Acting as a subcontractor

[Former Member]

Hi all,

I am aware of the subcontracting process where we are sending raw materials to vendors, however in my case, it is the other way around and we are the vendors and receiving the raw materials.

Would this process make sense?

1. Create sales order

2. Create PO with 'free item' checked so there is no accounting impact and MIGO goods into inventory

3. Make-to-Order production

4. Deliver goods

5. Invoice

My issue is with the 'free item' on the PO and whether it is the standard way of approaching this or not.

Thanks

[Former Member · Accepted solution]

Hi,

What you mentioned is correct. That is how the scenario is handled.

Some points which will make the process better.

1. Maintain seperate storage location for these materials

2. If possible maintain seperate MMR for these materials so that regular materials are not considered by the system while processing MRP for the sale order.

3. For Sale order processing, manitain new pricing procedure where "Conversion charges" are to be charged from the customer instead of normal price.

Hope this helps.

Regards,

Sharan

[Former Member · Accepted solution]

Sharan,

Is the benefit of maintaining storage location just differentiating materials for subcontracting?

Can we just give the materials a different name (i.e. bottle - subcontracting for company x) and not create a different storage location?

Thanks

Edited by: pistols123 on Nov 8, 2011 10:07 PM

[Former Member · Accepted solution]

Hi,

You Analysed it correctly.

When I said different storage location, that was for the purpose of differentiating the materials.

The alternative can be, as you mentioned, creating different material masters.

Regards,

Sharan

[Former Member · Accepted solution]

PDEwan - Unfortunately that won't work because transferring the materials to unrestricted will cause an accounting document to be generated

Sharan's method is what I will do,

Thanks

[Former Member]

Hi,

Have you considered using the following process:

1. Use of the MM consignment procurement process to get the raw materials from your customer. You would need to maintain a vendor record for this consignment PO process.

2.These materials would be managed as special stock in your plant, giving visibility to the partner stock lying at your locations. These would be managed as the same material number.

3. These materials would be transferred to your stock before being issued for production.

4. The settlement for these stock is done at periodic intervals and would depend on the stock withdrawn. It is possible to maintain consignment info records to help with this process.

5. The sales order is created as agreed by the customer, delivered when stock is made available and billed.

You can fine-tune this process to match your requirements. The advantage would be the visibility of stock, ability to undertake physical stock inventories and the determination of settlement amounts for stock issued.

Regards

PD

[Former Member]

I would recommend you to go through this process.

http://wiki.sdn.sap.com/wiki/display/SCM/Subcontracting+Process

Assign Text Removed

Thanks

Aman

Edited by: Lakshmipathi on Nov 2, 2011 12:32 PM Please dont ask for points