Professional Documents
Culture Documents
Subcontracting is one of the manufacturing strategy by which a company decides to outsource some or
all of its production operations to a vendor. In SAP, Subcontracting is one of the special procurement
type in the SAP MM.
Subcontracting can be defined as the processing of the material by the external supplier to get the final
products.
After GST Implementation, there is a change in the Subcontracting Configuration and Process.
As per GST law, we can run Subcontracting process in one of the following ways:
With Challan
Define Shipping Data for Plants: Assign Sales Organization, Distribution Challan and Division
should be maintained for Supplying Plant from which the components are to be delivered. Table
view – V_001W_IV, T. Code – SM30 Or SPRP -> SAP Ref. IMG -> Materials Managment ->
Purchasing -> Purchase Order -> Set up Stock Transport Order -> Define Shipping Data for Plants
New Billing Type define – ZSN SC Challan (No Taxes), ZSP – SC Invoice (with Taxes)
Classify Subcontracting Billing Types: Maintain View J_1IG_V_SUBINV through Code – SM30 –
Company Code, Sales Type, Billing Type, Billing Class – ZSN for Create Challan and ZSP for Create
Invoice
Use the existing SD Pricing Procedure or define a new Pricing Procedure for Subcontracting
process
Set up “Delivery to Billing Type” Copy Control. Copied with Billing Type “FX” and Sales Order “OR
Material Master - Material Master should be available in system for both Finished and Raw
Materials (T. Code – MM01). Components must have stock in the system. Extend the Sales View
for the Raw Materials or Components
Customer - Create Customer (T. Code – XD01) with necessary details as per Subcontractor
Vendor
Vendor - Maintain Subcontractor Vendor (T. Code – XK01) and assign Customer in the Vendor
Master data.
Sales Condition Record - Maintain Sales Condition Record for Material Pricing (T. Code – VK11)
Subcontracting Info Record - Create Subcontracting Info Record (T. Code – ME11) (Optional)
If we are using T. Code – ME2O for issuing components to vendor, then system will create
Outbound Delivery. And then Go To Change Delivery (T. Code – VL02N) to do PGI, which will
generate Goods Issue document using Movement Type – 541.
Post Goods Receipt - When Vendor sends the materials, we post the Goods Receipt in the
system using T. Code – MIGO with reference to Subcontracting PO having Movement Type 101
for final or end products and Mov. Type 543 for Components. Consumption of Components
material from the Vendor Stock and Stock update for the Final Products.
Reconcile Challan - Reconcile Challan with reference to goods receipt material document
through T. Code – J1IGRECON. Select Manual and enter the Challan No. and Save the Data.
Invoice Receipt - Post Invoice Receipt for Subcontracting Vendor for the service charges paid to
the Subcontractor through T. Code – MIRO with reference to Subcontracting PO
IGST or SGST/CGST Taxes A/C Dr. 900, 900 (CGST/SGST) or 1800 (IGST)