Steps in Subcontracting Process

Dear Experts,
In Subcontracting process if the subcontracting period of 180 days is completed and if material is still with Vendor, how to complete the process.
Also how to reverse the Cenvat Credit.And how cmplete/reconcile the challan.
Please explain detail steps and Tcode.
Thanks and Regards,
Sapmm user

Sub Contracting Cycle
(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 ) 0
(material provided to Vendor is now charged to expense)
(5) You do the IV for SC Invoice, and the process is complete.
Process of Subcontract in MM
Sub-contract business process:
You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality of certain item / price ) you will give some component to vendor .
Vendor shall process the item / use the item provided & supply the final item.
SAP process:
1.Create the finished goods material code.
2.Maintain the BOM for the material.
3.Create PO with item category as "L" .
4.Issue material to vendor with movement type 541
5.Receive the material against the PO with movement type 101.
6.MIRO to account for vendor's invoice for the service charge& material used by him.
Note:: At the Time of GR 543 Mvt is up dated for Raw Material.
Can anybody tell me how a process has to be given to subcontracting?
Suppose, I have 3 operations 1)weaving 2)dyeing 3)cutting & packing
if no 2 process (i.e Dyeing) has to be given to subcontracting, what process should i follow ?
The following process to be followed for subcontracting.
1. Item code(material master) to be created at the stage of before dyeing.
2. Item code(material master) to be created after Dyeing as subcontracted item.(F30)
3. Bill of material to be created for the material(2) calling for material(1)
4. Info record and source list to be created for material(2) with the corresponding vendor
5. PO to be released for material (2)
6.Along with PO the material(1) to be issued to vendor
7.On receipt of material when GR is made the stock with vendor will get updated.
How to Create a Subcontract Order?
To create a subcontract order, proceed as follows:
Enter the material you want to order and the item category for subcontracting (L) in the order item.
Press ENTER to display the screen for component processing.
Enter the components that the vendor requires to manufacture the product.
Please note:
u2013 You do not need to enter the date required for the components. This date is proposed by the system when you press ENTER.
It is calculated as follows:
Delivery date of the item - Planned delivery time
u2013 If you do not want the quantity of the components to be changed if the order quantity of the end product is altered, set the indicator Fixed quantity (column F).
u2013 You can determine whether the components are available on the date required by selecting Edit -> Availability check.
If you entered a bill of material as the material in the subcontract order, the components are created automatically.
If you want to determine the components in the bill of material at a later date (for example, if the bill of material is subsequently changed), choose Item -> Component -> New BOM explosion. The existing components are deleted and redetermined in the bill of material.
Save the purchase order.

Similar Messages

G/L accounts updation in subcontracting process

Hi,
i request you provide details of G/L accounts while ;1) updation while we supply materials to vendor
2) while we recieve the finshed product.3) And while settlement to vendor.
Thanks & Regards,
Ramesh kumar.

Hi,
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 +
And cost center is mandatory for subcontracting process
the accounts for the BSX FRL and GBB-VOB needs the cost elements
Sometimes if you have freight the key FRN also gets used.
Edited by: venkatesh kumar on May 11, 2010 12:46 PM

Excise treatment during subcontracting process with excise duty

Dear all,
Iam aware of the subcontracting process STEPS, but my query is while dealing with Excise in Subcontracting process, will the Excise duties captured in J1IS(create outgoing excise invoice) be RECONCILED with excise duties captured in J1IEX(subcontractor's excise invoice). As per my scenario both the duties are different unlike reconciliation process in the process without excise duty. My questions are
1.Do both excise duties during j1is and j1iex should be same or can it be different (since in j1is we capture Duties on raw material's assesable value where as in j1iex we capture duties semi finished goods given by sub contractor.)
2.Kindly eloborate treatment of excise duties captured in these steps.
Revert if you didnt understand this scenarion.
Regards,
Sravanthi.Y

Hi,
57fc challan will be issued when we send raw materials to subcontractors WITHOUT EXISE DUTY.Hence not relevant in my case. But my case is WITH excise duty.we send subcontractor the excise invoice by using j1is. later he will process these raw materials and will give back the semi finished goods along with excise invoice(which we will capture n post using j1iex). so my question will excise duties differ in j1is(excise invoice TO subcontractor) and in j1iex(excise duty FROM subcontractor)?

New requirement in Subcontracting process

Hi All,
There is a requirement related to indian excise, in Subcontracting process is it possible to merge below 2 steps 1)transfer posting to vendor stock and
2)creating subcontracting challan
That mean to say SC challan has to be created for some qty of material and transfer posting has to happen simultaneously for the same qty with 541 mov type.
This requirement may looks strange..!!
Do you think,it is possible in SAP..??by any means...
Pls confirm
Regds

Hi,
Normal pratice whenever you are sending material to sub contractor .Please count the material load inthe vehicle then raise document.
In you case instead of 10 nos document created and physically you have sent 5 nos only
You can do subsequent settlement
use t.code : MB04 enter the Purchase order no and enter the qty and save .
5 nos will be deducted from the vendor stock
I have tried just now. Please try
G.Ganesh Kumar

ThirdParty Subcontracting Process

Hi Experts,
Can you share the usage and process of thirdparty subcontracting process step by step in MM
Regards,
Udaya.
Note : Subject is widely discussed FAQ. Please search forum before posting.
Edited by: Jeyakanthan A on Dec 5, 2011 10:22 PM

Hi,
Go thru the Document [Detailed description:Subcontracting with Third-Party|http://help.sap.com/saphelp_scm41/helpdata/en/b7/78573da974c729e10000000a11402f/content.htm]
[SAP Best Practices:Third party Procurement, Subcontracting, and External Processing|http://help.sap.com/bestpractices/BBLibrary/HTML/J75_ThirdPartyOrdProcwithSub_EN_KO.htm]
Hope you find these useful.
Reetesh

PPDS Subcontracting Process

Hello Experts,
I am trying to replicate the subcontracting process through PP/DS run.
Business case: Handover the components from the destination location (DEST) to the subcontracting vendor (SUBV) to manufacture the finished goods. There is absolutely no operation that we do related to this. Subcontracting vendor provides us back the finished goods and we sell it.
Steps I followed:
1. For the finished goods product, I have created the BOM which includes the components which we handover to subcontracting vendor.
2. I have defined the finished goods product as procurement type X and Special Procurement key as 30 (Subcontracting)
3. The PDS is created. With production line as Subcontracted workcenter. Routing set up as N.
4. On the APO system, I have created a handling resource and assigned to model 000 and then assigned this Inbound handling resource for the location DEST. Please note that SUBV is not part of our supply chain, we are planning without source location.
5. Inforecord is created as a subcontracting inforecord and Production version is assigned at this Inforecord.
6. SUBV is CIFfed, Part is CIFfed, PDS is CIFfed, Subcontracting Inforecord is CIFfed and it created the transportation lane as well and default means of transport is assigned (and not product specific means of transport). Also there is no transportation resource assigned to this means of Transport.
7. Now when I ran the PP/DS Heuristics, it creates a Planned order. At this point, there is no subcontracting purchase req or order created on ERP system. And we don't CIF the planned order as well to ERP.
8. Now I trigger the convert planned order to production order manually by setting the conversion indicator. At this moment, a production order of type PP01 is created on ERP system. And this production order is also visible on APO system.
But the issue is still there is no Subcontracting purchase requisition or Subcontracting purchase order created in the ERP system. Is there something else like a basic settings which I am basically missing? Or is there anything wrong in my steps?
Thanks,
Suresh

Hi Shankar,
Yup, I can see the PDS. And regarding the second point, planned order is created as Inhouse. And it doesn't choose the subcontracting PReqs. I see the following error message, if I try to change the source of supply as Externally procured. I have maintained the Inbound Handling resource on DEST location. But I haven't maintained any transportation resource. Is there anything I am doing wrong?
Subcontracting PurchReq from location SUBV to loation DEST not created
Message no. /SAPAPO/RRP156
Diagnosis
The following causes are possible:
No handling resource has been specified in one of the locations involved.
No transportation resource has been specified in the transportation lane between the locations.
These resources must be available for subcontracting since the system executes detailed scheduling for the relevant orders on the basis of the resource calendar. (The relevant orders are a purchase requisition in your own location and a planned order at the subcontractor's location. The orders are linked by a cross-order relationship.)
System Response
The system cannot create the subcontracting purchase requisition.
Procedure
Enter the resources required in the location or in the transportation lane.
Thanks,
Suresh

Cofiguration step for SubContracting Order Cycle (SCO)

Pls,provide me the the configuration steps of SCO(Suncontracting Order Cycle)

Sub Contracting Cycle
(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. (special procurement type should be 30 in material MRP2 view for the mateiral you are getting back from subcontractor)
(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 ) 0
(material provided to Vendor is now charged to expense)
(5) You do the IV for SC Invoice, and the process is complete.
Process of Subcontract in MM
Sub-contract business process:
You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality of certain item / price ) you will give some component to vendor .
Vendor shall process the item / use the item provided & supply the final item.
SAP process:
1.Create the finished goods material code.
2.Maintain the BOM for the material.
3.Create PO with item category as "L" .
4.Issue material to vendor with movement type 541
5.Receive the material against the PO with movement type 101.
6.MIRO to account for vendor's invoice for the service charge& material used by him.
Note:: At the Time of GR 543 Mvt is up dated for Raw Material.
Can anybody tell me how a process has to be given to subcontracting?
Suppose, I have 3 operations 1)weaving 2)dyeing 3)cutting & packing
if no 2 process (i.e Dyeing) has to be given to subcontracting, what process should i follow ?
The following process to be followed for subcontracting.
1. Item code(material master) to be created at the stage of before dyeing.
2. Item code(material master) to be created after Dyeing as subcontracted item.(F30)
3. Bill of material to be created for the material(2) calling for material(1)
4. Info record and source list to be created for material(2) with the corresponding vendor
5. PO to be released for material (2)
6.Along with PO the material(1) to be issued to vendor
7.On receipt of material when GR is made the stock with vendor will get updated.
How to Create a Subcontract Order?
To create a subcontract order, proceed as follows:
Enter the material you want to order and the item category for subcontracting (L) in the order item.
Press ENTER to display the screen for component processing.
Enter the components that the vendor requires to manufacture the product.
Please note:
u2013 You do not need to enter the date required for the components. This date is proposed by the system when you press ENTER.
It is calculated as follows:
Delivery date of the item - Planned delivery time
u2013 If you do not want the quantity of the components to be changed if the order quantity of the end product is altered, set the indicator Fixed quantity (column F).
u2013 You can determine whether the components are available on the date required by selecting Edit -> Availability check.
If you entered a bill of material as the material in the subcontract order, the components are created automatically.
If you want to determine the components in the bill of material at a later date (for example, if the bill of material is subsequently changed), choose Item -> Component -> New BOM explosion. The existing components are deleted and redetermined in the bill of material.
Save the purchase order.

Standard subcontracting process?

plz anyone answer me standard subcontracting process in sap b1 9.0 in detail..
step by step..

Hi,
Please check this thread:
http://scn.sap.com/thread/3517239
Thanks & Regards,
Nagarajan

What about scrap generated dooring Subcontracting Process

Hi all
Good Morning
In Subcontracting Process(i am sending Components to vendor).What about Scrap generated, how can i enter dooring Migo - Goods Receipt
Regards
Manju

hi
frist ly u have to maintain the scrap quantity in -ve value in the subcon po then do the normal process of gr and at time of gr give the actual quantity of the scrap
but at this stage the system will show the scrap quantity to the subcon stock ,so to make it to own stock do following
1.
Scrap
What kind of scrap we are speaking about?
a) If you pay the scrap you can get rid of it by MB1A + 551 + 'O' directly from SC vendor's special stock (I mean you can scrap the raw material (subcon-component)).
b) If the scrap was delivered by your to SC vendor via MVT 541 you can use MB1B + 542 to bring it back. It may happen that the raw material was delivered by one of your other vendors to your SC vendor (in this case the goods got to the special stock via MVT 101 O) - if the situation is this you can create a return delivery (MIGO + PO reference + MVT 122) and ask for replacement. You can also use MB1A + 551 + 'O' or MB1B + 542 - it depends how you want to handle the situation from business point of view.
2.
by-product
You write the by-product with negative qty in the BOM or directly into the component list of the subcon-PO (item level, material data 'tab' in ME2*N). This will be booked by 545 to special stock and if you want to receive this material you can use MB1B + 542.
the simple process steps are
1> create a bom tcode cs01 and mention the components and the scrap material but with -ive quantity
2> creaet a info record with the subcontracting category tcode me11
3> create a po with item category L tcode me21n
4> do the good reciept tcode migo
5> do the subsequent adjustment tcode migo but the display variant should be subsequnet adjustment
6> do the gr of scrap tcode mb1b movement type 542
7> do the invoice
regards
kunal
award if helpful
Edited by: kunal ingale on Aug 9, 2008 7:45 AM

Error while releasing Billing document in Subcontract process

Hi All,
We are working on Subcontract process as explained below:
Company code X purchases the component A and sends it to Company code Y on Subcontract. Company codes X and Y belongs to one company using single operative chart of Accounts, Controlling area & operating concern. FI configuration has been maintained in OBYA by treating above company codes Inter company GLs. The component A is sent to company code Y as non value added item. Through 501 movement type, as the component is sent by Company code X.
Company code Y will add some components (like B,C and charges some expenses as service component D for preparing Finished good) and send this FG to Company code X. For this company code Y will raise a Sales order and followed by MRP run and Production order is created.
In VA02 of above Sales Order, while entering Item details, where the Settlement rule is asking for PA Transfer structure (in Account assignment tab of Item details) and giving the following error analysis:
Enter a PA transfer structure
Message no. KD 044
Diagnosis
A PA transfer structure is required for settlement to profitability analysis.
System Response
You cannot save this settlement rule.
Procedure
Enter a PA transfer structure. To do this, choose the "Parameters" function in the settlement rule. As part of customizing, you can also store a default value for the PA analysis structure, in the settlement profile. The system then uses this default value when you enter a settlement rule.
In addition to above, another issue has raised while releasing the Billing document after doing PGI. Accounting document is not getting generated and while releasing the Billing document (VF02) it is throwing an error as
Enter profitability segment as cost object for Revenue and COGS posting
Message no. ZC 001.
MM,PP,SD & FICO configuration settings maintained:
1. All required OBYC settings
2. All cost element and Cost element categories have been maintained
3. From MM side the system is generating FI & CO documents
4. Settlement profile in Production Order type is maintained (in KOT2). Allocation structure and PA transfer structure were maintained in (OK06, OK07 & KEI1). In PA transfer structure we have assigned the required Sources and Value fields and settlement cost elements.
5. In VKOA condition types KOFI and KOFK were maintained for relevant Customer & Material Account Assignment groups.
6. Required settings have maintained in OKB9.
Movement types 501 (sub contract), Received back to Company code X through Movement type 101. In spite of these settings still we are getting the above mentioned errors.
Could any one help to provide some inputs on the above issue as early as possible.
Thanks in advance.

Hi,
check in the sales order line item procurement tab . u can get the requirement type. in SPRo check the requiremnt class for the requirement type. in that requirement clas u will get settrlemnt profile for the sales order. Check that settlemnt profile there u have to maintain the PA transfer structure.
I think both problem will get solved by maintaing the PA structure..
You are doing sales order costing right....and i hope it is non vsaluated sales order costing .....
If help ful please assign points.
cheers
Prabhat

I am trying to upgrade EPM 8.9(8.49.23) to EPM 9.1 (8.53.08). During dataconversion step the AE process finished succssfully in few seconds. When i see the log it says "There are no conversions to run for upgrade path PF89 (18028,10003)". Please let me kn

I am trying to upgrade EPM 8.9(8.49.23) to EPM 9.1 (8.53.08). During dataconversion step the AE process finished succssfully in few seconds. When i see the log it says "There are no conversions to run for upgrade path PF89 (18028,10003)". Please let me know why it didnt do any conversion. Am i missing something?

yes, that app engine didnt inserted any rows. So now when i tried to drill down i found that there was no data in the "new demo" database on table UPG_DATACONV. That is the reason for all this.
When i applied required for upgrade patch in demo it said couple of patch already exists so those update i skipped. Now when i check upd877654 has a step which imports the data in this table. my change assistant told that the update is already available in my demo so i skipped. Now i am not sure what to do.
I tried reimporting the data and running the analyzer again. But worried that there can be any issues due to this.

Goods Receipt in Subcontracting process

Hi,
I am beginner in SAP.
This is regarding Goods Receipt in Subcontracting process.
I have provided raw material Quantity = 100 Nos. to subcontracting vendor.
Subcontracting vendor done machining on 80 Quantity, and we have done Goods Receipt for 80 Quantity as Finished Parts.
Subcontracting vendor found 20 Quantity as Defected.
Shall I take back 20 Quantity by Movement Type 542.
OR
Shall I do Goods Receipt of 20 Quantity as Finished Product and price = 0. & then stock transfer of Finished to Raw Material.
Please reply.

Hi,
It depends on what you want your subcontractor to do with the faulty raw material stock - if you want them to scrap it you can scrap stock from subcontractor stock using movement type 551 and special stock "O" (the system should prompt you to enter the vendor code). If you want it returned for you to scrap it - movement 542 to return it then scrap it from your own stock.
You shouldn't receive an additional 20 of the finished parts - as you only received 80 not 100. Close the purchase order off to close off the balance of 20 remaining.
Thanks

Error M7019 BAPI_GOODSMVT_CREATE - Subcontracting process

Hi,
I am developing a subcontracting process and using the BAPI_GOODSMVT_CREATE to return the goods, but when I do the low inputs (mov 543) the BAPI returns the following message.
TYPE       E
ID               M7
NUMBER      19
MESSAGE Combination of movement type 543 and function selected not possible
LOG_NO
LOG_MSG_NO     0
MESSAGE_V1        543
MESSAGE_V2
MESSAGE_V3
MESSAGE_V4
PARAMETER            GOODSMVT_ITEM
I'm using GOODSMVT_CODE = "07" (MB04).
When I run the same procedure via transaction MB04 I can create the document.
Has anyone experienced this? Would have any suggestions?
Thanks
Sandra Avila

Hi,
Successfully execute the BAPI using the help of SAP
http://wiki.sdn.sap.com/wiki/display/ERPSCM/HowToGoodsMovementswith+BAPI#HowToGoodsMovementswithBAPI-MoreinformationonLINEIDandPARENTID
Thanks to all
Sandra Avila

Serial numbers for subcontracting process

Hello Experts,
We are using SAP ECC 6.0 and trying to implement the subcontracting process with serial numbers. This scenario is focused on those materials that we need to keep track on how many times it has gone to repair (for example, a motor) by specific item. Suppose there's a material called "Material A". However, there are MANY "Motor A"'s, and thus, the need for serial number to keep track on the number of repairs each one has had.
So, having said that, the scenario is working so far. However, the user CAN'T type in the serial number of the material at the REQUISITION LEVEL. This can be done at the PO level and at the goods receipt level.
This brings a problem since the Purchasing dept. doesn't know the serial number. This information is known by the user, but there's "serial number" functionality in the requisition. Is there a configuration for this? Could it be possible for the serial number to be in the requisition and then inherit it to the PO?
We want this in order to automate the process.
The configuration we made was in the "Plant Maintenance and Customer Service" section, using procedures MMSL "Maintain goods receipt and issue doc." and POSL "Serial numbers in purchase orders". There's no procedure for purchase requisitions. If this can be also done from a Work Order, that will be just fine.
Let me know if it is possible or if you have any idea on how to do this.
Regards,
Gilberto Gallardo.

Hi,
Serial no can be used for the following business transactions.
1. Goods Receipt/Goods isssue and other inventory postings.
2.sales orders and delivery notes
3.maintenance orders
4.production orders.
Settings:
1. create a serial number profile in customising.
2. Assign the serial number profile in the material master record in work
scheduling view for fert and raw material in plant data / stor2 view..
Business procedures may be assigned in configuration to a serial number profile.
The assignment to the serial number profile determines if serial numbers are required , can be assigned, must be assigned,are assigned automatically
MMSL : Goods issue , receipts,stockj transfers,stock transport orders
Thanks
nandha

Third Party Subcontracting Process doubt

Hello all Gurus,
I have one doubt regarding the third party subcontracting process. I have created a PO with delivery address as that of SC vendor.
Now how to do the GR for components if the SC vendor lets me know that he has received the materials from the 3rd party vendor??
Can someone tell me the process after a PO is created for this scenario???
Thanks and Regards,
Umakanth.

Hi,
As I perceive you are speaking about the provision of subcontracting components from one of your vendor directly to another one,
In this case you did well if you wrote the vendorID in the suitable field on 'Delivery address' tab of your PO. 'SC Vendor' thickbox should be also checked. This is not the subcontracting PO itself, it is only a PO to procure the components for subcontracting - your SC vendor receive the components directly. That's why there's no point in speaking about 'L' item category.
After getting information from your SC vendor about the arrival of the goods (components) the only thing you have to do is to do a GR against your PO. The goods will get to your SC vendor's special stock via mvt 101 + 'O'.
That's all.
BR
Csaba

Steps in Subcontracting Process

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