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Subcontracting

Subcontracting. SAP Best Practices. Purpose, Benefits, and Key Process Steps. Purpose The Subcontracting process involves sending raw components to a vendor for specific manufacturing processes and receiving the value-added finished material back into inventory. Benefits

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Subcontracting

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  1. Subcontracting SAP Best Practices

  2. Purpose, Benefits, and Key Process Steps • Purpose • The Subcontracting process involves sending raw components to a vendor for specific manufacturing processes and receiving the value-added finished material back into inventory. • Benefits • BoM explosion triggers follow-on functions like delivery to subcontractor etc. • Automatic posting of value flow • Automatic posting of stocks into corresponding stock types

  3. Purpose, Benefits, and Key Process Steps • Key Process Steps • On goods delivery, the scenario focuses on the following activities: • Purchase order creation based on a scheduled purchase requisition created by last MRP run • Optional: manual purchase order creation • Purchase order approval (if required) • Creation of Subcontracting Challan • On goods receipt, the scenario focuses on the following activities: • Goods receipt for purchase order delivered by subcontractor • Reconciling Subcontracting Challan • Completing/Reversal/Re-credit Subcontracting Challan • Invoice receipt by line item • Invoice verification and validation of tax expenses • Outgoing payment

  4. Required SAP Applications and Company Roles • Required SAP Applications • Enhancement package 5 for SAP ERP 6.0 • Company Roles • Purchasing Administrator • Purchasing Manager • Warehouse Clerk • Accounts Payable Accountant • Production Planner • CIN

  5. Detailed Process Description • Subcontracting • A subcontract purchase requisition is either generated via the Material Requirements Planning (MRP) process or manually by a requestor. A buyer validates the accuracy of the purchase requisition and converts it into a purchase order. The purchase order is subject to approval based on predefined parameters prior to being issued to a vendor. • The consumption of sent components is recorded upon receipt of the value-added finished material. The vendor sends the invoice for the services provided which is paid during the normal payment cycle.

  6. Process Flow Diagram Subcontracting Event Requirement of Subcontracting Material Receive Material at Dock Incoming Vendor Invoice Vendor Subcontract PO Delivery Note Buyer Create Subcontract PO Approve PO Warehouse Clerk Goods Receipt Print GR Slip Transfer Components to Subcontractor Reconcile Subcontracting Challan Create Subcontracting Challan Complete/Reversal/Re-credit Subcontracting Chanllan Inventory GR/IR Subcontracting Services/Consumption Accounts Payable GR/IR PPV Vendor Invoice Vertification MRP = Material Requirements Planning, PO = Purchase Order, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase Price Variance The process for the role of Excise Clerk is not shown in this Diagram

  7. Diagram Connection Legend <Function> Hardcopy / Document External to SAP Financial Actuals Business Activity / Event Budget Planning Unit Process Manual Process Process Reference Existing Version / Data Sub-Process Reference Process Decision System Pass/Fail Decision

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