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Former Member
Dec 12, 2013 at 09:27 AM

Outsourced Manufacturing


Dear Colleagues,

Could you please provide your comments on the following issue.

We are in mining industry. In one of our divisions (coal) we have several company codes. They have to be created in the system as separate company codes as they are different legal entities.
Those companies operate in the same geographical area and sometime share infrastructure (they charge each other for that).

For example there 2 mines belonging to 2 different company codes very close to each other. Only mine A has a processing plant. So coal from mine B is delivered to (and stocked) mine A. Mine A provides a processing service to mine B. It's a subcontracting scenario. Coal from mine B which is at mine A still belongs to mine B.

That gets a bit more complex as all the coal (A and B, two different materials) is transported to port (another plant) which belongs to another company code C.

It's stored there and loaded onto vessels. But legally coal still belongs to company A and B respectively. Company C only provides port services.
Currently we simple use STO to move coal between company codes. But this solution causes lots of issues in accounting as each movement creates cross-company postings which have to be adjusted at month end.

We are looking at using Outsourced Manufacturing LOG_MM_OM_1 and Outsourced Manufacturing 2 LOG_MM_OM_2 business functions.

They allow for Multilevel Subcontracting and Third-Party Order Processing for Subcontracting. This way we can eliminate unwanted cross company code postings for transfer of coal.

But this functionality only covers "brand owner" (in our case company B) side of the process. In our scenario some companies are "brand owners" (B), some subcontractors (C) and some both (A).

How can we automate the postings on subcontracting company codes (GR of component in subcontractor based on GI of component in brand owner). We use one step STOs.

From what I learned Outsourced Manufacturing can be integrated with SCN but that solution aims to cover the scenario when subcontractors are completely external to us. In our case both brand owners and subcontractors are in the same system (same client).

In other words we are looking for something that can be called "cross-company code subcontracting".

Any ideas are welcome.