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admin June 4, 2023 No Comments

Subcontracting Po in Sap

Subcontracting in SAP is an important process that allows manufacturers to outsource part of the production process to a subcontractor. This approach helps manufacturers optimize their operations, increase efficiency, and reduce costs. In this article, we`ll explore subcontracting PO in SAP, an essential component that ensures smooth transactional and accounting processes.

What is Subcontracting in SAP?

Subcontracting in SAP refers to the process of outsourcing part of the production process to a subcontractor. This means that a manufacturer sends some of its required materials to a subcontractor to manufacture additional components or end products. The subcontractor then sends the final product back to the manufacturer.

Subcontracting in SAP is an essential feature that helps manufacturers reduce costs and optimize their operations. It provides a way to outsource part of the production process, allowing manufacturers to benefit from the subcontractor`s expertise while reducing overhead costs.

What is Subcontracting PO in SAP?

A subcontracting PO in SAP refers to a purchase order that is created by a manufacturer to request material and services from a subcontractor. The purpose of the PO is to outline the necessary specifications, delivery dates, and quantities. A subcontracting PO is a legal contract that governs the relationship between a manufacturer and a subcontractor, highlighting the terms and conditions of the agreement.

Creating a Subcontracting PO in SAP

The process of creating a subcontracting PO in SAP can be broken down into four steps:

1. Create a Purchase Order

The first step involves creating a purchase order in SAP. The purchase order should include the necessary specifications, delivery dates, and quantities for the subcontractor. The created PO should be assigned to a specific material master and a vendor set up as a subcontractor.

2. Create a Material Transfer

The next step is to create a material transfer. This is initiated by the issuing plant to transfer the raw materials required for the subcontracting operation. A material transfer reservation is created to move the stock from the issuing plant to the subcontractor.

3. Transfer Stock to the Subcontractor

The third step involves transferring the stock to the subcontractor. The material transfer reservation is used to create a goods issue, which is the transfer of the raw materials from the issuing plant to the subcontractor.

4. Receive the Finished Goods

Finally, after the subcontractor completes the production process, the manufacturer will receive the finished product. The subcontractor creates a goods receipt in SAP that confirms the receipt of the finished product from the subcontractor. This step completes the transaction and updates the relevant accounting records.

Conclusion

Subcontracting PO in SAP is an essential feature that allows manufacturers to outsource part of the production process to a subcontractor. Creating a subcontracting PO in SAP involves several steps, including creating a purchase order, creating a material transfer, transferring stock to the subcontractor, and receiving the finished goods. By following this process, manufacturers can efficiently manage the transactional and accounting processes associated with subcontracting operations, helping them reduce costs and optimize their operations.

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