SAP Procurement - Subcontracting

Subcontracting is one of the manufacturing strategy by which a company decides to outsource some or all of its production operations to a vendor. This process is considered better than a complete external procurement as there can be a tighter control on the product quality. In a typical subcontracting process, a manufacturing company provides raw materials / components (say material A and B) to a subcontracting vendor. The vendor in turn processes these materials to turn them into an end product (say material C). This product (if not a finished product) is then used by the manufacturing company to carry out the rest of the operations to turn it into a finished product. Standard SAP supports this process. To achieve this, a subcontracting purchase order for material C is created. Material A and B which constitute the Bill of Material (BOM) of material C are then delivered to the subcontracting vendor. Finally a Goods Receipt is posted when material C is received from the vendor. SAP process flow: 1. Create a subcontracting Purchase Order (ME21N)

Click on Material Data tab under Item details and then click on Components to view the components / make changes. Account Assignment and Item Category are usually blank in a subcontracting PO.

2. Delivery of components to subcontracting vendor (ME2O)

Enter selection parameters like vendor and plant and click on Execute. Select the desired line, click on Create Delivery and a delivery will be created.

3. Post Goods Issue (VL02N)

The movement type is usually 541.

4. Post Goods Receipt (MIGO) 5. Logistics Invoice Verification (MIRO) Master Data Setting: 1. Material Master (MM01)

Maintain special procurement key for subcontracting in MRP 2 view.

2. Bill of Material (CS01)

If a material needs to be returned by the vendor after the subcontracting process is complete, it should be entered as a negative quantity in the Bill of Material (BOM).

Points to Note: 1. A material can be sent for subcontracting at any stage in the manufacturing process 2. Material to be received after subcontracting should have a different material code, than the components issued. 3. Routing can be used for external processing but not subcontracting. 4. MIGO Transfer Posting (Mvt type 542) can be used to transfer scrap component back to the manufacturing location.

Mass Maintenance of Purchase Order

There are situations in real life scenarios, when transactional data needs to be updated enmass. This could arise due to change in material specifications, vendor terms etc. To update each and every document, one by one would be time taking, prone to errors and very tedious. To simplify this, SAP has provided utilities to update certain transactional data en-mass. This article highlights one such mass maintenance utility for updating Purchase orders in bulk. Go to T Code MEMASSPO.

Let's say we want to update Purchase Order Line Items. Select the line as shown below.

Click on Execute Button.

Enter the Purchase Order Number. If the purchase orders have multiple line items, only those purchase orders should be entered here which need maintenance of the same line item.

Click on Select Fields button.

Select the fields in the screen above which you want to mass maintain.

Select both the columns and click on mass update, as shown below.

Click on SAVE.

Click on the check box. Below is the update log.