Note
How the is the cost for subcontracting calculated: The vendor uses a special procurement key that specifies how an assembly can be processed. In this process, the assembly bill of material (BOM) is exploded, which provides component material costs. The contracted processing costs are included in the purchasing data.
If more than one vendor is available to subcontract the same service, the system searches through the purchasing system for the appropriate vendor. The search sequence for vendor selection is predefined. The system searches through all the appropriate records until a match is found. The valuation variant contains a strategy to locate a subcontracting vendor and the price. If a preferred vendor cannot be determined through purchasing, the cheapest vendor is selected. The purchasing info record category should be subcontracting. The special procurement key in the material master should designate subcontracting.
Subcontracting and External Processing: Example
Subcontracting | External Processing |
|---|---|
Bottlenecks often occur in the turnery section of the forklift manufacturing plant. So, you hire a subcontractor who has the necessary technical capabilities to produce shaft 100-300 for $100 per piece. You provide blank 100-310 to the subcontractor because strict quality control compliance is required for the raw material. | In metal production, particularly turning and drilling, the materials need to be degreased before they can be processed further. The task of degreasing shaft 100-300 after the turning operation is allocated to the external processor for commercial and environmental reasons. |
Subcontracting
The subcontractor is responsible for in-house production and for external procurement. This type of processing is defined by a special procurement key in the material master of the assembly.
A purchase requisition is generated in the order for the finished product. The purchasing team uses the purchase requisition to create a subcontract order for the vendor. The purchase order specifies which components of the assembly need to be sent to the vendor.
A goods receipt is entered for the vendor product.
The costs for the assembly are calculated in the material cost estimate using the following:
The price agreed with the subcontractor.
The material costs of the components delivered to the subcontractor.
External Processing
You can assign separate operations to an external supplier for processing.
When an operation is processed externally, data relevant to costing is maintained directly in the operation. You can use purchasing info records to maintain the data.
You use the valuation variant in Customizing to specify whether costing uses the price in the operation or whether one of the prices is associated with the purchasing info record.