Subcontracting- with two company codes.

Hi PP Gurus,
We got two company codes say company code 1000 and company code 1100. We're having plants 4000 in company code 1000 and 5000 in company code 1100. Manufacturing of all SFG and FG take place at plant 5000 in company code 1100.
Now the requirement is all Raw materials are supplied from plant 4000 in company code 1000 to plant 5000 in company code 1100.
Client want all the RM cost to be captured in company code 1000 and plant 5000 will only invoice for Services that are utilized for manufacturing....
How could we map this scenario? Either through making BOM and Routing in both plants 4000 and 5000. and in Routing of plant 4000 need to activate operation subcontracting and material to be supplied to plant 5000 and latter service cost to be captured through Service entry sheet. OR MRP area or Special prcurement key to be configured in plant 5000 to suffice the requirement?
Please reply with your prompt comments.
Thanks and Regards,
Abu Arbab

Hi,
This you can handle through the special procurement. Both the plants you need to maintain the material master. In Plant 4000 is your supplying plant. In plant 4000 the raw materials you need to maintain as external procurement. Plant 5000 you need to maintain this materials as special procurement as withdrawal from alternate plant. Since your production plant is 5000, you need to maintain the BOM in this plant. In Plant 4000 you need not maintain the BOM. When you run MRP in plant 5000, the planned orders will be created in Plant 4000. This you can see in MD04 screen as planning plant as 5000. But the planned order number will be same in both the plants.
Regards,
V. Suresh

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If the country is same for both the CCs, then you must have been assigned the same COD also to your CCs.
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i have caome across the subcontracting scenario which takes place between two company code with their respective plants, Please Provide best way to map the scenario
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(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 )
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CR GR/IR Clg
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DR Consumption (Components)
CR Change in Stock (FG/ SC By-Product )
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(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.
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 ?
Vijay
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 becreated for the material(2) calling for material(1)
4. Inforecord 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
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B.N.Rao
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:
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
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).
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.
When you print the purchase order, the components are printed per order item
Subcontracting - Key Points
Special Procurement Process.
Item category: L
Order type: NB
In info record vendor should be maintained as subcontractor.
Vendor (Subcontractor) receives the components used to manufacture a finished product directly from your company or through third party.
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Stock check at vendor level: ME2O
Company stock check: MMBE
GR for individual components through movement type: 501 or 561 (if with out PO or without reference).
GI to subcontracting vendor: through movement type 541.
GR from sub contracting vendor: through movement type: 101
Movement type 543 is displayed to cancel the material cost account.
If the subcontracting order has to be generated through materials planning,the special procurement key has to be set in MRP 2 screen.
SAP MM Tips by : Sundaramoorthi
Email : [email protected]
Editor Note:
- To create the Subcon Info Record : Tcode ME11 - Info Category - Click Subcontracting
- To create Material BOM : Tcode CS01
- With the Info and Material Setup, you can then create the Purchase Order in Tcode ME21N

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Thanks Krishnan and Chandra.
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