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Subcontracting or service Po

Former Member
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We are sending machines to a vendor for repair. Most of the times we are providing the spares- say as an example gear to the vendor. Sometimes vendor can also use this gear from his own if it is not available with us. In addition if required some other spare in the machine need to be changed, he can use his own spare.

He sends us the bills for his services and of spares if he has used any.

This scenario will fit in which process- Subcontracting or service Po?

If it is service PO than how can we issue the material to the vendor and how the accounting entries will look like?



Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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sub ciontracting will come to picture when there is a shape utilty, i...e conversion of parent material to child material.

here in your case there is no conversion.

as you are sending the material for repairs it will be service purchase order.

you also mention that some times ur vendor will add some spares to the main machine, at this pint of time ask ur purchase to raise the material PO.

u can have material as well as service line item in the one Po.

if u were not sure of material to be added while sending for repairs, u can add the same by amending the PO.

Answers (4)

Answers (4)

Former Member
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It's better to give Service Order to The vendor and issue the materials throgh 541 mov type with respect to that Service order . Please reward the answer if find usefull .

Former Member
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Hi Neeru,

In your case better is to send a subcontracting PO for the Finished component you required from the subcontractor.

and you can maintain the same value in subcontracting Info record irrespective of the material he use .

Now if he uses gears from his own which is defined in your BOM but you havent provided but vendor fited from his own

in this scenario raise a PO to that vendor for that component and provide the drop shipment info in the delivery tab

as subcontractor this will replenish the material at that vendor end. And now when you are doing ME20 you will have already material at vendor end if you have raised this PO before or if after raising subcontract PO you can provide it and it will be

in the stocks of Vendor and now at MIGO you can collectivelly do the 543 movement of this components.

This will stream line your process into two steps without faults else you will awlays have a mess ann will hard to account for.

still you can look into another options but I encountered the same situation and we adopted this method which is working well.


Biren Agnihotri

Former Member
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Dear Neeru,

you can use services, material (subcontracting) in a single P.O. you just have to mention different item category while placing the order.

Hope you got what i mean to say.



Former Member
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this will fit in subcontracting

if u are issuing the goods it comes in normal subcontracting scenario.

if u r not issuing goods then deal it like normal purchasing at take the bill of services in the system.