Internal Subcontracting with quantity payback

[mohammed_abbas25]

Hello SAP Experts,

We are currently facing a unique scenario in our Make-To-Order industry and would greatly appreciate your assistance in addressing it.

The situation at hand involves the following steps:

1. Receipt of Semi-Finished Material for a Customer:

   • How should we appropriately add this material to our inventory?
   • Under which specific case within the SAP system should it be categorized?

2. Manufacturing Process and Production of Finished Goods:

   • Once we receive the semi-finished material, we will proceed with the manufacturing process to transform it into finished products.

3. Special Consideration for Revenue Recognition:

   • Upon completion of the manufacturing process, we have a unique arrangement with our customers wherein instead of receiving monetary compensation, we retain a portion of the finished products.
   • Specifically, we retain 10% of the finished products, while delivering the remaining 90% to the customer.
   • It is imperative that we accurately reflect this arrangement within the SAP system to ensure proper tracking and accounting for the retained portion as part of the overall production process.

We kindly seek your expertise in configuring the SAP system to effectively manage and document these steps in accordance with our business requirements.

Your insights and guidance on how to best address these intricacies within the SAP environment would be greatly appreciated.

Thank you in advance for your valuable assistance.

Best regards,
Mohammed Abbas

[Lakshmipathi]

Since the subject header text says "Internal", I presume, you need to do stock transfer but follow the SD route to debit the other plant. Not sure, whether you made efforts to explore Inter Company Billing or Intra Company Billing.

Nevertheless, it is difficult to assist with step by step process as your post involves major configuration from MM / PP / SD & FI sides. At high level, let me list out transaction level sequence. For configuration, please copy the standard document types, movement types, item categories, schedule line category etc.

The first activity involves MM to make GR for the quantity received from the other plant and the Standard Material Type is HALB. What do you mean by "categorized". For inventory posting, discuss with your FI consultant who can do obyc settings.

The second one involves MM / PP to stock transfer the HALB from Receiving Storage Location to Production Storage Location and the standard transaction is MIGO or MB1B. The movement type will vary depending upon the Business process which can either be Inter Company or Intra Company and also whether it is one step stock tranfer or two step stock transfer. So, after deciding on this, check with your FI consultant on the configuration of inventory part.

Then, the final activity involves SD where I am not clear as to why you want to go with Revenue Recognition when you want to hold the quantity. Probably, Consignment Fill-up will work where you can create fill-up delivery for 100 nos. (let us assume, this is the ordered quantity) and create Consignment Issue and bill for 90 nos. By this, the inventory will be visible as a Special Stock indicator W and you can track via mb58. But again, I am not clear whether it is for intercompany or for an external customer. If for some reasons, Consignment process won't suit the Business requirement, you can explore Subsequent Delivery Free of Charge whereby, you post the goods issue for the entire ordered quantity but physically, despatch only 90% quantity. For the remaining 10%, create subsequent delivery free of charge order

[mohammed_abbas25]

Hello Lakshmipathi,

I sincerely appreciate your detailed response and the time you've invested in providing guidance. Your insights are invaluable in resolving our queries. Allow me to provide further clarification on a few points:

1. When I referred to "Internal," I was actually discussing the "Toll subcontracting" process. I apologize for any confusion caused by the terminology.

2. Regarding the term "categorized," my inquiry pertains to the specific procurement process to be applied to the material. Essentially, I'm seeking guidance on how to add the material to our inventory and designate it for use in a specific order. How can we indicate within the system that this material is intended for a particular purpose? Additionally, I'm interested in understanding how to designate it as special stock.

3. It's important to note that our scenario involves external customers, and we don't have any intracompany processes.

4. Lastly, when I mentioned "Revenue Recognition," I was referring to how we can configure the system to understand that we retain 10% of the produced quantity as compensation for the manufacturing process. Essentially, I'm seeking guidance on how to accurately reflect this arrangement within the SAP system.

Your expertise in addressing these points would be greatly appreciated. Thank you once again for your assistance.

Best regards,
Mohammed Abbas