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Subcontracting Scenario Issue

Former Member
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Subcontracting Scenario issue:

Dear all I am facing one problem in Subcontracting scenario:

Problem defination:

We are doing implementation for Wafers company in which they are sending peanuts for getting it roasted from subcontractor.

Let us Say the Material that which comes after subcontracting is

Roasted peanuts

whereas Bom items are:

1)Dana Chevda(Peanuts)

2)waste seng dana(Peanuts)

3)Small Peanuts for chevda

4)Process loss send dana for chevda

I am sending Dana Chevda(Peanuts) -12500 Kg for getting it roasted, where as at subcontractors location

Small Peanuts for chevda are separated out which are sent back to the original vendor,

Also while Processing waste seng dana(Peanuts) are generated which can be sold later on, and also Processing loss is there because while

roasting peanuts due to moisture contents in Peanuts the moisture get reduced and there is process loss so i have maintained Processing

waste seng dana(Peanuts) as one of the Item code .

Now all the 3 Items 3

2)waste seng dana(Peanuts)

3)Small Peanuts for chevda

4)Process loss send dana for chevda

These are generated at vendors location .

Subcontracting Vendor is charging Rs 95 per 50 Kg ,i.e 1.90 Rs/Kg.

But the actual quantity which comes after roasting is less than the Quantity sent for getting it roasted.

That means i m sending Peanuts 12500 But the actual Roasted peanuts are 10250.Where as Vendor is charging Roasting Charges for 12500 Kg.

How Do i manage in the system,coz i m facing problem in calculation ,Also i am mentioning (Process loss send dana for chevda ) so that i can track how much is the process loss.Is it the right method.

Awaiting for your valuable suggestion.

Regards

Shailesh

Accepted Solutions (0)

Answers (2)

Answers (2)

Former Member
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Hi,

During the subcontracting -rejection allowance is allowed normally 5% . So the subcontractor has to charge the rejection allowance in the bills.

Eg :

kgs sent to vendor:12500 Kg

5% rejection allowed -- 12500*.05---> 625 kgs

final material to be recd at your end after processing ---12500- 625 -->11875kg

you have to pay for the 11875 kg only.

In your case it is 15% which is more.

This is the standard procedure

G.Ganesh Kumar

Former Member
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Dear Ganesh

I agree with you that the process that u have mentioned is normal process

But the Subcontracting Vendor Charges me the Processing charges on the Material that i am sending and not on the material that comes after processing

as mentioned ablove in the thread

regds

shailesh

csaba_szommer
Active Contributor
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Hi,

Your requirement is against the standard SAP process. In standard SAP the subcontracting fee is paid for the F-30 material and it doesn't consider how much raw material has been processed to get the goods (F-30).

It's clear that you pay for the raw material processing and not directly for the F-30 material 'cause you don't know the exact amount at the time of issuing the subcontracting order. So, you know the exact amount of money you have to pay, but you do not know the qty of F-30 and it's difficult to define the proper price.

This is very similar to an external service order - the only problem that here you have some material flow....

If you can define an the exact rate (F-30 / processed raw material), there's no problem.

If not, at the end of the subcon work, your vendor should be able to tell you the exact amount of F-30 material > you have to modify the PO, unit price, component list of PO accordingly, manually, before the GR - not very comfortable.

I think you can also contact SAP AG since their software seem not to cover this business process (if I'm not mistaken). (If I'm right) the question is whether they take it(=the problem) important enough to take care of it...

Regards,

Csaba

Former Member
0 Kudos

Hai

In the Sub contracting PO the sub contracting charges are mentioned for each item of finished product that is going to be received.Hence the calculation of sub contracting charges will not be a problem for you.For deducting the charges due to loss, it is to be done on per kg loss or percentage of loss as per your client's wish.Hope this will answer your issue.Reward me if helpful

Regards,

Gangadhar Y

Former Member
0 Kudos

Dear Ganagadhar

I think you have not read the thread properly,my query is Subcontractor charges me for the whole Quantity he is roasting and not where as the finished quantity is always less then the material sent,so he is roasting the whole quantity and charging me on that ,where as i m receiving less then what i m sending it to subcontractor

Any other suggestion

Regds

shailesh