What Is Subsequent Adjustment In Process Of Subcontracting

ERP SAP ==> SAP Material Managment

After the subcontractor (as vendor) had delivered the ordered material (end product), you posted the goods receipt to the subcontract order. The system determined the necessary components for each purchase order item and created for each component a goods issue item with the quantity that was determined in the purchase order.

If the vendor informs you after these postings that a greater or smaller quantity of the subcontracting components was actually consumed than planned in the purchase order, you must post a subsequent adjustment to correct the component consumption.

If the component is a by-product, you must post the corrected by-product receipt (excess receipt) or by-product issue (short receipt).

"In Simple Words, suppose you have sent xx material 100 kgs to subcontractor for processing of 100 yy component. The subcontractor has produced 95 yy by using 100 kgs of xx. That means he has used 5 kgs excess material. But it was not of his fault. It was done on account of die / mould or some other reason. 

So you have to post a subsequent adjustment for 5 kgs of xx material and reconcile using J1IFQ for making subcontracting challan complete. Similar case can be understand when subcontractor processes 105 yy using 100 kgs of xx. That means 5 kgs of xx short consumed. These types of adjustment can be known using t-code mb51 and movement type 121."

In the transaction for goods movements MIGO, select the business operation Subsequent Adjustment from the list box. The system automatically chooses Purchase Order as the reference document. Enter the document number of the purchase order and the item number for which you want to post a subsequent adjustment.

So in the case of system, we have to choose the movement type 121 as and as automatically the system chooses the HIDDEN movt type 543 or 544 based on our requirement and itís clear that both the movts 543 & 544 are Hidden movements and we cannot execute those movts.

For the selected item, enter the difference quantity specified by the vendor and determine with the Under consumption/Short Receipt indicator, whether a receipt or an issue is concerned. If you set the indicator, it is an under consumption or short receipt. If you do not set the indicator, it is an excess consumption or excess receipt.

Post the subsequent adjustment.

The specified quantities of the originally posted goods receipt are corrected by the system to the subsequently adjusted quantities.

Can you update me the account postings for sub-contracting process at various stages.

Subcontracting Process

Subcontracting without Payment of Duty

Creation of Subcontracting PO (ME21N) 

Transfer Posting of Components to Subcontractor (Mvmt Type - 541) (MB1B/ME2O/MIGO) 

Creation of Subcontracting Challan w.r.t. Transfer Posting Doc (J1IF01) 

Goods Receipt w.r.t. Subcontracting PO and Refer Subcontracting Challan at the time of GR (MIGO) {GR with 101 and auto consumption of components with 543 movement} 

Reconciliation of Subcontracting Challan (J1IFQ) 

Completion of Subcontracting Challan (J1IF13) 

Generation of Annexure IV (J1IFR) 

Note: - In this case, you have to maintain the Assessable Value for the Components to be supplied to Vendor in J1ID and also Excise Tax rates for the Chapter IDs linked with these components. So during J1IF01, system will take the Assessable Value as Excise base Value and calculates the Excise Duties by taking Excise Tax Rates.

Subcontracting under Full Payment of Duty

Creation of Subcontracting PO (ME21N) 

Transfer Posting of Components to Subcontractor (MB1B/ME2O/MIGO) 

Creation of Outgoing Excise Invoice w.r.t. Transfer Posting Document (J1IS) - Used to send the components to Subcontractor's. Here 57F4 Challan is not created. 

Accounting Entry: -

CENVAT Suspense A/c - Dr

Capture Vendor Excise Invoice at the time of GR of Finished Goods w.r.t. Subcontracting PO (MIGO) 

Post Excise Invoice for FG received from Subcontractor (J1IEX) 

Accounting Entry: -

CENVAT Clearing A/c - Cr

Master Data:-

MM01- Material Masters for Components and FG 
XK01 - Vendor Master (Subcontractor) 
CS01 - BOM for FG 
ME11 - Purchase Info record for Subcontracting 

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