SAP PP Subcontracting Process

Process Owners use Subcontracting as add on facility to complete their manufacturing process within time and cost.

Few reasons for Subcontracting Work

1) Unable to complete product due to no facility.

2) Unable to complete product due to capacity overload.

3) Sometime subcontracting is economical as production losses will be handled by vendor.

4) Company Staff is less skilled for particular production activity.

5) Special testing facility requirement.

6) For survival of subsidiary unit.


Material Master MRP 2 View-Enter procurement type as External procurement (F) and special procurement as subcontracting (30)

SAP Define Subcontracting Procurement Type


Bill of Material is essential part of subcontracting process, here we define list of items to be send outside for further processing.

we should also consider scrap generation norm in bill of material in order to have smooth and flawless supply of FG product.

SAP Subcontracting BOM


Routing consist sequence of operations to be perform and they are controlled by control key.

Here control key works as CPU of computer, it not only control different business function but also guide system for steps to be perform.

SAP Routing for Subcontracting Operation

above screen, Operation no 0040 is defined as subcontracting relevant Hence Control Key FG01 assigned to it.

SAP Provides defaults control key with standard set up,we can also create new keys as per requirement.

It contains configuration settings for business process controlling.

SAP Control key for Subcontracting

Create Purchase info record for info Categ Subcontracting w/o material

it stores all purchase relevant details like price,tax code,buyer grup etc.

SAP Subcontracting info record


System would create Subcontracting PR in background against production order.

we will suggest you to create new doc type for subcont with separate no range,it will make tracking easy.

SAP Production Order Creation

Click on Operation to get Purchase requisition number, Operation Status is REL.

In below screen 3 operations are displayed, 1 st and last operations are to be performed in house while 2 nd operation needs subcont.

SAP Subcontracting PR

System automatically picks up Account assigns categ- Order (F) and also Item Category -Subcontracting (L).

some additional information can also be passed in above shown text field, it will be printed on order provided to vendor.

SAP Subcontracting PR

Now we can convert above PR into subcontracting purchase order for further Process.

subcont order should always assigned to correct release procedure so that approval formality can be fulfilled.

SAP Subcontracting PO

Click on Component button for Item and system will automatically copy BOM components to purchase order.

SAP Subcontracting PO

Save and PO issue to vendor.

Now we will transfer Raw Material i.e. BOM Components to vendor.

below posting will remove inventory from our stock and will place into vendor stock however value will be in our books only.

T Code MB1B mvt. type. 541 against Purchase Order

SAP Subcontractor Stock

Subcontracting stock will be displayed as material provided to vendor in MMBE.

Subcont Stock will be reduced at the time of Goods receipt of FG product.

SAP Subcontractor Stock

On Manufacturing Process completion, vendor need to send material back to company

Here we need to take goods receipts against Order

Finish Product Stock updated by Mvt Type 101 while component sent to vendor would be consumed by Mvt type 543.

SAP Subcontractor Stock

SAP changes status of operation after each transaction,status is a key which denotes different business transactions.

Check Operation status in Order View

SAP Subcontracting Operation Status


Operation no 20 Preparation confirm

SAP Prod Order Confirmation

Operation no 40 Preparation confirm

SAP Prod Order Confirmation

Operation no 60 packing confirm

SAP Prod Order Confirmation
Goods Movements

Reconciliation is very necessary at the end of every subcont process,we observed that many time companies occurs loss in subcontracting due to improper recon.

list of goods mvts are displayed in next screen.

SAP Prod Order Confirmation

Cost analysis Details.

SAP Cost Analysis

Subcontracting process also possible Via MM Route, in that direct order creation and same mvnt types are used

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