Subcontracting / Outsourcing of Production process

[Former Member]

Dear Team,

We have taken Manufacturing Module recently on our BYD recently.

but we are unable to define / locate out sourcing process in system.

Complete Scenario described as below

Procurement of Raw Material ---> BOM ---> BOO (two step) --->Quality Check ---> & Finish Goods.

In this we have Two step BOO (cost loaded through resources)

1. In-house Processing
   • Milling (Cost = Rs 10/-)
   • Drilling (Cost = Rs 10/-)
2. Sub-Contracting Processing (we pay below cost to contractor who process goods in his premises)
   • Hardening (Cost = Rs 15/-)
   • Blackening (Cost = Rs 15/-)

Unable to sort out below queries :

* Sub contracting cost is billed two times (in purchasing as cost center & in BOO Processing),

   which means if actual Cost is Rs 50/-, additional Rs 15/- cost loaded through PO)

* If we remove subcontracting process from BOO then we loose track of production process (still production cost of material is not calculated anywhere)

Experts.....

Please give your valuable suggestion.

Regards,

Vishal Kambare

Message was edited by: Caetano Almeida - Personal information removed, according to the SCN rules of engagement

[marianoc]

Hi Vishal Kambare,

I am not sure what do you mean with BYD or BOO.

Please avoid the use of abbreviations, that maybe are commonly known by you, but does not help to us to make a quick reading. At least does not help to me.

Thanks

Mariano

[Former Member]

Hi Mariano...

Thank you for your inputs....

SAP BYD = SAP Business By Design (SAP Product)

BOM = Bill Of Material

BOO = Bill Of Operation

PO = Purchase Order

Plz let me know if any

[Caetano]

Hi Vishal

This SCN space is specific for the PP module of SAP ECC.

Since this issue is related to Business By Design, I'm moving this thread to the space

Regards

Caetano

[Former Member]

Thanks Caetano...

Next time I will remember this....

Now do I have to do anything?

[stefan_resag]

Hi Vishal,

not sure if I understood correctly, because costs from a BOO are not billed. However I think you want to avoid that costs are collected on the one hand side based on resource rates and via purchasing.

Maybe you could try the following:

- create two resources, one with a cost rate reflecting the subcontracting and another w/o a cost rate.

Then create two alternative production models with either of these two resources.

- Use the production model w/o a cost rate for poduction

- Use the production model with a cost rate for material cost estimate. You can give this production model a higher priority for product costing.

Hope this helps.