SUBCONTRACTING BUSINESS PROCESS IN

SAP
 Subcontracting Process

 Lending a Raw Materials/ Child Parts to the Vendor to convert

those Raw Materials/ Child Parts to a Parent component / Semi
finisher Product.
 Process of Subcontracting

 1.Material Master
 2. Vendor Master
 3.PIR →Info Category Select Subcontracting ( Optional)
 4. PO → Item Category is L(Subcontracting),Item Level-
Material Data->Select Components
 5. Goods Issue to vendor → ME2O 541 MVT
 6.MIGO → Child Material gets Consumed by 543 MVT
 Material Master Data
 Lets consider we have created the Company ,company code,
Plant &Storage location .
 Configuration of MMD in T codes are listed below
➢ OMS3 → Industry Type
➢ OMS2 → Material Type
➢ MMNR → Number Range for Material Type
➢ OMSF → Material Group.
 Material Types
 Material Types → Materials with common attribute are COMBINED
under one material type.
 Raw materials ,Semi finished, Trading goods, Finished goods.
 List of Material types are
 ROH → RAW materials ; HALA → Semi finished Materials ;HAWA→
Trading goods
 FERT →Finished goods; DIEN→ Service goods; NLAG→ Non stock
Products
 Materials of common attribute are TAKEN together and set assigned
under a material Group.
 Example
 Mechanical Parts; Electrical Parts; Chemical Parts.
 Vendor Master Data
 Vendor master Data.
 Vendor are those org from which you can procure or sell goods
to it.
 Vendor master data consist of Vendor name address.
 For a vendor Purchasing and accounting data is important
Accounting Data consists of
1. Reconciliation account
 Vendor are of two types2. Terms of payments
3. Cash management Group
1. Goods supplier (MK01) 4. Banks details
Purchasing Data consists of
2. Invoice party (FK01) 1. Service Data
3. Central vendor(XK01) 2. Partner roles
3. Schema Group Vendor
4. Incoterms
5. Cash management Group
6. Banks details
 Vendors
 Invoice Supplier – (FK01)
 this vendor will only create a Invoice of the purchasing with order to the other Goods supplier.
 (Example –flipkart which only create a Invoice not directly supply the material directly)
 views in Master data.
1. General data
2. Purchasing data

 Good supplier –(MK01)

 This vendor will only manufacture goods or supply material, no PO and invoice data.
 Views in Vendor master data
1. General Data
2. Accounting data.
 (Example – XYZ supplier connect to flipkart who is supplying material )
 Central Vendor
 This is a vendor who will supply and create a Invoice by his own.
Is called as centralized vendor (XK01)
 XK01 = MK01 + FK01.
(central ) Purchasing ) ( Accounting )
 PIR and source list creation
 PIR creation (ME11)
 Parent Material
 Select radio button Sub contracting
 Source list
 In source list we can fix the vendor and block the vendor
 Source list is the find of info record for the triggering the vendor with
respect to material during the PO creation .
 Source list (ME01)
 Preference order for selection of vendor
1. Quota agreement
2. Source list
3. Purchase info record
 BOM creation
 As in this sub contracting a materials are taken and finished product is
made .
 So BOM is declaration of what child parts, what qty of child part is
related to parent part.
 BOM creation T code is CS01
 Enter the Parent part no ,plant and BOM
 PO creation
 In PO creation important point is to mention
 ITEM CATEGORY →L
 Mention the only Parent part no , Qty needed ,plant and store location .
 Components
 If a BOM is not created we can add on the Components clicking on to
components option under material tab in Item details.
 Transfer of Material to vendor
 After creating the Purchase Order,
 Transfer posting has to done for Transferring the Child Materials to
vendor through Movement type 541
 By using ME2O T-Code
 Good Receipt
 Good receipt is created by using MIGO
 The Parent Material will have a movement type as 101
 Child Material will have a movement type as 543
 Display Good receipt
 For checking the accounting documents of the material we need to go with
MIGO
Accounting document view
 Accounting Entries In Subcontracting

 BSX→ Inventory stock

 WRX → clearing stock
 BSV → Change in stock
 FRL → External service
 These 4 are the fixed accounting Documents for
subcontracting
 Addition to this we get 2 more documents.
 BSX and GBB for the components
 GBB → Offsetting entry
 If we have only 1 component for subcontracting then
BSX& GBB is generated for it
 If components increase to 2 then 2 more BSX & GBB
are generated
 So we can say the accounting documents for sub
contracting as
 4+2n documents where n → nos of components
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