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:
- Create subcontracting Info record (Optional) – T Code – ME11
- 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.
- Create Transfer Posting with Movement Type 541 to issue the sub components to the vendor T Code -ME2O/ MIGO
- 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
- 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
Accounting entries at the time of Invoice Receipt :
(KBS) Vendor A/C – 40 Cr
(WRX) GR/IR Clearing A/C – 40 Dr
Accounting entries at the time of Payment :
Vendor A/C – 40 Dr
Company Bank A/C – 40 Cr
Regards,
Ganesh
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GANESH SAP SCM 
very informative and detail article on
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Nice sir
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provide information about sub contract challans
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very useful
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Thanks for your feedback . Share the blog with your friends
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also share the accounting entries for Subcontracting with By Product and Scrap.
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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
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You are welcome. You don’t need any password to open my blog. You just enter http://www.ganeshsapscm.com to open. That’s enough
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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.
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Check whether the GR was done properly or not. If there is no GR, system won’t get the reference so it will ask for details to give as input
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very useful. thanks ganesh
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Thanks for your feedback Asesh. Keep visit all documents and share with your friends to make it useful to all.
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Mr. ganesh you are doing wonderful job…very useful document
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Thanks Prabhuvy for your valuable feedback. Keep visiting and sharing the blog to make it useful to many learners…
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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 .
Regards,
anand
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Nice Explaination on MM topics .
Sir do you have Sap PS related videos with explaination …Very much waiting for this.
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Very useful document
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Thanks Jay for your valuable comment
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Hello Sir
Your doing excellent job very informative document
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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.
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Hardly seen such a detailed explanation, wonderfully done. Very helpful indeed.
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Ganesh,
Your documents are really helpful to us. Can you share some videos & documents on End to end MRP Process…..thanks again
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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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You can get interview questions and many useful documents in blog. You can search as GANESH SAP in youtube to get my videos along with sample mock interviews which will be helpful for you to crack interviews.
If you need more clarifications, you can reach me at ganesh.sap2015@gmail.com
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doing good sir,
thank you…….!
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Dear Ganesh,
Very useful posts. Kindly try to post explanation of down payment process. Is it related to enhancement? or FI configuration? Kindly explain. Any real time scenario for enhancement in mm?
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Thanks for your feedback. You can check below document for Downpayment
https://ganeshsapscm.com/2015/07/05/down-payment-process-in-sap/
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Dear Sir,
Is it possible to make Subcontracting process without PO9only PR is done?
If I want to make such changes what should I do?
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That is external procurement so we should have PO and we can’t finish with PR
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Subcontracting is an external procurement process so you can’t finish the process with only PR as it is an internal document. You should convert PR to PO to finish the processs. You can check my document on Subcontracting and if you need more details, you can reach me to ganesh.sap2015@gmail.com
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I really like your writing style, excellent info , thanks for putting up : D.
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some genuinely wonderful info , Gladiolus I found this.
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Hi Ganesh,
Farooq here, I tried to contact you, can you please connect with me.
Thanks
Farooq
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You can mail to ganesh.sap2015@gmail.com
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you have good experience and knowledge. Thanks for teaching
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Hi Ganesh, thank for your explanation. I would like to ask you a question regarding to subcontracting process in SAP. Is there any way to avoid the PO step? I try to explain better: do you know if we can avoid the PO doing only 2 MvT in MIGO tcode? For example, 561 O and 543 O Movement Type?
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561 Movement type is not a regular business movement. It won’t be accepted.
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Suppose if we give the raw materials to the vendor 50 kg but at the end of process. we came to know about only 46 kg material is used so how we can receive our under- consumed material i.e. 4 kg in sap.
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