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Former Member
Apr 04, 2011 at 03:39 PM

Internal Subcontracting (Toll Manufacturing)


Dear SAP Expert,

We have requirement that our sister company is doing subcontracting to us (toll manufacturing).

Basically our sister company is supplying us the main raw material and then

we add our company own material plus some overhead.

The problem is we need our company to recognize the COGS during we produce

in the same period.

Example: in April we produce 1000 CTN, we dispatch the goods to customer (sister company) 800,

we want to recognize the COGS on April based on 1000 CTN (not based on 800). The remaining

200 we just need to record quantity.

My question is:

- What is SAP best practice of internal subcont (toll manufacturing)?

- Any idea how to recognize COGS in produced quantity?

something cross in our mind is we sell all right after we produced and receive remaining qty in virtual Plant non valuated.

That means once 1000 CTN is produced we sell it immediately (to recognize 1000 CTN as COGS),

then remaining stock of 200 CTN (physical dispatched 800 CTN) we need to GR again in different plant (which is non valuated)


Is there any idea to simplify this process?

Moreover we implement material ledger 😔

Thanks in advance,