s4 Hana Subcontracting [PDF]

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In subcontracting, the vendor is provided with materials (components), which he uses to produce the finished product. From the point of view of materials planning, subcontracting is initiated by the special procurement key Subcontracting. The special procurement key is allocated to the finished product or the assembly in the material master ( MRP 2 view). In order to plan specific material requirements for each individual subcontractor, you can use MRP areas. You can thereby create an individual MRP area for every subcontractor

Main differences between S/4HANA and ECC. ECC – with vendor segment

S/4HANA – without vendor segment

If you do not use MRP areas for components to be provided to the subcontractor, there is no separation of provision stocks and subcontracting requirements. The system displays the provision stocks and requirements to be provided as usual stocks and requirements in the net requirements segment of the plant. The provision stock that is already available for a subcontractor (supplier) will be considered as unrestricted-use stock in the plant. The system uses this stock to cover all requirements inside the net requirements segment, not only the requirements for components to be provided to the subcontractor (supplier). S/4HANA subcontracting process redefined with flexible functionality. In SAP S/4HANA MRP uses default planning parameters if MRP-area-specific material master records do not exist. You only have to create an MRP area for every subcontractor. Of course, it is still possible to create MRP area/supplier-specific material master data if required.

This simplification has the following advantages:  

Separate planning of every subcontractor is possible without having to create an MRP-area-specific material master record. The planning logic is simplified. There are two rather than three different ways to plan parts to be provided to a subcontractor.

The default way of planning parts to be provided to subcontractors is based on MRP areas. A subcontracting MRP area should be created for every subcontractor. It is not required to create an MRP-area-specific material master record for every part to be provided to the subcontractor, but of course, it is possible if you want to overrule the default planning parameters. If you have several subcontractors requiring the same component materials and if you do not yet use MRP areas to plan the required components then proceed as follows:  

Create MRP areas for every subcontractor (can be done before or after upgrade) Run regenerative MRP after the upgrade

Subcontractor MRP area configuration You can follow SAP navigation path or transaction code OMIZ directly to configure MRP areas. Click on New Entries and create MRP area as below.

After maintenance of MRP area click on double click on Subcontractor (one entry per MRP area) and maintain the vendor details as below.

Components Planning with Subcontracting Process

Master Data MRP Area MRP area called SUB_001 available to plan separately associated components. SAP suggested maintaining the MRP area parameters to all components which are planned under the MRP area in MRP 1 view (Material R-100101).

Click on MRP areas and maintain the MRP parameters as like plant parameters.

It is important to maintain MRP 2 special procurement to 45 – Stock transfer from plant to MRP area.

Make a note that you need to adopt data while entering MRP area parameters and save material.

Subcontracting Process Execution Demand Flow Forecast updated for subcontracting header material called F-100-101.

MRP Live After forecast updated runs MRP live.

Based on MRP live log total of 4 materials planned 1 material with classic MRP and another 3 with MRP on HANA.

Analyzing MRP results After MRP run completed purchase requisitions created for header article based on planning horizon.

Now go to component R-100-101 and analyze the result at a plant level and MRP area level. Plant level – Stock transfer reservations from the plant to the provision stock of the subcontractor.

MRP area level – Procure the components that you provide to a subcontractor for the production of an assembly, by transferring stock from a plant to the MRP area of the subcontractor.

Mass maintenance Mass processing reports RMMDDIBE and RMMDDIBE02 can be used for maintenance of MRP areas.

5 reasons to use subcontracting MRP areas in S/4HANA. I have been in contact with several customers who are upgrading to SAP S/4HANA recently and I was really surprised when two of these customers decided to implement the subcontracting scenario without the use of subcontracting MRP areas. As I pointed earlier in my blog MRP: Simplification on S/4HANA, one of the major simplifications implemented in MRP is related to the subcontracting scenario. As of the first release of S/4HANA, there is no separated planning stock segment for subcontracting without the use of subcontracting MRP areas. Of course that this is a big change for customers who were used with planning in the old scenario, but there are some advantages in planning with MRP areas and we will see them below. 1 – There is no separated stock segment for subcontracting without MRP areas in S/4HANA The subcontracting planning segment which we were used to see in ECC (highlighted in the figure below) no longer exists in SAP S/4HANA. It means that, without using MRP areas, there will be no separation between the stock provided to the vendor and the plant stock, from a planning perspective, and MRP will not know how much stock we have already provided to the vendor.

Figure 1 – Special stock segment for subcontracting in ECC

With MRP areas, however, there is a complete separation between the stock provided to the vendor and the plant stock, while MRP can plan the subcontracting requirements accordingly. In figure below we can see the subcontracting requirements displayed at MRP area level in S/4HANA.

Figure 2 – Subcontracting requirements at MRP area level

2 – MRP will not plan the transference of components from the plant to the vendor stock As I mentioned above, without MRP areas, there will be no separation between the plant stock and the stock provided to the vendor, which means that MRP will not know in advance how mush shortage of material we have in the vendor side and it will not plan to transfer the stock from the plant to the vendor.

It means that, without MRP areas, we will have additional manual steps, that is to manually transfer the stock from the plant to the vendor and we may even have delays, due to shortages in the vendor.

3 – Third-Party scenario does not work without MRP areas This is not exactly something new in S/4HANA, since the third-party scenario in ECC was only possible with MRP areas, but it is a very important topic. With the use of MRP areas, MRP can automatically plan the third-party scenario, that it the delivery of purchased components directly to the subcontractor. Without MRP areas, we will always receive the stock by default in the plant and then we have to manually transfer it to the subcontractor. With the third-party scenario. we won’t need to receive the components in our plant and then send it to the vendor, which means less steps in the supply chain and less manual activities for planners.

4 – No need to assign MRP areas in the material master If we want to use subcontracting MRP areas in SAP ECC, we need to first create the MRP areas in customizing and then assign them to the material master, so that MRP can plan at MRP area level. In SAP S/4HANA, we only need to create the subcontracting MRP areas in customizing and MRP will automatically identify it and plan accordingly in a subcontracting scenario. It means that the master data maintenance is simpler when using MRP areas in S/4HANA.

5 – Possibility to define MRP area specific planning parameters Even though it is not necessary to assign the subcontracting MRP area to the material master, I can still to that if I need to define planning parameters at MRP area level. Therefore, I can plan at the subcontractor level with a different MRP type, a different lot sizing or special procurement (such in the third-party scenario). I can also assign, for example, a different MRP Controller, if I want to have one MRP controller to take care of all the subcontractors. In addition, we have a mass processing report (RMMDDIBE) to create and maintain MRP areas in the material master.