SUBCONTRACTING

There are two types of subcontracting in production…

A) Operation subcontracting

B) Assembly subcontracting

ASSEMBLY SUBCONTRACTING
Due to some capacity problems or operational issues in manufacturing plant, entire Product is
asked to produce outside (at vendor place OR Third party Plant) and component materials are given
to vendor with a subcontracting Purchase Order. Vendor produces the Product and supplies the
Product to plant.

Process Flow:

1. Create material master for Header material ( Product ) and component materials – MM01

2. Make settings in Header material’s material master MRP 2 view for subcontracting. – MM02

3. Create BOM for Header material – CS01

4. Put requirement for Header material – MD61

5. MRP run for Header material – MD02

6. Convert generated PR to PO – MD04

7. Issue component materials to PO- 541 movement – MB1B

8. Goods receipt of the semi finished material – MIGO

Master data used:

Header material: PAPAYA SFG

Component materials: PAPAYA RM

Detailed process flow with screen shots

Create material master for Header material ( Product ) and component materials – MM01

Venkatesh Babu
Header material: PAPAYA SFG

Component materials: PAPAYA RM

Venkatesh Babu
Make settings for Header Material in MRP 2 view for subcontracting for special procurement as 30
as shown below

Venkatesh Babu
Create BOM for header material as shown below with CS01 with three components
as input materials.

Routing also can be created but is not mandatory..

Put requirement for Header ( SFG Or FG ) material in MD61

Venkatesh Babu
MRP run for Header material – MD02

Check for PR creation in MD04

Convert Purchase Requisition to Purchase Order and provide the details like vendor,
Purch. Org, Purch. Group

Venkatesh Babu
Click on the component button and you will be able to see the components attached to this Purchase
Order..

Now save the PO

Once the components are given to vendor, Issue component materials to

Purchase Order with T-code MB1B with 541 movements

Venkatesh Babu
Now check for the stock of the raw materials in MMBE they will be shown as Stock provided to
vendor as below

Venkatesh Babu
After vendor manufactures product he supplies the product to the plant.Goods receipt of the Product
material to be done.

Make 101 movement against the Purchase Order to receive the header material
(manufactured Product).

Venkatesh Babu
Venkatesh Babu