External Processing Operation

[#1]

Hi..

i have one finish material , which having five operation. Out of five third operation (Op.30) is external processing operation . Finish material use "metal rod "as a raw material.

After creation of production order system has cretaed PR for third operation.

Now I issued the" metal rod " for the first and second operation . After processing , third operation is External Processing,but my store person not getting the material in stock .Asi issued the metal rod for start the operation.

How should i deal with this condition.

What componenets i should maintain in routing of finish material.How store peson get the stock of material.

What is ideal case fro external process operation ??

Plasehelp out

Thnks

[Former Member]

External operation in PP

When you say external operation-it has 2 dimensions

1.Whether you are sending the material outside your company and track the inventory

Or 2.you are not sending the material outside the company and it is contactor in our company premises doing this operation and only service fee for completing the operation is to be paid to contactor..in this case material movement is not recorded in SAP. Hence I will explain option 1

For first option you need to create a separate material no for product which is coming from subcontractor

Say X material  needs Y materialneeds Z material.

Now Z is given to subcontractor and he will convert it be Y and send it to you.

You produce X from Y

In this case you have production order for X and Z and Subcontracting PR-PO for Y material.

You can book the service cost to production cost centre in PO so that cost is captured in cost centre.

Second option is suitable if you donu2019t want to monitor in SAP the stock with subcontractor.

If you donu2019t what to create so may materials simple solution is as below

Create routing for X in which you define external operation. Assign the raw materials to external operation.

When we want to issue the material to first operation, we will not issue the material, rather we will transfer the raw materials to a different storage location in system. Physically we will issue to production and after first operation it will be sent to subcontractor.

Whatever we receive from subcontractor will be issue to production order using 261 movement type.

This was possible as we did not have any excise/tax implications. If it is there then you have to go for option no 1.

[Former Member]

Thanks

i think second option will be useful..

But where is the new storage location..is it negatice storage location...

[Former Member]

But in the second option you cannot send the material outside yr companies (that means you cannot represent this in SAP) Is it okay?