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Subcontracting Process in SAP MM After GST

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Divyansh Johri
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57 views3 pages

Subcontracting Process in SAP MM After GST

Uploaded by

Divyansh Johri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Subcontracting Process in SAP MM after GST

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.

In this process, a manufacturing company provides raw materials/ components to a subcontracting


vendor. The vendor in turn processes these components to turn them into end products. This final
product is then used by the manufacturing company to carry out the rest of the operations.

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
➢ Without Challan (with Invoice)

Subcontracting Configuration for GST

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 Management ->
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

Steps for Subcontracting Process:

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)

Subcontracting Purchase Order - Create Subcontracting Purchase Order (T. Code – ME21N) against
Subcontracting Vendor with Item Category L. This will activate the “components” button in the
Material data tab in the Item of the Purchase Order. Explode BOM or maintain the components
manually and with zero tax

Goods Issue to Subcontractor - Enter Transfer Posting with reference to Subcontracting Purchase
Order through (T. Code MIGO/ MB1B) using 541 Movement type. This will issue the material to the
Subcontractor. No Accounting Document generate at the time of Transfer Posting. This will update
the stock of the material in the Stock Provided to Vendor in Stock Overview.

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.

Subcontracting Challan - Create Subcontracting Challan with reference of Material Issue Document
through T. Code -J1IGSUBCON. Then create Challan using “With Challan”, this will generate the
Billing Document (ZSN – SC Challan Document in SD). No taxes have been maintained in the Challan
Document. Any changes can be done in the Billing Document by using T. Code – VF02.

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

Accounting Entries at the time of Goods Receipt:

BSX – Stock A/C for Assembly/ Semi-Finished – Dr. 11000


BSV – Change in Subcontracting Stock Cr. 11000-
FRL – Subcontracting Charges Dr. 10000
WRX – GR/IR Clearing (Semi-Finished) A/C Cr. 10000-
BSX- Stock A/C for Components Cr. 1000
GBB-VBO - Consumption A/C for Components Dr. 1000

Accounting Entries at the time of Invoice Receipt:

GR/IR Semi Finished Clearing A/C Dr. 10000


IGST or SGST/CGST Taxes A/C Dr. 900, 900 (CGST/SGST) or 1800 (IGST)
Vendor A/C Cr. 11800

T. Code - MBLB To display Stock to Subcontractor

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