SAP Ariba

Ariba SCC – Subcontracting Collaboration

1. Introduction and Business Benefits

The purpose of this blog is to provide a detailed view of the Ariba SCC- Subcontracting end-to-end transaction flow along with screenshots of both Ariba and SAP ERP systems. This article will help the Ariba Consultants in visualizing the end-to-end transactional flow of Ariba SCC- Subcontracting.

Subcontract Manufacturing Collaboration is an outsourcing of certain production activities that were previously performed by the manufacturer to a third-party. Ariba SCC enables buyers and contract manufacturers to manage the supply of component materials and finished goods through Ariba Network.

Capabilities of Ariba SCC – Subcontracting:

  • Informs Supplier about product ordered and components to be used
  • Enables buyers to advise Supplier of component OH inventory and shipment
  • Enables Supplier to report real-time receipt and consumption of components ensuring greater predictability of supply

Benefits of Ariba SCC – Subcontracting:

  • Allows buyer to reduce production cost while maintaining visibility and control into contract manufacturing process
  • Improves visibility into availability of supply, inventory, and production status
  • Drives greater efficiencies between multiple supply chain parties

2. Ariba SCC- Subcontracting Process:

Ariba SCC – Subcontracting Process flow
  • Subcontracting PO:

Subcontracting PO with item category L is created in SAP ECC/S4 by the buyer. The Components tab in the PO will contain the components to be sent to the supplier for Finished goods manufacturing.

The price of the subcontracting material is determined from the Purchasing info record.

Based on the Purchasing info record setting either real time or back flush component consumption can be configured.

The PO output message is sent to the supplier on Ariba network:

  • Subcontracting PO Confirmation:

The Supplier reviews the Subcontracting PO details on Ariba network and creates Order confirmation to acknowledge the PO.

The Order confirmation is sent to SAP ECC/S4 and can be viewed in the confirmations tab of the PO in ME23N transaction.

  • Issue Component to the Subcontracting supplier:

Buyer creates outbound delivery for Subcontracting PO in SAP ECC/S4 using transaction ME2ON.

Buyer creates Post Goods issue using transaction VL02N and the component is issued to the supplier.

The Supplier can validate the outbound delivery in Ariba network using the path -> Extended collaboration->Component Shipments

  • Component Acknowledgement in Ariba network by Supplier:

Supplier creates component acknowledgement in Ariba network once he receives the components from buyer.

The component acknowledgement created by supplier is sent to SAP ECC/S4 and updated as Proof of delivery. The Proof of delivery can be validated in SAP ECC/S4 using transaction VLPOD.

  • Component Consumption by Supplier:

The Supplier creates component consumption in Ariba network for the components used in manufacturing finished goods.

The Component consumption creates a material document with movement type 543 in SAP ECC/S4

Ariba SCC supports both real time and back flushing for component consumption.

  • If the Buyer opts to receive component consumption information in real-time, CM will have to complete a consumption report after components have been used.
  • The report will update the Buyer’s ERP by consuming the component inventory against the Subcontracting PO
  • If the Buyer opts for backflushing (component consumption at the time of finished goods receipt) instead, CM does not need to report consumption. The Buyer’s ERP will have to be set up to consume components upon receipt of the finished goods – either based on the BOM quantity or actual usage.
  • Ship Notice by Supplier in Ariba network:

Once the finished goods are manufactured by the supplier and he is ready to ship them to the buyer, the supplier creates Ship notice (ASN) in Ariba network.

The ASN is sent as inbound delivery to SAP ECC/S4 and can be viewed in the confirmation tab in the PO

  • Goods receipt in SAP ECC/S4:

The stores person creates goods receipt in SAP ECC/S4 upon receiving the finished goods using transaction MIGO.

The Goods receipt output message is sent to the supplier on Ariba network using output type WE03.

The supplier validates the goods receipt in Ariba network against the Po number:

3. Ariba SCC – SAP ECC/S4 Subcontracting Integration overview:

The flow of documents between Ariba SCC And SAP ECC/S4 during Subcontracting collaboration is shown below: