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I have been in contact with several customers who are upgrading to SAP S/4HANA recently and I was really surprised when two of these customers decided to implement the subcontracting scenario without the use of subcontracting MRP areas. As I pointed earlier in my blog MRP: Simplification on S/4HANA, one of the major simplifications implemented in MRP is related to the subcontracting scenario.

As of the first release of S/4HANA, there is no separated planning stock segment for subcontracting without the use of subcontracting MRP areas. Of course that this is a big change for customers who were used with planning in the old scenario, but there are some advantages in planning with MRP areas and we will see them below.

1 – There is no separated stock segment for subcontracting without MRP areas in S/4HANA

The subcontracting planning segment which we were used to see in ECC (highlighted in the figure below) no longer exists in SAP S/4HANA. It means that, without using MRP areas, there will be no separation between the stock provided to the vendor and the plant stock, from a planning perspective, and MRP will not know how much stock we have already provided to the vendor.

Figure 1 – Special stock segment for subcontracting in ECC

 

With MRP areas, however, there is a complete separation between the stock provided to the vendor and the plant stock, while MRP can plan the subcontracting requirements accordingly. In figure below we can see the subcontracting requirements displayed at MRP area level in S/4HANA.

 

Figure 2 – Subcontracting requirements at MRP area level

 

 

2 – MRP will not plan the transference of components from the plant to the vendor stock

As I mentioned above, without MRP areas, there will be no separation between the plant stock and the stock provided to the vendor, which means that MRP will not know in advance how mush shortage of material we have in the vendor side and it will not plan to transfer the stock from the plant to the vendor.

It means that, without MRP areas, we will have additional manual steps, that is to manually transfer the stock from the plant to the vendor and we may even have delays, due to shortages in the vendor.

 

3 – Third-Party scenario does not work without MRP areas

This is not exactly something new in S/4HANA, since the third-party scenario in ECC was only possible with MRP areas, but it is a very important topic.

With the use of MRP areas, MRP can automatically plan the third-party scenario, that it the delivery of purchased components directly to the subcontractor. Without MRP areas, we will always receive the stock by default in the plant and then we have to manually transfer it to the subcontractor.

With the third-party scenario. we won’t need to receive the components in our plant and then send it to the vendor, which means less steps in the supply chain and less manual activities for planners.

 

4 – No need to assign MRP areas in the material master

If we want to use subcontracting MRP areas in SAP ECC, we need to first create the MRP areas in customizing and then assign them to the material master, so that MRP can plan at MRP area level.

In SAP S/4HANA, we only need to create the subcontracting MRP areas in customizing and MRP will automatically identify it and plan accordingly in a subcontracting scenario. It means that the master data maintenance is simpler when using MRP areas in S/4HANA.

 

5 – Possibility to define MRP area specific planning parameters

Even though it is not necessary to assign the subcontracting MRP area to the material master, I can still to that if I need to define planning parameters at MRP area level. Therefore, I can plan at the subcontractor level with a different MRP type, a different lot sizing or special procurement (such in the third-party scenario). I can also assign, for example, a different MRP Controller, if I want to have one MRP controller to take care of all the subcontractors.

In addition, we have a mass processing report (RMMDDIBE) to create and maintain MRP areas in the material master.

 

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12 Comments

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      1. Former Member

        Hello Mr.Caetano Almeida

        Can you please help me

        Error:  Capacity planning CM01 = Requirement showing 0..

        Work center(Capacities,scheduling) , Rounting(Control key,Standard key,Scheduling,Scheduling result & Update Material Master) , OPU3 setting also done

        And SPRO Capacity related configuration Settings also done even though i will face the above error can u pls suggest

        Regards

        Mugesh u

        (0) 
        1. Caetano Almeida Post author

          Hello Mugesh

           

          Your question is not related to the blog topic. Please open a new question with your doubt under the tag MAN Production Planning (PP).

          Regards,

          Caetano

          (0) 
  1. Kyatam Vinamrath Kumar

    Hi Caetano,

    I have few questions here.

    How the stocks provided to vendor, will move from storage location to vendor MRP area ? with same movement type 541.

    Do we need to create MRP area for each vendor separately  and with one MRP area we can manage?

    It would be better if you post an end to end process document with step by step screen shots and it will be very useful for us.

     

    Thanks

    Kumar

     

    (0) 
  2. Nancy Guo

    Hi Caetano,

    Happy holidays!

    Did you test MD01N if the subcontracting MRP area is not assigned to the material master? Is proposal created for the subcontracting requirement by MD01N?

     

     

    (0) 
  3. Former Member

    Hello Caetano,

    We just migrated our client’s ECC system to S/4 HANA 1610 OP.

    We would like to know from you if Subcontract MRP area would fulfill the below requirements from client.

    Client wants to create a  new plant to handle subcontract procurement and sales happening at a 3rd party location Рthis plant should receive raw materials & semi-finished from existing plants of the client through STO, manufacture the finished goods and ship the finished goods directly to customer. Client wants to track only the procurement and sales business processes and not the production related processes in S/4 HANA. To be specific, they want to track raw material issue to subcontract location, raw material consumption, finished goods stock at 3rd party location and delivery and billing from subcontract location.

    Can MRP Aarea be used instead of additional plant for the 3rd party location & handle all these processes?

    If yes, are there any additional settings that need to be done for MRP area?

    Please advise.

    Thanks

    Prabhu

    (0) 
  4. Tom Critchley

    We are using 1709 and setting up third party subcontracting process.  I have done all the necessary setup:

    1. Created a new 03 MRP area (OMIZ) and assigned supplier
    2. Created a new special procurement type (OMD9) for plant, 20 ‚Äď external procurement
    3. Extended both components to the new MRP area
    4. Created BOM for material
    5. Created Source lists
    6. Created sub-contract SA and also component SA with delivery address to sub-contractor

    When we create demand on the sub-contract SA then we see the demand for the components, however instead on adding a delivery line to the component SA a purchase requisition is created.  This only happens when using MD01N, if we plan using MD02 then delivery lines are added.

     

    Any advise would be good

     

    Thanks

     

    Tom

     

    (0) 
    1. Caetano Almeida Post author

      Hi Tom

       

      Can you please open a new question in the tag MAN Production Planning PP with your issue?

      According to the SAP Community rules, Blog comments should not be used for troubleshooting issues.

      Regards,

      Caetano

      (0) 
  5. Fabian Wagner

     

    Hi Caetano,

    thanks for this and your other posts regarding subcontracting in S/4. Often it is mentioned that it is no longer required to assign the MRP area to the subcontracting components.

    Is this also true if you want to use MRP / product heuristic in Advanced Planning?

    Thanks and best regards

    Fabian

    (0) 

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