Explore the subcontracting process in SAP S/4HANA across MM, EWM, and TM modules. Understand how each module handles material movements, warehouse tasks, and transportation logistics, offering a comprehensive view of the end-to-end subcontracting process. Gain insights into the differences and integration points between these critical SAP modules for optimized supply chain management.

𝐒𝐮𝐛𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐢𝐧𝐠 𝐏𝐫𝐨𝐜𝐞𝐬𝐬 𝐅𝐥𝐨𝐰 𝐢𝐧 𝐒𝐀𝐏 𝐒/4𝐇𝐀𝐍𝐀 𝐌𝐌 (𝐌𝐚𝐭𝐞𝐫𝐢𝐚𝐥𝐬 𝐌𝐚𝐧𝐚𝐠𝐞𝐦𝐞𝐧𝐭)

1. 𝐂𝐫𝐞𝐚𝐭𝐞 𝐒𝐮𝐛𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐢𝐧𝐠 𝐏𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐎𝐫𝐝𝐞𝐫:
   • create a purchase order (PO) with item category “L” for subcontracting, specifying the components to be provided to the subcontractor.
2. Transfer Components to Subcontractor:
   • Create a transfer posting using movement type 541 to send the components to the subcontractor.
3. Goods Issue to Subcontractor:
   • Post a goods issue with movement type 541 to record the movement of components to the subcontractor’s location.
4. Monitor Subcontracting Stock:
   • Check subcontracting stock at the subcontractor’s location.
5. Goods Receipt for Finished Goods:
   • Post a goods receipt with movement type 101 to bring the finished goods into inventory.
6. Consumption of Components:
   • Automatically triggered during the goods receipt, where the components issued are consumed and deducted from the subcontracting stock using movement type 543.
7. Invoice Verification:
   • Process the invoice received from the subcontractor and match it against the purchase order and goods receipt.

Subcontracting Process Flow in SAP TM (Transportation Management)

Initiation of Subcontracting Purchase Order in SAP S/4HANA MM:

• A subcontracting purchase order is created in SAP S/4HANA MM, which triggers the need for transportation planning in SAP TM.
• This PO specifies the components that need to be sent to the subcontractor and outlines the finished goods to be received back.

Freight Unit Creation:

• Based on the subcontracting PO, freight units are created in SAP TM for the components that need to be transported.

Transportation Planning and Scheduling:

• Plan the transportation of the freight units, which involves selecting appropriate carriers, determining routes, and scheduling the shipment.
• This step ensures that the components are delivered to the subcontractor within the required timeframe.

Creation of Freight Orders:

• Freight orders are created to manage the transportation of goods. Each freight order contains details about the carrier, vehicle, route, and schedule.
• The freight order is then assigned to the selected carrier, who will be responsible for transporting the goods

Carrier Selection and Tendering:

• The system may automatically tender the freight orders to pre-selected carriers based on predefined criteria such as cost, service level, or capacity. Carriers can accept or reject the tender.

Goods Issue for Components:

• A goods issue is posted for the components being sent to the subcontractor. This reduces the inventory in the warehouse and updates the stock in transit.

Execution and Tracking of Shipment:

• The shipment of components is executed according to the freight order. SAP TM provides real-time tracking of the shipment, allowing for monitoring of its progress and the management of any exceptions or delays.

Freight Cost Calculation and Settlement:

• After the transportation has been completed, SAP TM calculates the freight costs based on carrier contracts, distance, weight, and other factors. These costs are then settled, and the carrier is paid for their services.

Subcontracting Process Flow in SAP EWM (Extended Warehouse Management)

Outbound Process (Sending Components to Subcontractor):

Create Subcontracting Purchase Order (MM):

In SAP MM, create a subcontracting purchase order (PO) for the required finished product. The PO will specify the components that need to be provided to the subcontractor. Using Item category as Subcon (L)

Create Outbound Delivery in S/4

An outbound delivery is created in SAP EWM based on the subcontracting PO. This delivery includes the components that need to be sent to the subcontractor.

Outbound delivery gets distributed to EWM for Picking process:

Picking Warehouse Task Creation:

SAP EWM generates warehouse tasks (WTs) to pick the components from the storage bins in the warehouse.

Goods Issue Posting:

The picked and packed components are shipped to the subcontractor. The goods issue is posted in SAP EWM, which reduces the stock of components in the warehouse.

Inbound Process (Receiving Finished Goods from Subcontractor):

Create Inbound Delivery with reference to PO

Once the subcontractor has finished processing the components, an inbound delivery is created in SAP EWM for the receipt of the finished product.

The Inbound delivery gets distributed to EWM system

The inbound delivery S/4 once save, the system will distribute to EWM system

Create the Put away warehouse task

With putaway strategy, the system will create the putaway warehouse task to put away the material received form subcontractor.

Goods Receipt Posting in EWM and S/4:

Once the goods are put away, the goods receipt is posted in SAP EWM and SAP MM, updating the stock levels of the finished goods in the warehouse.

End of process steps

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Blog by Nitin kumar

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