Sub-contracting Scenario - Profit Center / Cost Center

[Former Member]

Hi,

We have model wise profit centers.

Following is the scenario:

One particular model in produced inhouse as well as subcontracted.

FG to be subcontracted has Model Profit center.

We maintain BOM for this FG, which is exploded in sub-contracting PO.

RM is transferred to s Spl Storage Location.

When MIGO is done, FG inward is posted and RM consumption is posted as also the conversion charges.

FG inward is posted to Model Profit center.

RM consumption, being cost element is posted to a common cost center, which has a different common profit center.

So there is a mismatch between consumption and COGM within profit centers.

This is not the case if a normal Production Order is maintained, wherein Model Profit center is defaulted for COGM as well as consumption.

The client doesnt want to maintain modelwise cost centers which could have resolved the issue..

Any suggestions please!

[Former Member]

Hi,

Can a production order be created for sub-contracting scenario?

We have maintained std customising for sub-contracting.

In Valuation variant, for subcontracting, Gross PO, Net Quotation price has been maintained.

We have maintained BOM for subcontracted material

In Sub-contracting PO, this BOM is exploded.

Std cost is run for the sub-contracted material.

When RM is issued, it is parked against a separate storage location.

When sub-contracted material is received, the goods inward as well as goods issue entry is posted.

Now, for goods issue, the consumption accounts, being cost elements, require cost object.

The CLIENT is saying that it should be a production order which is a cost object.

How this scenario can be mapped through Production order?

[Former Member]

Sub-contracting is not production.

If they do not want to see the cost in the same cost centre, and do not want to create a separate cost centre, you can use an internal order as a cost object. It will work very much like a period based production order in this instance.

[Former Member]

Hi,

Thanks for your reply. I also agree that it is not production.

However, I again have a doubt.. Where would this internal order be settled..

Based on the scenario, functionally, we would have to suggest where this internal order would have to be settled.

Please suggest.

[Former Member]

Hi,

Sub con scenarios can be handled via Purchase order or even Prod order. Them main difference from the two options are as follows;

Purchase order;

1) no variance analysis

2) to be able to post price diff, additional Config has to be set in MM - LIV. cant remember the exact config.

3) handled by MM users

Prod order;

1) with variance analysis

2) more effort required from user maintenance point of view.

3) handled by PP users

A point to note for item (3) is that there will be tug of war between the user groups to determine who will take up the responsibility.

Please refer to your PP consultant for more detail on Prod order for sub con.

Cheers,

Panichang

[Former Member]

Hi Panichang,

Thanks for those inputs.

Request you to please share the additional config that you are talking about for price difference if the scenario is considered from MM route.

Anyone Please share your inputs regarding the same.