Posted by: ahmedashfaque | May 9, 2014

Subcontracting cycle in SAP


Subcontracting cycle is a process where the customer engages a contractor to make a sub-assembly.For this sub-assembly the customer makes available the required material to the contractor. The contractor makes the sub-assembly and returns it to the customer. The customer then pays the contractor for the work performed by the contractor. This is the entire cycle. Let us see how it is done in SAP.

Steps:

1. Create an info record of subcontracting type for the material with the vendor.

2. Make sure that purchasing organization and vendor are mapped to the respective pricing schema groups for accurately calculating subcontracting charges.

3. Create a PO with item category “L” (subcontracting). Here enter the product which the contractor will make. Also enter the components which you will supply to the vendor.

4. Do a goods issue against the PO for components to be issued to the contractor with movement type 541 and movement indicator “O”. At this stage a material document will be created. You can also check the storage location from where the goods were issued to see if the material quantity is get reduced by the amount for which goods issue was done.

5. Once the contractor makes your product and ships it, you will do a goods receipt against the PO. If any material quantity is more or less or if any by-products were created then they can also be received here. At this stage a material document as well as a financial document is created.

6. The contractor is paid for his work after invoice is verified.

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