Subcontracting
In subcontracting, you give components to a vendor from which a product is
produced. The product is then ordered by your company through a purchase order.
The components required by the vendor to manufacture the ordered product are
imported in the purchase order through the BoM (Bill of Materials), and they are
provided to the vendor. After the contractor has produced the finished product, we
can post the goods receipt.
Create BOM (Bill of Material)
BOM is used to maintain list of components required to manufacture finished
products. T. code: Path: Give final product code→ Maintain plant→ Maintain BOM
usage 1→ Press enter→ Maintain item category L→ Maintain Qty, maintain valid
date BOM→ Press enter→ And save it.
➢ CS01- Maintain BOM.
➢ CS02- Change BOM.
➢ CS03- Display BOM
Creation of subcontracting info record
Subcontracting info record will be created for final product and vendor combination.
➢ Go to T. code- ME11.
➢ Give vendor.
➢ Give material.
➢ Give purchase order.
➢ Give plant.
Select info category→ Subcontracting enter→ System will copy date from vendor if
required edit the information and save the info record.
Step 1) Create a standard purchase order for the material that has a BOM
maintained.
1. Create a PO with item category L.
2. Enter the storage location where the material should be placed upon goods
receipt.
Step 2) On the Material Data tab, click the Components or Explode BOM icon.
On the component screen, enter storage location from which the components should
be issued.
I have created a fake BoM for our material (we sure can’t create LCD TV 40″ from
two components called semiconductors and plastics), but it’s enough to serve the
purpose (you can create a BoM in CS01 transaction if you don’t have it for your test
material).
Save the PO.
If your PO needs to be released, release it by using ME29N.
Step 3) In stock monitoring transaction, we will provide the components for vendor.
1. Execute the transaction ME2O.
2. Enter Vendor.
3. Enter Plant.Execute.
Step 4) You will get a list of open item for transfer towards the vendor. You can see
the components from our purchase order.
1. Select the components (click the boxes next to components material
numbers).
2. Post goods issue.
Step 5) You will be prompted to confirm the items being PGI’d.
Just confirm the right storage location and quantity. Do that for all of the
components.
Step 6) You should see this kind of screen confirming that your PGI was done
successfully for 2 items.
Step 7) The next screen should look like this.
You can see that there is a material document for the components, with movement
type 541.
Or
Issuing the components to the subcontractor through
541 movement type. (MIGO)
The next step is the issuing the components to the
subcontractor. This is done via MIGO. Select transfer posting
against the purchase order. Even though the goods are issued
to the subcontractor, the ownership of the stock is still lying
with the manufacturer because the actual stock consumption
will happen only when manufacturer receives the finished
goods. Due to this, there is no accounting document created for
this material document. This issued stock will be shown in the
MMBE as stock issued to the vendor. This is a special stock in
SAP and called as parts provided to the vendor.
Step 8) Goods receipt. (MIGO)
In this step, the manufacturer will receive the finished goods
from the vendor. When the finished goods are received from
the subcontracting vendor that means that the components are
consumed at the vendor premise for making the finished
goods.
You can post a goods receipt against a purchase order to receive the finished goods
from the vendor.
Now you have issued the components to subcontractor, received the finished
product.
9. Invoice verification.
The accounting clerk in the accounts payable can do the
invoice verification (SAP T code- MIRO).
10. Vendor payment.
The baking team in the accounts payable department will do
the vendor payment.(SAP T code- F-53)
