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SAP APO - Cross Application Functions
In SAP APO, you can have different sources where products can be procured. During planning in CTM, SNP, or PP/DS, you need to determine the source of supply for the procurement.
In Location Product Master, you determine the procurement type to be used to procure a product. There are different Procurement types −
In-house Production(E) − When the product is procured internally.
External Procurement(F) − When the product is procured externally.
Both In-house Procurement and External Procurement − In Location Product master, you can also use both the types of procurement.
Source Determination in External Procurement
In an external procurement system, you define the planning of procured products under Material Management in APO application.
Subcontracting is another form of procurement in which the product to be procured is manufactured by the subcontractor. Subcontracting process is planned in PP/DS and Supply Network Planning (SNP). Subcontracting planning can be initiated with two types of orders - First is to raise a Planned order, which results in manufacturing of procured products at the subcontractor’s location and another one is stock transfer requisition to transfer the products from the subcontractor’s location to the demand location.
Note − When you implement subcontracting for the first time with PP/DS or SNP, SAP recommends using Production Data Structure (PDS) over PPM to provide better integration of master data.