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Author's profile photo K V Kumar

Assembly Subcontracting in Production


There are two types of subcontracting in production…

A) Operation subcontracting

B) Assembly subcontracting

Assembly subcontracting:


Due to some capacity problems or operational issues in manufacturing plant,  entire Product is asked to produce outside (at vendor place) and component materials are given to vendor with a subcontracting Purchase Order. Vendor produces the Product and supplies the Product to plant.

Process Flow:

  1. Create material master for Header material ( Product ) and component materials – MM01
  2. Make settings in Header material’s material master  MRP 2 view for subcontracting. – MM02 
  3. Create BOM for Header material  – CS01
  4. Put requirement for Header material – MD61
  5. MRP run for Header material – MD02
  6. Convert generated PR to PO – MD04
  7. Issue component materials to PO- 541 movement – MB1B
  8. Goods receipt of the semi finished material  – MIGO

Master data used:

Header material: 2148

Component materials:  100-410, 100-420, 100-430

Detailed process flow with screen shots

Create material master for Header material ( Product ) and component materials – MM01

Make settings for Header Material in MRP 2 view for subcontracting for special procurement as 30 as shown below 

Create BOM for header material as shown below with CS01 with three components as input materials.

Routing also can be created but is not mandatory..

Put requirement for SFG material in MD61

MRP run for Header material – MD02

Check for PR creation in MD04

Convert Purchase Requisition to Purchase Order and provide the details like vendor, Purch. Org, Purch. Group

Click on the component button and you will be able to see the components attached to this Purchase Order..

Now save the PO

Once the components are given to vendor, Issue component materials to Purchase Order with T-code MB1B with 541 movements

Now check for the stock of the raw materials in MMBE they will be shown as Stock provided to vendor as below

After vendor manufactures product he supplies the product to the plant.Goods receipt of the Product material to be done.

Make 101 movement against the Purchase Order to receive the header material (manufactured Product).

Give the relevant details like storage location and others and save

Now check for the consumption of component materials in mmbe

Now check the stock of the header material (Product)



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      Author's profile photo Sankar AK
      Sankar AK

      Hi Kumar,

              Documented very nicely. I believe that we can use SAP Enjoy transaction MIGO for all kind of GI/GR and transfer posting instead of using MB**.

      Author's profile photo K Kumar
      K Kumar
      Blog Post Author


      Thanks for your appreciation....



      Author's profile photo Srini Ravindra Kumar
      Srini Ravindra Kumar

      Appreciate your effort Kumar.

        Topic as Assembly subcontracting should alone be sufficient and the reference to production can be removed. Subcontracting as a planning process uses 'planning segments' and the same can be included as appropriate.

      Author's profile photo K Kumar
      K Kumar
      Blog Post Author


      Good observation and thanks for your feedback...



      Author's profile photo Eason Ling
      Eason Ling

      Hello Kumar,

      This is a great blog for assembly subcontracting.

      I do have a question on this topic:

      What if i use this assembly as a bom item in other header material, just like,

      Material A--- Subcontracting --SPK = 30

      Component B and C belong to Material A. For B and C, i purchase them and send to vendor to produce A, then i get the A to produce D.

      Material D

      Component A and C belong to Material D.

      And I just want to maintain the PIR for Material D, during the MRP run for Material D, i want to generate the DR for the component B and C, so i can purchase them..

      Is that possible i can simply use your scenario and add the subcontracting material to material D?

      Please kindly to give some tips~~

      Thanks and best regards,