing tab of operation details screen of OP30 in SAP Production order.
Purchasing department generates a purchase order against the automatic purchase requisition generated in production order, which informs the
vendor which service is required.
With reference to the purchase order – service oriented, the WIP material (no material code exists in SAP) is sent out to vendor. After the material has been processed, the vendor delivers the material back to manufacturing plant. When a goods receipt against purchase order is posted at manufacturing plant, the system displays the received quantity on the external processing tab of operation details screen of the operation - OP30 in production order and also displays in order information system reports. It also possible to track the cost incurred for external operation. However, Goods receipt against production order does not cause an increase in the quantity and value of the warehouse stock of header material of production order.
The above mentioned process is not a subcontracting process - where in we send raw materials and receive semi-finished/finished materials from vendor
3. The respective partially processed part (WIP) received from vendor is sent to shop floor to complete the rest of the process
in OP40 (shaping) and OP50 (powder coating).
4. After OP50, the respective header material (semi-finished/finished) of the production order will be received (goods
receipt against production order) as inventory in respective storage location.
With reference to the above process, we can track the status of receipt of WIP material from vendor after processing at his premises;
however, we can’t track when WIP material ( after completing processing at OP20) was sent out to vendor for external processing by purchasing department and when WIP material was returned back to production shop floor for further processing at OP40 after receiving from vendor by stores.
Please provide your feedback for the possibility to track the details of WIP material (no material code exists in SAP system) sent out to
vendor and received back at shop floor from stores for external processed operation of production order
Thanks for help in advance.
Regards,
Rajesh

Hi Rajesh,
Process what ever you have explained is the right process with respective to operation wise subcontracting as per SAP Best practice. As you rihtly said in operation wise subcontracting PR is created with any material code. Once PR is created after PO and GR actual cost of that particular operation will be seen on the order. I believe sub contact operation after GR can be confirmed through confirmation transactions. Since it is subcontract operation specfic to peration seperate inventory is not tracked instead cost is reflecting directly on order
If you to want to track the inventory of the intermdiate product then you need to have a seperate material code for intermediate product (Eg A) received after second operation and do seperate subcontacting PR for seperate new material (Eg B) by issuing the intermediate material (Eg. A). Upon receivng GR for PO inventory will be updated for the new material (Eg B).This new material can be issued to your final product which has operation 0040 and 0050. Here two different material codes will be required.
Else follow the suggestion given by expert Caetano.
Thanks & Regards,
Ramagiri

Can SAP get material number in Purchase order in external processing?

I have a question that:
As I know, Exeternal processing is a service, so that Material number can not be shown in purchase order converted from PR for external processing. Here, PR can be automately generated from transaction CO01 to create an external processing production order. Meanwhile, for external processing, purchase info record is created without material number only with material group.
So, I want to know that if there any solutions to show material number in purchase order generated for external processing?
thanks,
best regards,

If therer are no production order, How can I get finished products from internal activity and external processing?
Now, external processing in our company like this:
1.create an purchase info record. (type:subcontracting, with material group, but not material ID)
2.Maintan external processing data in external operation where external processing happens.(control key: pp02, external processing data: info record, purchase org. net price, cost element etc.)
3.create a production order for the material.(one of the operations is an external processing operation described like step 2)
4.Purchase requstion is changed into Purchase order. (Purchase requestion is automately created with the production order)
5.MIGO to receive goods from the purchase order.
6.finished the production order and delivery goods.then the production order is DLV.
In step 4, purchase order can only get the production order ID, but there are no material ID shown in it. Only method to show material is that maintaining a description text in the external operation, then, purchase order item could show material in material text(but, here, there is no material ID derectly from info record or production order).
this is the big problem now for our company. No material ID can be automately carried into the purchase order.
Hope you help..
thanks...

Subcontracting Assembly Process

Dear gurus,
Just want to get guidance on the process flow of Subcontracting/Outsourcing Assembly..
Our org will still plan the requirements for the materials, inform the OEM (original equipment manufacturer), and supplying the components..
Thank you.

Dear,
Within in-house production if some capacity bottleneck exists in any operations then you can assign this job to some vendors to carryout this job in his premises and supply us the semi-finished part. This can be done via control key example PP02 (external processing control key and activate the subcontracting Check box in routing).
Option1:
1) In Control key PP02 enable external processing and in the routing in the operation detail enable external processing under radio button sub contract.
2) In Order type dependent parameter T code OPL8 enable reservation / PR creation - 3 (immediate reservation / PR creation) during release / confirmation.
3) Create Info record T code ME2O only for vendor no material combination. (You are not going to issue material for the vendor through SAP) system will not allow through ME2O since it is operation subcontract.
4) Run MRP it will not create PR directly since the it is enable in OPL8 only after release.
5) Do the In-house operation then confirm the in -house operation in CO11n. Once the previous operation is confirmed PR is generated automatically.
6) Then Convert PR to P.O. In purchase order only operation description will appear. since no component is assigned. And the order type will be F.
7) Then make separate DC (Gate pass). Consult your MM guy for this.
8) If any component is assigned to the operation. Do stock transfer to Vendor storage location till such time it comes to factory again.
9) While return from vendor do MIGO against the P.O and it will come settle in prod order.
10) Payment to the vendor is through service record entry concept. Consult MM gut for this.
Option 2:
1) You have to create separate material master for that operation. Treating that it will be a different material
2) Create Vendor master with Material and Vendor combination
3) Create BOM with header material and this material as item for the header.
4) Create Routing for the header material with only one operation with control key PP02.
5) Assign the item material to this operation.
6) Run MRP this will create PR automatically. Then convert PR to PO
7) Send material to the vendor through ME2O
8) Do the GR MIGO the item will come have header material and it will automatically update in unrestricted stock.
9) Payment to the vendor will be with different as service entry concept consult MM guy for this.
Hope clear to you.
Regards,
R.Brahmankar

Externally Processed Operation

Hi All,
I want to perform end-to-end cycle for externally processed material. Please provide link or document having step-by-step guideline.
I got following error:
I have performed following steps:
1) In the routing control key maintained which is externally processed (PP02)
2) Purchase Info record (ME11) maintained with 'Subcontracting' item category
3) While creating production order if I select that purchase info record then it prompts me an error "Material class differs from material class from info record"
Purchase Info record is created with 057 class default. The same class is not available under material classification.

Raja Sekhar.S wrote:
Hi,
>
> In external Processing
>
> you will not create Production order you have to Create purchase order for the material
>
> In this case you will create Purchase order on the material which you would receive but you will be sending different semi finished material. (because you will be sending one material and after the operation it will convert to other form)
> you should create separate BOM for the material which you will be receiving after external operation
> You have to create work center with Control key=PP02
> with 521 movement type you can send the material to vendor
>
>
> Regards,
> Raj
Hi typing error
Actually movement should me 541 instead of 521
regards,
Raj

Externally processed operation and planned order

Hello experts,
When an operation is defined as externally processed, once the production order (from a planned order generated via MRP) is created, the purchase requisition for that operation is automatically generated. My question is if it is possible to generate the purchase requisition before generating the production order, I mean, with the planned order.
Although this external operation is defined in the routing, the planned order does not show it and it means that the purchase requisition is not generated.
In our scenario we want to convert the production orders as late as possible to have automatic changes in BOM, but if we do not convert the planned orders to production orders, we won’t have this purchase requisitions.
Is there any way to solve this?
Regards

Hi Laura
No, it's not possible to generate the purchase requisition for an externally processed operation before the creation of the production order. The planned order routing is only exploded for scheduling and capacity requirements calculation and an operation is not actually created.
As an alternative, you can create a separated material number and assign the special procurement 30 for subcontracting to this material. If you add this component to the BOM of the parent material, MRP will directly generate a purchase requisition for subcontracting.
BR
Caetano

Component for external processing

hello!
i would like to have special stock indicator '2' for a component that is used for external processing. when i enter 2, it is removed automatically - all components for external processing (and subcontracting) are always plant stock.
any ideas?
best regards,
matthias

Dear,
Go to MRP-4 View---> Individual /Coll. Indicator --->
Change it from 1 Individual Requirements to 2 Collective requirements.
Is best the solution.
One suggestion is to remove the indicator "1" manually in CO02-Component overview and then issue material to that production order set it as 2.
Hope clear to you.
Regards,
R.Brahmankar

'External process-0130' Inspection in QM?

Hi Team,
Requesting your valuable help for below scenario.
Step 1: Receiving the material(M1) in GR stage from 'vendor1' - 01 inspection active with one operation(op10-Visual inspection) in Inspection plan .If material ok it should be sent to External process.
Step 2 : Sending received '(M1) material' to External processing to 'vendor2' through P.O
Step3: Recieving the 'processed material' M1 material and Inspection
As per SCN links, I under stood that '0130 inspection type' to be used.
Q1:Prefered tick mark for 0130 / 01 ?
Q2:Where 0130 insp.type should assigned? is it required to assign in any
Q3:If preferd tick put to one of 01/ 0130 inspection type-Automatic insp.lot for 2nd insp.type will not be created?
Help me out with the SAP-QM-best practice
Regards,
Karthik(Trainee-SAP-QM)

Hi Sai,
Nitin has correctly suggested the best standard SAP approach you should adopt. In case if only activating "01" is acceptable to business it will solve your case. It's easy to implement, maintain, error-free and scalable.
Paralelly (if at all its required..), you can explore further on the custom approach like below -
a) Activate insp type "01" and "0130" for the relevant materials. Do not flag any insp types as "PreferredInsTyp".
b) Create a custom table to maintain a combination like Material + Insp Type + Insp Plan. Example below -
M1 - 01 - IP01
M1 - 0103 - IP02
c) During Goods Receipt, user exit/BADI should if the PO is Subcontractor PO (Item Cat L) or not. If Subcontracting PO, then it should allocate the insp type 0130, else it should assign insp type "01" for all normal PO, or Sch Agr, etc.
d) It should first validate how many inspection plans for the concerned material is 'Active" for the usage "5". Now check form the Z-table if for the same material, Z-table has one active insp plan added. Then allocate the insp plan to the inspection lot. There can be a chance that there are more than one active insp plans for same usage available and in Z-table a plan is available which is no more active, then the program should not allocate any insp plans, and the inspection lot status should be "CRTD". Same is the case if there is no active inspection plan available and added in Z-table for the material.
e) In case if you wish to have one more round of check at "Vendor Level" on the selection of inspection plan, you can extend this Z-table with Vendor too!!. Then the Ztable will look like below -
M1 - 01 - V1 - IP01
M1 - 01 - V2 - IP01
M1 - 0130 - V1 - IP03
M2 - 0130 - V2 - IP04...
Please do not adopt a custom approach, just to try out fancy things as they are difficult to implement, complexity gets higher, lots of codings involved, lots of testing required and difficult to maintain in the long run. Moreover there should be a significant business benefit in it and everyone should be aligned to take a decision to go with such custom approach. These are just my thoughts!!
Thanks,
Arijit
Message was edited by: Arijit Banerjee

External Processing

Dear all,
I've created a control key for external processing and assigned it to a work center.
Now, I've used this work center in my routing and put the following
Material Group
Purchasing Group
Planned Delv. Time
Price Unit
Net Price
Cost Element
Purchasing Org.
Cost Element
Currency
When I create a production order, what should happen? I know that a purchase req. should be created
nothing occurs.

Dear,
Special procurement type "52 use for collective order no need to use it in for subcontracting we use Special procurement type 30.
Message no. C2 325??
Check this settings to get the immediatte PRs for externally processed operations. This is in transaction OPL8..for immediatte PRs this must be 3.
Youshould mainatin all master data perfectly like vendor master, Source list
(ME01) and Info record (must-ME11) in case of material sub-contractingand you need to define the info record no created .
Then in the production order operation over view under external operation you will get
PR for externally processed operation.Please check if the sub-contracting check box is selected & purchase info record number is entered in the routing for the operation (control key PP02).
Then after release of order goto the operation overview, double clcik the operation & check the enternal processing tab page.
Document type which should include category B...
go to SPRO->Materials Management->Purchasing->Purchase Requisition->Define Document Types
Hope it will help you.
Regards,
R.Brahmankar

External process operation

hi
how to inspect external process operation which are given for subcontracting, how to reject the operation which was done by subcontractiong
regards
Baswa

Dear Raj,
Inspection of external process is done in the same way as of internal one.
Please check the following:
1. You must make sure that the operation control key in the production order specifies external processing.
2. You must activate a goods receipt inspection for the operations to be processed externally by:
a. Specifying an inspection type (inspection lot origin 01) in the routing (external processing data for the operation)
b. Activating this inspection type in the material master of the final product
Regards,
Alok Tiwari

SAP PP-difference between External processing & Sub-contracting

Hello SAP-Guruu2019s
What is the difference between External processing & Sub-contracting w,r,t PP module

HI
Operations that are performed by a third party are called external processing operations
The detailed data you can enter in external processing operations can be divided into two basic groups:
External processing data
Procurement option data
External processing data contains information from the supplier on net price and planned delivery time. The procurement option data contains vendor account and purchasing information, such as the purchasing info record, purchasing group and organization.
In subcontracting, the vendor is provided with materials (components), which he uses to produce the finished product.
This section describes how to procure materials using a subcontract order. It describes how subcontract orders are processed in Purchasing, Inventory Management, and Invoice Verification.
In subcontract order processing, the vendor receives materials (components) with which it produces the end product. The following are involved:
You order the end product using a subcontract order. The components that the vendor needs to manufacture the end product are specified in the purchase order.
In Inventory Management, the components are posted to the stock of material provided to vendor. The components are then supplied to the vendor.
The vendor performs its service and delivers the ordered material (the end product). The consumption of the components is posted.
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 vendor charges for his or her service. The invoice is posted in Invoice Verification.
The quantities of the components to be provided to the vendor are entered into the stock of material to be provided to vendor. This stock has the following features:
It is managed as part of your total valuated stock, and is available for MRP.
It is only managed at plant level, since it is not stored at your own company but on the vendor's site.
Two stock types are possible:
unrestricted-use stock
quality inspection stock
Stock can be transferred between the two stock types. Withdrawals can only be posted from unrestricted stock, however.
You can take a physical inventory of the stock of material to be provided to vendor
-ashok

PP - Subcontracting (External Processing)

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