In subcontracting, the vendor (subcontractor) is provided with input materials (components) by the buying entity, which are then used to manufacture the end product. These materials can be sent to the subcontractor via an SD delivery. For this purpose, the vendor must also be created in the customer master record. The two master records reference each other. The shipping functionality can only be used for material types that are relevant to sales and distribution (SD). Procedure:

1. You order the end product by means of a subcontract order. The components that the vendor needs to manufacture the end product are specified in the purchase order.
2. From the Purchasing menu, you can invoke a list showing the materials the subcontractor needs you to provide him with in order to manufacture the end product specified in the subcontract order. In the event of a shortage (insufficient stock to cover the requirement), the user can initiate a transfer posting or send the necessary materials to the vendor by means of SD functions.
3. The vendor performs the necessary service (i.e. does the required assembly or processing work) and delivers the ordered material (the end product). You post the consumption of the components.
4. If, after the goods receipt has been posted, the vendor informs you that a larger or smaller quantity of the components was actually consumed than planned in the purchase order, you must make an adjustment posting.
5. The vendor submits an invoice for the service provided, which is then posted as part of the invoice verification process.