how to manage scrap in sub contracting process

[Former Member]

Dear SAP Guru,

When we process subcontract process, I send the material X (10 MT) and subcontractor vendor return the material Y (9 MT). How we manage the the 1 MT scrap. what is the procedure. where this process run there is no production pallaning (PP) module.

[Former Member]

1. Say i am providing three components A1, A2 & A3 to get ASSEMBLY from sub contractor vendor.

2. Create a Material master for Scrap material say S1.

3. In BOM, maintain the Material S1 in negative quantity, Say A1 - 1 off, A2 - 2 off , A3 - 2 off, S1 - 1 kg.

4. Now follow the regular process of subcontrating.

5. When you want to inward the scrap material from the subcontractor end, first receive the material S1 with the movement type 545 ( This will make the material available in material provided to vendor stock ).

6. Then do a GR with 542 movement type to get the scrap material in to plant stock ( ie reversal of 541- Goods issue movement type)

Another option is to perform a a subsequent adjustment. Transaction MB04.This will issue the material out of the subcontractor and place the cost of the material on to the po that was placed on the subcontracting vendor.

++ Depending upon the process/ client requirement, you can maintain the material type as non-stock or waste or finished goods. As far as S1 as 1 Kg is concerned, every industry works on some kind of standards where a percentage is fixed for scrap ... please check with the end user how they are doing it in their legacy system, depending on that fix a average quantity in the BoM. any +/- can be adjusted as explained above

[Former Member]

this is very helpful answer

[yoge15]

Great help by your answer, but what if we prepared BOM with -5kg of scrap and after work completion received the 4.5 kg of scrap then how can we manage that 0.5 kg scrap which will be on subcontracting vendor stock.

[Former Member]

While Creating Bill of Material in CS01 you Can maintain Components aith + ve Quantities and By Products / Scraps with - Ve Quantities.

When you make Goods Receipt fort Subcontracting Purchase Order with 101 Mov type you can see the Components with 543 Mov type and By Products / Scrap with 545 Mov type.

You can take the by Products / Scrap into your Stock / Premises USing Transfer Posting MB1B 542 Mov type.

[Former Member]

without PP module, isBOM working? And when we create BOM where we maintain +ve or -ve QTY.

we need we give some precentage for scrap. like we give 100 MT component then we need FG from vendor with 5% of scrap. Receiving QTY is 95 MT and Scrap QTY is 5 MT.

When we reconcile the QTY there we give exact scrap value.

we config the movement type 545 for by product for scrap

[Former Member]

In this scenario,

Bring in the Vendor Pending stock (physically - scarp, but system-wise stock) and scrap it in host plant.

Also by perfect industrial engineering practice you can always include Processing scrap as a byproduct of the Subcontracting PO where the scrap part code will be kept pending at vendor end ,in due course of period say quarterly or monthly (based on turn over volume) bring in the scrap quantity inside the plant and follow usual scrap methodology.

In monitory terms you can charge the vendor inclusive of scrap (in contract itself) else the company has to take responsibility of Scrapping.

By Indian excise rules no material is allowed to be in sub contract Vendor destination more than 180 days..

Kindly remember above legal issue and decide which will be adaptable

[former_member343155]

Please use the exit to define the way you want the system to consider Scrap in the subcontracting process.

1084323 USER-EXIT to update challan status if scrap is calculated

1103537 Correction to note 1084323 for ECC 600 Release

Please note the user exit will be accessed only if you were to write a code for it and you assigned/made 545 O as relevant to subcontracting

subcontracting scrap will work if the scrap percentage is defined for the component which is sent to the job worker. If you have a completely new material for scrap then this is not going to work as the system will never be able to assign the qty (mismatch of material code between the scrap material & the challan material).