Outside Service Processing

(Boyum Edition)

Mascidon LLC
May 2020
Contents
Outside Services ............................................................................................................................................ 4
Objectives ................................................................................................................................................. 4
Heat Treat Example Described.................................................................................................................. 4
Figure 1.1 Example BOMs - ‘Configuration No’ ........................................................................................ 4
Implementation ........................................................................................................................................ 6
Set up Outside Service Warehouse....................................................................................................... 6
Figure 1.2 Designate the Outside Service Warehouse ............................................................................. 6
Set up Item Master Item(s) ................................................................................................................... 7
Figure 1.3 Item Master Setup for Non-Stock Item.................................................................................... 7
Figure 1.4 Defining the Preferred Vendor (Optional) ............................................................................... 7
Figure 1.5 Default Warehouse .................................................................................................................. 7
Figure 1.6 Planning Data – Weight or Quantity Service............................................................................ 8
Setup of Resources................................................................................................................................ 8
Figure 1.7 Resource Master Setup ............................................................................................................ 9
Figure 1.9 Using the Resource in a BOM .................................................................................................. 9
Using the Outside Service Module.............................................................................................................. 10
Figure 2.1 Assembly Outsourced to Subcontractor ................................................................................ 10
Details of the Processing ......................................................................................................................... 10
Figure 2.2 BOM for the Assembly Process .............................................................................................. 11
Purchase Order ................................................................................................................................... 11
Figure 2.3 PO for Assembly Services ....................................................................................................... 11
Issue of Components to the Subcontractor Vendor ........................................................................... 12
Figure 2.4 Issue to Sub Entry Screen ....................................................................................................... 12
Figure 2.5 Transfer Resulting from ‘Issue to Sub’ ................................................................................... 12
Figure 2.6 Prompt for Quantity at Sub Whs Report................................................................................ 13
Figure 2.7 Qty at Sub by PO .................................................................................................................... 13
Receipt from Subcontractor................................................................................................................ 13
Figure 2.8 PO Goods Receipt .................................................................................................................. 14
Figure 2.9 Quantities at Sub Contractor for a Specific PO ...................................................................... 14
Figure 2.10 Quantity at sub for a particular item ................................................................................... 15
Figure 2.11 Goods Receipt Unit Price ..................................................................................................... 15
Adjustments ............................................................................................................................................ 16
Figure 2.12 Goods Issue Adjustment for Scrap ....................................................................................... 16
Appendix A – SAP User Defined Fields and User Defined Table ............................................................. 17
Figure A-1 User Defined Table for Outside Service Processing .............................................................. 17
Figure A-2 Fields with the DCMOS Table ................................................................................................ 17
User Defined Fields (udf) ........................................................................................................................ 18
Warehouses ........................................................................................................................................ 18
Item Master Data ................................................................................................................................ 18
Resources ............................................................................................................................................ 18
Marketing Documents ........................................................................................................................ 18
Outside Services
Manufacturing companies often subcontract some processes within their plant. For example, a plant
may not have the capability to heat treat metal parts. Or they may not have a dedicated area where
painting of products can be done. In this document I will describe 2 different outside service processing
parts and how this module assists in the management of inventory.

Objectives
These are the objectives for this outside service module:

1. Make the clerical work required conform to the documents and parts the clerks physically see in
front of them with no extra steps required.
2. Enable tracking of quantities of parts at the subcontractor at all times.

Heat Treat Example Described

Before going into too much detail, let’s describe the processing with reference to what needs to occur
within SAP and how this module assists with the SAP functions. We’ll use the Figure 1.1 BOM for heat
treating a part that has been stamped. The part that was stamped is ‘BLANK’. Let’s assume we stamped
4,000 of these over a period of 2 days. After the first day we have 1,800 stamped parts and these now
need to be heat treated. Internally within SAP, you have reported completion of a production order to
stamp the part ‘BLANK’ and have reported a quantity of 1,800 completed. The SAP inventory shows
1800 as the on hand quantity of the ‘BLANK’ part. Now you need to send these parts to a vendor
‘V20000’ to be heat treated. You should set up a PO with this vendor for heat treating services for a cost
of $0.55 per part. You set up the PO for the full production order quantity of 4,000 even though only
1,800 are completed. You issue the PO to the vendor with a description of the service required
(engineering specifications added as text lines to the PO).

BLANK-HT Assy-1

BLANK HT Assy C-1001 C-1002 C-1003

Figure 1.1 Example BOMs - ‘Configuration No’

The next step is you need to move the parts to the vendor’s location so they can be heat treated. You
want to track the on hand quantity of parts at the vendor and have set up a special SAP warehouse
specifically to track quantity at the subcontractor(s). One such warehouse is all that is needed. To
‘move’ the on hand to this outside warehouse within SAP you would enter an inventory ‘transfer’
document for 1,800 pieces moved from the production warehouse to the outside service warehouse.
The SAP transfer document can have an associated ‘printed’ document so that you have paperwork to
get signed by the trucker.
At this point you have 0 on hand of the ‘BLANK’ part in the production warehouse and 1,800 of this
same part in the outside service warehouse (i.e. at the vendor’s location).

The second day of production proceeds and you produce another 750 pieces of the ‘BLANK’. You want
to send these parts to the vendor for heat treating and create another SAP warehouse transfer
document.

On the third day, you produce the remaining 1,455 pieces (stamping doesn’t always come out to exactly
4,000 pieces). You create another inventory transfer to ‘send’ these parts to the subcontractor within
SAP. The end result is there are 1,800 + 750 + 1,455 = 4,005 pieces of the part ‘BLANK’ at the vendor site
and noted within SAP.

The vendor starts sending back heat treated parts. They do this in different quantities than the parts
were sent to them. Let’s assume that over the next 5 days you receive shipment of heat treated parts in
these quantities: 620, 650, 900, 800, 700, and 300 = 3,970 in total.

As these parts are received into your plant the SAP transactions for each receipt are: 6 PO goods
receipts against the original PO; 6 different goods receipts of the heat treated part (BLANK-HT) ; and 6
different goods issues of the ‘BLANK’ part to relieve the quantity of this part at the subcontractor. After
a few more days, the vendor will send an invoice for the full quantity processed.

Note the number of transactions required of the receiving / shipping clerk and think about what they
actually observe in the form of paperwork:

 They have a PO for heat treating services with vendor V20000 – so they know where to send
parts
 They receive parts after production in 3 lots of 1,800, 750 and 1,455 and arrange for 3 different
shipments of these parts to the vendor
 They get 6 lots of parts back from the vendor at different times and for these lots they need to:
o Create 6 PO goods receipt to recognize the liability for heat treating services
o Create 6 inventory goods receipts for the quantity of the heat treated parts received
o Create 6 inventory goods issues for the quantity of the non-heat treated parts no longer
present at the heat treat vendor

In addition, the A/P clerk needs to match up 6 PO goods receipts with the A/P invoice from the vendor.

This clerical function becomes increasingly complex if you stamp out 20 different parts each day and all
of these need to be heat treated. And it could become considerably more complex if the outside service
were an ‘assembly’ that was performed by the vendor and you sent them multiple different items for
each assembly. My assembly example in Figure 1.1 has only 2 parts in the assembly, but it could be a 10
– 15 part assembly just as easily – and then the number of transactions entered into SAP by the clerk get
tedious.

Note: the vendor sent back 3,970 of the 4,005 parts you sent them. Is this an acceptable loss (0.9%)?
Implementation
This add-on is entirely implemented using SAP and Boyum functionality. There is no SDK add-on
required other than Boyum.

In Appendix A there is a description of each of the fields added as user defined fields in SAP. The
appendix also shows the definition for one outside service table (DCMOS).

The implementation of the Boyum add-on is quite automated. Mascidon provides XML import
documents to be imported using standard Boyum import functionality. After all of the imports are
completed, the add-on is operational. You should import the XML for Boyum in this sequence:

 Configuration Categories
 Universal Functions
 Item Placement Tool
 Function Buttons
 B1 Validation Configuration

This whole process should take 5 – 10 minutes.

There are several setups that need to be done in order to begin using the system.

Set up Outside Service Warehouse

One and only one warehouse should be designated as the outside service warehouse. Set the flag as
shown in Figure 1.2.

Figure 1.2 Designate the Outside Service Warehouse

Only 1 warehouse can be designated as an Outside service warehouse.
Set up Item Master Item(s)
A non-stock inventory item in the item master file is required for each outside service to be provided.
i.e. if you have outside services for heat treating, plating and painting, then you would set up at least 3
non-stock inventory items. You could add more if you want reporting in more detail, but it is not
necessary.

Figures 1.3 through 1.6 show a non-stock item ‘HT’ set up for processing.

Figure 1.3 Item Master Setup for Non-Stock Item

Figure 1.4 Defining the Preferred Vendor (Optional)

Figure 1.5 Default Warehouse

 Figure 1.6 Planning Data – Weight or Quantity Service

Notes: The item group definition in Figure 1.3 is optional. The ‘locked’ warehouses is optional in Figure
1.5 but it avoids clerical issues and is recommended.

Note: If you had heat treating for small parts which may be managed by weight of parts heat treated
and also have larger parts which are managed by piece, you should set up 2 parts for heat treating in the
item master. i.e. HT-SMALL and HT-PIECES. Make the item codes and descriptions easily recognized by
the users.

Setup of Resources
There should be at least one resource master record set up for each type of outside service processing
done by your company. The resource master resource type is ‘Other’ (not labor or machine). There is a
flag that indicates this is an ‘Outside service’ resource. Refer to Figure 1.7. Only resource master
records with a type of ‘Other’ can have the outside service flag checked to ‘Yes’.

The resource designated as an outside service should be included in the BOM as shown in Figure 1.9 for
an ‘assemble’ process done by a subcontractor.
 Figure 1.7 Resource Master Setup

Figure 1.9 Using the Resource in a BOM

Using the Outside Service Module
This section details how to use the outside service module. Our example will be applied to the second
BOM example shown in Figure 2.1 – a group of parts sent to a subcontractor vendor to be assembled
and then shipped back.

Assy-1

Assy C-1001 C-1002 C-1003

Figure 2.1 Assembly Outsourced to Subcontractor

The steps being followed are:

 Create a purchase order for the assembly service

 Issue stock of each of the components
o This transfers the on hand of the component items from the production warehouse to
the outside service warehouse (C-1001, C-1002 and C-1003)
 Create PO goods receipt(s) against the purchase order when the completed assemblies are
received back from the service vendor
o This does a normal PO goods receipts for the ‘assembly service’
o This receives into inventory more on hand of the completed assembly (ASSY-1)
o This reduces the on hand of each of the components in the outside service warehouse

The steps being followed are simple and intuitive to the receiving clerk.

Details of the Processing

The BOM for the outside service assembly is shown in Figure 2.2. Reviewing, the completion of 1
assembly part ASSY-1 requires a quantity of 4 of C-1001 component, a quantity of 2 of C-1002
component, and a quantity of 3 of C-1003 component.
 Figure 2.2 BOM for the Assembly Process

Purchase Order
A purchase order for this service is shown in Figure 2.3.

Figure 2.3 PO for Assembly Services

The left portion of the PO grid is normal – the item, description, quantity and price. In this instance you
are buying the part ‘ASSY’ (see setup in Figures 1.3 to 1.6). The quantity being purchased is the quantity
of assembled parts – and you are being billed $1.18 per assembly.

The normal grid entry is to enter the ‘Item No’, then enter the ‘Incoming item from sub’ – in this case
the part ‘ASSY-1’ – the BOM parent part. Then enter the quantity of the assembly service and the
outside service quantity is automatically calculated. In this instance the assembly service is based on
‘Quantity’ (see Figure 1.6) and the ‘Outside Service Qty’ is the same as the purchase order quantity. The
price is the cost of the service to assemble the kit.

Note: you can double click on the ‘Incoming Item from Sub’ to drill to the item master.
Issue of Components to the Subcontractor Vendor
Access the PO and ‘Right Click’ and select the option ‘Issue to Sub’. This brings up the screen shown in
Figure 2.4.

Figure 2.4 Issue to Sub Entry Screen

Each of the 3 components required for the assembly are included in this screen. The quantity to be sent
to the subcontractor for each of these components can be entered in the column ‘Issue Quantity’.
When the entries are complete, the ‘Process’ button is clicked to do the issue to sub transactions. The
result of this ‘Process’ is the Inventory transfer transaction shown in Figure2.5.

Figure 2.5 Transfer Resulting from ‘Issue to Sub’

Notes: the components are transferred from the production warehouse (‘01’ in the example) to the
outside service warehouse (‘09’ in the example). From the inventory transfer screen the user can drill
back to the purchase order ‘PO for Sub’.

If at this point you access the PO 418 and then right click and select ‘Quantity at sub whs’ option, the
prompt shown in Figure 2.6 displays.
 Figure 2.6 Prompt for Quantity at Sub Whs Report

If I select the option ‘P’ – by PO, then the report shown in Figure 2.7 displays. After several more
transactions are entered we will use the ‘By Item’ display.

Figure 2.7 Qty at Sub by PO

At this point we have the component materials required for the assembly located at the subcontractor
and SAP knows about it because we see the quantities in the outside service warehouse.

Receipt from Subcontractor

The subcontractor sends assembled parts back to your plant. They may send them back kitted by in the
same quantities they were issued, or they may send the assembled parts back to you as they complete
assemblies on a daily basis. When the assemblies are received back into the system, the receiving clerk
does the following:

1. Pulls up the PO for the assembly processing for this vendor

a. It is important that the PO number be included on any shipping papers received from
the vendor.
2. Copies the PO to the PO Goods receipt screen.
a. Modifies the quantity of the assembled part that is actually received. i.e. the PO may be
for a 3 month quantity but you are only receiving 20 assemblies at this time.
3. Clicks the ‘Add’ button on the PO Goods receipt.

An example of a receipt for 14 assemblies is shown in Figure 2.8.

 Figure 2.8 PO Goods Receipt

Returning to the ‘Quantity at sub’ screen, Figure 2.9 shows the transactions for this PO.

Figure 2.9 Quantities at Sub Contractor for a Specific PO

The receipt of the 14 pieces of the item ‘ASSY-1’ is shown. Then each of the components have 2
transactions – one the original transfer to the outside service warehouse, and the other the issue out of
stock.

In my test database I have processed other POs for this same assembly. If we initiate the quantity at sub
query and select ‘I’ for item selection and then key in the part C-1001, the result is shown in Figure 2.10.
 Figure 2.10 Quantity at sub for a particular item

Note: on this screen the first row in the grid shows the net quantity of this item in the outside service
warehouse. In this manner you not only have the audit trail of the transactions, but the net effect on the
on hand.

Note: the unit price of the receipt is calculated automatically. Refer to Figure 2.11 to see the receipt of
the 14 pieces of item ASSY-1.

Figure 2.11 Goods Receipt Unit Price

The unit price is calculated as (refer to the BOM and the PO) 19.58:

 4 x unit cost for item C-1001 = 4 x 1.500 = 6.000

 2 x unit cost for item C-1002 = 2 x 3.200 = 6.400
 3 x unit cost for item C-1003 = 3 x 2.000 = 6.000
 Heat treat service unit cost (from PO) = 1.180
Adjustments
Periodically adjustments to the on hand at the subcontractor are required. You may have miscounted
when you sent ‘x’ pieces to the subcontractor. The subcontractor may have lost some pieces in their
plant. The subcontractor may have scrapped some pieces of the components sent to them. If you are
tracking on hand using ‘weigh’ counts, there will always be rounding error adjustments to be made.

To make the adjustments, simply go to the inventory goods issue screen (to reduce the on hand) or the
inventory goods receipt screen (to increase the on hand).

Figure 2.12 Goods Issue Adjustment for Scrap

Note: be sure to connect this adjustment to a PO Goods receipt related to the PO being adjusted. And
don’t forget to make the adjustment in the Outside Service warehouse.
Appendix A – SAP User Defined Fields and User Defined Table
There is one user defined table ‘DCMOS’. Its definition is shown in Figure A-1 and A-2.

Figure A-1 User Defined Table for Outside Service Processing

Figure A-2 Fields with the DCMOS Table

The DCMOS table is used when processing data for ‘issues to sub’ and for ‘receipts from sub’. Refer to
the Boyum implementation for details of how it is used.

User Defined Fields (udf)

The SAP ‘User defined fields management‘ function which is accessed from the ‘Tools’ menu is used to
add the udfs.

Warehouses

This flag indicates the warehouse that is designated as the ‘Outside Service’ warehouse. This warehouse
is used to track the on hand quantities of parts that are at the vendor’s site.

Item Master Data

This flag is used for the item designated as the outside service. The flag is used to determine whether
the service is tracked by weight or by quantity. i.e. if you heat treated small parts you may want to track
these by weight rather than quantity.

Resources

This flag in the resource master designates this resource as an outside service. It is applied to the
resource type ‘Other’ (not labor or machine resources).

Marketing Documents

The ‘title’ field u_DCMPO is used in the following documents to ‘link’ back to the document with which it
is associated.

Inventory transfer – this field links to the purchase order associated with the ‘issues to subcontractor’.

Inventory goods receipt – this field links to the PO Goods receipt document used to create it
Inventory goods issue – this field links to the PO Goods receipt document used to create it

In each case there is a ‘golden arrow’ providing the user access to the creating document.