Hi, it's an interesting scenario.

There may be some alternatives for that scenario that might involve SD. But, I want to give an alternative that only use MM module, I don't know whether it's acceptable for your company or not.

Here it is:
- Create a subcontract PO to the vendor for the FG cement, qty 600 KG, price = 0 (free).
- On the material tab, input the "component": Cement Raw material, qty 1000 KG.
- save the PO.
- Transfer posting (movement type 541) based on the PO from your sloc to the vendor: Cement Raw material, qty 1000 KG.
- When you receive the FG from the vendor, do MIGO_GR based on the PO. FG cement qty 600 KG, Cement Raw material qty 1000 KG. This will increase your FG Cement stock 600 KG and decrease the Raw material stock 1000 KG.
- the value of 1000 kg raw material will be transferred to 600 KG FG cement, so when you sell the 1 KG of FG Cement, the COGS is 1000/600 * Raw material price. as long as you have not sold the FG, your total inventory value is the same with 1000 kg raw material price.

There is no need to process the payment with this scenario.

does it fit with your scenario?

Hi,

I am working for a cement industry. We have a new requirement for sub contracting our end product (Cement).

Requirement:

We will be supplying 1 raw material to a vendor for producing finished product Cement ( Two raw materials are required. 1 we will be supplying and the remaining 1 the vendor will add from their side).
After converting to FG vendor will return us cement based on a mutually agreed ratio. Ex: for 1000 TON of raw material we supplied they will return us 600 KG of FG Cement, remaining 400 KG will be their charge.

I have completed the cycle in MM & SD. But when it comes to payment how to handle it. Here no payment is involved. I am supplying vendor with 1000 KG of raw material and getting back in return 600 KG of finished Good. 1000 - 6000 = 400 KG is the charge taken by the vendor.

How to handle this scenario financially.

How to include this process in SAP kindly guide.

Thanks