The subcontracting process involves sending raw components to a vendor for a specific manufacturing processes and receiving the value-added finished material back into inventory. I focus on the main quality management activities that are involved during the subcontracting processes related to production operations. In particular, I explain how this process is integrated with Production Planning (PP), Quality Management (QM), Materials Management (MM), and Financial Accounting (FI) considering the following two flows:

• Evaluate the subcontracting processes for a specific operation using QM functionalities with Inspection Type 0130 (Receiving Insp. from External Processing), before performing a subcontractor’s payment
• Evaluate the overall production processes using QM functionalities with Inspection Type 04 (Goods receipt [GR] inspection from production) to validate overall production activities before shipping the products to the final customers

In the SAP system, you should distinguish external processing from the subcontracting process that is the topic of this article. I have noticed that there is often confusion about how these two processes differ. Following are the most important differences between the two. External processing is tied to production orders or maintenance orders on the shop floor. This process occurs when an organization sends the material in process on the order to an outside vendor to do work it can't do itself or for which it lacks available capacity. When the parts are received back, they return to the same order and are finished on the shop floor. The key here is that the part number doesn't change and the value of the outside work is collected on the shop order. Subcontracting is different in that you are not just sending out an operation, but you are purchasing a new part that consists of some of your own materials. In subcontracting the part number can change. The subcontracting costs are charged to the part number. Subcontracting uses a bill of material (BOM) to determine what internal parts are required. For external processing, a purchasing info record is set up at the material group level with a sort string to differentiate between different info records with the same material group. This info record is referred to in the routing operation purchasing details. When this is done, at order release the system creates a requisition for the order amount in accordance with the info record data. The parts are not issued to the purchase order (PO), but the operations are confirmed as normal on the production/maintenance order. The PO is received in the standard manner. Subcontracting is done at the part number level that the sub-contractor supplies via Material Requirements Planning (MRP). The special procurement key 30 Subcontracting is defined in the MRP-2 view of the part that needs to be sent to subcontracting. A subcontracting info record needs to be created for the part number and vendor combination. When this is done, MRP or the Releasing of Production Order process creates a subcontracting requisition that converts into a sub-contract PO. If a BOM exists for the subcontracting part number, the system generates reservations for the components. A separate transaction is used to post the movement to issue the parts to the subcontractor. A standard GR is done against the sub-contract PO that in turn consumes the vendor’s inventory of your parts.

Business Activities in the SAP System

The transactional flow for the subcontracting process is managed by the procurement, PP, MM, QM, and FI modules, as shown in Figure 1.   In this process, the buying department can create a PO in MM with reference to the purchasing requisition generated automatically from the production order’s releasing stage. Then the subcontractor receives the parts under special stock O and performs its work. Upon the GR with reference to a PO, the QM activities are triggered via an appropriate inspection lot. The invoice is paid only if the quality services are accepted by the company. The business activities that are shown in the system are the following:

• Purchase requisition generated upon production order’s release
• Create a PO with reference to a purchasing requisition
• Post the goods issues to ship the products to the subcontractor
• Receive the goods back from the subcontractor and post the GR with reference to the PO
• Trigger the inspection lot creation
• Post the results recording
• Post the usage decision (UD)
• Post the logistic invoice verification (LIV)
• Release the invoice verification (if needed)
• Check the result in the PO history (optional step)
• Pay the subcontractor

Let's delve deeper into these steps in the SAP system now.

Maintain the QM View of Relevant Goods

The QM department can maintain the quality management view of the relevant goods either by executing transaction code MM01 or by following menu path SAP Menu > Logistics > Quality Management > Quality Planning > Logistics Master Data > Material > Create. This action opens the screen in Figure 2. In the Quality management tab in Figure 2, you maintain the inspection type for external processing. Click the Insp. setup button to open the pop-up screen in which you enter 0130 in the Insp Type field and a short description (Receiving Insp. from External Processing). Verify that the default information is in line with your business requirements. For example, verify that the inspections are performed based on the inspection task list. You also need to maintain the inspection type for GR inspection from production. In the Quality management tab in Figure 3, enter 04 in the Insp Type field and a short description (Goods receipt inspection from production). Click the continue icon (the green checkmark). Note that you can also maintain a large amount of data in batch processing for the inspection type for materials using either transaction code QA08 or by following menu path SAP Menu > Logistics > Quality Management > Quality Planning > Logistics Master Data > Material > Inspection Setup.

Maintain the Work Scheduling View of Relevant Goods

The production department can maintain the working scheduling view of the relevant goods either by executing transaction code MM01 or following menu path SAP Menu > Logistics > Quality Management > Quality Planning > Logistics Master Data > Material > Create. This action displays the screen in Figure 4.

In the Work scheduling tab in Figure 4, you need to maintain the scheduling profile and serial number profile (if needed) in the Scheduling Profile and Serial no. profile fields, respectively. Without a working scheduling view a product cannot be manufactured. The scheduling profile is used to specify that certain business transactions are carried out in parallel in a production order (e.g., create and release an order at the same time, or release an order and print the shop papers). You also select the Batch Mgmt Rqt (batch management required) check box (if needed). Usually, you also need to populate the Prod. Stor.Loc. (production storage location) field, and if necessary, populate the fields in the Tolerance data section to indicate tolerance percentages for a goods receipt. Click the save icon (not shown) to save your data. Then, after all the other departments have maintained their views, the material master can be saved. You can see the maintenance status of the materials either via end-user transactions or via a data browser. Usually the master data management process is centralized and managed by workflow, but this is not part of this article. In such a case, the system issues an information message as shown in Figure 4 to state that the material has been created successfully.

Create a Master Inspection Characteristic (MIC)

The QM department can create an MIC using transaction code QS21 or following menu path SAP Menu > Logistics > Quality Management > Quality Planning > Basic Data > Inspection Characteristic > Create. This action opens the screen in Figure 5. Enter the master inspection characteristic code and the plant code. Then decide the type of characteristic, in this case Quantitative (to evaluate the characteristic from a quantitative point of view), the status, language key, and short text. Save the data by clicking the save icon. When you click the Quantitative Data option in Figure 5, the system shows the screen in Figure 6. Here, for your characteristic, you can define the following main options: Decimal Places, Msmt unit (measurement unit), Lower Limit, Upper Limit, Target Value, UpPlaus. Lmt (upper plausibility limit), LoPlaus. Lmit (lower plausibility limit), number of classes, Class width, and Class midpoint. The class width is the difference between the upper limit and the lower limit of a class. The class midpoint is the arithmetic mean of the class limits (upper and lower limits of a class). A plausibility limit protects against the recording and processing of invalid or improbable values. When you click the Control Indicators button in Figure 5, the system shows the screen in Figure 7. In this screen, you can specify the following details:

• Lower specif. limit: If set, you must enter a lower specification limit for the inspection characteristic.
• Upper specif. limit: If set, you must enter an upper specification limit for the inspection characteristic.
• Check target value: If either the Upper specification limit or Lower specification limit indicator is set, then the system checks whether the target value lies within the tolerance.
• Sampling Procedure: If set, a sampling procedure must be assigned to the characteristic in the task list.
• Required char.: If set, the inspection characteristic must be inspected, which leads to the fact that a UD can be posted only after you have confirmed inspection results for this inspection characteristic.
• Classed Recording: If set, the inspection results for the inspection characteristic are recorded as classed values.
• Defects Recording: If set and an inspection characteristic is rejected during results recording, the function for recording defects for a characteristic is automatically called up and a recording procedure can either be initialized by the user or performed in the background.

Click the continue icon and the system shows Figure 8. In this screen, you can specify the following details:

• Fixed Scope: If set, the number of inspected units must correspond to the pre-calculated number of units to be inspected for results recording.
• Docu. if rejected: If set, additional text has to be entered in case the characteristic has been rejected during the results recording.
• RR change docs (Create Change Documents During Results Recording): If set, change documents are created for this inspection characteristic when results are recorded based on characteristics.
• Record measured vals: If set, measured values for this quantitative characteristic have to be inspected and confirmed.
• Print: If set, the inspection characteristic is printed on the inspection instruction.

Click the save icon. You then receive a confirmation that the characteristic has been saved (Figure 9).

Create a Sampling Procedure

The QM department can create a sampling procedure either by using transaction code QDV1 or following menu path SAP Menu > Quality Management > Quality Planning > Basic Data > Sampling > Sampling Procedure > Create (Figure 10). Enter the Sampling Procedure description as the sampling procedure code was entered in the initial screen of the transaction QDV1. The Sampling Type is Fixed. The Valuation Mode that defines the rules for accepting or rejecting a characteristic or a sample is attributive inspection according to nonconforming units. Click the Sample button to see the pop-up Fixed Sample, Attributive screen where you can specify the sample size and the acceptance number for failure. Then, save the data by clicking the save icon. The system issues the information message shown in Figure 10.

Create Inspection Planning

The QM department can create an inspection plan either by using transaction code QP01 or following menu path SAP Menu > Logistics > Quality Management > Quality Planning > Inspection Planning > Create (Figure 11). For my example, there are two inspection plans, respectively, for:

• External quality management activities via subcontracting (Figures 11 to 15)
• Internal quality management activities (Figures 16 to 19)

In Figure 11, you can find the main header details of the Inspection Plan created for the material code FG00000001 and Plant 1010. In this case, I entered the usage of the inspection plan as 53 – GR external processes, the Status as 4 – Released (general), which means that the plan can be used without further restrictions, the Planner Group responsible for planning using that Inspection Plan, and the applicability of the lot size. In this case the plan is valid without limitations. Click the Operations button and the system proposes the details shown in Figure 12. Enter the appropriate work center, plant code, control key, and a description of the operation. Note that the Control Key is a critical field that defines the activities expected or allowed for a specific operation. In my example, the control key ZQM1 is relevant for quality activities and for external processing. For more details, refer to the “Customizing Activities” section. Select the operation and then click the Inspection Characteristics button. The system proposes the details shown in Figure 13. In the Sample folder, specify the Sampling Procedure created in Figure 10, as shown in Figure 14. You then see the message in Figure 15. In Figure 16, you can find the main header details of the Inspection Plan created for the material code FG00000001 and Plant 1010 and group counter 2. In this case, I entered the usage of the inspection plan as 5 – Goods receipt and the Status as 4 – Released (general), which means that the plan can be used without further restrictions. I also entered the Planner Group responsible for planning using that Inspection Plan, the Planning work center, and the applicability of the lot size. In this case the plan is applicable irrespective of the size. Click the Operations button. The system proposes the details in Figure 17. Enter the plant code, control key, operation description, and the duration of the operation in terms of labor, setup, and machine timings. Select the operation and then click the Inspection Characteristics button. The system goes to the screen shown in Figure 18. Enter the type of characteristic to be evaluated (in my example Qualitative), a description, and the sampling procedure created in Figure 10. The system confirms that the plan group is created (Figure 19).

Create a BOM

The PP department can create the BOM either by using transaction code CS01 or by following menu path SAP Menu > Logistics > Production > Master Data > Bills of Material > Bill of Material > Material BOM > Create. In Figure 20, you can display the BOM used for my example. In this case, the QM department can use transaction code CS03 and display the components and related quantity of the manufacturing BOM for the produced goods number FG00000001. Create a Purchasing Info Record The purchasing department can create a purchasing info record either by using transaction code ME11 or by following menu path SAP Menu > Logistics > Materials Management > Purchasing > Master Data > Info Record > Create. This action opens the screen in Figure 21. The purchasing department defines the logistics and price details for the vendor (subcontractor), material group, purchasing organization, and plant combination. Save the document by clicking the save icon. At this stage, the system shows an information message as displayed in the pop-up screen of Figure 21. Note that the Info Category must be defined as Subcontracting. The Info Category field is not shown in Figure 21 as this is an option that is defined in the first screen of transaction code ME11.

Create a Work Center

The PP department can create a work center either by using transaction code CR01 or by following menu path SAP Menu > Logistics > Production > Master Data > Work Centers > Work Center > Create. This action displays the screen in Figure 22. Here, specify the appropriate person responsible (e.g., 001), usage (e.g., 009), and standard value key SAP1 for the setup, machine, and labor timings. Now select the Default Values tab (Figure 23). Here, specify the appropriate Control key as standard PP01 and the Units of Measurement of Standard Values. Click the Capacities tab (Figure 24). Specify the appropriate formulas for setup and machine time requirements. Select the Scheduling tab (Figure 25). Specify the Capacity category as 001 – Machine and the appropriate formulas for setup and machine time. Specify the Validity period, the appropriate Cost Center, and the activity type with the appropriate formulas (Figure 26). Click the Costing tab to go to Figure 26. Display the work center that will be used for the external subcontrating activities via transaction code CR03. In my example, specify the Plant Code 1010 and Work center QMLABS. Press Enter. Note that in this case, only the Basic Data view has been maintained with dummy data as the work in reality is performed externally by the subcontrator (Figure 27).

Create a Standard Routing

To create, change, or display a routing, you can use transaction codes CA01, CA02, or CA03, respectively, or follow menu path SAP Menu > Logistics > Production > Master Data > Routings > Routings > Standard Routings > Create/Change/Display. In the initial screen that the system opens (not shown), enter the material code number and plant. After you press Enter, the system displays the screen in Figure 28. Specify the general data of the routing:

• Usage: 1 – Production
• Status: 4 – Release (general)
• Planner Group: PP department
• Lot size: It depends. In my case I defined it without any limitation.

Click the Operation button and then in Figure 29 specify the work center, plant code, control key, description, and duration data (i.e., setup, machine, and labor time) per each operation. Click the Inspection Characteristics button in Figure 29 and then in Figure 30 specify the master inspection characteristic, plant, version, and sampling procedure. In Figure 29, select the operation 0020. Then follow menu path Details > Operation Detail and scroll down the screen. You reach the External processing details shown in Figure 31. Make sure that the Subcontracting check box is selected and then specify your purchasing organization, inspection type 0130, the cost element, and the appropriate purchasing info record number. Click the save icon to save the data. The system confirms that the routing was saved (Figure 32).

Create a Production Version

To create, change, or display a production version, the PP department can either use transaction codes MM01, MM02, and MM03, respectively or follow menu path SAP Menu > Logistics > Materials Management > Master Data > Material > Create (General)/Change (Immediately)/Display (Current). This action displays the screen in Figure 33. For my example, link Routing 50000002/2 and the BOM 1/1 within an unlimited time for all lot sizes, as shown in Figure 33. Confirm that the status, lot size, validity, routing, and BOM data are correct. Click the Continue button.

Check a General Ledger (G/L) Account

To edit (create, change, or display) a G/L Account, the FI department can either use transaction code FS00 or follow menu path SAP Menu > Accounting > Financial Accounting > General Ledger > Master Records > G/L Accounts > Individual Processing > Centrally. This action displays the screen in Figure 34. For my example click the display icon  as the G/L account was already created by the production planning department (which should be the case also in production). In the Type/Description tab confirm that the GL account type has been defined as Primary Costs or Revenue, the Account Group has been defined as Income statement accounts, and the text descriptions are appropriate. Click the Control Data tab (Figure 35). In the Control Data tab, verify that the G/L account has been linked to a Subcontracting Services account, the cost element category is 1, and the sort key is 008. Click the Create/bank/interest tab (Figure 36). In Figure 36 make sure that the Field status group has been set for Cost accounts for external services. This data should be maintained by the financial department. Click the save icon.

Transactional Data

To perform the quality activities for the subcontracting processes, perform the following main flows in the system:

• Evaluate the subcontracting processes for a specific operation using QM functionalities with Inspection Type 0130 - Receiving Insp. from External Processing
• Evaluate the overall production processes using QM functionalities with Inspection Type 04 - Goods receipt inspection from production

Step 1. Create a Production Order

To create, change, or display a production order, the production planning department can use either transaction codes CO01, CO02, or CO03, respectively, or follow menu path SAP Menu > Logistics > Production > Shop Floor Control > Order > Create > With Material/Change/Display. In the selection screen (not shown), you specify the material code, plant code, and order type. After you enter your data, press Enter. The system then displays the screen in Figure 37. For my example, use transaction code CO01, then enter the Material code number FG00000001, Plant code number 1010, and order Type ZP01. Press Enter and the system displays the screen shown in Figure 37. Here you can enter the produced quantity and the scheduling type. Click the Components button in Figure 37 to assign the components to be sent to the subcontrator for Operation 0010, as shown in Figure 38. Note that the components are defaulted from the BOM of the produced good. Double-click the operation number 0010 and go to the Ext. Processing tab. Here, specify the Purchasing Info Record document number 5500000030 in the External processing tab. All relevant details to manage the subcontractor’s services will be automatically retrieved from the Info Record document as shown in Figure 39. To release the production order, you can either click the flag icon or use the option Functions > Release, as shown in the Figure 40. You then see that the production order document number is saved (Figure 41).

Step 2. Display the Purchase Requisition

To display the puchasing requisition created for the external subcontrating operation activities, you can either use the reports available in the Purchasing module or use transaction code CO03 and go to the Operation details of the external processing, as shown in Figure 42. Double-click the document number in the Purchase Requisition field in Figure 42. The system then calls the Display Purchase Requisition transaction (transaction code ME53N), in the background as shown in Figure 43. Click the Components button. You then see the components that will be delivered to the subcontractor with your premises, as shown in Figure 44. With your premises means that the company issues the components to the subcontractor but the legal owner of the stock is still the company.

Step 3. Create a PO

The purchasing department can create a PO with reference to the purchasing requisition either by executing transaction code ME21N or by following menu path SAP Menu > Logistics > Materials Management > Purchasing > Purchase Order >Create > Vendor/Supplying Plant Known. This action displays the screen in Figure 45. Save it by clicking the save icon.

Verify the components retrieved from the purchasing requisiton, as shown in Figure 46. For my example, note that the Material number SF00000001 appears.

Step 4. Provide Components to the Subcontractor

The logistics department can deliver the components to the subcontractor either by executing transaction code ME2ON or following menu path SAP Menu > Logistics > Materials Management > Purchasing > Purchase Order > Reporting > Subcontracting Cockpit. This action displays the screen in Figure 47. Specify the selection criteria (e.g., subcontractor and plant) and then run the report by pressing F8 or by clicking the execute icon. The system reports the details shown in Figure 48. Enter the issue storage location, batch, and quantity you need to send to the subcontrator and then click the save icon to save your entry. The system then shows the information message in Figure 49 that one item was posted. To display the material document created from the previous step, execute transaction code MB51 or follow menu path SAP Menu > Logistics > Materials Management > Inventory Management > Environment > List Displays > Material Documents. This action displays the screen in Figure 50.

Step 5. Verify the Stock Level

All affected departments can verify the inventory stock level at the subcontractor’s site and associated status either by executing transaction code MMBE or following menu path SAP Menu > Logistics > Materials Management > Environment > Stock Overview. This action opens the screen in Figure 51 that displays a report to verify the stock level and status.

Step 6. Post the GR

To post the GR with reference to the PO upon the reception of the goods and services from your subcontractor, the logistics department can execute transaction code MIGO with MvT (movement type) 101 or follow menu path SAP Menu > Logistics > Materials Management > Inventory Management > Goods Movement > Goods Movement. This action displays the screen in Figure 52. Specify the PO document number and associated line item 4500000113/10 and check the Item OK check box. The data is always saved using the save icon.

Step 7. Display the Inspection Lot

Upon the goods receipt, the system has created an inspection lot automatically. To display the inspection lot, you can use transaction code MIGO, specify the material document, and then click the InspLot (inspection lot) button, as shown in Figure 53. In case the material document created during the GR process is not known, the QM department can either use transaction code QA03 or follow menu path SAP Menu >Logistics > Quality Management > Quality Inspection > Inspection Lot > Processing > Display. Another way to search for the inspection lot (and this is my recommended one) is to use transaction code QA33 or follow menu path: SAP Menu >Logistics > Quality Management > Quality Inspection > Worklist > Inspection > Display Data. After you click InspLot button in Figure 53, the system displays the following Inspection Lot details in the Data for Lot Origin tab, as shown in Figure 54. The main details of the inspection specifications are shown in the Inspection Specifications tab (Figure 55).

Step 8. Enter Results Recording

To enter Results recording, you can either use transaction code QE51N or follow menu path: SAP Menu > Logistics > Central Functions > Batch Management > Environment > Quality Inspection > Worklist > Results Recording. Select the inspection lots for your material FG00000001. Enter any value within the tolerances that is different than the planned value in the Result field in the data entry section and press Enter to confirm. Click the save icon. The system then saves the record results, as shown in Figure 56. You need to evaluate the inspected quantity that in my example is 1 PC. The valuation was accepted by the class 2 and then based on that the results were accepted and saved.

Step 9. Record the UD

To record the UD, the user can use transaction code QA11 or follow menu path SAP Menu > Logistics > Central Functions > Batch Management > Environment > Quality Inspection > Worklist > Results Recording. Specify the Inspection Lot in the main screen and then press Enter. The screen in Figure 57 appears.   In the UD Code field, use F4 help to enter an acceptance without further action (code A1) and click the save icon to save the UD.

Step 10. Verify the Stock Consumed by the Subcontractor

All affected departments can verify the inventory stock level and status - in this case the stock consumed from subcontractor for the batch number 000000021, either by executing transaction code MMBE or following menu path SAP Menu > Logistics > Materials Management > Environment > Stock Overview. This action opens a screen that shows a report used to display the stock level and status (Figure 58).

Step 11. Enter the Incoming Invoice

To post the Logistic Invoice Verification (LIV), the user can use transaction code MIRO or follow menu path SAP Menu > Logistics > Materials Management > Logistics Invoice Verification > Document Entry > Enter Invoice. In the screen that the system displays, enter the data as specified in Figure 59.

Step 12. Display and Release the LIV

To display and release the LIV, you can use transaction code MRBR or follow menu path SAP Menu > Logistics > Materials Management > Logistics Invoice Verification > Further Processing > Release Blocked Invoices. In the screen that the system displays, enter the data as specified in Figure 60. After you have entered all your data, click the execute icon. The system shows the details in the next screen (Figure 61). Note that the invoice was blocked due to the different days (7). The delivery date of the purchase order was specified as 02.05.2017 while the invoice was posted on 25.04.2017.

Step 13. Check the Result in the PO History

To display the PO history, you can use transaction code ME23N or follow menu path SAP Menu > Logistics > Materials Management > Purchasing > Purchase Order > Display. This action opens the screen in Figure 62. Click the Purchase Order History tab to view the GR (Figure 62).

Step 14. Confirm the Production Order

The production operator can enter the production’s confirmation either by executing transaction code CO11N or following menu path SAP Menu > Logistics > Production > Shop Floor Control > Confirmation > Enter > For Operation > Time Ticket. This action opens the screen in Figure 63. Enter the data as specified in Figure 63. For my example, enter partial confirmation details for the operation 0010. Verify the planned goods movements and post the confirmation. After you click the save icon to post the confirmation, the system then displays the details shown in Figure 64. Enter the production order confirmation (Final confirmation) for operation 0010, then save the data, as shown in Figure 65. Note that at this stage the status of the production order operations has been updated as CNF – Confirmed and EODL - External operation delivered as shown in Figure 66. To open the screen in Figure 66, execute transaction code CO03, specify the production order document number, and press Enter.

Step 15. Post a GR against a Production Order

To post the GR with reference to a production order, you can either use transaction code MIGO or follow menu path SAP Menu > Logistics > Materials Management > Inventory Management > Goods Movement > Goods Movement. This action opens the screen in Figure 67. Note that these movements are also visible in the production order document via transaction code CO03, especially the costs for the subcontracting’s services as shown in Figure 68.

Step 16. Display the Inspection Lot

If the material document created during the GR process is not known, the QM department can either use transaction code QA03 or follow menu path SAP Menu >Logistics > Quality Management > Quality Inspection > Inspection Lot > Processing > Display. Another way to search for an inspection lot (and this is my recommended one) is to use transaction code QA33 or follow menu path SAP Menu >Logistics > Quality Management > Quality Inspection > Worklist > Inspection > Display Data or SAP Menu >Logistics > Materials Management > Inventory Management > Goods Movement > Goods Movement (MIGO). These activities display the screen in Figure 69. After you click the InspLot button in Figure 69, the system calls the Display inspection lot transaction (transaction code QA03) in the background and displays the details shown in Figure 70. Now you can navigate within the document and in particular you can go to the Inspection Specifications tab to verify the task list associated to the Inspection lot, as shown in Figure 71. In the Sample tab, you can see the Inspection Lot quantity details, as shown in Figure 72.

Step 17. Verify the Stock Status Before the UD

All affected departments can verify the inventory stock level of the finished goods and associated status either by executing transaction code MMBE or following menu path SAP Menu > Logistics > Materials Management > Environment > Stock Overview. This action opens the screen in Figure 73. Verify that the stock level of the material number FG00000001 and batch number 0000000030 is 1 EA in the status quality inspection.

Step 18. Record the Results

To record results for the inspection lot, the QM department can either use transaction code QE51N or follow menu path SAP Menu > Logistics > Quality Management > Quality Inspection > Worklist > Results Recording. Enter the data in the selection screen and then run the report either by using the execute icon or by pressing F8. The system then displays the details shown in Figure 74. After making your decision about the valuation code, save the document. The system issues the message shown in Figure 75.

Step 19. Post the UD

To perform the UD for the inspection lot, the QM department can either use transaction code QA11 or follow menu path SAP Menu > Logistics > Quality Management > Quality Inspection > Inspection Lot > Usage Decision. This action displays the screen in Figure 76. Specify the appropriate UD code. In my example, I am going to accept the UD as the results recorded for the Inspection Lot passed the quality inspection controls. Then, specify the stock status of the goods from the UD, as shown in Figure 77. After making your decision about the valuation code and stock type, save the document. The system displays the confirmation message shown in Figure 78.

Step 20. Verify the Stock Status After the UD

All affected departments can verify the inventory stock level and status either by using transaction code MMBE or following menu path SAP Menu > Logistics > Materials Management > Environment > Stock Overview. This action opens the screen in Figure 79. As shown in the Figure 79, you can see that the unrestricted use status of the stock of the material number FG00000001 has been increased of 1 EA as the Inspection Lot Stock associated to the IL has been put to unrestricted status. From Figure 79, follow menu path Environment > Equipment/Serial Number, the system will show the details of the serial number data associated to the stock has been posted for the material number FG00000001 and batch number 0000000030, as shown in the Figure 80.

Step 21. Run Reports

All affected and authorized departments can display the details of the QM documents (e.g., Inspection Lot) either by using transaction code QA33 or following menu path SAP Menu > Logistics > Quality Management > Quality Inspection > Worklist > Inspection > Display Data. This action displays the screen in Figure 81. This is a report. The user can run this report based on specific requirements. In my example, I ran the report and selected the plan, inspection lot origin, material code, and lot creation date. After specifying the selection option, press F8 or click the execute icon to run the report. The system displays the details shown in Figure 82.

Customizing Activities

Now I describe the most important customizing activities that you need to check and complete to enable the subcontracting processes.

Define a New Control Key Relevant for Quality Management Activities and External Process Operations

Without the Control key set as described, the subcontracting process cannot be triggered from the production order’s operation. To complete this step, you can either use the IMG transaction code OPJ8 or follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Production > Shop Floor Control > Master Data > Routing Data > Define control key. This action opens the screen in Figure 83. The Control key is used in the operation of the production order. To enable the subcontracting functionalities in the QM module, you need select the Insp.char.required check box and enter the value + in the External processing field. Click the save icon.

Define Task List Usages to Be Used during the Routing Creation for Internal Production and External Subcontracting Activities

Follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Quality Management > Quality Planning > Inspection Planning > General > Define Task List Usages. Task list usages are used in conjunction with routing. For my example, use the value 5 for the GR with reference to the production order and 53 for the GR with reference to the subcontracting PO, respectively, as shown in Figure 84.

Verify the Customizing Settings for Inspection Type 0130 - Receiving Insp. from External Processing

To complete this step follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Quality Management > Quality Inspection > Inspection Lot Creation > Maintain Inspection Types. This path takes you to the screen in Figure 85. For my example, the task list usage value in the routing used for subcontracting was 53 - GR external process. Based on this value the system determines the task list to be associated to the inspection lot created automatically with reference to the subcontracting PO.

Maintain the Inspection Lot Origins and Assign Inspection Types

In this step you make sure that the Inspection Type 0130 - Receiving Insp. from External Processing has been assigned to the Inspection Origin 01 - Goods Receipt. Inspection Type 04 - Goods receipt inspection from production should be assigned to the Inspection Origin 04 - Goods Receipt from Production. To complete this step follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Quality Management > Quality Inspection > Inspection Lot Creation > Maintain Inspection Lot Origins and Assign Inspection Types. This path takes you to the screen in Figure 86. You link the lot origins 01 and 04 with the Task List Type Q - Inspection Plan and status 4 - Released (general). Note that these settings should already have been set by standard QM module activation. Click the save icon. Selecting the second line item in Figure 86. Then double-click the folder Inspection types for the origin. The system reports the details as shown in Figure 87. The entry listed in Figure 87 should have already been created by the system upon the activation of the QM module. In my example, the entry I need to enable is 04 as the origin of the GR and 04 as the inspection type. Having this entry, the system automatically creates an inspection lot with type 04 upon the GR of the production order. Click the save icon. To go to the next screen, click the next entry icon . The entries listed in Figure 88 also should have already been created upon the activation of the QM module. In my example, the entry I need to enable is 01 as the origin of the GR and 0130 as the inspection type. With this entry, the system automatically creates an inspection lot with type 0130 upon the GR of the PO created with reference to the purchase requisition from the production order. Click the save icon. Select the first line item in Figure 86 and then double-click Inspection types for the origin folder. The system reports the details in Figure 88.

Define Default Values for the Inspection Type

In this step you define default values for inspection types 04 and 0130. To do so, follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Quality Management > Quality Inspection > Inspection Lot Creation > Define Default Values for Inspection Type. This path takes you to Figure 89. In the Inspection Lot, with inspection type 0130, select these check boxes: Inspect by task list, Record characteristic results, and Serial nos possible. Leave the rest of the fields as defaulted by standard. Click the save icon and to go to the next screen, click the next entry icon. In the Inspection Lot, with inspection type 04 as shown in Figure 90, select these check boxes: Inspect by task list, Record characteristic results, Serial nos possible, and Post to inspection lot. Leave the rest of the fields as defaulted by standard. Click the save icon.

Maintain the Item Category and Account Assign Category Linkage

In this step you make sure that the combination of Item Category (IC) L - Subcontracting and Account Assignment Category (AAC) F - Order has been defined in the purchasing configuration. This ensures that you can create a purchasing document with these two elements to manage the subcontracting activities. To complete this step follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Materials Management > Purchasing > Account Assignment > Define Combination of Item Categories/Account Assignment Categories. This path takes you to the screen in Figure 91. Enter L in the ItCat. Field and F in the AAC field. Enter Order in the Acc.Assgt Cat.Dscr. field. Click the save icon.

Maintain the Purchasing Requisition Option

In this step you make sure that the Reservation Relevance/Generation of Purchase Requisition option is flagged to 3 - Immediately to have purchase requisitions generated automatically for non-stock material and external operations. To complete this step, you can either use IMG transaction code OPL8 or follow menu path Tools > Customizing > IMG > Edit Project (SPRO) Pushbutton: SAP Reference IMG. Production > Shop Floor Control > Master Data > Order > Define Order-Type-Dependent Parameters. The system displays the screen shown in Figure 92. Select your plant and production order type and then double-click the line item. Click the save icon. The system displays the details in the next screen (Figure 93). In Figure 93, you should set up the parameters related to the Purchase Requisition (PR) management. You can decide how to generate the Purchase Requisition (PR) in case of operations relevant for subcontracting: Reservation/Purch. Req field: You can choose either the value 2 - PR creation upon the releasing of production orders or the value 3 - PR creation immediately upon creation of production orders. Collective PR flag field: If flagged, only one PR is created per production order. If it is not flagged, then a separate purchase requisition is created for every externally processed operation or non-stock component.