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Subcontracting Scrap Return Process

This document describes the scrap return process in subcontracting procurement in SAP. It discusses how a company can send raw materials to a subcontractor to perform operations, and the subcontractor will return the finished goods along with any scrap produced. It outlines the key steps in SAP for creating a purchase order, issuing goods to the subcontractor, receiving the finished goods back along with scrap, and moving the scrap into the company's storage location. It also discusses how to monitor stock at the subcontractor and view the accounting entries for the goods receipt.

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Sahil Jadhav
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684 views

Subcontracting Scrap Return Process

This document describes the scrap return process in subcontracting procurement in SAP. It discusses how a company can send raw materials to a subcontractor to perform operations, and the subcontractor will return the finished goods along with any scrap produced. It outlines the key steps in SAP for creating a purchase order, issuing goods to the subcontractor, receiving the finished goods back along with scrap, and moving the scrap into the company's storage location. It also discusses how to monitor stock at the subcontractor and view the accounting entries for the goods receipt.

Uploaded by

Sahil Jadhav
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Shreeja SAP Learning Hub

Scrap return process in subcontracting


procurement with real time business scenario
with Challan

What is subcontracting
In subcontracting process company send raw material (Child) to vendor, vendor
perform operation on raw material and send back finish material (Parent or Final
material) to company. And company have to pay for subcontracting charges.

Business scenario for scrap return


In ABC manufacturing industry, Company has not laser cutting machines. That’s
why for metal sheet cutting they are using subcontracting procurement. In this
company is sending metal sheets to subcontractor and after completion of laser
cutting vendor send back final metal sheets as per design and scrap produced of
metal sheets.

Scrap return process in SAP


Prerequisites
1) Material master for Metal sheet before laser cutting, Metal sheet after
laser cutting, and scrap

2) Stock for ‘Metal sheet before laser cutting’


Before subcontracting procurement materials stock
1) Stock of Metal sheet after laser cutting (Initial stock zero)

2) Metal sheet before laser cutting (Initial stock= 1,00,000 M²)

3) Metal sheet scrap (Initial stock zero)


Process steps in SAP
Step-1 Creation of PO (ME21N)

In material data tab,

Click on components to maintain child materials,

In components,

Maintain child material and scrap with negative with quantity

Then click on save


Configuration scope in subcontracting as MM consultant-
1) Separate document type with different number range and Allowed item
category as L only.
2) Separate pricing procedure with condition type ZSUB for subcontracting
charges.

Step-2) Goods issue to subcontractor-


We can use ME2O or MIGO also, here we will use MIGO

T Code- MIGO

Select Transfer posting –Purchase order- PO no and Movement type - 541

Enter+

Enter storage location (From) Item Ok

Check and save+


Note- In real time company issue Materials to vendor on a returnable basis for
subcontracting operations. That’s why one challan document is created (T code-
J1IGSUBCON) and send with material.

And no accounting entries will happen

Monitor stock at subcontractor –


T Code- MBLB

Enter vendor and execute

Here we can check stock present at subcontractor

Step-3 Goods receipt of final material


After completing subcontracting operations Vendor will send back Final Material

T Code- MIGO

Enter+
Observations on good receipt-
1) For final material Movement type 101 (+)
2) For child material Movement type 543 (-)
3) For Scrap Material Movement type 545 (+)

Note- Here if received scrap quantity is different that quantity which is


maintained in PO then we can change in goods receipt.

Now check and Post document

To see accounting entries of goods receipt


In MIGO, Display--Material Document--Doc no

Enter,

Doc info—FI Documents—Accounting documents


Note- In real time after Goods receipt reconciliation of challan is posted with t
Code- J1IGRECON
Step- 4) Move scrap in company from subcontracting
stock
After good receipt, Scrap stock will show in subcontracting stock

To move in company storage location

Use T Code- MIGO

Transfer posting—Other Movement type- 542

Enter Qty and storage location

Enter Item Ok. Check and post


After subcontracting procurement materials stock
Before performing subcontracting process, we checked materials stock let’s see
changes after goods receipts.

1) Stock of Metal sheet after laser cutting

(Material received 10 M²)

2) Metal sheet before laser cutting (Initial stock= 1,00,000 M² )

(Material gets consumed


10M²)

3) Metal sheet scrap

(Scrap produced 5KG)

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