Types of Subcontracting in Sap Pp

Subcontracting in SAP PP (Production Planning) refers to the process of outsourcing a part of the production process to another company or vendor. This method is often used when a company is unable to handle the production of a particular component or product on its own. In this article, we will discuss the different types of subcontracting in SAP PP.

1. Standard Subcontracting:

The most commonly used type of subcontracting in SAP PP is the standard subcontracting process. In this method, the company sends raw materials to the vendor who then manufactures the necessary product using these raw materials. The vendor then sends the finished product back to the company. The entire process is done based on a purchase order created in the SAP system.

2. Subcontracting with Stock Transfer:

In this process, the company transfers the raw materials to the vendor`s location as stock. The vendor then uses these materials to manufacture the products and sends them back to the company. The entire process is managed through a purchase order in SAP.

3. Subcontracting with Delivery:

In this process, the vendor sends the finished product directly to the company`s customer. The company provides the raw materials to the vendor, and the finished product is shipped from the vendor`s location. The entire process is managed through a purchase order in SAP.

4. External Subcontracting:

In this process, the company outsources the complete manufacturing process to an external vendor. The vendor manufactures the entire product and sends it back to the company. The entire process is managed through a purchase order in SAP.

5. In-House Subcontracting:

In this process, the company outsources a part of the manufacturing process to another department or division within the company. The department or division then manufactures the necessary product and sends it back to the main department. The entire process is managed through a work order in SAP.

In conclusion, subcontracting is an important aspect of production planning in SAP PP. The different types of subcontracting processes discussed above can help companies effectively manage their production processes and ensure timely delivery of quality products to their customers. By understanding the various types of subcontracting in SAP PP, companies can choose the process that best suits their needs and streamline their production processes for maximum efficiency.

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