Online Supply Chain and Logistics Management, SAP Implementation Strategy and Documentation

The life cycle of a process order consists of the following stages: Process Planning   Process order execution Order closing 1.         Process Planning It comprises all activities that are performed during the creation and the release of a process order. Important steps in process planning are: §          Process order creation §          Selection of Production version §          Batch determination for raw materials/ semi-finished §          Material Quantity Calculation for Active Ingredients §          Process order release

Process order management is a process that is used to convert the raw materials into the finished and semi-finished products. Process manufacturing with process orders in SAP ERP enables batch-oriented manufacturing in the process industry on the basis of recipes and production versions. In My Company pharma environment, process order is a mandatory requirement. A process order describes the production of batches (materials) in a production run. A Process order defines the following: §          Which materials are to be processed §          What quantities are to be produced §          Which resources are to be used §          When (at what time) is that order to be processed (scheduling) §          It also defines how the order costs are to be settled.

Process Definition The DEMAND PLAN generated by the demand management in the form of planned independent requirement becomes the input for MRP. MRP Functions MRP run performs the following functions: ·          Material Requirement planning i.e. calculating the quantities and dates of all the components to be procured. ·          Lead time scheduling i.e. calculating the start and finish dates of all the operations and phases for the assemblies to be produced in-house and pegging the component arrival dates with the start date of the phases or operations. At MYCOMPANY, lead time calculation would incorporate Set-up time (time required to change the filters and other parts when a grade or thickness of the film changes) and Operation time (duration of the production run). On this basis, the system would calculate the planned lead time. ·          MRP al...

Process Definition Demand Management determines requirement quantities and delivery dates for finished products assemblies. To create a demand program, Demand Management uses Planned Independent Requirements and Customer Requirements. Planned Independent Requirements (PIRs) are used to determine the quantities of a material required in a particular time period. The PIRs could be both manually maintained or determined using Sales and Operational Planning. Customer Requirements represents the Sales Orders in the system. Once a sales order arrives, the PIRs are reduced. Planning Strategy To create the demand program, a planning strategy has to be defined for a product. Planning strategies represent the methods of production for planning, and manufacturing or procuring a product, which are assigned in the Material Master of that product. A planning strategy determines if production is triggered by Sales Orders (make-to-order production), or if it is planned independently without h...

Production Planning is a part of PP Module, which offers the information for planning materials required to be produced or procured. In planning process, production requirements are originated from Sales Forecast or from direct sales orders in certain cases which, in turn, is transferred to Production Planning via Demand Management in the form of Planned Independent Requirements. Demand Management is a function in SAP PP module that serves the purpose of matching production plan (supply) with the sales targets (demand). In other words the function of demand management is to determine the requirement quantities and delivery dates for the end products (finished products) that a company produces. The result of demand management is the demand program (Demand program provides the information that helps to decide when the finished goods should be produced along with the quantities so that customer demand could be met at all times. Demand management can be done manually or based on previ...

Sales and Operational Planning Sales Forecast is the amount of sales (in units or rupees) a company expects to achieve during some future period under a given marketing plan and expected market conditions. The sales forecast identifies the amount of units that are likely to be sold and/or the dollar value of what is likely to be sold. Sales Forecast is used for transferring data to Production, which will be maintained by Marketing Department of MYCOMPANY. Currently, marketing department at MYCOMPANY prepares a rolling sales forecast for 12 months. The first three months are kept frozen for changes.

Master Data for PP Module Process Description Process owner Triggering event Create PP Master Data PP Master data is also a type of master data which is created once at the time of setting up SAP landscape. The PP master data includes BOMs, work centres, routings, recipe and production versions. PP Power user/ Production Manager When SAP landscape is being created or when a new material would be brought into production or a new machine or production line is acquired or discontinued. Master data is the data that remains unchanged over an extended period of time. Master data contains information that is always used in the same way. At MYCOMPANY, the following Master Data in Production Planning and Control Module will be used: Material Master Bill of Material (BOM) Resource Master Recipe Production Version

A production version determines which alternative BOM is used together with which task list/master recipe to produce a material or create a master production schedule. An alternative BOM is defined if multiple formulations exist to manufacture same semi-finished or finished material. Similarly, if a same material could be produced using more than one resource, multiple routings (task lists) would exist. Both the instances would require the creation of multiple production versions. For one material, we can have several production versions for various validity periods and lot-size ranges. At MYCOMPANY, we would have several production versions because of multiple BOM alternatives as well as multiple RESOURCES that could be used for the production of same materials. Production versions are used in Sales and Operations Planning (SOP), material requirements planning (MRP), process order creation, and product costing to select the most suitable task list or recipe and the correspondin...

In the master recipe, the processes (list of operations/ a given sequence/ task list) to be used for producing materials as well as the resources and components required for production are defined. A master recipe consists of a header and several operations , each of which is carried out at a resource. An operation is subdivided into phases. A phase is an independent process step that contains the detailed description of a part of the entire manufacturing process. Phases are carried out at the primary resource of their superior operation. At MYCOMPANY, we would create Master Recipe for semi-finished and finished materials. At MYCOMPANY, the master recipe would consist of multiple operations and phases (sub-operations). The way phases are related to each other specifies the sequence of the manufacturing process. Phase relationships can be sequential, parallel, or overlapping.

Resources (Work Centers) are production facilities (or group of people) where any production related operations are carried out. Every resource is assigned a capacity.   Capacity refers to the ability of resource to perform a specific task or operation with reference to a time frame.   Resource Categories: Resources are subdivided into categories to specify their suitability for certain purposes or their use in certain processes. Resources can be, for example: ·              Persons involved in production that are also recorded as employees in personnel administration. In caseof MYCOMPANY, the packing staff (for example) would fall under this category. ·                Parts of the plant that are used for production (processing units/machines). In case of MYCOMPANY, Auto-clave in the area of sterile manufacturing would fall in this categ...

Bill of Material - SAP PP Module A Bill of Material (BOM) is a complete, formally structured list of components (raw or semi finished materials), which are needed to manufacture a finished product. The BOM list contains the material number together with quantity and unit of measure of each component. The header of the BOM contains the information of the material whose BOM is to be maintained.  A finished product may be assembled from many components. In SAP all BOMs are single level. In SAP we maintain BOMs for all the assemblies (semi-finished products and of course for the finished product. Therefore, various SINGLE level constitute together to form a complete product structure. BOM yields the quantitative recipe which is used by the MRP as its basis ; these define the relationships of assemblies (finished products semi-finished and) and their components (packaging and raw materials). Thus, BOM becomes a framework on which the entire planning process depends. As a vital pa...

Production Planning and Control (PP) SAP Production Planning and Control Module offers the information for the decision makers of replenishing materials required in a production process and captures the efficiency of materials consumption and machine usage in that process. SAP Production Planning and Control consists of two basic areas: Production Planning: Production planning is a tool for medium to long term planning. The basic objective of the production planning is to ensure the availability of raw, packing and auxiliary materials (production supplies) against the sales forecast for a given period. Production planning tool also checks the availability of capacity to meet the sales targets in a given period. Production plans could differ from the sales plans in case of capacity constraints.

SAP Recommended Procedure: External Service Procurement A need for certain services arises in a user department. The department will raise a requirement, via a framework requisition. The framework requisition will contain a set of service specifications with details of the necessary service(s) that have been planned. The concerned authority, by means of a release strategy, will approve the framework requisition. The framework requisition will be created using document type NS. The Purchase Department will run the open and approved framework requisition list and raise RFQs (document type AN; number range: 60000000000 - 69999999999), referencing the requisition, and float them to various vendors. When quotations are received, the prices and rates will be maintained in the system. The purchase manager will run the price comparison list, and select the best-quoted price based on price and quality. The framework order is placed with reference to the quotation.

  EXTERNAL SERVICE MANAGEMENT Overview: External Service Management This blueprint describes the work MyCompany will need to execute to procure services and details how this business process is available within the application component MM External Services Management for the efficient procurement of externally performed services. The process supports the complete cycle of bid invitation, award/order placement phase, and acceptance of services, as well as the invoice verification process. The procurement of services involves the following steps: ·          Determination and recording of requirements ·          Determination of possible sources ·          Bid invitation procedure ·          Entry of data from quotations submitted by bidders ·          Com...

  Overview: Logistics Invoice Verification Logistics Invoice Verification is a part of Materials Management (MM). It puts an end to the purchasing cycle and hands over further processing to Financial Accounting. The verification process checks the incoming invoices of their content, prices and other details. Logistics Invoice Verification is thus integrated with the components Financial Accounting and Controlling. It passes on the relevant information about payments or invoice analyses to these components. Credit memos can also be processed, either as invoice reversals or return deliveries. SAP Recommended Process of  Invoice Verification An invoice is a document from the vendor containing the payments to be made against the delivery of goods or services. An incoming invoice can be an invoice or a credit memo. An invoice is to be used when the vendor charges for the goods/services he has supplied to MyCompany . A credit memo is to be used when a retur...

SAP Recommended Process: Material Master Creation For all materials to be maintained, a material master record is to be created. A material number (system generated) will uniquely identify this record. The material number comprises 18 digits and can be assigned externally or internally by the system. For MyCompany , 9-digit internal number ranges will be used according to the material types. Refer to the material type table for the number range intervals. The material type groups materials with similar characteristics and treatment. It also determines whether the material will be valued at a standard price or a moving average price. Sales relevant material is to be valuated at the standard price. This includes Semi-Finished Materials and Finished Materials. The materials that are to be valuated at moving average price are Raw Materials, Packaging, Machine and Spares, and Trading Materials. The materials that are to be charged off at the time of goods receipt are Chemicals...