Subcontracting (External) with Quality Management

1. Subcontracting (External) with Quality Management SAP Best Practices for Chemicals

2. Purpose, Benefits, and Key Process Steps • Purpose • The purpose of to describe business processes related to external subcontracting. • Benefits • In-time consumption of components provided to Vendor • Two Production version provided for order type- one for in-house production and other for external operation • Key Process Steps

3. Required SAP Applications and Company Roles • Required SAP Applications • SAP ECC 6.00 enhancement package 5

4. Process Flow Diagram Subcontracting (External) with Quality Management ) Purchaser Create Purchase Order Purchaser Manager Approval of Purchase Order (Optional) Purchaser Chemicals Stock Transfer for Subcontractor without Delivery Stock Transfer for Subcontractor with Delivery Processing Deliveries and Picking Warehouse Clerk Goods Receipt for Subcontract Order (without WM) Quality Specialist Results Recording Record Usage Decision Accounts Payable Accountant Invoice Verification

5. Process Flow Diagram Subcontracting (External) with Quality Management Strategic Planner Create Planned Independent Requirement Production Planner Material Requirements Planning at Plant Level Evaluation of the Stock/Requirement List Warehouse Clerk Receiving a Subcontract Purchase Order – Goods Receipt Posting In-time Consumption of Components Initial Stock Posting Pick Confirmation (Optional) Generate Transfer Order (Optional) Confirm Transfer Order (Optional) Post Goods Issue to Subcontractor Transfer Stock Stock Overview (Optional) Production Planner Create Process Order Shop floor Specialist Process Order Confirmation Release Process Order Purchaser (Purchaser Chemicals) Create Outbound Delivery Request (Purchasing Manager) Release Purchase Order (Optional) Create PO for External Processing with Material Number Accounts Payable (Accountant) Enter Invoice (Manager) Release Blocked Invoices Quality Specialist Results Recording Record Usage Decision Engineering Specialist Derivation Monitor (Optional)

6. Plan requirements Supply material to the Subcontractor Generate material request automatically Assign source of supply Create purchase order and update contract Create and validate sales order (Job Order) Provide material (components) to the subcontractor Process material Business View - 1 Business Benefits Buyer Sub-Contractor Third Party Vendor Business Benefits No process time for buyer Increased transperancy Reduced purchasing process cycle time Increased customer satisfaction

7. Send out shipping notification Confirm goods receipt Adjust under and over consumption Create invoice Verify and release invoice Check and release payment Business View - 2 Business Benefits Buyer Sub-Contractor Third Party Vendor Business Benefits Increased customer satisfaction Reduced transaction cost

8. Purchse order Company Code 1000Plant 1000 Vendor: S-9000(subcontractor) Delivery of components Goods delivery Invoice Purchase order for components with delivery address to subcontractor Delivery to subcontractor Invoice Vendor: S-1003 Subcontracting (External) with Quality Management CH-6210 (GranuSAP, 100 Lb)

9. 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