Subcontracting
What is Subcontracting ?
Raw Materials
My company Subcontractor
Finished Product
✓ To do a particular job in the production process, we are sending the goods to
a subcontracting vendor who will be doing that job for us.
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Subcontracting - Business Example
Raw Materials:
1. MOUSE_LENOVO
2. MONITOR_LENOVO
3. KEYBOARD_LENOVO
My company Subcontractor
Finished Product:
LENOVO_LAPTOP
Vendor = Subcontractor
100608 – XYZ Private Limited
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Subcontracting Process flow in SAP
1. Create Subcontracting 2. Send Goods 3. Goods Receipt for
PO to vendor finished product
(ME21N) (ME2O) (MIGO)
Item Category – L (Subcontracting).
BOM is a must.
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What is BOM ?
There is a term in SAP PP module which is known as BOM (Bill of material).
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Bill of Materials - Example
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Subcontracting Process Overview
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1
Create Subcontracting PO
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Create Subcontracting PO – ME21N
✓ On thing you need to make sure while creating subcontracting PO is that you select item category as L which is
Subcontracting; You also needs to have the Components of the material for what you want to create subcontracting PO.
Note: Components can be exploded through BOM (Tcode: CS01) or components can be given manually also.
Subcontractor = Vendor
100608
Finished Product:
LENOVO_LAPTOP
Raw Materials:
MOUSE_LENOVO
MONITOR_LENOVO
KEYBOARD_LENOVO
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Create Subcontracting PO – ME21N
✓ Components of the material for what you want to create subcontracting PO.
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Create Subcontracting PO – ME21N
✓ Status bar displays the below message once the PO created successfully.
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Stock Overview (MMBE)
✓ Stock of LENOVO_LAPTOP after posting the Subcontracting PO.
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Stock Overview (MMBE)
✓ Stock available of MOUSE_LENOVO in my company.
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Stock Overview (MMBE)
✓ Stock available of MONITOR_LENOVO in my company.
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Stock Overview (MMBE)
✓ Stock available of KEYBOARD_LENOVO in my company.
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2
Send Goods to vendor – ME2O
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Send Goods to vendor – ME2O
✓ We need to provide BOM components to the vendor, So we need
to send components or raw materials to the vendors so that they
can do the processing or the assembly or what ever they are
supposed to do. The point to be noted here is that the system
always withdrawal the stock from the unrestricted use stock.
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Send Goods to vendor – ME2O
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Send Goods to vendor – ME2O
✓ Select KEYBOARD_LENOVO, MONITOR_LENOVO and MOUSE_LENOVO. Then click on Post Goods Issue to
send the goods to the vendor 100608.
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Send Goods to vendor – ME2O
✓ Click right mark to proceed.
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Send Goods to vendor – ME2O
✓ Click right mark to proceed.
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Send Goods to vendor – ME2O
✓ Green light means that the goods are sent to the vendor.
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Stock Overview (MMBE)
✓ Stock of LENOVO_LAPTOP after sending goods to vendor.
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Stock Overview (MMBE)
✓ Stock available of MOUSE_LENOVO in my company after sending the goods to vendor.
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Stock Overview (MMBE)
✓ Stock available of MONITOR_LENOVO in my company after sending the goods to vendor.
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Stock Overview (MMBE)
✓ Stock available of KEYBOARD_LENOVO in my company after sending the goods to vendor.
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3
Goods Receipt for finished
product
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Goods Receipt for finished product - MIGO
After a few days the vendor will call us and confirm that he have done the assembly and that our finished product
LENOVO_LAPTOP is ready and they are going to deliver.
Here as soon as I post it system will receive 10 pcs of LENOVO_LAPTOP and it will consume 10 of each of the three raw
materials (MONITOR_LENOVO – MOUSE_LENEVO – KEYBOARD_LENOVO).
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Goods Receipt for finished product - MIGO
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Stock Overview (MMBE)
✓ Stock of LENOVO_LAPTOP after Goods Receipt for finished product.
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Stock Overview (MMBE)
✓ Stock of MOUSE_LENOVO after Goods Receipt for finished product.
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Stock Overview (MMBE)
✓ Stock of MONITOR_LENOVO after Goods Receipt for finished product.
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Stock Overview (MMBE)
✓ Stock of KEYBOARD_LENOVO after Goods Receipt for finished product.
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THANKS!
Any questions?
You can find me at
yassirfahchouch1@gmail.com
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