subcontracting

[Former Member]

Hi Experts,

Please guide in following scenario.

(1) We have purchased an material (RM) from an vendor X1.

(2) Now the material goes directly from vendor X1 to vendor X2.

(3) Vendor X2 do processing on it and its changes its state to finish goods and then deliver to us.

Now how to map this scenario into the system, please explain in detail.

Regards

Santosh

[Former Member · Accepted solution]

Hi Santosh,

1. Create BOM for finished prod with component as material(RM) in CS01

2. Then create normal PO against vendor A from whom u want to procure material RM in that PO under delivery address tab at item details enter the vendor B's address who will processed component and produce finished product also check the SC vendor Check box.

3. DO the MIGO for subcontractor vendor.

4. Next create the subcontracting PO with item category L against subcontractor vendor. Enter finished goods material in PO.

5. Do the do the MIGO for recieving finished goods at your location.

Regards

Chetan

[Former Member]

Here in this case you have to raise two PO one subcontracting & another std PO with delivery address to another vendor.

1. Subcontracting PO is raised for X2 where tha deliver address would be of your plant

2.Std PO for vendor X1 where you have to give the delivery address of vendor X2 in deliver tab by giving the vendor number & you also have to check the subcontracting vendor check box in deliver tab.

when vendor X2 recieve the materia from vendor X1 he would inform you & you have to do the GR against second PO with stock indicator 'O'.the material would directly move to stock provided to vendor 'X2'

Write if you require more clerification

[former_member182609]

Use Third Party Subcontracting scenario

Create BOM for Finished Product.

(1) We have purchased an material (RM) from an vendor X1.

Create the material ( RM ) PO to Vendor X1 and give delivery address in PO vendor X2 and give tick SC vendor

(2) Now the material goes directly from vendor X1 to vendor X2.

As soon as you do GR for material (RM) PO goods will reflect at Vendor X2

(3) Vendor X2 do processing on it and its changes its state to finish goods and then deliver to us.

Now how to map this scenario into the system, please explain in detail.

Create Finished goods Sub contacting PO item category "L" to venodr X2.

Receive the Goods from Vendor X2 through MIGO.You can view consumed RM components in GR.

In this process Goods tranfer is not required (541)

Hope this would help

[Former Member]

Hi Sridhar,

You mention Goods Transfer is not required, that is obvious but how will the system react when you do a GR on the subcontracting PO for which no material has been transferred? Will it allow this?

MdZ

[Former Member]

Just tested it and it works indeed.

[former_member659143]

This is a case of third party scenario as suggested by Sridhar.

Third Party Subcontracting scenario

Step 1: Please Create BOM for Finished Product.

(1) We have purchased an material (RM) from an vendor X1.

Create the material ( RM ) PO to Vendor X1 and give delivery address in PO vendor X2 and give tick SC vendor at item level.

(2) Now the material goes directly from vendor X1 to vendor X2.

As soon as you do GR for material (RM) PO goods will reflect at Vendor X2

(3) Vendor X2 do processing on it and its changes its state to finish goods and then deliver to us.

Create Finished goods Sub contacting PO item category "L" to venodr X2.

Receive the Goods from Vendor X2 through MIGO.You can view consumed RM components in GR.

In this process Goods tranfer is not required (541).As material goes directly to Vendor when you POST goods receipt for RM .

Please run the scenario and reply back.I have the document prepared on this if you wan then i will forward you the same.

AMIT

[Former Member]

Hi Sridhar,

how the excise duty will be taken care of in the process? I guess, you do not need to create subcontracting challan for movement type 541. Again, the goods have not been delivered to subcontractor from companies premise.

I would appreciate if you can throw some light on it.

Regards,

Ranjan

[Former Member]

This message was moderated.

[Former Member]

hi

its Standard Subcontracting Process.