Subcontracting Process in SAP MM

Hi Friends,

I have provided brief details about Subcontracting process as per my experience. Make it useful. What is subcontracting process? Subcontracting is one of the procurement processes available in MM. In this process, components are shared to vendor to get the final product. Below are the steps involved in this process. Steps to perform subcontracting:

  1. Create subcontracting Info record (Optional) – T Code – ME11
  2. Create subcontracting PO with item category L – T Code – ME21N                                         Steps:  ME21N —>  Enter Item Category L –>, Material (End Product), PO Quantity, Delivery Date, Net Price, Plant  –> Click on Item Details –> Tab Material Data  — >Components, select Explode BOM –> Click on Components button –>  Enter the sub components –> Go back & Save.                                                                                                                                                                                                                                                            Note: Components can be exploded through BOM (T Code CS01) or components can be given manually also.
  3. Create Transfer Posting with Movement Type 541 to issue the sub components to the vendor T Code -ME2O/ MIGO
  4.  Goods Receipt for finished product – T Code -MIGO                                                                                                                                                                                                                                       Note: During goods receipt, final product will be received with movement type 101 and components will be consumed automatically with 543 movement type
  5. Invoice Receipt for the services performed – T Code – MIRO

Accounting entries for subcontracting: Example: Components cost is 100 INR, Subcontracting Charges are 40 INR

There will be no account entries at transfer posting 541.

Accounting entries at the time of Goods Receipt 101 (&543) : Finished goods will be received with 101 and the Components will be consumed with Movement type 543. 

Here Dr means Debit (+Ve) and Cr means Credit (-Ve)

(BSX) Stock A/c of Assembly – 140 Dr

(BSV) Change in Subcontracting Stock -140 Cr

(FRL) Subcontracting Charges – 40 Dr

(WRX) GR/IR Clearing A/c – 40 Cr

(BSX) Stock A/c of Components – 100 Cr

(GBB-VBO) Consumption A/c of Components – 100 Dr





Watch my latest video in below YouTube link and subscribe to my YouTube channel:

YouTube Channel: 


Authorization object in SAP MM

Authorization objects:

Authorization object is an element of the authorization system. Authorizations are checked against objects in the system. Authorization objects enable complex checks (linked to several conditions) of an authorization. For the authorization check to be successful, the user must pass the check for each field contained in the object.

Field of an Authorization object:

In authorization objects, authorization fields represent the values to be tested during authorization checks. For example, Movement type in material movements, document type, plant etc in purchasing documents etc. An authorization object combines up to 10 authorization fields.

Finding out missing authorization object:

The most common and easiest way of finding out missing authorization is through Transaction SU53. Whenever user finds a missing authorization, User needs to enter /nSU53 in Command field and see the authorization data for the user. In this example, I have given details for no access to SU01 edit/create access.

Here, make a note to drill down and get both authorization object and field name. This will make the job of Basis/Security consultants easy and they can provide the required authorization correctly.

When you find such messages, go to SU53 and share the screen with Security team and also a functional consultant can understand and identify missing authorizations as per the screen.


And the best ways for finding out Authorization object is to check in table TOBJ.

Here, in SE16N, for table TOBJ, Enter the authorization class (Say MM_E for Materials Management: Purchasing).



You can see the list of authorization object and fields relevant for entered class below in the output screen


We can get the Authorization object of a Role from T Code PFCG as shown below. 




List of Authorization objects can be seen with Transaction Code SU21. 





I hope this is useful for you. Please share with your friends to make it more useful




Queries about Material Classification view

Hi Friends,

Many MM consultants after several years of experience also have few queries about the functionality of classification view. Here I have provided few questions and answers about material classification view along with few important SAP screen shots. I hope it will be useful

Bookmark below link and user for on line shopping  which will work for both app and web.

Classification view of Material