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. 

(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





If you want to know more details about Subcontracting Procurement such as Under/Over consumption, By Products and scrap handling etc, or if you want complete SAP MM videos, you can reach to . Share my blog in Social Network and use online shopping links in my blog when you shop online. 

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25 thoughts on “Subcontracting Process in SAP MM

    1. Thanks for giving the valuable information Sir. Actually I forgot my password, I tried to login your blog so many times but I can’t. There was a problem to get new password. Could you please guide me sir


  1. Sir while doing Invoice receipt(MIRO) in subcontract process, its not picked Amount after entering Purchase order number.It showed me empty column.Then i am getting warning messages as ” Invoice document still contains messages”.How to solve this issue.

    Liked by 1 person

  2. Dear Ganesh sir,
    Kindly Post some basic configuration videos in MM .Which every MM consultant should be aware of.Your explaination is very nice & easy to understand .


  3. Thanks for sharing much informative document. Could you share your view on rejection in – sub contract goods. Can we handle these along with rejection flow of normal purchased goods.

    Liked by 1 person

  4. Ganesh,

    Your documents are really helpful to us. Can you share some videos & documents on End to end MRP Process…..thanks again


  5. Hello sir,

    Your documents are too good, its understandable & I am learning SAP MM & I am a fresher, and want to enter this SAP MM consultant domain. How can I start to give interviews. Please help to share the tips to attend interviews.


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