Let's deeper in knowing subcontracting process in SAP.

1. SUBCONTRACTING
SAP – MATERIALS MANAGEMENT
By :Viany Adriana

2. CONTENTS
What is Subcontracting
Subcontracting Process
ScenarioTest

3. WHAT IS SUBCONTRACTING
• Subcontract is one type of purchase where we supply component to vendor and vendor working on it (value added).
Example : We open Subcontract PO to vendor then sent the round bar to vendor and vendor cut it for us.
• The advantage of using subcontracting are:
1. Control stock of component at vendor side.
2. Cost for using component after vendor send finished product, in other words component still our stock before
vendor send finished product.
3. Streamline subcontracting processes efficiently and cost-effectively
4. Reduce manual effort greatly
5. Monitor the process progress in real-time

4. SUBCONTRACTING PROCESS
• For Subcontracting Process, you also can take a look in SAP Best Practice. This scenario is under Supply Chain with BMY
code.
• A subcontract purchase requisition is either generated via the Material Requirements Planning (MRP) process or manually
by a requestor. The purchase requisition can be approved and is converted into a subcontract purchase order. The
purchase order is subject to approval based on predefined parameters before being issued to the subcontractor. The
consumption of the sent components is recorded upon the receipt of the value-added finished material. The outbound
delivery is created and the goods are picked and shipped to the subcontractor. With the supply of the finished material
the goods receipt is created. Subsequently the invoicing process is triggered.
• Key of the process flows:
1. Manage purchase orders
2. Manage stock
3. Manage outbound deliveries
4. Pick and post goods issues
5. Manage goods receipts
6. Manage invoices

5. SUBCONTRACTING PROCESS
• Below is the subcontracting process

6. SCENARIOTEST
• The scenario for subcontracting process:
• Material 6235 using A202RAW for the component. The bill of material for that is: 1 PC of A202RAW can make 2 EA of 6235
• Price of Material 6235 is 100 EUR and Price of Material A202RAW is 100 EUR
• We will open Subcontracting PO for make 6235 which the price for that is 20 EUR

7. CREATE PURCHASE ORDER
• The important thing when create PO
Subcontracting is using item category L
(Subcontracting)
• When using item category L, system will
automatically fill the component that must be
sent to vendor.
• System will put the component based on the bill
of material which already maintained. If the BOM
not yet maintained, system will give the error
message to fill the component manually.

8. TRANSFER POSTING
(SENT COMPONENTTOVENDOR)
• Stock position before do the transfer posting
• Subcontracting stock monitoring for supplier, we can
check which component must sent to vendor.
• Here also can see the quantity and the purchase order
number
• When sent the component to vendor, didn’t have
accounting document. Due to, the stock is still belong
to our company.
• After sent the component to vendor, we can check
the stock already available at vendor side
• When check stock position, we can easily
monitor the stock that the stock is at vendor or
at our warehouse. The differentiate is stock type.
For stock at vendor side is using stock type O with
the vendor number

9. POST GOODS RECEIPT
• When post goods receipt, system will automatically doing goods issue for the component.

10. ACCOUNTING DOCUMENT (GOODS
RECEIPT)
• Below is the accounting document after post goods receipt
When post goods receipt:
1. The cost of using the component will be recognized
Db. Raw Material Consumption 100 EUR
Cr. Raw Material 1 100 EUR
*component price is 100 EUR/PC → used 1 PC
2. Purchase services will be recognized
Db. Purchased Services 40 EUR
Cr. GR/IR 40 EUR
*purchase service price is 20 EUR/PC → bought 2 PC of FG
3. Inventory value and the price different (due to using standard price) of the
Finished Goods will be recognized
Db. Finished Goods 200 EUR
Cr. Price Different 60 EUR
Cr. Inventory Change 140 EUR → Total Cost
*finished goods price is 100 EUR/PC → receipt 2 PC
total cost is usage of component plus service charge = 100 + 40 = 140 EUR
total cost is different from inventory price, because of that has price different
as much as 60 EUR

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