SC_CONSIGN.ppt
- 1. Materials Management Sub Contracting & Consignment - Ramakrishna Mangena
- 2. Agenda • Overview of ERP / SAP & Modules of SAP • MM Overview • MM Organization Structure • Master data • Purchasing • Inventory Management • Invoice Verification • Concepts of Warehouse Management – Overview – Warehouse Management structure – Functionalities
- 3. Subcontracting - Overview • Subcontracting involves the procurement of partial or complete manufacture of an end product where the components are supplied to the vendor.
- 4. Vendor A Vendor B Vendor A BOM Master ----- ------ ------- ----- - ----- -- ------- ------- --------- Product 123 Purchase Order Components Delivery Invoice $ Vendor A Overview of Subcontracting
- 5. Steps involved in Subcontracting 1. Create subcontracting PR/PO with item category “L”. Specify the components which are required to manufacture the end product in subcontracting order. This components may automatically come from BoM explosion in case it is maintained in PP module. 2. Supply the required components to the vendor by transfer posting. The provided components are shown as “stock of material provided to vendor”. 3. The SC vendor performs the required service and delivers the ordered material (End product) i.e., goods receipt for end product and consumption of components is posted in SAP 4. If there is a difference between provided components consumption, we must make subsequent adjustments 5. Post the vendor invoice
- 6. Subcontracting in Purchasing BILL OF MATERIAL SC Item 1 qty UOM 0010 Component A 2 LB 0020 Component B 1 each Purchase Order Item Category L Subcontract Item 1 Component A Component B Purchase Requisition Item Category L Subcontract Item 1 Component A Component B The components to be provided can be entered manually or copied from an existing Bill of Material in purchasing document.
- 7. Provision of Components – Option 1 Plant Subcontracting Vendor Subcontracting PO SC components issue from unrestricted stock Note : •Issued components are managed as a part of company’s valuated stock and shown as “Material provided to vendor” in stock overview data. •Only Current stock can be obtained from system for subcontracting stock
- 8. Provision of Components – Option 2 Plant Subcontracting Vendor Subcontracting PO components are directly delivered to SC vendor Second Vendor PO for SC components Maintain Subcontracting vendor address as delivery address in PO (shown as “Material provided to vendor” in stock overview data)
- 9. Plant Subcontracting Vendor Subcontracting PO And consumption for components Note : The goods receipt is valuated at the subcontract price plus the value of components consumed. As a result, the material document consists of • Goods receipt for the end product supplied by the vendor • Goods issue for the components supplied to the vendor Goods Receipt for the Subcontract Order Along with required components Goods receipt for End product
- 10. Vendor Consignment - Overview • In this process, vendor provides material and stores them at our company premises. The vendor remains the legal owner of the material until you withdraw materials from the consignment stores. The liabilities are settled periodically.
- 11. Some interesting details about consignment process • Consignment purchase order does not contain any net price, by default it will be zero. • After posting the goods receipt, only material document is created. No Accounting documents are created because net price is zero • Consignment stocks are not valuated as it is considered as vendor’s stock kept at organization's premises. When material is withdrawn from consignment stores, then it is valuated at the price of respective vendor • The material price can only be determined at the time of issue ( consumption) against consignment material as per market price. The prices will be adopted from consignment info- record. • The consignment stock is managed under the same number as your own stock and is available for MRP depending on setting. • Consignment stocks of the same material from different vendors can be managed independently from one another • Consignment material can be allocated to one of the three stock types i.e., unrestricted, quality inspection and blocked stock. But withdrawals can only be posted from unrestricted stock. • Consignment process is treated as important tool to reduce organization's inventory carrying cost to a great extent
- 12. Steps involved in Consignment process 1. Create purchase info-record with info category as “consignment”. It is mandatory 2. Create consignment PR / PO with item category “K” 3. Goods receipt against consignment order 4. Withdraw the material from consignment stores as and when required 5. Settle the consignment liabilities for withdrawn quantity
- 13. Vendor Consignment Process Master Data Purchasing Inventory Management Invoice Verification Consignment PR / PO Item Category “K” Items Consignment Stores GR Settlement GI Consignment Info-record with price Material Master Vendor Master
- 14. Consignment items in Purchasing Consignment Order Item Category “K” 010 --------------- 020 --------------- Consignment Requisition Item Category “K” 010 --------------- 020 --------------- Contract Item Category “K” 010 --------------- 020 --------------- • No Price • No Conditions • No Invoice Receipt • GR required
- 15. Consignment Vendor Consignment PO Note : After posting the goods receipt, only material document is created. No Accounting documents are created because net price is zero in PO Goods Receipt to Consignment stock M A T E R I A L Unrestricted Use Quality Inspection Blocked Consignment Stores Consignment stocks are not valuated. When material is withdrawn from consignment stores, then it is valuated at the price of respective vendor maintained in consignment info-record Vendor Consignment stock
- 16. Goods Issue from Consignment stock M A T E R I A L Unrestricted Use Quality Inspection Blocked Vendor Consignment stock Consumption Transfer to Own stock Invoicing Consignment Info-record GI Liabilities to Consignment vendor Consignment Price The material price can only be determined at the time of issue against consignment material. The prices will be adopted from consignment info-record
- 17. Settlement of consignment liabilities • Removing / withdrawing material from consignment stores or transferring material to company’s own stock results in liabilities towards the vendor. We should settle these liabilities at regular intervals • Consignment liabilities are settled without the vendor issuing an invoice • Consignment info record must be existed and valid prior to settle liabilities
- 18. Thank You