The Subcon Process in SAP Purchasing Modules

Subcontracting Processing

When a main BOM item is a subcontract item (in the item category field of PO/PR line item, the value is "L"), then the system will automatically know that the sub items need to be issued out. Such issue, from the internal system processing view point, is only a transfer from one storage location to the subcontractor vendor storage location rather than a consumption. It will only be deemed a consumption when the parent item is received back from the vendor. The system will automatically track all the items sent to the vendor waiting to be receieved back.

The following are the pre-requisite procedure for handling subcontract items:

• When setting up the subcontracted parent item (material type HALB), the material master has a procurement type of "F" and special procurement of 30. The effect is that when the purchase requistion was created by MRP or manually, the item category will be "L".
• BOM items for the main part has been setup to contain all the materials which must be supplied FOC to the vendor.
• There is no need to setup the routing for the sub-contracted main item.

The following are subcontracted related procedures:

• Finding out what sub-items need to be issued to subcontractors and issue them.
• Finding out what sub-items have been issued to subcontractors and waiting to come back.
• Receiving subcontracting item (from the store viewpoint, there is no difference from normal receiving).
• Invoice processing : the invoice is only for the services and is no difference from normal processing.

Invoke transaction ME2O

• Leave the Date required, Material and Plant blank unless you wish to limit the listing to a specific area. Check the Only Negative available SC stocks if you only want to look at the cases where materials need to be handed to the subcontractor. If you do not check this, then items which have already been issued to the subcontractor and waiting to come back will also be shown.
• To issue the items to the subcontractor, select the item, then click Post goods issue button.
• Enter the storage location from which the sub-items is taken out, and the quantity given.
• If there is not sufficient on hand stock to be given to the subcontractor, then the system will issue a "0 items posted" message. If there is sufficient quantity, the system will transfer the quantity to the vendor storage location. On this screen, you can also check the on hand stock balance by clicking the stock overview and stock/requirement buttons. You may also palce the cursor on a PO number and display the PO details giving rise to this SC issuing requirement.

Subcontract Posting

Material Document
101 + Receive in the new Material after sub-contract
543 - Clear the quantity in Material Provision for Vendor

Accounting Document
Debit Inventory - New Part 150
Credit Inventory - Purchase Offset 150

Debit Service cost for sub-contract 50
Credit GR/IR - Inventory 50

Debit ROH - Material Consumed 100
Credit ROH - Material Consumed 100