Manage Outsourced Manufacturing with New Features in 6.0 Enhancement Package 4

  • by Suresh Veeraraghavan, Capgemini
  • June 12, 2013
If you use contractors for some of your manufacturing operations, new functionality for managing them is designed to save you some time. See how to configure SAP Outsourced Manufacturing, what master data needs to be maintained, and the functional steps required to implement six new features.
Key Concept
Outsourced Manufacturing is a new SAP capability that provides the capability to manage outsourced manufacturing from a new cockpit and to have non-delay consumption posting, tracking of in-transit components, product costing, and consumption reporting.

Outsourced manufacturing is used when a company focuses on core manufacturing capabilities and decides to outsource some of its operations. There could be a number of reasons why outsourced manufacturing is used: 

  • When you don’t have enough capacity to assemble the products
  • When these outsourced activities are not your core capabilities
  • The outsourced manufacturer can do it cheaper and faster
The outsourced manufacturing functionality enables the following end-to-end business process:
  • Identify the need for finished products assemblies that would be handled by an outsourced manufacturer
  • Initiate planning for these finished products by entering the demand for these items
  • Run material requirements planning (MRP) to create subcontracting purchase requisitions
  • Convert the requisitions to outsourced manufacturing purchase orders (POs)
  • Ship components needed to assemble the finished product to the outsourced manufacturer
  • Track in-transit inventory of components provided by the outsourced manufacturer
  • Receive components at the outsourced manufacturer
  • Complete assembly of finished products at the outsourced manufacturer and consume components
  • Report on component consumption
  • Receive value-added assembled product at your company

New outsourced manufacturing functionality was introduced with SAP ERP 6.0 enhancement package 4, with the following features:

  • Subcontracting cockpit
  • Inbound delivery with component overview
  • Non-delay consumption posting
  • In-transit tracking for component inventory
  • Direct provisioning from another plant
  • Consumption reporting


Suresh Veeraraghavan

Suresh Veeraraghavan is a senior manager with Capgemini, a leading management and IT consulting firm. He works in the technology service group. He has 14 years of experience delivering SAP implementations in various capacities. Prior to joining Capgemini, he worked with Hewlett-Packard as a supply chain architect, managing and implementing SAP supply chain projects on a $26 billion platform. His expertise is in implementing best practices in supply chain management, specifically procure-to-pay and order-to-cash. He is a certified project management professional (PMP) and CPIM certified.

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