| # Operation subcontracting in Procurement The operation subcontracting functionality enables purchase requisitions, requests for quotation (RFQs), and purchase orders to include these subcontracted items: Subcontracted service items, that do not require supply of material Purchased or Manufactured items with linked material supply information, which require supply of materials and subassemblies from the manufacturer to the subcontractor Purchase documents for subcontracted items can be generated from a routing operation or production order using these sessions in Manufacturing Routing Operations (tirou1102m000) Production Orders (tisfc0501m000) Generate Subcontracting Purchase Documents (tisfc2250m000) For subcontracted services, you can also manually specify purchase documents. Master data Before you can generate purchase documents from Manufacturing to subcontract operations, specify this master data: For items with material flow In the Implemented Software Components (tccom0100s000) session, select the Subcontracting with Material Flow check box. For purchase requisitions In the Items - Purchase (tdipu0101m000) session, specify the Requisition Mandatory for Operation Subcontracting field. In the Purchase Requisition Parameters (tdpur0100m200) session, specify the Requisition Series for Subcontracting and Submit Generated Requisitions Automatically fields. For purchase orders In the Purchase Order Parameters (tdpur0100m400) session, specify the fields in the Subcontracting group box, such as Order Series for Subcontracting, Order Type for Subcontracting, and Valuation for Subcontracting WIP. For prices In the Items - Purchase (tdipu0101m000) session, specify the fields in the Operation Subcontracting group box, such as Source of Price and Subcontracting Purchase Price. Purchase requisitions Step 1. Generating and updating subcontracting requisitions You can generate a purchase requisition from a routing or a production order. For a subcontracted requisition line: The Subcontracted check box is selected in the Purchase Requisition Lines (tdpur2502m000) session The operation for the item routing, the production order, and the material supply information are displayed in, or can be initiated from the Linked Requisition Line Data (tdpur2502s000) session As much requisition lines as possible are stored under one requisition header. Lines with the same requester, purchase office, and currency appear under one header. If you change the required date, quantity, or peg distribution data for the production order that is linked to the purchase requisition, the changes are updated in the requisition line. For requisition lines without peg distribution, you can update the quantity and quantity unit. However, the linked production order is not modified. If you make changes to a routing operation that is linked to a purchase requisition, the requisition line is not modified. The routing operation can be deleted only if the requisition is not closed. You can cancel requisitions with the Rejected or Modified status and delete requisitions with the Created status. If the requisition is canceled or deleted, a new requisition can be generated for the subcontracted item. Step 2. Approving subcontracting requisitions If the Submit Generated Requisitions Automatically check box is selected in the Purchase Requisition Parameters (tdpur0100m200) session, LN submits the generated purchase requisitions for approval. Note: If this check box is selected, the purchase requisition cannot be updated before approval. Updates can be made only when the requisition is rejected by the approver. For more information, refer to Purchase requisition approval process. Step 3. Converting subcontracting requisitions An approved subcontracting requisition can be converted to a purchase order or an RFQ in the Convert Purchase Requisitions (tdpur2201m000) session. The following apply to conversion: If the requisition has a linked production order and a buy-from business partner and price for the subcontracted item are identified, the requisition can be converted to a purchase order. The requisition cannot be converted to a purchase order before the linked production order is released. If the requisition has a linked production order, but no buy-from business partner or price can be identified or the price must be negotiated, the requisition can be converted to an RFQ. If the requisition has a linked routing and no linked production order, it must always be converted to an RFQ and cannot be converted to a purchase order. For more information, refer to Purchase requisition conversion process. Note If an RFQ is generated for a subcontracting requisition, you cannot delete the requisition before the RFQ is converted to a purchase order. The production order must remain linked to the requisition until a purchase order is generated. Requests for quotation (RFQs) After a requisition with a subcontracted item is converted to an RFQ, the origin of the generated RFQ is set to Requisition. For a subcontracted RFQ line: The Subcontracted check box is selected in the Request for Quotation Lines (tdpur1502m000) and RFQ Responses (tdpur1506m000) sessions The operation for the item routing, the production order, and the material supply information are displayed in, or can be initiated from the Linked RFQ Data (tdpur1502s000) session If the RFQ has a linked production order and is not yet converted to a purchase order, the production order cannot be changed. For RFQ lines and response lines, the item and peg distribution data cannot be changed. For RFQ lines without peg distribution, you can update the quantity and quantity unit, but these updates are not applied to the linked production order. RFQ lines that are linked to a production order must be converted to a purchase order only after the linked production order is released. RFQ lines that are not linked to a production order can be converted only to a purchase contract, or a price book. If an RFQ line has alternative lines, the link with the production order or routing is defaulted on the alternative 0. The origin for the alternatives is Manual and no linked data is available. If the RFQ line has a linked production order, only one alternative must be converted to a purchase order. Other alternatives can be converted to a purchase contract or a price book. An RFQ line with the Requisition origin cannot be deleted before the line is converted. If more than one alternative is available for a line, alternatives can be deleted. However, the first alternative (alternative 0) must remain. Purchase orders Purchase orders lines with subcontracted items can be generated from Shop Floor Control or from a converted requisition or RFQ. These purchase order lines must always have a linked production order. For a subcontracted purchase order line: The Subcontracted check box is selected in the Purchase Order Lines (tdpur4101m000) session The production order is displayed in the Purchase Order Line - Linked Information (tdpur4502s000) session The material supply information is displayed in the Purchase Order Material Supply Lines (tdpur4116m000) session The process to generate and update purchase orders lines with subcontracted items is similar to the applicable process described earlier for purchase requisitions. Operation subcontracting prices If a requisition is generated from SFC and the Source of Price field is set to Subcontracting Rate in the Items - Purchase (tdipu0101m000) session, the subcontracting rate is defaulted as the purchase price for the requisition line. When the requisition is converted to a purchase order, this purchase price is also stored on the order line and no discounts are retrieved. If the Source of Price field is set to Price Book / Contract, no price is defaulted for the requisition line. When the requisition is converted to a purchase order, a purchase price and discounts are retrieved for the purchase order line based on the general searching logic for retrieving pricing information. For RFQs, the requisition line price is defaulted as Target Price in the Request for Quotation Lines (tdpur1502m000) session. When a requisition (with or without price) is converted to an RFQ, LN overwrites the requisition line price with the price and discounts that are returned by the bidders on the RFQ. Subcontracting origins A requisition, RFQ, or purchase order line with a subcontracted item, can have these origins:
Purchase object | Available origins | Explanation | Linked document(s)
--- | --- | --- | ---
Requisition | Routing | Generated from a routing operation | Routing operation
SFC | Generated from a production order | Production order
Manual | Manually specified subcontracted service | -
RFQ | Requisition | Generated from a converted requisition with the Routing, SFC, or Manual origin | Routing operation, or production order, requisition
Manual | Manually specified subcontracted service | -
Purchase order | SFC | Generated from a production order | Production order
Requisition | Generated from a converted requisition with the SFC origin | Production order, requisition
RFQ | Generated from a converted RFQ with the Requisition origin | Production order, RFQ
Related topics Subcontracting in Procurement Pegging material supply lines for operation and item subcontracting Overview of subcontracting Purchase requisitions Overview of RFQ handling Overview of purchase order handling An outline of the pricing information retrieval processes |