In subcontracting, the end product is ordered by using a subcontract ORDER. The materials or components required by the vendor to manufacture the end product are mentioned in the purchase order. The components are posted to the stock of material provided to vendor in Inventory Management. When the components are supplied to the vendor, the vendor manufactures the end-product and delivers it. At this point, the goods receipt with reference to the subcontract order is posted. The goods receipt also CONTAINS the posting of the consumption of the components from the stock of material provided to vendor. In case the components consumed by the vendor are more or less than that SPECIFIED in the purchase order, an ADJUSTMENT NEEDS to be posted to correct the consumption of components.

In subcontracting, the end product is ordered by using a subcontract order. The materials or components required by the vendor to manufacture the end product are mentioned in the purchase order. The components are posted to the stock of material provided to vendor in Inventory Management. When the components are supplied to the vendor, the vendor manufactures the end-product and delivers it. At this point, the goods receipt with reference to the subcontract order is posted. The goods receipt also contains the posting of the consumption of the components from the stock of material provided to vendor. In case the components consumed by the vendor are more or less than that specified in the purchase order, an adjustment needs to be posted to correct the consumption of components.