Subcontracting with Third-Party Provision of Components in SNP (SAP Library

Subcontracting with Third-Party Provision of Components in SNP

Purpose

The functionality for the third-party provision of components enables the components of a product that is to be manufactured by a subcontractor to be provided by an external supplier instead of your own plant.

For example, a firm sells handheld devices in the U.S.A. However, it does not manufacture them itself, but has the entire production carried out by a subcontractor in Asia. The components for the handheld device, such as the housing, and so on, are procured from an external supplier who is likewise located in Asia.

In the normal form of subcontracting, the Asian supplier would deliver the components to the plant in the U.S.A. The latter would then send them back to Asia – to the subcontractor. To avoid this unnecessary detour, the supplier can send the components directly to the subcontractor.

Through third-party provision of materials in external procurement, you can now replicate this process in the SAP system.

In the SAP SCM system, you must manually create a transportation lane for the components that are to be procured externally between the supplier who is to provide the components (start location) and the subcontractor (destination location) who is to manufacture the handheld devices. The transportation lane must reference the external procurement relationship. If you are using an SNP production data structure generated from SAP R/3 data, this step does not apply (see below).

If an SNP stock transfer is created for the end product in the subcontractor location, a purchase requisition is generated from it in the SAP R/3 system after the CIF transfer. This automatically contains the address of the subcontractor in Asia (not that of the plant in the U.S.A.) as the delivery address At the same time, the Subcontracting Vendor indicator is set. The delivery address in the requisition is adopted in the PO during the document conversion process. When a goods receipt is posted against such a purchase order, the components of the handheld device are automatically posted to the “stock of material provided to vendor” (stock with subcontractor).

Note

In SNP, the heuristic-based and optimization-based planning approaches are available for the subcontracting process. The planning procedures deployment, transport load building (TLB), and capacity leveling are not possible.

This graphic is explained in the accompanying text

Prerequisites

Business partners involved	Representation in SAP R/3	Representation in SAP APO
Customer	Plant/Location	Location - type plant 1001
Vendor	Vendor	Location - type vendor 1011
Subcontractor	Vendor	Location - type vendor 1011

Data in the SAP R/3 System

The following data must have been created in the SAP R/3 system and transferred to the SAP SCM system via CIF (Core Interface):

● The end product

● The components to be provided to manufacture the end product

● The supplier who is to manufacture the end product as subcontractor

● A purchasing info record of the category subcontracting which documents the subcontractor as the source of supply of the end product

● If necessary, an SNP production data structure (SNP-PDS), if you are using this instead of a production process model (PPM) and wish to generate it from SAP R/3 data (see also Production Data Structure in SNP)

Integration Model

The integration model of the Core Interface (CIF) with which you wish to transfer your data from the SAP R/3 system to the SAP SCM system must contain all the above-mentioned data.

If you are using an SNP PDS and wish to generate it from SAP R/3 data, you must choose the option SNP Subcontracting in the integration model. In this case, all master data in the subcontractor location, such as the product master data and the transportation lane from plant to subcontractor, is automatically created in the SAP SCM system.

For more information, see Integration of Master and Transaction Data.

Data and Settings in the SAP SCM System

The following data must exist in the SAP SCM system:

● External procurement relationships and transportation lanes

From the purchasing info record, the SAP SCM system automatically generates an external procurement relationship of the category subcontracting for the end product, and a transportation lane from subcontractor (source location) to plant (destination location).
This transportation lane is assigned to the external procurement relationship for the end product.
See also: Transportation Lane and Automatic Creation of Transportation Lanes

● Transportation lanes from plant to subcontractor

If you are using an SNP PPM, you must manually create a transportation lane from the plant (source location) to the subcontractor (destination location) for all components that are to be provided by the plant. If you are using an SNP PDS generated from SAP R/3 data, this step does not apply.

● Location of type subcontractor

This is only required, if the subcontractor processes the same product for multiple plants. In this case, you must manually create a location of the type subcontractor for each plant-vendor combination.

● Means of transport

You must maintain the means of transport for all relevant transportation lanes.

● Product master in the subcontractor location

If you are using an SNP PPM, you must create the end product and all components in the subcontractor location and assign them to model 000. If you are using an SNP PDS, this step does not apply.

The procurement indicator must be set to F in the product master records for the end product and the components.

● Production process model

You create an SNP PPM for the end product and assign it to model 000. You specify the subcontractor location as the planning location. In doing so, note that the transportation lot size defined in the transportation lane and the production lot size specified in the PPM should be identical. If this is not the case, the system takes the transportation lot size into account.

If you are using an SNP PDS, this step does not apply.
See also: Production Process Model

● Transfer to SAP R/3 system

You must make the relevant settings in Customizing so that SNP orders can be transferred to the SAP R/3 system. To do so, choose SAP Advanced Planning and Optimization -> Supply Chain Planning -> Supply Network Planning -> Basic Settings -> Configure Transfer to OLTP Systems.
Note the following: If you have set No Transfer, the orders will not be transferred, even if you have made a different setting at the Supply Chain Planning interface for SAP APO.

● Further settings

You must also take into account the prerequisites set out in the documents Running the Heuristic in the Background und Running the Optimizer in the Background. The following special aspect applies to optimization-based planning: Only either the transportation capacity or the production capacity should represent a constraint for planning. For the SNP Optimizer, production and transportation represent a coherent unit.

Process

...

1. Release of the Demand Plan to Supply Network Planning

You release the demand plan from Demand Planning to Supply Network Planning.

2. Execute a multilevel heuristic or an optimization run

To plan the subcontracting, you can use the standard planning book 9ASNPSBC with the data view SUBCONTRACTING. It contains the key figures specific to the subcontracting.

You execute a multilevel heuristic or an optimization run for the end product. The SAP SCM system carries out the following activities:

In the plant

○ It creates an SNP stock transfer of the type Subcontracting, containing the subcontractor location as the source location, for the end product

At the subcontractor location

○ It creates an SNP planned order of the category subcontracting containing the PPM for the end product as the source of supply.

○ It creates an SNP stock transfer of the type subcontracting, containing the plant as the destination location, for the end product

○ On the basis of the SNP PPM, it plans the subcontracting components for the SNP planned order and carries out a source determination process there.
If a valid transportation lane from the vendor (supplier) to the subcontractor exists with the corresponding info record, the system creates stock transfer reservations, specifying the subcontractor location as the destination, for the subcontracting components in the plant.

Following the CIF transfer, a purchase requisition is created for the end product in the SAP R/3 system. It contains the components for the end product.

Running the Optimizer in the Background

Source Determination in Supply Network Planning

3. Conversion of R/3 purchase requisition for end product

You convert the requisition of the category subcontracting for the end product into a purchase order. You make the conversion in the SAP R/3 system. Through the conversion, the SNP purchase requisition is deleted in SAP APO and the PO created.

See also: Converting Purchase Requisitions

4. Conversion of R/3 purchase requisition for subcontracting components

You convert the R/3 requisition (category standard) for the subcontracting components into a purchase order. Through the conversion, the requisition is deleted in SAP APO and the PO created. When creating the purchase order, the system adopts the delivery address from the requisition.

5. Posting the goods receipt for the subcontracting components

You post the goods receipt for the subcontracting components in the SAP R/3 System. In the material document, it is noted that the movement type goods receipt to subcontractor-vendor is involved and the address of the subcontractor is specified as the receiving vendor. This means that the subcontracting components are posted to stock with subcontractor in the SAP R/3 system. Correspondingly, in the SAP SCM system the open PO quantity is reduced and the stock of material provided to vendor increased accordingly.

6. Posting the goods receipt for the end product

You post the goods receipt for the end product in the SAP R/3 system. In the SAP SCM system, the PO quantity is reduced by the quantity of the goods receipt. The system increases the unrestricted-use stock for the end product.
At the same time the goods receipt is posted, the goods issue for the subcontracting components provided to the subcontractor is posted. The “stock of material provided to the vendor” is reduced accordingly.