RGL Consultancy aug.

2010

Subcontracting v0

www.rglconsultancy.nl

Subcontracting

CONTENTS: 1) 2) 3) 4) Introduction Customizing settings Master data settings Process demonstration 1 - Create subcontracting Purchase Order 2 - Create Outbound delivery 3 - Confirm TO and post Goods Issue 4 - Create Inbound delivery 5 - Confirm TO and Post Goods Receipt 6 - Invoice verification

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 RGL Consultancy aug. 2010 1) Introduction

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In this document I will demonstrate the subcontracting process using a HUM WMS. As preparation for this demo I have brought the no. of materials in warehouse DE1 from 1 to 4. In subcontracting, the vendor (subcontractor) is provided with input materials (components) by the buying entity, which are then used to manufacture the end product. This involves the following steps: 1. You order the end product by means of a subcontract order. The components that the vendor needs to manufacture the end product are specified in the purchase order. 2. In Inventory Management, the components are posted to the stock of material provided to the vendor. The components are then supplied to the vendor. 3. The vendor performs the necessary service (i.e. does the required assembly or processing work) and delivers the ordered material (the end product). You post the consumption of the components. 4. If, after the goods receipt has been posted, the vendor informs you that a larger or smaller quantity of the components was actually consumed then planned in the purchase order, you must make an adjustment posting. 5. The vendor issues an invoice for the service provided. This invoice is then checked in Invoice Verification.

2) Customizing settings
The following are some customizing settings used by the process. Calculation schema When creating the Purchase Order, the system must be able to find a price calculation schema. For this it uses the schema group of the Purchase organisation(1000) and the schema group of the vendor(1100) . Schema group of the vendor: Call up the transaction as follows: Logistics Materials Management Purchasing Master Data Vendor Menu Path Purchasing Display (Current) Transaction code MK03

Flag Purchasing data then click on button

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Schema group Vendor = 01 Schema group purchase organisation: Call up the customizing transaction as follows: IMG Materials Management Purchasing Conditions Define Price Menu Path Determination Process Define Schema Group Assignment of Schema Group to Purchasing Organization Transaction code n.a.

Schema group purchase organisation = 1000 Schema Determination: Call up the customizing transaction as follows: IMG Materials Management Purchasing Conditions Define Price Menu Path Determination Process > Define Schema Determination Determine Calculation Schema for Standard Purchase Orders Transaction code n.a.

Calculation schema = RM1000

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 RGL Consultancy aug. 2010 Document type outbound delivery

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You need to define in customizing which delivery type the system needs to use for delivering the goods to the subcontractor for the supplying plant. Call up the customizing transaction as follows: IMG Materials Management Purchasing Purchase Order Set Up Menu Path Subcontract Order Transaction code n.a.

Supplying plant=1000

delivery type = ZLB.

3) Master data settings

Following new materials have been setup/extended for this process in warehouse DE1: 101-100 : assembled/final product 101-110 and 100-120 : components. There is a BOM(Bill of material) of material 101-100 in the system. For these new materials warehouse management material views, packing instructions and packing determination records were maintained similar as done for material QS6X20 in document WMS master data and testing. Vendor no. 1100 which will be used has also been setup similar as vendor 1111 in the vendor returns process, which means with an equivalent customer no. 1100. Output conditions: A WMTA output has been created to automatically create the Transfer Order(TO) for the outbound delivery. Call up the transaction as follows: Logistics Logistics Execution Master Data Output Shipping Menu Path Outbound Deliveries Change Transaction code VV22

Another WMTA output has been created to automatically create the TO for the inbound delivery.

Call up the transaction as follows:

Menu Path Transaction code Logistics Logistics Execution Master Data Output Shipping Inbound Deliveries Change MN25

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BOM explosion material 101-100: Check setup of BOM material 101-100.

Call up the transaction as follows: Logistics Production Master Data Bills of Material Bills of Material Menu Path Material BOM Change Transaction code CS02

Enter selection criteria and then click on button

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 RGL Consultancy aug. 2010 Info record:

Check created info record.

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Call up the transaction as follows: Logistics Materials Management Master Data Info Record Change Menu Path Transaction code ME12

Enter selection criteria, select Subcontracting and then click on button

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4) Process demonstration Warehouse stock situation:

Call up the transaction as follows: Logistics Logistics Execution Internal Whse Processes Bins and Stock Menu Path Display Bin Status Report Transaction Code LX03

Enter warehouse no. and layout, then click on button

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As already indicated materials 101-110 and 100-120 are components and will be provided to the subcontractor, who will send back the assembled material 101-100. So, inventory at start of the process is: - 101-100 = 4 ST, finished product - 101-110 = 124 ST, component - 100-120 = 140 ST, component 1 - Create subcontracting Purchase Order: I will use purchase order type NB, but its best for a new implementation to copy NB and create something like a ZSC order type and make some modifications to restrict its use to subcontracting. Call up the transaction as follows: Logistics Materials Management Purchasing Purchase Order Create Menu Path Transaction Code ME21N

Enter vendor no., material no., qty, plant and stor.loc. Note that Item category L has been entered for item 10. Click on button to check for errors in the PO.

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You can also view the BOM explosion by going to tab Material data and then click on button

If column Prod.stor.Loc. is empty fill it with the storage location of the components, else you need to enter it in the next step or maintain a default value in the material master. When done click on button , then save the PO by clicking on button

2 - Create Outbound delivery:

For this we need to use the Sub Contractor Monitoring screen. Call up the transaction as follows: Logistics Materials Management Purchasing Purchase Order Reporting Menu Path SC Stocks per Vendor Transaction Code ME2O

Enter vendor no. and plant, then click on

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Selected both lines then click on button

The system will prompt with a pop-up window for each selected line, where the storage location and the quantity can be maintained . Click on button to proceed.

The SC Monitor screen now shows:

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3 - Confirm TO and post Goods Issue:

First lets display the document flow of the delivery. Call up the transaction as follows: Logistics Sales and Distribution Shipping and Transportation Menu Path Outbound Delivery Display Transaction Code VL03N

Enter the del. No. which can be taken from the SC monitoring screen, then click on button

As can be seen, the transfer order has been created automatically. Display the delivery by selecting it and then click on button .

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As can be seen shipto party=1100 and document type=ZLB. Display Transfer Order(162) prior to confirmation.
Call up the transaction as follows: Logistics Logistics Execution Internal Whse Processes Stock Transfer Menu Path Display Transfer Order Single Document Transaction Code LT21

Now confirm TO 162.

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Call up the transaction as follows: Logistics Logistics Execution Internal Whse Processes Stock Transfer Menu Path Confirm Transfer Order Single Document In One Step Transaction Code LT12

Next post Goods Issue of the delivery using tx VL02N.

Then display the document flow again.

Display GI document 4900036734 by positioning the cursor on the line with the document no. and

then click on button

As can be seen the stock has been posted to vendor stock using movement type 541 and with special movement indicator O.

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Lets check the Stock overview of material 101-110. Call up the transaction as follows: Logistics Materials Management Inventory Management Environment Menu Path Stock Stock Overview Transaction Code MMBE

Note the 20 pc of stock which has been provided to the vendor. You can also click on the button on the SC monitoring screen to check the stock.

4 - Create Inbound delivery:

We create an inbound delivery in order to receive the goods from the subcontractor. Call up the transaction as follows: Logistics Materials Management Inventory Management Goods Menu Path Movement Goods Movement (MIGO) Transaction Code MIGO

Enter the PO no. and then click on button

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Mark the item OK, and check if this step has any errors by clicking on button If everything is OK, as is in this case then click on button

Next we display the document flow of the created delivery. Call up the transaction as follows:
Menu Path Transaction Code Logistics Materials Management Purchasing Purchase Order Inbound Delivery Display VL33N

Enter del. No. and then click on button

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As can be seen the Handling Unit(HU and Transfer Order(TO) were created automatically due to the output conditions which were setup. Display TO 163 (tx LT21) or position the cursor on the line with the TO no. and then click on button

5 - Confirm TO and Post Goods Receipt

Next confirmed TO 163(tx LT12) , then post goods receipt for delivery 180000245(tx VL32N). Then display document flow of delivery 180000245.

Display the GR document. by positioning the cursor on the line with the document no. and then click

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What must be noticed here is that the components are posted out of stock with movement type 543 and special movement indicator O, while the finished product is posted into stock using movement type 101. Bin overview report( tx LX03).

- 101-100 = 4 ST, finished product - 101-110 = 124 ST, component - 100-120 = 140 ST, component 20 ST finished products were requested which required 20 ST of each component. The inventory at end of the process is: - 101-100 = 24 ST, finished product - 101-110 = 104 ST, component - 100-120 = 120 ST, component

The inventory at start of the process was:

6 - Invoice verification: Posting of the invoice of the subcontractor/vendor. Call up the transaction as follows:
Menu Path Transaction Code Logistics Materials Management Purchasing Purchase Order Follow-On Functions Logistics Invoice Verification MIRO

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Enter the relevant data such as PO no., invoice date, amount, tax code, flag PO item for OK, Simulate the posting and if everything is OK, then click on button

Display Invoice:
Call up the transaction as follows: Logistics Materials Management Logistics Invoice Verification Further Menu Path Processing Display Invoice Document Transaction Code MIR4

Enter invoice number and fiscal year, then click on button

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On tab Payment a payment block has been set by the system because according to the payment terms we can wait 14 days before the first period is due for payment. Click on button

to check the accounting document.

Double click on the Accounting document no.

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In the next step we are going to release the blocked invoice. Call up the transaction as follows: Logistics Materials Management Logistics Invoice Verification Further Menu Path Processing Release Blocked Invoices Transaction Code MRBR

Enter the company code and the invoice document no.(and fiscal year) to restrict the selection and then click on button

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Select the field with the block X and then click on button

to delete this block.

After the block has been deleted we need to confirm this to the database by clicking on button

We now display the invoice again to check that the invoice is now free for payment(tx MIR4).

Now that the payment block has been removed, the invoice can be paid.
Click on button to leave the transaction.

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