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Support for Subcontracting Trade Model

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Dear Experts,

We are in the consumer products business.

We are exploring SAP as our next ERP system. One of the key reasons to consider SAP is due to the out-of-the-box support for sub-contracting.

We have two subcontracting models, the first job-work and the second trade. In the job-work model, we own the RM/PM and pay for the conversion to FG so it is straightforward.

However, in the Trade model, the subcontractor purchases the RM/PM from our designated vendor or from us directly.

We directly buy the FG from the subcontractor. In such cases even though we do own RM/PM. It is critical for our procurement and dispatches planning to know the status of the inventory at the subcontractor.

We cannot show this inventory in our books as we don't own it. (we buy FG on a need basis).

We were communicated that SAP supports a non-valued factory such that the inventory has no value in the books but still can be considered for procurement planning.

I could not find any article/blog explaining how this scenario is managed.

I am hoping that the experts in this community would guide me in this case.

Thank you for reading this far!

-- Anup


Community Manager
Community Manager
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