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Third party sub-contracting - Scenario

Hello Friends,

We have 2 diff company code, let say Company-A and Company-B. And both the company have diff plants, lets say Plant-A for Company-A and Plant-B for Company-B.

Now Plant-B purchase finish goods from the Plant-A, and directly send the finish goods to one vendor for Packing Purpose. After packing it is send to Sales office of Company-B(Plant-B).

now diff constrain the the scenario is that - Plant-B and its Sales office is in diff states (Maharashtra and Gujarat)

kindly see the attached file for more info.

Please let me know how to map the scenario in the systems



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  • Best Answer
    Posted on Jan 08, 2014 at 10:28 AM


    You may check the feasibility of the following procedure:

    1. Create 2 material codes, one for the material from plant A, say SFG and another for the final product from the vendor, say FG.
    2. Maintain BOM for the material FG with SFG and the packing material. If you are not tracking the packing material, the create BOM for FG with SFG as component. (Note: If you don’t want two material codes, then use only one material code and create BOM for FG with FG as the component, with recursion allowed indicator at BOM header.)
    3. Now, Create an inter company PO for the SFG with the plant A as vendor and with “sc vendor” indicator the PO – item level delivery address tab and the subcontract vendor in “vendor” field in PO – item level delivery address tab – delivery tab. Use the appropriate tax code in PO (CST)
    4. While doing GR against the PO, system will automatically post the goods to the subcontract vendor with 101 O movement.
    5. Now, we have stock provided to vendor, if you check in MMBE. . If you want to capture excise, do J1IF01 with respect to 101 O movement material doc.
    6. Now, create PO for the FG from the subcontract vendor with item cat L. If you are tracking the packing material, then you have to insert the packing material in the PO as separate line item with free item indicator and post the material to subcontract vendor with sc vendor indicator. Use appropriate tax code in PO.
    7. Receive the FG and complete the excise part as in normal subcontract scenario.



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