scm2010_deridder_howtodesign

0© SAP 2010 / 0© SAP AG 2010 / 0

How to Design, Integrate, and Deploy a Sales Order Process for Configurable

© 2010 Wellesley Information Services. All rights reserved.

and Deploy a Sales Order Process for Configurable Products in 60 Days

Jan De RidderAccenture

In This Session …

• We will demonstrate the use of variant configuration in SAP

� This presentation is built around a fictitious project, but based

on a real client in a completely different industry

� The project was delivered in 60 man days from study to go-live

• We will discuss the setup of three SAP flows for sales,

production, and subcontracting

2

• We will use primarily the following modules:

� SD

� PP

� MM

� LO-VC

What We’ll Cover …

• Business case

• Business requirements

• High-level solution overview

• SAP configuration

• SAP demo

• Wrap-up

3

• Wrap-up

Company: Paint Inspiration

• We will discuss the company “Paint Inspiration,” a company that

produces and sells paint

• The company has two factories, each linked to a local sales office:

� 1 in Belgium serving mainly West Europe

� 1 in US serving mainly North America

• Both factories produce similar products

4

Both factories produce similar products

• The company has two divisions:

Paint production Bottling

Volumes High Low

Margins Low High

Production process Process industry Discrete mfg

Customers Industry, wholesalers, ‘home depot’ … End-users (painters)

Turnover share 80% 20%

Project Rationale

• The company had an SAP implementation but only for the paint

production division

• The bottling division was not on SAP:

� No integration with paint production, planning of requirements

for paint

� Manual bookings, high workload for accounting people during

month-end closing period

5

month-end closing period

� Inaccurate stock follow up

� Plant controller has no grip on the sales and production

processes

Management decided that the bottling division may

be integrated in the SAP ERP system

Defining the Project Scope

• The company was in a cost-cutting campaign and asked the

consultant for a low-cost project/solution

• As a pilot, only the European plant was in scope of the initial

implementation

• The SAP processes of the industrial paint division could not be

taken over

No fit with the business processes of the bottling division

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� No fit with the business processes of the bottling division

� Too many transactions for the operators

• The only way to meet the budget constraints was to go for a 100%

standard SAP solution


• Business case




• SAP demo

• Wrap-up

7

• Wrap-up

Study Phase: Define Business Processes and Requirements

• The company identified three business flows:

� Sales of in-house produced material

� Major flow where the bottled paint is produced in-house and shipped to the customer

� Sales of sub-contracted material, direct shipment

� Production is subcontracted to US plant if the customer is based in North America

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based in North America

� Production is subcontracted to third-party subcontractor if there is no own capacity

� The subcontractor ships goods directly to the customer

� Sales of sub-contracted material, shipment via own plant

� Material comes to the plant before shipping to the customer. Mainly done to re-label or to avoid subcontractor – customer contact.

• All flows are 100% Make-to-Order (MTO)

Production Process

• The production process is simple:

� Color pigments are added to the white paint

� Paint is mixed in a big mixer

� The colored paint is poured in the container

• Customer requirements when placing an order:

� Total volume

Color

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� Color

� Intensity

� % pigments: red, blue, and yellow

� Packaging

� Material (metal/plastic)

� Dimensions


• Business case




• SAP demo

• Wrap-up

10

• Wrap-up

Three Process Flows

• We distinguish three different flows (all MTO):

� In-house production

� Subcontracting with direct shipment from subcontractor to

customer

� Subcontracting with plant as forwarder

• This separation was driven by the fundamental differences in

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This separation was driven by the fundamental differences in

configuration required for these three flows

• On these flows are some (non-fundamental) variances:

� Raw materials in stock or to be ordered

� Subcontractor uses own raw materials or consigned from Paint

Inspiration (components provided to vendor)

Three Process Flows (cont.)

• The three flows are harmonized; same transactions, same

materials, same users, etc.

• Variant configuration is used in the three flows:

� It is the data carrier through the different modules

� Lean master data setup

� Automation throughout the flow, including calculations

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Automation throughout the flow, including calculations

• Each flow starts with a sales order. To trigger a specific flow, the

user has to select the relevant order type:

� ZP01: In-house production

� ZP02: Subcontracting direct

� ZP03: Subcontracting indirect

For the user, the sales order type is the only main

decision point between the three flows

Process Flow: In-House Production

Sales order

Production order Sales order stock

Delivery Invoice

MRP Planned order

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MRP

Purchase req

Raw materials

Purchase order

Raw materials

Intermediate product

Process Flow: Subcontracting Direct Shipment

Sales order

Purchase order

Subcontracting

Goods Receipt

(w/o qty update)

Invoice

Invoice verificationGoods Issue

(stock @ vendor)

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MRP

Purchase req

Raw materials

Purchase Order

Raw materials

GR at own plant

GR @ subco

(stock @ vendor)

Delivery to subco

GI (stock @ vendor)

Process Flow: Subcontracting via Own Plant

Sales order

Purchase order

Subcontracting

Goods Receipt

(with qty update)Sales order stock

Goods Issue

Delivery Invoice

Invoice verification

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Subcontracting

MRP

Purchase req

Raw materials

Purchase Order

Raw materials

GR at own plant

GR @ subco

(stock @ vendor)

Delivery to subco

GI (stock @ vendor)

(stock @ vendor)


• Business case




• SAP demo

• Wrap-up

16

• Wrap-up

SAP Configuration

• Variant configuration

� In most companies, the setup of variant configuration is

considered as “customizing” (not done by end-users), but in

SAP, it is all defined as master data (not in SPRO and not

transportable via normal procedures)

� The only variant configuration customizing objects in SPRO are

authorizations and statuses

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authorizations and statuses

• Master data

� Master data is another determent for the flow, especially in the

PP module where master data (BOM, routing, etc.) controls the

process flow

SAP Configuration (cont.)

• Standard customizing

� The setup of SD, MM, PP, LE and FI/CO

� For this setup, the amount of standard customizing is extensive

and can be found in the take-home customizing guide

� In this presentation, only a small selection of key elements for

the flow and integration will be shown

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Setup Variant Configuration

Configurationprofile

Class 300 Pricing

Used in our flow Not used in our flow

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ProductVariant table

Super BOM Dependencies Super routing

Variant function

Product

• Only one configurable material was created: Bottled paint

• Material type: KMAT – customizing

You can also use a Z material

type, but make sure the flag

“Material is configurable” is

flagged

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Configuration Profile

• The behavior of the variant configuration in the sales order is

controlled by the configuration profile

One configuration profile for the end-

product is needed

21

Several dependencies are assigned

to the configuration profile. This

means that they are always active

during configuration and not

triggered by a specific characteristic.

Class 300

• 3 groups of

characteristics:

� Group 1: reference

characteristics to use

in dependencies

� Group 2:

characteristics to

model the product

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model the product

� Group 3: calculated

characteristics to be

used in the rest of

the process

• All characteristics are

added to the 300 class

to be available in variant

configuration

Class 300 (cont.)

• Characteristics group 1: reference characteristics

� These characteristics are linked to a field in a database table

� They are filled automatically during configuration and are not

editable

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The formatting is taken over from the database field

Characteristic Table Field Function

PI_CUSTOMER VBAK KUNNR Get default values from variant table

PI_ORDER_TYPE VBAK AUART Distinction between production and subco

Class 300 (cont.)

• Characteristics group 2: modeling characteristics

� The values will be entered by the user in order processing

� The modeling parameters are completely fictitious for the paint industry and are only used to demonstrate the SAP functionalities

Characteristic Function

PI_PACK_REQUIRED Only relevant in the subco flows: determines if the subcontractor uses packaging

from Paint Inspiration or own packaging. Only shown if order type is ZP01 or ZP02

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from Paint Inspiration or own packaging. Only shown if order type is ZP01 or ZP02

Allowed values: 0 and 1

PI_PACK_MATERIAL The type of packaging material

Allowed values: S – steel and P – Plastic

PI_PACK_FORMAT The format of the packaging material

Allowed values: C – cylinder and R – rectangular

PI_PACK_SIZE1/2/3 The dimensions of the packaging

PI_COLOR_DENSITY The concentration of the color on a scale of 0 to 100%

PI_FACTOR_RED

PI_FACTOR_BLUE

PI_FACTOR_YELLOW

The concentration of the 3 individual basic colors (blue, red and yellow) on scales of

0 to 100%

Class 300 (cont.)

• Characteristics group 3: calculated characteristics

� The values of these characteristics are calculated by

dependencies based on the modeling characteristics


PI_PACK_VOLUME The volume per packaging unit is calculated from the dimensions and will be used

to calculate the number of packages per order

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• Divide by 1,000 to go from cm³

to L

• Dependency type is procedure

• Assigned to the configuration

profile

Class 300 (cont.)

• Characteristics group 3: calculated characteristics


PI_BLUE_GRAM_PER_LITER

PI_RED_GRAM_PER_LITER

PI_YELLOW_GRAM_PER_LITER

For each pigment the required quantity in grams is calculated to get the

desired color requested by the customer. The assumption is that for a

fully concentrated paint with one basic color, 50 g of pigment material is

needed.

These quantities are used later to calculate the BOM item quantities.

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These quantities are used later to calculate the BOM item quantities.

• 1 procedure per basic color

• Assigned to the configuration

profile

Variant Table

• Paint Inspiration has mainly returning customers who have

recurring orders. We use a variant table to avoid re-entering the

same parameters for each order.

� The key field is “customer,” the sold-to party in the sales order.

For this we used the reference characteristic PI_CUSTOMER.

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Never use blank values in the

table. Dependencies will not

work! Use 0 instead.

Variant Table (cont.)

• To get the default values from the variant table in the variant

configuration, we use a dependency with two parts:

� Part 1: Read data from the table based on the key (sold-to)

� Part 2: Default these values in the variant configuration

Part 1: The defaults for the sold-to are stored in

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sold-to are stored in intermediate characteristic

Part 2: The values are defaulted in the VC characteristic

Without the “default” function,

the user can not change the

defaulted values!

Super BOM — Overview

• The super BOM is a key element in the integrated flow

� The super BOM has usage “3” (universal) and is used in SD, MM, and PP

� It consists of three component groups selected by the variant configuration

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Component Selection Quantity

Basic white paint • Only for in-house production No dependency: 1:1 with header Qty

Pigment (blue/red/yellow) • Only for in-house production

• Qty > 0

Qty derived from VC � g/L calculated

Packaging • Always for in-house production

• For subcontracting: only if indicated in VC

N/A for the phantom component

Component Selection Quantity

PACK-01 Based on the

dimensions

entered in the VC

Total volume of order divided by volume

per packaging unit. This volume is

calculated in VC based on the dimensions

of the packaging.

PACK-02

PACK-03

…

The packaging is a phantom

component. This allows to re-use

in other BOM’s with central

maintenance of the packing BOM

Super BOM — Basic White Paint

• Component basic white paint

� Requirement for the industrial paint division

� Only relevant for the in-house production, the subcontractor

uses his own paint

The dependency type is “selection condition”

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Use object variable PARENT: The configuration of the header material is used

The dependency is assigned to the BOM Item

Super BOM — Pigment Blue/Red/Yellow

• Pigments are raw materials; procured externally. The BUOM is gram.

� Setup for the blue pigment:

Selection condition

The required quantity (calculated in the

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(calculated in the configuration) is written to the item quantity of the BOM item

We created a reference characteristic to the BOM Item quantity. This will update the database field; a standard SAP functionality to control the item quantities via variant configuration.

Super BOM — Packaging

• For the packaging, we use a phantom material:

For phantom materials, the special procurement key must be 50.

The phantom indicator is automatically flagged in the BOM item

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The phantom item in a BOM (also called “phantom assembly”) has its own

BOM with “real” materials as components. At the time of explosion (i.e., in

production order or purchase order) the phantom BOM is exploded but the

phantom material will not be part of the component list.

You can use phantom assemblies for groups of components which are part

of many different BOMs. This allows central maintenance without having a

dummy material in the component lists at the time of explosion.

Super BOM — Packaging (cont.)

The phantom material must also have configuration profile

A procedure (assigned to the configuration profile) will copy the VC values from the header material to the phantom material. Needed for the packing component selection.

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The BOM of the phantom material:

Super BOM — Packaging (cont.)

• These components are not selected via dependencies, but by

another standard SAP feature:

In the BOM item the flag “as selection condition” is flagged, the class type is 001.

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An additional class is created (type 001) with the dimension’s characteristics of the VC. The dimensions of the packing materials are maintained via MM02.

The selection is based on the variant configuration of the BOM

header material. In our case, this is the phantom material

which is not configured. For this reason we copy the variant

configuration of the root material to the phantom item.

SD Customizing

• Based on the sales order type, the following SD customizing objects are selected automatically

• We will demonstrate how this (mainly) SD customizing controls all processes in SD, MM, and PP

Order type� Relevant for delivery

� Order/delivery-based billing

� Variant configuration active

SD

SD

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Item category

Schedule line

category

Account assignment

category

Requirements Class

� Variant configuration active

� Relevant for billing

� Relevant for delivery + movement type

� Purchase Order type + Item Category

� Financial posting

� Invoice Receipt/Goods Receipt

SD

SD

MM

SD� Production order type

� Sales order stock

Integration MM

Integration MM

Integration PP

SD Customizing — Sales Area and Order Type

Paint Inspiration has two sales areas: for the

consumer paint (this setup) we created distribution

channel P2. This allows us to make a completely

different SD setup and is a key distinction in SD

reporting.

IMG � Sales and Distribution � Sales � Sales Documents � Sales Document Header � Define Sales Document types

IMG � Enterprise Structure � Assignment � Sales and Distribution � Setup sales area

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Order Type Delivery type Order Rel. Billing Del. Rel. Billing

ZP01 – In-house production LF N/A F2

ZP02 – Subco direct N/A F2 N/A

ZP03 – Subco indirect LF N/A F2

We have three sales order types, with almost

identical customizing

SD Customizing — Item Category/Link Schedule Line Category

Activates the variant

configuration in the sales order

Billing relevance is specific per flow.

• ZP01 & ZP03 �� A “delivery related”

• ZP02 �� C “order related”

IMG � Sales and Distribution � Sales � Sales Documents � Sales Document Item � Define Item Categories

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IMG � Sales and Distribution � Sales � Sales Documents � Schedule Lines � Assign Schedule Line Categories

Each item category is 1:1 linked to a

schedule line category

SD Customizing — Item Categories

IMG � Sales and Distribution � Sales � Sales Documents

� Schedule Lines � Define Schedule Line Categories

Only movement type for delivery

is relevant. No integration with

MM.

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Integration with MM: Standard

PO must be created with item

category subcontracting

Link with Account

Assgt. Cat.

SD Customizing — Account Assignment Category

SPRO � MM � Purchasing � Account Assignment � Maintain Account Assignment Categories

We have a new AAC for the subco direct flow.

No goods receipt is done (the goods go

directly to the customer) but we do need a

MIGO GR transaction to consume the

components at vendor (subcontracting).

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The AAC is MM customizing which controls the following

parameters of the PO item (relevant for this flow):

• Goods receipt

• Invoice Receipt

• FI/CO booking

For the subco indirect flow, we use the standard AAC “M” (Indicates

customer without KD-CO)

SD Customizing — Requirements Type/Class

IMG � SD � Basic functions � Availability Check and Transfer of Requirements � Transfer of Requirements � Define requirements classes

Requirements class Z40 for in-house production

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In-house production; the order type is the

production order type! Via this setting, we

specify that a production order must be

created.

In all flows, the stock type is “E”

�� sales order stock

All costs are assigned to the

sales order

SD Customizing — Requirements Type/Class (cont.)

IMG � SD � Basic functions � Availability Check and Transfer of Requirements � Transfer of Requirements � Define requirements classes

Only difference is that we have

no order type; no production

order created

Requirements class Z41 for subcontracting

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IMG � SD � Basic functions � Availability Check and Transfer of Requirements � Transfer of Requirements � Define requirements types

A requirements class is linked to

a requirements class (n:1)

IMG � SD � Basic functions � Availability Check and Transfer of Requirements � Transfer of Requirements �Determination Of Requirement Types Using Transaction

Each item category is linked with

a requirements type (n:1)

Other Customizing

IMG � Production � Shop Floor Control � Master Data � Order � Define Order types

In the production order type, the

settlement profile is SD1 – the costs of

the orders will be settled to the sales

order

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The setup of PP and other modules is similar to a normal MTO and

subcontracting setup. There are no specific variant configuration

settings. Details can be found in the configuration guide.


• Business case




• SAP demo

• Wrap-up

43

• Wrap-up

SAP Demo

• Three flows:

� In-house production

� Subcontracting direct

� Subcontracting indirect

• Not all the process steps will be shown in all three flows, but all

steps will be shown at least once in one of the flows

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steps will be shown at least once in one of the flows

In-House Production

• We will first show the in-house production flow

Sales order


Delivery Invoice

45


MRP

Purchase req

Raw materials

Purchase order

Raw materials

Planned order

intermediate product

Create Sales Order

VA01 – create sales orderThe bottling department has a specific distribution channel, forming a separate sales area. This allows specific customizing and reporting. This could also be done via a separate division.

We use one generic, configurable, material that is used for all customers and for all flows

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Create Sales Order (cont.)

VA01 – create sales order

Maintain variant configuration

The defaults come from the variant table, looked up via the sold-to number. The defaults can be changed in this screen.

The modeling characteristics. These define the product the customer is ordering.

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the product the customer is ordering.

The calculated characteristics which will be used for the BOM explosion in the production order. These could also be hidden.

Create Sales Order (cont.)

VA01 – create sales order

Complete relevant data

For the demo, we use a very simple

pricing scheme with only one condition

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The standard item text “Production memo” is

copied into the production order and can be

used as a communication means between sales

and production

Lookup Production Order

CO46 – order progress report

With this transaction, we can follow up the

MTO flow, starting from the sales order

In a productive environment, the production department

will use the transaction COOIS to create the list of new

production orders. This will be used as a work list.

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We jump to the stock/requirements list

where we can see the production order

number and the reserved component

quantities

Change and Release Production Order

CO02 – change production order

The order is to produce the material

“PAINT,” our generic configurable

material.

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Because it’s an MTO flow, you can see

immediately the sales order number and

customer name.

In the tab “Production memo” you can see

the text we entered in the sales order.

Change and Release Production Order (cont.)

CO02 – change production order

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In the production order, we can also see the

variant configuration. This is for information

purposes only and could be printed on shop

floor paper (together with the production memo

text).

Change and Release Production Order (cont.)

CO02 – change production orderIn the components view, we can see the

components that were selected by the

dependencies. The quantities of the pigment and

the packaging are also calculated via

dependencies. The user must select the batches

via batch determination.

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The last step is to release the order

Confirm Production Order

CO11N – confirm production order

We confirm the full order quantity in one

step. To keep the demo simple, we don’t

confirm scrap, machine time, labor time,

etc.

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In the goods movements screen, the

components with quantities are filled

automatically. We check the data and

save. Now the order is confirmed and the

goods movements posted.

Settle Production Order

KO88 – order settlement

54

This step is done at month-end

closing. Because it’s an MTO

flow, the costs will be settled to

the sales order.

Settle Production Order (cont.)

CO03 – display production order

55

In the example is the cost of raw

materials. By double-clicking we see the

details.

The costs are settled to

the sales order

Settle Production Order (cont.)

VA03 – display sales order

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As a result, we can see the costs of the

production order in the sales order. This will

be settled to CO-PA where the costs can be

compared with the revenues of the sales

order. This will lead to margin reporting based

on individual sales orders.

Create Delivery, Goods Issue, and Create Invoice

VL01N – create delivery & goods issuePost goods issue

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VF01 – create invoice

Subcontracting Direct

• In the subcontracting direct flow, the production is outsourced

• We will have a purchase order instead of a sales order

Sales order

Goods Receipt

Invoice

58

Purchase order

Subcontracting

Goods Receipt

(w/o qty update)

MRP

Purchase req

Raw materials

Purchase Order

Raw materials

Invoice verification

GR at own plant

GR @ subco

(stock @ vendor)

Delivery to subco

GI (stock @ vendor)

Goods Issue

(stock @ vendor)

Create Sales Order

VL01N – create delivery & goods issueWe choose another order type

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In customizing we specified that, for

this flow, a purchase requisition

must be created. Thanks to the

integration in SAP, the user can

enter the PR data already in the

sales order via this pop-up.

Create Purchase Order

VA03 – display sales order

In the sales order schedule line, we can see

the PR number

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Create the purchase order by dragging the PR

in the basket.

ME21N – create purchase order

Create Purchase Order (cont.)

ME21N – create purchase order

Click Components to see the

material to be shipped to the

subcontractor. The components

are from the BOM, selected by

the configuration.

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Press Configuration to see the

variant configuration entered

in the sales order

Ship Components to Subcontractor

ME2O – subcontracting stock monitorComponent PACK01 is in balance:

- Purchase order for 100 PC

- Stock of 100 PCThe stock can be posted directly

(Post Goods Issue) or via an

outbound delivery.

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In our demo, we use component PACK07:

- Requirement of 6 PC

- 0 stock

Replenishment needed

Ship Components to Subcontractor (cont.)

MMBE – stock overview

ME2O – subcontracting stock monitor

In the standard stock lists,

you can see the stock at

vendor

In the subcontract stock

monitor, both components

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monitor, both components

are in balance

Goods Receipt

MIGI – Goods receipt

At goods receipt we will do two postings:

- The 101 movement: receive the finished products. In this flow (subcontracting direct) the goods are not posted in

our stock. They are delivered directly to the customer.

- The 543 movement: the stock at vendor is consumed. The quantity can be adjusted in the MIGO transaction.

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Final Steps

• The final steps in the process are:

� Enter incoming invoice (transaction MIRO)

� Create outgoing invoice (transaction VF01)

� Costs from the purchase order settled to the sales order

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Subcontracting Indirect

• This flow is very similar to the subcontracting direct flow

• Differences

� Stock is received in the BE99 plant; not directly at customer

� An outbound delivery is created to ship the stock from plant

BE99 to the customer

� The sales invoice is delivery-based and not order-based

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The sales invoice is delivery-based and not order-based


• Business case




• SAP demo

• Wrap-up

67

• Wrap-up

Resources

• SAP Best Practices: Make-to-Order Production with Variant

Configuration

� http://help.sap.com/bp_bl604/BBLibrary/HTML/147_EN_DE.HTM

• SAP courses PLM 140 & PLM 143

� www.sap.com/services/education/index.epx

• Variant Configuration (LO-VC)

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Variant Configuration (LO-VC)

� http://help.sap.com/saphelp_erp60_sp/helpdata/en/92/58d45541

7011d189ec0000e81ddfac/frameset.htm

• Configuration Workgroup

� www.configuration-workgroup.com

Resources (cont.)

• SAP Variant Configuration Technology blog

� http://sapvariantconfiguration.blogspot.com

• Uwe Blumöhr, Manfred Münch, Marin Ukalovic, Variant

Configuration with SAP (SAP Press, 2009).

• A full list of IS-MILLS/DIMP functionalities

� http://help.sap.com/saphelp_dimp50/helpdata/EN/4e/1796374b0

69

http://help.sap.com/saphelp_dimp50/helpdata/EN/4e/1796374b0

88e5ce10000009b38f8cf/frameset.htm

7 Key Points to Take Home

• Stick to standard SAP: Variant configuration offers enough flexibility and your budget will be surprisingly low

• Have somebody on the project who knows the different modules in scope: this is key for the integration

• It’s not required to use only one material in your system: You can use different configurable materials for different groups of materials

70

materials

• If you have the same components in all your BOMs, you should switch to configurable phantom assemblies

• Make use of variant tables; it’s the best to way to use defaults in the sales order variant configuration

• Link your variant table to a database table when it’s getting big and hard to maintain

• Foresee at least one custom build report where users can see sales orders with configuration

Your Turn!

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How to contact me:

Jan De Ridder

[email protected]

Disclaimer

SAP, R/3, mySAP, mySAP.com, SAP NetWeaver®, Duet™, PartnerEdge, and other SAP products and services mentioned herein as well as their

respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product

and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by

SAP.

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Documents

sales order process

sap flows

paint production division

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business flows

sales order type

sap processes

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