Special Procurement using Subcontract & Consignment Hybrid

[matthew_hunt]

customer req:

Is there a way to make an external procured material both subcontract and consignment?

My research has concluded that you can only assign one special procurement method (i.e. consignment (K), or subcontract (L)) to a special procurement type for MRP. Therefore, my challenge to all of you is to help me find a way to procure a subcontract part (i.e. the material has components below it in the BOM), but post goods receipt the material into consignment stock. The components for the material must also be issued (543 O movement type) during the posting of goods receipt.

[former_member184627 · Accepted solution]

Hi Mathew,

Try using quota arrangement.

1.) F -External procurement, Spl procurment- L (Sub-contracting)

2.) F-External procurement, Spl .pocurment - K - Consignment.

Regards,

Senthilkumar SD

Reward if helpful

[matthew_hunt]

I am going to do the following movements 101, 102, 562 O, and 561 K.... these should accomplish what i want to do.

[Former Member]

Hi,

Unless all of the components and the finished product are valued at ZERO in SAP the you cannot have a process where the item is subcontracted and then placed in consignment stock (if that it what you meant). the reason I say this is because the consumption of the components and the GR of the finished product will cause postings to the GL accounts and if this is consignment stock you don't own it.

Or di you mean that sometimes you want to use consignment stock of the item and other times you want to use a subcontract process, for the same material master?

If this is the case then don't use ANY special procurement key for this item, just create a normal P req and change the item category manually to suit the requirement. This is assuming that there is no fixed rule that can be applied (such as the good suggestion for the Quota arrangement). If the decision is manual then change the item category manually.

Steve B

[matthew_hunt]

I have tried adding code to program ZXMBCU01 in customer exit, to say that when a material is received with a special proc type 'L' then do a 101 movement and then immediately do transfer posting 412 K to move into consignment. From a material movement standpoint this works, but from finance standpoint it does not becuase a GL entry is created for the standard cost of the material when the 101 is done... The vendor account entries also cancel each other out by the time i withdraw the parts from consignment and execute MRKO, so vendor payment never occurs.

The situation i'm looking to have is that the components are consumed when the finished assembly is posted for GR, but i don't want the cost of the assembly recorded in the GL. Rather i want the inventory moved to consignment stock and then paid for when i withdraw it and execute MRKO. I realize this is not standard SAP, but is there any work arounds anyone has tried? I've also thought about possibly using a virtual plant to post the assembly GR, then doing a stock transfer into a valuated plant when i want to withdraw the assembly stock. This is just an idea if anyone has some feedback on this thought i would like to hear about it.

[Former Member]

Hi,

As I said, you cannot do this without causing problems with the GL postyings unless all of the items are Zero value.

You need to consider what you are trying to do. You are trying to create a finished product from some somponents and a service provided by the subcontractor. You are then saying that this material (that has value) is going to be passed to consigment stock and consignment stock is not yours, it has no value and does not show in any GL.

So effectively you are asking for a situation where a stock item with value can be moved to a vendors consigmnet stock.

I really need to know why you think that you need to move it to consignment stock? Which vendor would you use, who would you pay when iot is consumed and how much would you pay? Why is it your stock when you have the components, still your stock when the finished product has been produced but then it suddenly becomes the vendor's stock.

So the main difficulty is passing the ownership of the item to a vendor.

Could you possibly use a copy of the write-off movement type to remove the stock from your ownership? You could then reverse this when you want to bring it back? But I guess that you may want to have some stock visibility and this would not achieve this?

The other option is to have the components valued at ZERO, raise the subcontract PO also with a value of ZERO (switch off the IR flag). Then you will have a zero value item and NO postings during the process. You still won't have it in consignment stock because I think that a 412 movement may cause a credit for the value of the consignment stock (not sure though).

Basically I can see perhaps why you might need this but I would probably suggest that you do one part or the other on SAP and do the other part off system (subcontract or Consignment). So treat it all as consignment stock but consume the components som other way.

Sorry if this rambles a bit but I have been interrupted 10 times while writing this (day job!)

Steve B

[matthew_hunt]

I'm going to leave this question open for a few more days to allow others to possibly weigh in on the subject... i appreciate your feedback Steve. I will give you points!

I understand how SAP designed subcontracting to work, but in our case the assembly vendor does more than just provides labor...the vendor will also add several of his own components to the finished assebly, so it is a very expensive assembly to keep in stock... the vendor has agreed to go consignment and let us pay him for only the assemblies that we use. That is the reason for needing to put the assembly part on consignment.

[Former Member]

Hi,

Could you not simply keep the components that you want to use for consignment stock in your plant, as consignment stock and then only bring them into your own stock and then use the 541 o movement to the subcontractor, just before you do the 101 receipt of the finished item?

That way you would have visibility of the stock without taking ownership.

Perhaps I am still misunderstanding way that you want to use these components, but the standard subcontracting process is built around the fact that any materials that the subcontractor provides are NOT included in the subcontract PO components list. the charges for these materials is supposed to be built into the "price" on the subcontract PO.

I think we need a fresh pair of eyes to have a look at this, perhaps this will help

(thanks for the points)

Steve B

[matthew_hunt]

I am not talking about putting the components on consignment... I want to receive the finished assembly into consignment.

We have two PO's... First PO is for components and goes to vendor A. The price for that PO is only the price for the component. Second PO is for the finished assembly and it goes to vendor B. The price for the second PO (does not include the cost of any components that we provide to Vendor B, those have already been purchased and paid for to vendor A). So what i want to put on consignment is the finished assembly with the price on the second PO (which subsequently for consignment is the price on the info record).

Does this help clarify our situation?

[Former Member]

Hi,

It does help clarify it a bit but it also indicates that there is no standard way of doing this.

The ONLY stock that should be put into consignment stock is the stock provided by the vendor with NO COST or accounting postings (because consignment stock belongs to the vendor still) and you are trying to put stock that belongs to YOU into consignment stock, this is just NOT accaeptable accounting practice. You can just LOSE the value of the item like this.

Anything put into consignment stock does not have a price. The consignment PO does not have a price field available because you are not buying anything.

So my last piece of advice is to NOT use subcontract POs at all, simply manage the incoming item on a consignment PO just like any other consignment stock and manage the PO for the components as a normal PO but when you receive them from Vendor A consume them directly into a GL account (thereby accounting for the costs).

I don't think this ia a clean solution but I don't think you will find a solution that fits the process exactly (and it certainly wouldn't be by combining subcontract and consignment stock).

Steve B

[Former Member]

Hi Matthew,

You can try in the following Way:

- Keep the MRP parameter for the material as Proc type as F and special Proc type as L.

- Create a output message for matl document. and code a requirement type such that, once your receive the matl from subcontract into inventory, the new output message should trigger a transfer posting to Vendor consignment stock.

here I am assuming that , You are not worried about payment to Vendor.

Thx,

MJ

Reward if it helps.