SAP PP-difference between External processing & Sub-contracting

Question

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

Answer 1

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