What is third-party provision of components in SAP SCM-APO-PPS - Production Planning and Detailed Scheduling?

SAP Term: third-party provision of components

• Component: SCM-APO-PPS

• Component Name: Production Planning and Detailed Scheduling

• Description: A process in external procurement in which components to be provided for a product, which is to be produced by a subcontractor, are provided by an external vendor instead of by the plant. Third-party provision of components is generally executed in combination with subcontracting. &EXAMPLE& A company in the USA sells mobile handheld equipment. The company doesn't manufacture the devices themselves, but instead outsources all production to a subcontractor in Asia. The company acquires the components to be provided for the mobile hand-held equipment such as the casing from an external vendor who is also based in Asia. In traditional subcontracting, the vendor would deliver the components to be provided to the plant in the USA, and the components would then be sent to the subcontractor in Asia. Using third-party provision of components, the vendor can now directly send the components to be provided to the subcontractor.

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• Key Concepts: 
  Third-party provision of components is a process in which a company outsources the production of certain components to an external supplier. This is done to reduce costs and increase efficiency. In the case of SCM-APO-PPS Production Planning and Detailed Scheduling, this process involves the outsourcing of certain components related to production planning and detailed scheduling. 
  
  How to use it: 
  When using third-party provision of components, it is important to ensure that the external supplier is reliable and can provide quality components in a timely manner. Additionally, it is important to consider the cost savings associated with outsourcing production of certain components. Once these considerations have been made, the company can then decide which components should be outsourced and which should be produced in-house. 
  
  Tips & Tricks: 
  When outsourcing production of components, it is important to ensure that the external supplier has the necessary resources and capabilities to produce quality components in a timely manner. Additionally, it is important to consider the cost savings associated with outsourcing production of certain components. 
  
  Related Information: 
  Third-party provision of components is a common practice in many industries, including manufacturing, automotive, aerospace, and electronics. Additionally, there are many software solutions available that can help companies manage their third-party provision of components more effectively.