Subcontracting Process

1) Create Material Master Data For Subcomponent (using material type – ROH) & for
the finished component (using material type – FERT) – MM01
2) Create BOM – CS01
 Enter FG Product , plant and BOM usage = 1
 Enter your components and their quantity
 Item Category should be L.

 Here quantity is 1 and 2 for components. It means for 1 final product, we need 1
quantity of component1 and 2 quantity of component2.
3) Maintain Stock of subcomponents in Plant – MIGO
 Select “Goods Receipt” and “other”
 Movement Type - 501
4) Create Subcontracting info record For finished components – ME11
 Give your subcontracting vendor name, FG material name, purchasing org.,
Plant and select “subcontracting”.
 Enter Std. Quantity, Net Price.
 Go to purchasing org. data and conditions tab. Fill all required fields there.
 Save

5) Create Subcontracting PO – ME21N

 Select Standard Doc. Type or any Z document type available in system
 Enter Vendor and org. data
 Item Category - L
 Enter FG Material, quantity, net price, plant and storage location
 In item details, under material data tab, click on explode BOM if BOM is
maintained or enter manually.
 In invoice tab, click on “GR Based IV” and give tax code
 Check and save
6) Create Transfer Posting – MIGO
 Select “Transfer Posting” and “Purchase Order”
 Movement Type – 541
 Enter Your Purchase Order Number
 Under Where tab, Enter Storage location
 Click on item OK then check and save
 Then go to “display” and “material document”
 Enter your material doc. Number
 Go in doc. Info and click on FI document.
 You will get message “No Accounting document is there”
7) Stocks at Subcontractor – MBLB
8) Monitor Stocks Overview – MMBE
9) Create GR For Finished Material – MIGO
 Select “Goods Receipt” and “Purchase Order”
 Enter Your Purchase Order number
 Movement Type – 101
 Enter Storage Location for FG material
 Click on “Item OK”
 In where tab, you can check movement type for FG material and components.
It Should be 101 for FG material and 543 for component.
 Check and save
10) Monitor Material Document – MIGO
 Select – “Display” & “Material Document”
 Then System Displays Movement Type 101 for finished Component & 543
For all Subcomponents.
 Click on Doc. Info and Click on FI Documents
 Click on Accounting Document
 Click on GOTO and select display as list
 Then Add “transaction”
  Accounting Entries-
o BSX is for FG material
o Opposite to BSX is BSV (Consumption of Components)
o FRL = External Charges/ Subcontracting Charges & WRX is
GR/IR Clearing accounts
o +FRL = - WRX
o For each Raw material consumption BSX is there which is credit
o And opposite to that GBB will be there
o So if two raw materials are there, 2 BSX and 2 GBB will be their.
o If “n” is number of raw materials , then accounting entries will be
4 + 2n

11) Create Invoice - MIRO

o Create With respect to Purchase Order
o Give Tax Code
o Total cost will be = Subcontracting Charges + tax amount
o Save
o Go to MIR4 and Enter your invoice number
o Click on follow on Documents and Click on Accounting Documents