Subcontracting: Vendor sends two bills.

[ramesh_reddy25]

Hi Gurus,

I have one issue in Subcontracting process:

Subcontracting vendor will use component material provided by us and his own extra material to finish the jobwork,

But he will send us 2 bills one for jobwork and another is for amount for extra material used. we don't know the extra material value at the time of PO creation and he will send us 2nd bill only interms of value( amount for all extra material used)  not interms of quantity.

Both jobwork+ROH cost+ extra material cost used by vendor should account on finished goods.

The value of 2nd bill we will gwt only at the time of month end.

How to track this in SAP, please help me to solve this.

Thanks and regards

Ramesh

[Former Member · Accepted solution]

Hi Ramesh,

                    When you are raising the Subcontracting PO, please maintain another line Item for the Material that is being supplied from the Vendor, maintain the material with the Account assignment category, in that fashion you can be able to get the material also as well as the Services as different line Items.

Hope it helps you.

Regards,

Yawar Khan

[ramesh_reddy25 · Accepted solution]

Thanks for your reply yawar,

According to you I will create 2nd line Item for extra material.But what is the Component material and is that extra material cost is get accounting for finished goods?

Vendor is sending 2nd bill for extra material only in value.

please give more suggestions.

Thanks and regards

ramesh

[Former Member · Accepted solution]

Hi Ramesh,

When you maintain the condition as suggested above. we can make the payment for service charges and extra material cost separately.

you just try to analyse the freight costs situation in procure to pay cycle. I mean that extra material cost condition will also behave like freight cost condition.

Whenever we use freight cost condition in subcontracting, it will load the PO freight value in final product at the time GR and it will recalculate the value at the time of IR based on actual fright IR(invoice).

your case also extra material cost will load on final product and there will be an option to make the payment of service charges incurred for subcontracting and extra material cost separately as per two bills you get.

Regards

Ravi Kumar

[former_member192897 · Accepted solution]

If you are not getting the both bills at a time then you donot have any option other than Month end JV which is not Recommended.

Try one thing. Create a Second line in the PO for say 1 qty with 0.01 price and Settle the Vendor invoice for Subcontracting charges in the month end only and try adding the Material cost as a Unplanned delivery cost during Invoice verification. Check whether it gets fulfil your requirement.

Ensure that the setting from SPRO-MM-Invoice Verification-Incoming Invoice-Define how Unplanned delivery cost is set the Distribute among line items and try in Development server.

[Former Member]

Hi,

Include a condition in your pricing procedure which is similar discount/surcharge/freight condition.

Name that condition as Extra material cost.

Maintain the approximate extra material cost value in that condition.

This will also help in controlling the manipulation of extra material cost between the purchaser and vendor.

As per your requirement it will be loaded on your finished material cost.

Suppose:

PO raised with

Service charges= 100

Component prices= 100

Extra Material cost =100

At the time of GR:

Finished price will be 300

A liability against vendor is 200(service charge+extra material cost).

At the time of IR

Suppose that you got a bill of 300

Service charges 100 and Extra material cost 200(which is more than estimated in PO)

here you will be able to pay the vendor and also update the stock accounts properly and also your finished material price will be appropriate.

Then system will automatically update the stock accounts if finished material stock is there in system.

If stock is not there it will take the difference value to price difference account.

[ramesh_reddy25]

Thank you so much Ravi Kumar,

More useful answer. But here we are doing Invoice for jobwork and month end we are doing invoice for extra material cost.

  we are not getting both amounts at same time. How to do this??

Thanks and regards

Ramesh

[Former Member]

Hi Ramesh,

When you maintain the condition as suggested above. we can make the payment for service charges and extra material cost separately.

you just try to analyse the freight costs situation in procure to pay cycle. I mean that extra material cost condition will also behave like freight cost condition.

Whenever we use freight cost condition in subcontracting, it will load the PO freight value in final product at the time GR and it will recalculate the value at the time of IR based on actual fright IR(invoice).

your case also extra material cost will load on final product and there will be an option to make the payment of service charges incurred for subcontracting and extra material cost separately as per two bills you get.

Regards

Ravi Kumar

[former_member192897]

Consider the Material code used by Subcontractor as one of the Component for Parent Material and add it in Component list.

Create Second line in the same PO for the Material code used by the vendor.

It is not possible to have a PO with tentative price. You must explain the problem to your vendor clearly. You can change the price in the po even at the time of GR also.

System considers the MAP for the Material consumption.

[ramesh_reddy25]

Thanks for you reply Dear Ashok,

For the above method we should have the stock for extra material used by vendor at the time of MB1B to transfer component goods. We are doing any GRN for that extra material and we don't know the quantity used by vendor. he will just sends us bill with value.

thanks

Ramesh

[former_member192897]

Hope you will be knowing the Consumed quanity when you receive the FG/SFG Material. In that case in the Second line of Purchase order under delivery address input the Subcontract Vendor code and first perform GR for Second line.

Here once the document is posted, the stock will be updated at Vendor end.

Then you perform GR for the Parent Material code.

By the way you have the possibility of changing the component / scrap quanitity during Subcontracting GR. Give a try in Development server and let us know your findings.