Subcontracting Process

In subcontract order processing, the vendor receives materials (components) with which it produces the end product.

Step 0:

MM01 create materials (finished product and its components)

CS01 create BOM for subcontracting (optional)

ME11 create PIR of subcontracting type for the material and subcontractor (optional)

Do initial stock entry for components in MB1C using mvt type 561.

CS01 Maintain BOM a material

Logistics  Production – Master Data – Bills of Material – Bill of material – Material BOM – Create.

BOM usage 1 for production

In BOM, item category L for stock items

Step 1: ME21N create PO of doc type NB, item cat L (acct assignment usually blank)

Under item details, in material data tab, click on component – if BOM is available, component are filled in from BOM (make any changes if necessary). Otherwise, fill in the components.

Step 2: ME2O deliver components to subcontracting vendor

Enter selection parameters like vendor and plant – execute

Check the lines for the subcomponents for the PO and click on Create Delivery.

Outbound delivery will be created. Double click on line with outbound delivery number to display it. Outbound delivery – display/change or use VL02N as in step below.

Step 3: VL02N (change outbound delivery)

Enter picked qty and click on Post Goods Issue

Display outbound delivery again. Under goods movement tab, check that GI mvt type is 541.

Alternative for step 2 and 3: MIGO – GI against PO 541 mvt type (MIGO transfer posting with reference to subcontracting PO)

Note: Material is sent to subcontractor. But as material remains under your ownership, system does not make any value entry. Only quantity is shown as “Material Provided to Vendor”

Step 4: MIGO – GR against PO

Display mat doc created. Check mvt types.

For finished product, GR mvt type is 101.

For the components sent to vendor, mvt type is 543 O (Consumption from stock of material provided to vendor – special stock indicator O)

If you have negative components in BOM, now you’ll also receive subcontracting by-products with mvt type 545 O (Goods receipt from by-product from subcontracting).

If, after the goods receipt has been posted, the vendor informs you that a larger or smaller quantity of the components was actually consumed than planned in the purchase order, you must make an adjustment.

Subsequent Adjustment: MIGO – Subcontracting Adjustment against Purchase Order; mvt type 121 (Subsequent adjustment for subcontracting)

Enter the qty and check under-consumption or short receipt if smaller qty was consumed – mvt type 544 O.

If larger qty was consumed, that qty has to be issued to vendor (541 transfer posting against other) before adjustment can be made – mvt type 543 O.

Step 5: MIRO – invoice verification

Master Data Setting:

Material Master (MM01)

•             Maintain special procurement key for subcontracting in MRP 2 view.

Bill of Material (CS01)

•             If a material needs to be returned by the vendor after the subcontracting process is complete (could be any waste generated or any byproduct generated during subcontracting process), that material should be maintained as a component with negative quantity in the Bill of Material (BOM). Treat scrap the same way as byproducts.

Points to Note:

1. A material can be sent for subcontracting at any stage in the manufacturing process

2. Material to be received after subcontracting should have a different material code, than the components issued.

3. Routing can be used for external processing but not subcontracting.

4. MIGO – Transfer Posting  can be used to transfer scrap component back to the manufacturing location.

Release Procedure with Classification

Steps to set up a release procedure with classification in Customizing 

path: SPRO – IMG – MM – Purchasing – PR – Release Procedure – Procedure With Classification

path: SPRO – IMG – MM – Purchasing – PO/Contract/Scheduling Agreement – Release Procedure for PO/Contract/Scheduling Agreement

1. CT04: Edit Characteristics

Characteristics are the criteria for triggering the release procedure.

Communication structures or tables for characteristics in release strategies:

For PRs: CEBAN

For purchasing documents: CEKKO

Note: doc type is an important characteristic; if doc type is not specified, then the release procedure will be triggered for all the doc types if the other characteristics match (like total PO value)

Example 1: PO based on doc type and total PO value

Enter in TotalPOvalue in the characteristic and press enter. If the characteristic already exists, it will be displayed. Otherwise, below pop-up will appear. Click on Yes.

Basic data tab: Enter some description – this will be updated automatically later based on the description of the field, choose Single-value radio button, choose CURR as data type, enter in 15 as the number of chars, and check interval values allowed.

Addnl data tab: Enter CEKKO for table name and GNETW for field name (use SE11 or SE12 to look at the table and find the field name)

Snapshot of SE11 transaction with table CEKKO:

The description in the basic data tab is now updated with the description of the field.

Restrictions tab: Enter 032 in class type for release strategy

Values tab: for example: Enter “1 – 50,000” in 1st row, “> 50,000 – 100,000” in 2nd row, enter “> 100,000” in 3rd row

Save.

Enter in POdoctype in the characteristic and press enter.

Basic data tab: Enter some description, choose Single-value radio button, choose CHAR as data type, enter in 4 as the number of chars

Addnl data tab: Enter CEKKO for table name and BSART for field name

Restrictions tab: 032 in class type for release strategy

Values tab: Enter your PO doc type

Save.

2. CL02: Edit Classes

Create classes of type 032 (Release Strategy) with characteristics. If you wish to set up both overall and item-wise release procedures for PRs, you must create a class for each. You can create any number of classes. But a maximum of two classes can be used for PRs at any one time. A maximum of one class can be used for external purchasing documents at any one time.

Example: Enter POrelease for class and 032 for class type, and click on create

Basic data tab: enter description PO Release

Char tab: Enter created characteristics (TotalPOvalue and POdoctype )

Save.

3. Set Up Procedure with Classification (for PR) or Define Release Procedure for PO/Contract/Scheduling Agreement

i. Create release groups

With the release class, you link the release groups to the PR or external purchasing doc release object. Note: as mentioned before, a maximum of two classes can be used for PRs (one for overall release and one for item-wise release) at any one time. A maximum of one class can be used for external purchasing documents at any one time.

Purchasing document	Release Object
PR (internal purchasing document)	1
External purchasing document – PO, Contract, Scheduling agreement	2

For PRs:

Example 1: you could create a group for item-wise release and a group for overall release.

For POs:

Example 1: if you have created different release groups for different plants, you can use the release group to specify whether a user can release POs for only one plant or for more plants.

Example 2: if you have created different release groups for different doc types (PO, RFQs, contracts, etc), you can use the release group to specify whether a user can release POs only or POs and contracts, etc)

ii. Create release codes

Create release codes under the release groups created. If a workflow is to be initiated by a release code, set the corresponding indicator.

Refer to Release Procedure without Classification for more details on release codes.

iii. Create release indicators

For PR, create a release indicator for initial status (when initially created and before RFQs or POs can be created from this PR), i.e. blocked status and a release indicator for the released status, i.e. for release for issue of a RFQ or a PO, etc.

Refer to Release Procedure without Classification – only for PR for more details on release indicators for PRs.

Release indicators for external purchasing documents:

Changeable indicator: whether release strategy will be changed if anything is changes in the characteristics (usually use 4 or 6)

% value change: how much is the change before you want to change the release strategy (usually use 10%). In case PO has been created and released, but then qty is changed after the release, and thus total PO value is changed, how much of a change has to have occurred in the PO value before you want to change the release strategy and require a release again.

iv. Create release strategy (release simulation can be used to check the release strategy)

Click on new entries and enter release group you created and a new strategy code and description e.g. > 100,000

Example: Strategy is that Manager (release code 10) and General Manager (release code 20) (both together) can release the document or VP (release code 30) can release the document.

So enter 10, 20, 30 in the release codes (Note: you can use a maximum of eight (8) release codes in a release strategy.)

Click on Release Prerequisites. Click continue as there are no prerequisites here.

Click on Release Statuses and enter release indicator Blocked B for all other than 10 and 20 checked, and as long as 30 checked, for which enter release indicator Released R.

Click on Classification – choose > 100,000 in value and your doc type in doc type.

Save.

Click on Release Simulation – simulate release – check if working as per requirement.

v. (optional) Define a workflow

4. Check Release Strategies

Release Procedure without Classification – only for PR

Steps to set up a release procedure without classification in Customizing – only possible for PR

OME6 Set Up Procedure Without Classification

path: SPRO – IMG – MM – Purchasing – PR – Release Procedure – Set Up Procedure Without Classification

1. Set up release codes

Release code: The release code is a two-character ID used by an individual or group of individuals responsible for processing a document to release (approve) an item of a PR, a complete PR, or a complete external purchasing doc, like PO,  or cancel an already effected release (that is, revoke an approval).

Who may use which release codes is controlled via authorizations. If a link to SAP Business Workflow has been defined for the release code, the person can release (approve) or refuse to effect release (withhold approval) thus rejecting the item or document.

2. Set up release indicators

Like R for Released

Note: You can protect a PR generated in a planning run against changes caused by a new planning run with a fixing indicator.

You can use a field selection key to prevent certain fields being changed during later processing.

Otherwise you can use the Changeability indicator to specify the consequence of changing the document after the start of the release procedure.

For value changes you can define a percentage that will be tolerated.

And B for Blocked

3.  Assign release indicators

Example: You create a release strategy S1 consisting of two release codes 10 and 20.

If release has been effected with 10, the requisition has been given the “all clear” for the issue of RFQs. If release has been effected with 10 and 20, the requisition has been given the “all clear” for issue of RFQs and POs.

Release with 10 is a prerequisite for release with 20 (defined in next step).

You have created the release indicators B (blocked), 1 (cleared for issue of RFQs) and 2 (cleared for RFQs and PO) in the previous step.

Now enter the following as assignment:

Note: you can use a maximum of eight (8) release codes in a release strategy.

4. Release points: Prerequisites

Define which release codes are involved in a release strategy. Specify whether a code is set for a release status following release, and whether one release status is a prerequisite for another (+).

Example: Release with 10 is a prerequisite for release with 20.

5. Determination of the release strategy

Determine the conditions under which each release strategy is assigned. The criteria are account assignment category, material group, plant, and value of the requisition item.

i.e. Assign release strategy to a combination of Account Assignment Category, Material Group, Plant, Value of PR, and Currency.

Account Assignment Categories

The account assignment category determines

• The nature of the account assignment (cost center, sales order, and so on)
• Which accounts are to be charged when the incoming invoice or goods receipt is posted
• Which account assignment data you must provide
• If you can post a GR
• If you can post an IR

If you cannot post a goods receipt, the R/3 System suggests the difference between the purchase order quantity and the invoiced quantity in Invoice Verification.

In Invoice Verification, the R/3 System suggests the account assignment defined in the purchase order.  You can change the account assignment, provided that the following two conditions are fulfilled:

1. ŸChanging the account assignment is defined for the respective account assignment category in Customizing (T code: OME9)
2. No valuated goods receipts are defined for the purchase order, i.e.  there must be either a planned non-valuated goods receipt, or no expected goods receipt for the PO item

Account assignment categories:

•   A for asset: must enter the asset numbers (main asset and sub-asset) (G/L account determined automatically by the system from the asset numbers)
•   K for cost center: must enter the G/L account no of the consumption account and the cost center for which the material is procured
•   P for project: must enter the G/L account no of the consumption account and the project for which the material is procured
•   F for prod. order: must enter the G/L account no of the consumption account and the prod order for which the material is procured
•   C for sales order
•   E for individual customer requirement
•   U for unknown
•   X for auxiliary
•   Etc…

New account assignment categories can be created or existing ones can be modified in OME9.

OME9 Maintain Account Assignment Categories

path: SPRO – IMG – MM – Purchasing – Account Assignment – Maintain Account Assignment Categories

Item Categories in MM

There are 7 standard item categories in MM and we cannot create new item categories in MM.

The item category determines whether the material defined in a purchase order item:

• Requires a material number
• Requires an account assignment
• Is to be managed as a stock item
• Requires a goods receipt (GR) and/or an invoice receipt (IR)

Error in Consignment: Not possible to determine a condition type for the price; Pipeline/consignment movement posted without value

Problem:

Error message while creating Info Record is:

Not possible to determine a condition type for the price

And net value is not being saved in Consignment Info Record even if you enter it in.

Error message while posting Goods Issue with consignment stock is:

Pipeline/consignment movement posted without value

And no accounting document is generated. Thus, you are unable to settle liabilities in MRKO. 

—

Solution:

The price was not saved in your consignment Info Record as the calculation schema could not be determined (i.e. there is no calculation schema assigned to the combination of vendor schema group and purchasing organisation schema group).

1. Find out what is the vendor schema group assigned to your vendor (from the vendor master record, purchasing data) – XK03

XK03 – Display Vendor

Enter in Vendor no, co-code and Purch Org and check the “Purchasing Data” check box. Enter.

Let’s say schema vendor group assigned to that vendor is A1 as below:

2. Find out the purchasing org schema group assigned to your purchasing org

path: SPRO – IMG – MM – Purchasing – Conditions – Define Price Determination Process – Define Schema Group

Click on Assignment of Schema Group to Purchasing Organisation

Let’s say the schema purchasing organisation group assigned is 1000 as below:

3. Assign a calculation schema to this combination

path: SPRO – IMG – MM – Purchasing – Conditions – Define Price Determination Process – Define Schema Determination 

See snapshot of menu path above.

Click on Define Calculation Schema for standard Purchase Orders)

So let’s say I assign Pricing Procedure RM1000 to the vendor schema group A1 and purchasing org schema group 1000 as below:

4. Now, try to save the price conditions in your consignment PIR (ME12 – change IR).

5. Now, you can enter goods issue and settle the liabilities through MRKO.

Release Procedure

Release procedures:

All purchasing documents (internal like PR or external like PO) can be released individually or collectively. Refusal of release is possible only individually, it is not possible collectively,

Purchase requisition:

PRs can be released item-wise or overall. Whether a requisition is to be released on item-wise or overall is determined by the doc type and the release group in the classification. For PRs, two mutually-exclusive release procedures are available:

Without Classification

• Release can be done at Item level only.
• Only Acct assignment category, Material group, Plant & Value fields in the purchasing document can be used as release criteria.

With Classification

• Release can be done at both Item level & header level (overall release).
• In principle, every field in the purchasing document can be used as release criterion i.e. can be used as Characteristics while defining release strategy in customizing.

External purchase documents like PO:

Only With Classification

• Only Header Level release, item-level release not possible
• In principle, every field in the purchasing document can be used as release criterion

Steps to set up a release procedure without classification in Customizing – only for PR

Steps to set up a release procedure with classification in Customizing

SAP Easy Access – transactions search

In SAP Easy Access, enter search_sap_menu in the control field.

Enter in T code or menu description. Do not use ‘*’ to wildcard. It is on wildcard mode by default.

Example of search:

And results:

SAP IMG menu path to T codes

To find T code of desired IMG activity.

1. If you know the menu path in SPRO IMG, navigate to desired activity.

Then, activate Activity Display in the IMG tree view by choosing Menu – Additional Information – Additional Information – Display Key – IMG Activity

Try to use the last four characters of the newly appeared column as the T code.

If this does not work, copy the whole value from this column. Then call up table CUS_IMGACH in transaction SE16, paste the value from the column and execute. The T code will be in the field Transaction Code.

2. If you know the description or part of the description of the activity, use SE93 transaction.

Snapshot of SE93 screen:

In SE93 transaction, select the Transaction Code field and press F4 or click on the input help button next to the field.

Then click on Information Systems or press F5.

Snapshot of Info Systems pop-up:

Now enter in the description or part of the description of the activity in the Short Description field, using ‘*’ to wildcard if required.

Example of search:

and the results:

Automatic Account Determination (FI-MM integration)

0. OB62 – Assign co-code –> COA

path: SPRO – IMG – Financial Accounting (New) –  G/L Accounting (New) – Master Data – G/L Accounts – Preparations – Assign Company Code to Chart of Accounts

Here, assign COA to co-code.

1. OX14- Set valuation area – set valuation by plant or by co-code (plant level valuation is recommended)

path: SPRO – IMG – Enterprise Structure – Definition – Logistics General – Define valuation level

Must be set before assigning any plants to co-code. Cannot be changed after any plants have been assigned to co-code.

2. Account Determination

path: SPRO – IMG – MM – Valuation and Account Assignment – Account Determination – w/o Wizard

3. OMSK – Define Valuation Classes

path: SPRO – IMG – MM – Valuation and Account Assignment – Account Determination – w/o Wizard – Define Valuation Classes (see snapshot of path above)

Here, create Account Category Reference and assign it to Material Type and Valuation Class.

Account category reference is the link between the material type and the valuation class. So when you create a new material of a particular material type, the acct cat ref assigned to that material type determines the valuation classes that can be selected for the new material. One material can only have one valuation class. In the case of split valuation, valuation type is considered instead of valuation class.

4. OMWM – Define Valuation Control

path: SPRO – IMG – MM – Valuation and Account Assignment – Account Determination – w/o Wizard – Define Valuation Control (see snapshot of path above)

Here, activate valuation grouping code.

5. OMWD – Group Together Valuation Areas 

path: SPRO – IMG – MM – Valuation and Account Assignment – Account Determination – w/o Wizard – Group Together Valuation Areas OMWB (see snapshot of path above)

Here, assign valuation grouping codes to valuation areas.

6. OBYC – Configure Account Postings

path: SPRO – IMG – MM – Valuation and Account Assignment – Account Determination – w/o Wizard – Configure Account Postings  (see snapshot of path above) – Account Assignment

Here, select transaction/event key, enter COA, then enter in the G/L accounts for the Valuation Grouping Code, Account Grouping Code, and Valuation Class combination.

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Useful: FI Global Parameters: OBY6 – Enter Global Parameters

path: SPRO – IMG – Financial Accounting (New) – Financial Accounting Global Settings (New) – Global Parameters for Co-Code – Enter Global Parameters

COA, Fiscal Year Variant, Field Status Variant, Posting Period Variant, and other important FI parameters are assigned here.