Subcontracting: Subsequent Adjustment For Overconsumption Or Underconsumption

Introduction: 

If the subcontractor reports excess consumption or underconsumption of subcontracting components after delivery of the finished product, you must post a subsequent adjustment to correct the component consumption. In this blog, I will demonstrate subsequent adjustment functionality with subcontracting process.

The following functions are available for posting a subsequent adjustment:

• Post Subsequent Adjustment Fiori app, since SAP S/4HANA 2021

Process Flow:

Process Flow

Enter a subsequent adjustment using Post Subsequent Adjustment app:

On the initial screen, enter the document number of the purchasing document for which you want to enter a subsequent adjustment. To enter the overconsumption or underconsumption of a component, open the item details. In the Components section, in the Goods Movement field, select whether there is Overconsumption or Underconsumption for the individual component and enter the quantity to be posted. For components for which no subsequent adjustment needs to be posted, leave the default No Posting for the goods movement unchanged. Finally, choose to Apply for the component data and post the subsequent adjustment.

Note: A subsequent adjustment can only be entered for a subcontracting purchasing document once a goods receipt has been posted for this document.

Process Steps:

1. Execute Fiori Tile “Post Subsequent Adjustment.”

2. Enter the Subcontracting Purchase Order.

3. Select the Overconsumption or Underconsumption and Quantity Under Goods Movement.

4. In this case, I am selecting Underconsumption and quantity.

5. Post the document.

6. Material Document gets created.

7. Execute Fiori Tile “Material Documents Overview.”

8. Display the Material Document. Validate that reporting underconsumption post movement type: 544 – O, and it puts back inventory to subcontracting location.

Conclusion:

• Using subsequent adjustments, we can report underconsumption or overconsumption of components.
• This will ensure that inventory at subcontracting location is always in sync with what’s physically reported.
• We can roll out the component cost to the finished product by making subsequent adjustments.

Special Procurement Type

In Standard Procurement, a company purchases a material from a vendor and the material is delivered to the company premises. Upon delivery, the ordered goods become the property of the company.

In case of Special Procurement, the goods do not necessarily flow from the vendor to the company. In third-party processing, for example, the ordered material is delivered directly by the vendor to a customer of the company. In stock transfer processing a material is procured internally and transported from a storage location to the place where it is needed.

The following Special Procurement types exist in the SAP system for Purchasing:

• Consignment
• Subcontracting
• Stock transfer using Stock Transport Order
• Third-Party Processing
• Returnable Transport Packaging
• Pipeline Handling

Consignment:

In Consignment Process, the vendor provides the material and stores them in your premises. The vendor remains the legal owner of the material until you withdraw from the consignment stores. Only then does the vendor require payment. The invoice is due at set periods of time, for example, monthly. In addition, you can also arrange with the vendor that you take over ownership of the remaining consignment material after a certain periods of time.

Subcontracting:

In Subcontracting Process, the company provides raw materials/ components to the subcontracting vendor. The vendor in turn process these materials and turn them into final products. These final products are then used by the company to carry out the rest of the operations.

Stock transfer using Stock Transport Order

In Stock Transfer processing, goods are procured and supplied within a company. One plant orders the goods internally from another plant (Receiving and Issuing Plant). The goods are procured using a special kind of purchase order: the stock transport order. With Stock Transport Order, you can request and monitor the transfer of goods. The delivery can be processed in Inventory Management or in the Shipping Component.

Third-Party processing:

In Third-Party processing, the company forwards the sales order to the external vendor, who sends the goods directly to the customer. The sales order is not processed by the Company but by the vendor. Third-party items can be entered in the Purchase requisitions, Purchase orders or Sales Order.

Third-party processing is linked with the Sales and Distribution component. If the sales order contains the third-party items, the system creates the Third Party Purchase Requisitions from the sales order.

Returnable Transport Packaging:

Returnable transport packaging (RTP) is a multi-trip packaging medium (for example, pallets or containers) in which goods can be transported more than once between vendors and customers.

Returnable transport packaging from a vendor, that is stored at a location in the company premises is managed as special stock and clearly assigned as belonging to the vendor. It is property of the vendor and is therefore not included in the Company valuated stock.

Pipeline Handling:

A Pipeline material is a material that flows directly into the production process from a pipeline (for example, oil), from a pipe (for example, tap tower), or from another similar source (for example, electricity)

A material from the pipeline is always available; i.e. it can be withdrawn from the pipeline at any time and in any quantity. 

Depending on the system configuration, a material can be withdrawn only from the pipeline or, in addition to the pipeline, normal stocks of the material can also be managed.