Subcontracting is a process of issuing your raw materials to a vendor who processes them to provide you a new product.
In SAP you create a subcontracting purchase document and issue raw matrials to vendor by ME2O or MB1B 543 movement type. You recieve the new products by 101 movt. type, raw materials gets backflushed by 543 automatically during this.
Contracts in SAP are of two types Value and Quantity based contracts. In value based contract you set limit for Value of the materials to order, whereas in quantity based you set the limit quantity.
Technically contracts can be divided in 2 types, one is Centralized other is Distributed. Centralized is used mostly when you have single client in a geography. Distributed contracts can be distributed across different clients mainly by ALE Idoc method where a single contract can be referenced by other purchasing organisations.
Amit G
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