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subcontracting

Former Member
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hello to everyboby

i have a case of subcontracting . let i am sending po of 10 kg of the finishrd product which involve two materials to the subcontractor. let from these bom material 9 kg of finished material is returned from subcontractor. then at the time of reconcilling of subcontracting with gr i asigned 9 kg quantity .but how can i show that 1 kg material goes scrap.while scrap column is coming gray field.

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Answers (3)

Answers (3)

Former Member
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Hi Krishan

Sub Contracting Cycle

(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 )

(for finished goods received)

DR Subcontracting Charges

CR GR/IR Clg

(for moneys payable to Subcontractor)

DR Consumption (Components)

CR Change in Stock (FG/ SC By-Product )

(material provided to Vendor is now charged to expense)

(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 ?

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

7.On receipt of material when GR is made the stock with vendor will get updated.

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.

Your company should place a purchase order for the finished product. In this manually you can enter the required individual components or it can be determined via the explosion of BOM (if exists).

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.

- 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

Reward if useful to u

former_member218067
Active Contributor
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Hi,

In suncontracting po while assigning the components maintain scrap component as negative one 9 kg your receiving part and 1 kg negative as scrap

BR

Diwakar

reward if useful

csaba_szommer
Active Contributor
0 Kudos

Hi KC,

I think it would worth maintaining scrap rate in BOM (select the component, Goto > Item). You can maintain <i>component scrap</i> & operation scrap. You can maintain scrap rate in MM too (MRP 4, 'component scrap').

Maybe this would be a solution for you to set a scrap rate on the BOM.

Of course, if the scrap rate isn't of a constant value, I think you can set the to-be-consumed component qty when you receive the goods in MIGO.

BR

Csaba