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Topic starter
What is subcontracting process?
One of the procurement methods accessible in MM is subcontracting. To obtain the finished product, components are shared with the vendor during this process. The steps that make up this process are listed below.
Procedures for subcontracting:
- Create subcontracting Info record (Optional) with the T Code ME11 (Optional).
- Make a subcontracting purchase order with the item category L-T Code-ME21N.
- Actions: ME21N —> Enter the following information: Plant, Material (End Product), PO Quantity, Delivery Date, Net Price, Item Category L -> Select Explode BOM under Components on the Material Data tab of the Item Details window.
- Toggle the Components button.
- Enter the sub components -> Return and save.
Note: Components can be manually entered or exploded using the BOM (T Code CS01).
- To issue the sub components to the vendor T Code - MIGO (create a Transfer Posting with Movement Type 541.)
- Goods Receipt for finished product - T Code -MIGO
- The completed product will be received with movement type 101 during goods receipt, and components will be automatically consumed with movement type 543.
- For the services rendered, an invoice receipt with the T Code MIRO
Note : Accounting entries will be made at the moment of goods receipt 101 (and 543): Finished goods will be received with movement type 101, and components will be consumed with movement type 543.
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Dr. (BSX) Stock A/c of Finished Goods 1500 Cr (BSV) Change in Subcontracting Stock 1500 -
Dr. (FRL) Subcontracting Charges 500 Cr (WRX) GR/IR Clearing A/c 500 -
Cr. (BSX) Stock A/c of Components 1000 Dr (GBB-VBO) Consumption A/c 1000
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Hope this helps.
Posted : 03/09/2022 4:26 pm
Topic starter
The subcontracting process in SAP involves sending materials to a vendor or subcontractor to perform a service or process on them. The end-to-end process involves several steps, which are as follows:
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Material Master Data: Before the subcontracting process can begin, the material master data for the materials being subcontracted must be maintained in the SAP system. This includes creating a material master record for the finished goods, the components being sent for subcontracting, and the vendor.
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Purchase Requisition: The first step in the subcontracting process is to create a purchase requisition in SAP. The purchase requisition includes details of the materials to be subcontracted, the vendor, and the quantity of materials required.
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Purchase Order: Once the purchase requisition is approved, a purchase order is created in SAP. The purchase order includes the details of the materials, the vendor, and the delivery date. It also includes information about the services to be performed by the subcontractor.
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Goods Issue: After the purchase order is created, the goods issue transaction is used to issue the raw materials to the subcontractor. This transaction reduces the inventory of the raw materials.
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Subcontracting Challan: A subcontracting challan is a document that is created to track the movement of goods to the subcontractor. This document includes details of the materials being sent, the quantity, and the delivery date.
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Goods Receipt: Once the subcontractor has completed the services or process, the goods receipt transaction is used to receive the finished goods back into inventory. The system creates a purchase order receipt for the finished goods, and the inventory of finished goods is increased.
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Invoice Verification: The final step in the subcontracting process is invoice verification. This involves verifying the invoice received from the subcontractor against the purchase order and the goods receipt. If the invoice is correct, it is posted in the system, and the accounting documents are generated.
By following these steps, the subcontracting process can be efficiently managed in SAP, ensuring that materials are sent to the subcontractor, services are performed, and finished goods are received back into inventory.
Posted : 15/02/2023 7:33 pm