SUBCONTRACTING PROCESS IN SAP MM

Subcontracting process in sap mm is a kind of special procurement where your company orders material from external vendor and provides components to the said vendor for production.

For example, if your company requires a product FG1112 , then for the production of the said product i.e. FG1112, company provide two raw materials RM11 and RM12 respectively to external vendor.

After production or rework your vendor will supply required material i.e. FG1112.

Subcontracting Process has following characteristics :

1. Purchase order for finished product raised which includes components to be provided for the subcontractor. You can add these components manually or through Bill of Material.
2. Components provided gets added in the stock as material provided to Vendor. You can check stock position vide transaction code MMBE.
3. Subcontractor (Vendor) supplies finished product . After this enter Goods Receipt for these products and consume components gets clear from stock.
4. In case of over or under consumption of the components provided to vendor, subsequent adjustment entry has to be made.

For  providing material to Vendor available stock types are unrestricted use and quality inspection i.e. we can supply material to the vendor from these stocks only.

A material can be provided to the vendor through Transfer Posting from unrestricted use stock to the stock of material provided to the vendor with a movement type 541 O.

When vendor supplies ordered material you can post Goods Receipt (T code MIGO). You can change component quantities manually if vendor informs about any excess or under consumption.

In case of such case,  we have to post Subsequent Adjustment to correct the consumed components.

Following is the process of Subcontracting :

Provide material to vendor (T code MB1A)

Select Movement Type as 541

Select your Vendor, Plant and put Components to be provided and save the record.

Create Purchase Order

Select L as Item category. Put your Finished product code, Quantity and save the record.

Click on Explode BOM and check your components.

Take Goods Receipt Note