Understanding Subcontracting in SAP IBP: Optimize Your Supply Chain

In today’s fast-paced supply chain environment, subcontracting plays a crucial role in helping organizations meet production demands by leveraging external suppliers. SAP IBP offers advanced functionality to manage subcontracting within order-based planning. We will provide information on how subcontracting works in SAP IBP and how businesses can use this feature to optimize their supply chain processes.

What is the Subcontracting Process?

The subcontracting process is a procurement process where the purchasing organization provides components to an external supplier, known as the subcontractor, to produce the final product. SAP IBP’s subcontracting functionality integrates seamlessly into the order- based planning framework, allowing companies to efficiently manage these external production processes.

Subcontracting Process in SAP IBP

In SAP IBP, the subcontracting process is initiated through subcontracting purchase requisitions, which specify the components to be provided to the subcontractor. These requisitions are automatically created during planning runs, either in the Supply Planning

Run or the Demand-Driven Replenishment (DDR) Run, depending on the business’s planning model.

The subcontracting process in SAP IBP includes the following steps:

Creation of Subcontracting Purchase Requisition: A planning run in SAP IBP identifies the subcontractor as the source of supply and generates the purchase requisition. The system ensures that all required components are associated with the requisition, and stock transfer requisitions for components are created automatically.

Transfer of Components to the Supplier: Components are transferred from the purchasing organization’s stock to the subcontractor. The transfer postings are managed by SAP ECC or SAP S/4HANA systems, and the stock levels in IBP are updated to reflect this movement.

Receipt of the Final Product: Once the subcontractor completes production, the final product is received by the purchasing organization, and the corresponding stock levels are updated. At this stage, the system posts the goods receipt for the final product, and the necessary component stock reductions are made.

Key Features of the Subcontracting Process in SAP IBP

To ensure smooth execution of subcontracting processes, SAP IBP offers several critical features:

• Subcontracting Quantity Management: Subcontracting component demand quantities are updated during planning runs. This helps in effectively tracking and managing component requirements.
• Real-Time Integration (RTI): SAP IBP integrates with SAP S/4HANA or SAP ECC, ensuring that subcontracting processes such as stock transfers and goods receipts are reflected in real-time.
• Transportation Load Building: Subcontracting purchase requisitions are transformed into transportation loads when necessary, facilitating the logistical aspects of subcontracting.

Prerequisites for Subcontracting in SAP IBP

Before implementing subcontracting in SAP IBP, certain system settings must be in place:

• PRODUCTIONVERSIONID Attribute:This attribute should be maintained in the planning model to determine the Bill of Materials (BOM) for the final product.
• VALIDONLYFORSUBCONTRACTING Attribute:This attribute is used to define production data structures specific to subcontracting.
• Updated RTI Structures: Real-Time Integration (RTI) profiles related to the production source supply should be set to version 2.

Benefits of Using Subcontracting in SAP IBP

• Subcontracting in SAP IBP offers various advantages for businesses looking to

improve the efficiency of their supply chain operations:

• Improved Visibility: With integrated subcontracting processes, businesses can track component movements and production statuses in real-time, enabling better decision- making.
• Efficiency in Planning: The automated creation of purchase requisitions and integration with external suppliers reduce manual workload and ensure adherence to production timelines.
• Enhanced Supply Chain Flexibility: By leveraging external production capacities, organizations can respond more flexibly to fluctuations in demand.

Conclusion

Subcontracting in SAP IBP allows businesses to manage external production efficiently, ensuring that components are supplied to subcontractors on time and final products are received according to the production plan. By integrating subcontracting into the order- based planning process, SAP IBP enhances supply chain visibility, planning accuracy, and overall efficiency.

Yazar: Korhan UYANIK