SAP-Industry Solution: Catch Weight Management
For any planning & execution system it has been always a challenge to cater a flexible business model to support the food industry processes. When you look at the various processes in food industry, which are complex & variable from product to product, you can think of a huge supply chain management behind it to handle the challenges of this industry.
It becomes more challenging when we focus about a specific segment of food industry where the products are measured in parallel unit of measure and vary in terms of weight over a period of time which in turn changes the inventories & valuations.
To handle these complexities in addition to the planning & execution processes (procurement, sales etc) which are managed in ECC, SAP introduced an Industry Solution called 'Catch Weight Management' after release SAP ECC 6.0.
In this blog, I will highlight the details of CWM, the industries where it is applicable & various key function areas of CWM.
First, when we hear the name of this solution, a question arises to anybody why it is called Catch Weight Management. Even I was used to think the same before joining the CWM team in SAP that what is behind the name 'Catch Weight Management' and found the answer as:
In meat /dairy industry, the weights can vary from piece to piece, either due to biological variations or because of weight loss during storage; hence each piece will not weigh the same. Such materials are required to be managed in different Unit of Measures (UoM) with no fixed conversion between UoMs. The relationship between Logistic unit (e.g. Piece, Each) and valuation unit (e.g. Kg) is unknown and a typical variable. The variability of two UoM ensures that processes like procurement, sales, production, logistics & inventory accounting are based on the correct values with parallel unit of measures.
“ It is required to 'Catch' the correct 'Weight' of each piece for better 'Management' of various processes (procurement/sales/inventory management/costing/pricing) based on correct values & quantity at any point of time."
That makes it clear that why the solution is called Catch Weight Management. The key focus sectors of this solution are industries comprising of following products, such material can be called catch weight materials:
Meat, fish, dairy (cheese), fruits/vegetables, livestock, Fresh food items
Coming to the industry challenges & the functional areas of this solution, below are some key challenges to manage catch weight materials:
- Variable weight due to biological reasons/storage.
- Each individual is unique (Example: Each chicken piece does not weigh same.)
- Price change on daily/weekly basis.- Food safety is important. (Threat: Bioterrorism)
In order to handle above challenges, CWM solution offers below key feature:
- Variable weight handling ability.
- Accuracy in stock maintenance.
- Correct financial handling in terms of costing of products.- Integration with ERP: Each stock transaction (MIGO, MB52, MMBE, ME21N, VL01N etc.) is handled with two units of measure to maintain the proper communication within different UoMs at transaction level.
- Two units of measure are provided which are independently maintained in inventory management.
CWM touch through almost all functional areas of standardized ERP processes and consists of following five business scenarios:
1. Procure To Pay
2. Order To Cash
3. Manufacturing
4. Inbound and Outbound logistics
5. Inventory Accounting
Above scenarios are handled in CWM with an underlying concept of distinctions between logistic unit of measure & valuation unit of measure. A CWM material can have different Unit of Measure (UoM) which are Base UoM, Parallel UoM & alternative UoM. There is a variability between Base UoM & Parallel UoM with no fixed conversion factor. This variability is used, to have a correct basis of quantities & valuations all over the Logistic & Financial (Valuation & Payment) processes. Hence one of the units is used as Logistic unit & other as Valuation unit. Though, an alternative UoM can have a fixed conversion factor with either Base UoM or Parallel UoM. UoMs like piece, each; are often used as logistic unit which is a leading unit for all logistic related processes which include goods handling. Whereas, transactions related to valuation & payment are done on the basis of Valuation units like KG, LB etc.
While managing above processes for Catch weight Materials in IS-Catch Weight Management, on one hand it provides full integration with ERP with a simple to understand & implement solution of managing parallel units during all processes, on the other hand business benefits with an improved margin handling & business insight. CWM enables the business to have a reduced inventory cost & food processing cost which also depends on the extent to which CWM is implemented for various processes.
