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MM Subcontracting
MM Subcontracting
Purpose
The purpose of this document is to introduce the subcontracting process in
purchasing.
Overview
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.
The system automatically creates reservation items for MRP-relevant components. The
purchase order price is the vendor's subcontracting service. Conditions for
subcontract orders can be stored in a subcontractor purchasing info record. You can
link service specifications for services to subcontract items. This means that you
can provide the vendor with clearly lay out, detailed specifications about
performance of the required services. Service specifications are only intended for
information purposes, in other words, they do not have an effect on an item’s
value.
The components at the subcontractor's site are managed in a special stock for the
vendor. This stock is valuated and available for MRP. It is not allocated to a
specific storage location. Components can only be withdrawn from the stock of
material provided by the vendor. You can monitor the stocks of provided materials
by means of evaluations.
Finally a Goods Receipt is posted when material C is received from the vendor.
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)