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Sub Contract Manufacturing

Mar 06 at 12:50 PM

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Former Member

Dear Experts

I have a requirement as follows:

Plant A - Is the Inhouse Vendor from Other company

Plant B - Is the manufacturer and does the conversion of the product

Plant C - Creates Sales Order and Delivers to the customer

Requirement is:

Plant C raise the Sales Order, Requirement should go the Vendor to supply the raw material from Plant A to Plant C

Plant C will then do sub contracting of material to Plant B

Plant B then converts the raw material and supply the Finsihed goods to Plant C

Following are my questions:

a. How planning have to be done in SAP so that Plant A is informed when to send the material

b. How Plant B understands when Raw material will be received from Plant C

c. Document flow across these plants and the process

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What does Plant A do in this scenario, exactly? Plant C does the sale, plant B does manufacturing. Why do you need Plant A?

Also - are they all in the same SAP system?

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1 Answer

G Lakshmipathi
Mar 06 at 01:13 PM
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Since the material code should be different in sale order to the one which is there in PO to plant-A, this is ideally, two separate process. Once the sale order is created, based on the production BOM, plant A will start producing the raw materials and supply to plant B who would then, do conversion. Once this activity is over, the material code would get changed and with that material code, plant-B to transfer to plant-C who, then, have to follow the normal SD process

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Former Member

I agree with the process but how the planning and communication will be done is still unclear.

The process of planning and documentation at Plant A and B should be automated.

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Hello

Basically, you will define a special procurement type for your products, defining what is the supplying plant. Based on the planned delivery time defined in the material master, MRP will generate stock transfers, suggesting you to bring your materials from the supplying plant. The stock transfer requirements will be considered by MRP, in order to generate planned orders for you to manufacture your product.

Regards,

Caetano

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Former Member
Caetano Almeida

But Plant C is the center point of planning where gives the requirement to plant A and receives raw material and on the other hand it gives a trigger to manufacture FG at Plant B along with supply the raw material which he has received from Plant A.

I may be wrong but still not sure how Special Procurement can help because FG requirements are placed at Plant C only.

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Hello

You would set up a stock transfer special procurement, telling that plant B is the supplying plant for plant C, then MRP will drive the stock transfer requirements to plant B and generate requirements.

You will also define the special procurement for the components in plant B, so that they can be brought from the other plant.

Regards,

Caetano

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