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Best Practices in Manufacturing Industry

  • The manufacturing industry is the paradigm of the “Discrete Manufacturing” production process. In many cases, it follows the traditional concept of the assembly line. Manufacturing is one of the industries where the concepts of Just-in-Time and Kanban management of stock parts provided to the assembly lines were first introduced, and have remained relevant through the years.
ProcessSub-ProcessS/4 Scope IDDescription
ManufacturingMake to Stock – Discrete ManufacturingBJ5

This process covers production planning in make-to-stock scenarios for a serial number managed finished good.

This process supports the following: Requirements planning, production order releasing, goods movements, and production order confirmation including Available-to-Promise checks for serial number managed finished good

 

ManufacturingMake to Order – Finished Good Sales and Final Assembly.BJE

This scope item covers the Make-to-Order process of batch-managed (optional) finished goods from customer quotation, sales order, production planning execution to the delivery, and billing of the customer.

 

ManufacturingManufacturing with Kanban Supply into Production (‏1E3‏)1E3

 

This scope item focuses on a lean production control method within a manufacturing environment using Kanban processing for lean replenishment. It includes Supplier Kanban, Move Kanban, and Flow manufacturing flavors.

ManufacturingJust-In-Time Supply to Customer from Stock (‏2EM‏)2EMThis scope item describes the Just-in-Time process (Supply to Customer from stock) for component manufacturers. The business process encompasses steps from receiving Just-In-Time calls to billing.
  • Very complex Bills of Materials with multiple levels (including Engineering BOMs, phantom assemblies, sub-assemblies, etc.), as well as Routings with multiple operations, often combining multiple plants and even external manufacturers are very common in this industry.
ProcessSub-ProcessS/4 Scope IDDescription
Product EngineeringEngineering Bill of Material – Change Master Management1R3This scope item covers two central PLM BOM processes: setup and release steps for change master-controlled Engineering BOM, and change iteration
Product EngineeringEngineering Bill of Material – Versions Management1NRThis scope item uses a new versioning technology. An engineering bill of material (EBOM) is a type of bill of material that reflects the product as designed by engineering, referred to as the as-designed bill of material.
Product Lifecycle ManagementBasic Handover of Bill of Material (‏1ZI‏)1ZIHandover to Manufacturing allows the user to create a Manufacturing Bill of Material from an Engineering Bill of Material within one step.
  • Apart from using Batch Management to trace specific components, this is an industry that relies very heavily on Serial Number Management, both for parts and for the finished product itself. This information is particularly relevant for the post-sales services scenarios, in order to track defects, and also perform preventative and corrective maintenance on the goods sold.
ProcessSub-ProcessS/4 Scope IDDescription
ManufacturingBatch ManagementBLF

This scope item lets you work with homogeneous partial quantities of a material or product throughout the logistics quantity and value chain. This includes documentation of material properties, where-used information, and quality status.

 

ManufacturingSerial NumberBLL

This scope item helps you to identify material items in the supply chain and to track these during goods movement. It includes configuration settings for serial number management and provides serial number handling at finished goods level.

 

Asset ManagementCorrective MaintenanceBH1This process covers the maintenance of technical objects when a breakdown or failure occurs.
Asset ManagementPreventive MaintenanceBJ2This scope item describes the processes for preventing system breakdowns that have high repair and production breakdown costs.
ServicesService Order Management and Monitoring3D2The scope item covers the creation of service orders in SAP S/4HANA Cloud. The service order is released for execution once the planning is completed. A purchase requisition is created automatically for non-stock spares once the service order line items are released.
ServicesService Contract Management3MOThis scope item covers the creation of service contracts in SAP S/4HANA Cloud. Customer-specific price agreements can be defined and handled within service contracts. Service contract determination is enabled for service orders that are created with reference to a service contract – in this case, contract and price details from determined service contract are considered.
ServicesProcurement for Service Management3NIThe scope item covers the integration of service management with the procurement of non-stock materials and the external workforce. This facilitates automatic purchase requisition creation against service order line items and corresponding purchase order processing. A message is sent to the service order regarding purchase order creation. The purchasing manager can use a workflow to approve the purchase order. The goods receipt is executed, resulting in the subsequent update of costs against the service order line item. The goods receipt against the purchase order sends a message to the service order.
ServicesIn-House Repair3XKThe scope item covers the lean in-house repair process (resource-related or fixed-price) with repair quotations and repair orders in SAP S/4HANA Cloud. The in-house repair process helps in selecting the simple serialized repair devices, perform prechecks, and aid in decision making to provide a repair quotation, repair order, or return to the customer. A repair order is created for each repair object directly or automatically based on acceptance of repair quotation
ServicesService Quotation4GAThis scope item covers the service quotation process in SAP S/4HANA Cloud. The service quotations are used to provide legally binding offers with fixed conditions made to a customer for the performance of services.
ServicesCredit Memo Processing for Service Management4GGA credit memo request is created against a service process (such as a service contract) with the amount to be credited; the request is placed for approval. Once reviewed and approved, a credit memo is created, sent to the customer, and posted to a journal entry.
ServicesService Order Processing with SAP Field Service Management49XThis scope item describes end-to-end business scenarios between SAP S/4HANA Cloud service order processing and SAP Field Service Management.
ServicesService Management Overview43BThis scope item helps the customer service manager ensure on-time service delivery by monitoring the service orders for completeness and whether they are overdue. It also helps to compare the average repair time per product.
  • Given a particular “defect” scenario, the serialization feature can also be used to trace (locate and recall) units sold or in stock that have been produced with the same components or in a particular line or facility associated with the defect. Properly and proactively managing this can have a huge impact on customer satisfaction, as well as in legal or regulatory compliance.
ProcessSub-ProcessS/4 Scope IDDescription
Quality ManagementNonconformance Management 2QNThis scope item describes the management of nonconformances. The user enters defect data and documents defect processing. Afterward, the quality engineer analyzes the current defect situation, and if needed, creates additional manual inspection lots.
Quality ManagementQuality Management for Complaints against Suppliers 2F9This scope item describes the management of complaints against suppliers. The quality engineer captures basic information, informs the supplier, and manages defects and tasks. He can also capture the root causes identified by the supplier.
Quality ManagementQuality Management for Complaints from Customers2FAThis scope item describes the management of customer complaints. The quality engineer captures basic information given by the customer and starts a root cause analysis. The engineer can manage defects and causes, corrections, and corrective and preventive actions.
Quality ManagementQuality Management in Discrete Manufacturing1E1This scope item describes quality inspection in discrete manufacturing. Quality inspection is relevant when a material is received from production or during the production process itself. The result of the inspection may trigger further processing.
Quality ManagementQuality Management in Procurement 1FMThis scope item describes quality inspection in procurement. Quality inspection is relevant when a material is received from a supplier. The result of the inspection might trigger further processing, such as return to the supplier for inadequate quality.
Quality ManagementQuality Management in Sales1MPThis scope item describes quality inspection during the sales process (for example, high-quality materials are delivered to a customer). Once the inspection is accepted, the goods issue is posted, and the materials are delivered to the customer.
Sourcing & ProcurementSerial Number ManagementBLLThis scope item enables you to serialize and thus differentiate between individual material items. The history of serialized items enables tracking during goods movements. In this way, it is possible to carry out root cause analyses for any issues with materials.
  • This industry normally deals with tens of thousands (if not hundreds of thousands) of parts, a very robust warehousing capability is normally required, in connection with proper labeling and data collection technologies via scanners or RFID. Often times, the difference between similar parts is imperceptible to the naked eye (e.g. components tuned to a certain frequency), so the proper physical identification of the goods, and the associated put-away and picking strategies is critical.
ProcessSub-ProcessS/4 Scope IDDescription
Supply ChainProcurement of Direct MaterialsJ45This purchasing process uses purchase requisitions that are generated either by the Material Requirements Planning (MRP) process or manually by a requester. The conversion from a purchase requisition to a purchase order can either be done manually (in case adoptions are necessary) or automatically (applicable for large volumes).
Supply ChainCore Inventory ManagementBMCThis scope item covers core inventory management processes, including the following processes: post goods receipt without reference, scrapping, block stock, unblock stock, one step stock transfer, two steps stock transfer, stock overview, slow or Non-Moving Materials, Dead Stock Analysis, Goods Movement Analysis, and material document overview.
Supply ChainBasic Warehouse Inbound Processing from Supplier with Quality Management1V9This process allows you to inspect the products received from external suppliers in a basic warehouse inbound process using basic warehouse management functionality seamless integrated with quality management in SAP S/4HANA. The process starts with the creation of a purchase order and an EWM inbound delivery.
Supply ChainBasic Warehouse Outbound Processing to Customer1G2This process is used to ship ordered goods to external customers. This process usually starts with the creation of a sales order and an outbound delivery, which is later used to trigger the outbound processing in the warehouse.
Supply ChainAdvanced Warehouse Outbound Processing to Customer1VDThis warehouse process optimizes the process of picking products and sending them to external customers by leveraging the extended functionality of SAP S/4HANA Warehouse Management. It extends the basic warehouse outbound process with wave management and transportation unit handling. The process usually starts with the creation of a sales order and an outbound delivery.
Supply ChainPhysical Inventory in Warehouse1FWIn this process, you create physical inventory (PI) documents for a chosen number of storage bins or products on a regular basis to distribute the workload for physical inventory over the year. You perform the counting using a radio-frequency (RF) device or paper.
  • Subcontracting capabilities: toll-in and toll-out are very common in the manufacturing industry. The ability to manage these through subcontracting features in Procurement and in the Sales/Manufacturing processes is normally a requirement as part of the normal business in this industry. By implementing these features properly, not only the process steps but also the cost of the product can be properly managed and monitored.
ProcessSub-ProcessS/4 Scope IDDescription
ManufacturingProduction Subcontracting – External ProcessingBJKTo avoid a capacity bottleneck with your resources or to gain efficiencies within your production, you can process individual production steps (such as operations or sub-operations) with external service providers.
ManufacturingSubcontractingBMY

The subcontracting process involves sending components to a supplier for manufacturing and receiving the finished materials. The seamless and efficient process includes all steps from the initial creation of a purchase order to the invoice management.

 

  • This is also an industry where the Configuration of the product is a Competitive Advantage. In this context, robust Configure, Price, Quote capabilities are an absolute must, paired with Variant Configuration/Advanced Varian Configuration to handle the Planning, Production, and Procurement portions of the process.
ProcessSub-ProcessS/4 Scope IDDescription
ManufacturingMake-to-Order Production with Variant Configuration1YT

This scope item shows a Make-to-Order Production scenario using the Advanced Variant Configuration for an efficient state-of-the-art configuration of a material ordered by a customer. It covers single-level and multi-level configurable materials.

 

ManufacturingMake-to-Stock Production with Variant Configuration21DThis scope item shows the Make-to-Stock Production with Variant Configuration in which Advanced Variant Configuration enables efficient state-of-the-art configuration for product variants that reflect common definitions of a configurable material.
SalesSell from StockBD9The process starts with the creation of a customer and standard sales order. Depending on the customer and the process starts with the creation of a customer standard sales order.
SalesSales Order Processing for Sales Kits31QCompanies often want to sell single products bundled into a sales kit (example selling a PC together with the monitor, keyboard, computer mouse, and so on). Sales kits are commonly used when the products being part of the sales kits can also be sold independently as single products.
ManufacturingMake-to-Order Production for Sales Kits with Variant Configuration4OC

Customers want to have a way to use Variant Configuration and show the component as sales kits (SET) during order taking and follow up processes.

This scope item shows a Make-to-Order Production scenario for sales kits using the advanced variant configuration for an efficient state-of-the-art configuration of a material ordered by a customer.

Sourcing & ProcurementProcurement of Materials with Variant Configuration2XUThis scope item covers the procurement of materials with Variant configuration. Create a customer sales order (optionally based on a sales quotation) for a product configured per customer requirement then Identify and create a purchase order for required configurable material for the supplier
  • On the planning side, depending on the actual characteristics and behavior of the product there might be multiple planning strategies (Planning without final assembly, Planning with Final Assembly, Hybrid models, etc.) that are suitable, as well as multiple manufacturing execution strategies (Make-to-Stock, Make-to-Order, Postponement, etc.)
ProcessSub-ProcessS/4 Scope IDDescription
ManufacturingMaterial Requirements Planning (‏J44‏)J44This scope item describes the process for a Materials Requirements Planning (MRP) process to procure material using purchase requisitions or delivery schedules in case a scheduling agreement exists. Additionally, MRP material exceptions can be handled.
Challenges faced by chemical companies  

Chemical industries continue to face challenges due to digitalization at lightning speed. Ever-changing prices of raw materials, demand patterns, geopolitical climates, or mass commoditization are giving a tough time to chemical industries. Moreover, competition from new companies and environmental pressure-demand digitalization more than ever.  

For timely real-time analysis and carrying out difficult algorithms with large data, every chemical company needs computing capability. For instance, the company needs to access data when they need it so that suppliers can be notified of company orders. Thus, insights for real-time data can help the salesperson to view customer history for credit risk.   

  

Intelligent enterprise for chemical companies  

Intelligent ERP got the potential to enhance innovative business services and application technologies such as IoT, Machine Learning, and BlockChain. SAP S/4HANA coupled with SAP’s business technology platform can lead to a flexible and intelligent enterprise.  

 

What’s new with SAP 

Through SAP S4/HANA, companies can upload accounting documents in less time. Thus, employees can focus their time over much innovative work. Companies can now simplify order processes and boost productivity by establishing a digital platform based on SAP. Chemical companies no longer must rely on SAP ERP or SAP Business Warehouse applications now. They can reduce costs by switching from SAP ERP to SAP S/4HANA.  

Contact us at sap@argano.com to find out how Echelon can help you in SAP migration.

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