Sub-Contracting Cycle (1) You have a material that can be procured externally, and you have maintained BOM

with components. Any waste generated and received during subcontracting process can be maintained as component with negative quantity. (2) You create a subcontracting PO (PO with Item Category L). You can also maintain Purchase Info Record for Subcontract category for material and subcontractor. (3) You make a transfer posting to issue components for SC PO. Material is sent to subcontractor. As material remains under your ownership, system does not make any value entry. But quantity is shown as "Material Provided to Vendor" (4) You receive finished material against SC-PO. You also specify components consumed in manufacturing of finished goods. Additionally, if you have negative components in BOM, now you'll also receive subcontracting byproducts. There are three events, so three accounting entries are generated: DR FG Stock/ SC By-Product Stock CR Change in Stock (FG/ SC By-Product ) (for finished goods received) DR Subcontracting Charges CR GR/IR Clg (for moneys payable to Subcontractor) DR Consumption (Components) CR Change in Stock (FG/ SC By-Product ) 0 (material provided to Vendor is now charged to expense) (5) You do the IV for SC Invoice, and the process is complete.

Process of Subcontract in MM Sub-contract business process: You want to buy material from the supplier (processed material/ assembled item) , but for some reason (quality of certain item / price ) you will give some component to vendor . Vendor shall process the item / use the item provided & supply the final item. SAP process: 1.Create the finished goods material code. 2.Maintain the BOM for the material. 3.Create PO with item category as "L" . 4.Issue material to vendor with movement type 541 5.Receive the material against the PO with movement type 101. 6.MIRO to account for vendor's invoice for the service charge& material used by him. Note:: At the Time of GR 543 Mvt is up dated for Raw Material. Suppose, I have 3 operations 1)weaving 2)dyeing 3)cutting & packing if no 2 process (i.e Dyeing) has to be given to subcontracting, what process should i follow ?

The following process to be followed for subcontracting. 1. Item code(material master) to be created at the stage of before dyeing. 2. Item code(material master) to be created after Dyeing as subcontracted item.(F30) 3. Bill of material to be created for the material(2) calling for material(1) 4. Info record and source list to be created for material(2) with the corresponding vendor 5. PO to be released for material (2) 6.Along with PO the material(1) to be issued to vendor 7.On receipt of material when GR is made the stock with vendor will get updated.