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101PPCO02ME21Nintermediate

External Operation Processing: Subcontracting One Operation of a Production Order (Control Key PP02)

One step of an in-house order is done by a supplier: the operation's control key creates a purchase requisition, purchasing orders the service, the parts travel as work in process (no stock posting), and the goods receipt charges the external cost straight to the production order.

Educational content. SAP behaviour varies by configuration and release. Spotted something off? Report it.

Digital twin

Docs
SAP DOCUMENTSVisualization of External Operation Processing: Subcontracting One Operation of a Production Order (Control Key PP02). All information shown in the scene is also available in the caption and the panels next to it.
Demo data

01Releasing the order creates a requisition

Order 1000011 is released. Operation 0020 has control key PP02 (external), so a purchase requisition is created for the plating.

Business scenario

Production order 1000011 builds 100 EA of FG-2000. Operation 0020, zinc plating, is done by Demo Subcon Works at ₹80 per piece. Assembly (0010) and final inspection (0030) stay in-house.

All companies, numbers and documents are fictional demo data.

Step-by-step flow

  1. 01

    Releasing the order creates a requisition open in twin

    Order 1000011 is released. Operation 0020 has control key PP02 (external), so a purchase requisition is created for the plating.

    Purchasing gets the demand automatically, already assigned to the order.

  2. 02

    Purchasing orders the service open in twin

    PO 4500002400 to Demo Subcon Works: plating 100 EA at ₹80.

    The supplier is paid for work, not for a material.

  3. 03

    Sending the parts out open in twin

    Assembly is done. The 100 unplated brackets go to the plater. What is posted?

    They have no material number of their own at this stage; their cost is already on the order.

  4. 04

    Subcontracting is a different process open in twin

    541 provides components for a subcontracting PO, where the supplier makes a whole material. Here the supplier performs one operation on parts that belong to an open production order.

    Subcontracting tracks components as special stock O; an external operation tracks cost on the order and no stock moves.

  5. 05

    Parts travel to the plater open in twin

    The shuttle truck takes the brackets to the plater. Nothing is posted.

    A delivery note or shipping paper usually accompanies the parts — configuration dependent.

  6. 06

    Plated parts come back — goods receipt open in twin

    The plated parts return. GR against the PO charges ₹8,000 to order 1000011. No stock is created.

    The order now carries the external cost alongside its own material and activity costs.

  7. 07

    Confirm the operation open in twin

    Operation 0020 is confirmed (automatically from the GR in many setups), and the order continues with 0030.

    Order progress and scheduling continue normally.

  8. 08

    Supplier invoice open in twin

    MIRO: GR/IR ₹8,000 against the supplier.

    Completes the purchasing side.

  9. 09

    External step complete open in twin

    The order carries ₹8,000 of external processing. Its settlement works as for any production order.

    A clean way to buy single steps without turning half-finished parts into stock.

SAP documents

Drag to pan · Ctrl + scroll to zoom

Stock impact

This part of the process does not change stock.

Accounting impact

Goods receipt for an external operation

Typical

Plated parts come back — goods receipt

  • Dr Production order 1000011 — external processing (PO account (F))₹8,000
  • Cr GR/IR clearing (WRX)₹8,000

The receipt for an account-assigned (F) item posts the external processing cost to the production order against GR/IR.

Invoice for the external operation

Typical

Supplier invoice

  • Dr GR/IR clearing (WRX)₹8,000
  • Cr Supplier 100002 (payable)₹8,000

Clears GR/IR. A price difference would also go to the order.

Typical conceptual flow. Actual G/L accounts and posting behaviour depend on material valuation, automatic account determination and system configuration.

Movement type

  • 101GR for account-assigned PO (external operation)Reversal: 102

Outsources individual operations of an in-house production order while keeping the cost and progress on the order.

Transactions & Fiori apps

  • CO02 — Change / Release Production Order
  • ME21N — Create PO
  • MIGO — Goods Receipt
  • CO11N — Confirmation
  • MIRO — Invoice
  • Manage Production OrdersAvailability depends on release and scope
  • Manage Purchase Orders

Differences by SAP version

PP02 and external processing data on routings.

Configuration

  • Control key PP02 (typical)

    Typical

    External processing; creates purchase requisitions at order creation or release.

  • Automatic confirmation from GR

    Configuration dependent

    Whether receiving the service confirms the operation.

Prerequisites

  • Routing operation with an external-processing control key (e.g. PP02)
  • Purchasing data on the operation: purchasing group, material group, cost element, optionally supplier and price

Master data

Routing operation
Control key and external processing data.
Purchasing info record
Supplier and price for the service.

Organizational structure

  • Plant 1000
  • Purchasing organization 1000 (demo)

Tables

TableDescription
AFVCOrder operation with control key
EBANRequisition from the operation
EKKNPO account assignment to the order

Integration

  • MMPurchasing and goods receipt for the service.
  • COExternal cost on the production order.

Common errors

  • “No requisition for the external operation”

    Likely causes: Control key does not allow external processing; Purchasing data missing on the operation

    Where to look: Order operation details · Control key configuration

Troubleshooting

Something went wrong? Work through these checks in order. They are diagnostic questions, not configuration instructions — confirm changes with your system owner.

  1. CHECK 1

    No requisition

    • Control key?
    • Purchasing group and cost element on the operation?

Interview questions

  • What is the difference between MM subcontracting and an external operation?

    MM subcontracting (item category L) buys a finished material from a supplier who uses components you provide (541 to stock with subcontractor, 543 consumption). An external operation (control key PP02) buys one step of an in-house production order; no components are provided as stock, the parts travel as work in process, and the service cost is posted to the order at goods receipt.

Quiz

Q1 · Identify the accounting impact

What does the GR for an external operation post?

Q2 · Configuration reasoning

What marks an operation as externally processed?

References

  • SAP SE — SAP Help Portal: External Processing in Production Orders (source)
  • SAP SE — SAP Help Portal: Control Keys (source)

Explanations are original. They summarize standard behaviour; always validate against your system's release and configuration.

Version history

VersionChange
1.0.0Initial version.