Blog on Subcontracting in SAP MM

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SAP MM Tutorial

In this blog you will learn about SAP MM Tutorial and its basics, tool and modules.

Now, study and practice our concepts with SAP Masters Bangalore, from a leading SAP Training Institute in Bangalore, on the blog.

Maximizing Efficiency: Subcontracting in SAP MM

Subcontracting, a essential aspect of SAP Materials Management (MM), facilitates efficient production processes by outsourcing certain manufacturing tasks to external vendors. Let’s explore the significance and functionality of subcontracting within the SAP MM module.

Understanding Subcontracting:

  1. Definition:
    • Subcontracting involves outsourcing specific manufacturing processes to external vendors while retaining control over the overall production.
  2. Key Components:
    • Primary materials: Materials provided to the subcontractor for processing.
    • Subcontracting order: A purchase order to initiate the subcontracting process.
    • Finished goods: Products produced by the subcontractor using the primary materials provided.

Process Flow in SAP MM:

  1. Creation of Subcontracting Order:
    • Generate a subcontracting purchase order specifying the primary materials to be provided to the subcontractor and the quantity required.
  2. Goods Issue to Subcontractor:
    • Issue the primary materials to the subcontractor’s location using a goods issue transaction in SAP MM.
  3. Subcontracting Processing:
    • The subcontractor processes the provided materials to manufacture the finished goods according to specifications.
  4. Goods Receipt of Finished Goods:
    • Receive the finished goods from the subcontractor using a goods receipt transaction in SAP MM, updating inventory levels accordingly.

Advantages of Subcontracting in SAP MM:

  1. Cost Efficiency:
    • Subcontracting allows for cost-effective production by leveraging specialized expertise and resources of external vendors.
  2. Flexibility:
    • It offers flexibility in production planning by enabling quick scale-up or scale-down of manufacturing activities as per demand fluctuations.
  3. Focus on Core Competencies:
    • Outsourcing non-core manufacturing processes frees up internal resources to focus on core competencies and strategic initiatives.

Implementation Considerations:

  1. Vendor Selection:
    • Choose reliable vendors with proven expertise and track record in subcontracting activities to ensure quality and reliability.
  2. Contract Management:
    • Establish clear contractual agreements outlining deliverables, timelines, and quality standards to mitigate risks and ensure compliance.
  3. Inventory Control:
    • Maintain visibility and control over inventory levels of primary materials and finished goods to optimize stock levels and prevent stockouts or overstocking.


Subcontracting in SAP MM streamlines production processes, enhances flexibility, and fosters cost efficiency by leveraging external resources and expertise. By implementing robust subcontracting processes and collaborating with trusted vendors, organizations can optimize production operations, meet customer demands, and drive business growth in today’s dynamic marketplace.

What are the best ways to learn the Pipeline Procurement in SAP MM?

Enroll in an SAP Masters Course Provided:

Take an online class: SAP Masters sessions address both fundamental and advanced language concepts.

Attend a workshop: To get the entire SAP MM experience, sign up for one or more local or online workshops that provide hands-on training.

Study SAP MM: In SAP Masters there are various materials available that provide extensive technical overviews and serve as efficient Subcontracting of SAP MM study materials.

Practice is key. Exercising of SAP MM will allow you to study it better and showcase your programming skills by writing new code samples for development or execution.

The SAP Masters provides plenty of assistance to freshers looking for help, making the learning process much easier!

Beginning programming can be easy for freshers; however, practicing can assist to build confidence as new programmers gain experience with an expansive programming language

Experience is essential when developing increasingly complex software applications.

SAP Masters learning resources for Subcontracting in SAP MM deliver high-quality training via courses, blogs, and videos in an efficient and time-saving manner, making them ideal for Subcontracting in SAP MM beginners seeking for their first encounter with the software.

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