This document explains the business process of Linked Orders used in Automobile Industry. We have tried to explain this concept by making use of the business case used in our implementation project for one of the auto major. We have explained the concept with Standard SAP ECC functionality for the audience having limited exposure in Automobile Industry processes. It is assumed that the target audience is aware of standard sales business processes mapped in SAP ECC.
In Automobile Industry, normally the Vehicle, Parts, Accessories & Merchandise sales to the end customer happens through the dealer network spread across various geographical locations. Thus a typical sales channel for automobile company may have a manufacturing plant, a regional distribution center for catering demands of various geographies and a local distribution center for selling the vehicles & parts in local regions. Typically the primary customers will be the dealers appointed for selling the vehicles in local regions while the end users are normally referred as secondary customers. This business processes is related to the sales of specific type of parts & Merchandise only. In case of a regular order for standard parts or accessory (e.g. side mirrors or indicators), a customer approaches the vehicle dealership and purchase the same at real time as it is a regular stocked item. The dealership normally stocks the standard service parts which are frequently required as a part of regular vehicle maintenance process.
“Linked Order” is a terminology generally used in automobile industry for selling Parts & Merchandise which are linked to a specific VIN, Lock or imprint text etc. A simple example of Linked Order can be an automobile dealer ordering a pre- calibrated speedo or a Key of a particular vehicle sold by him to the end customer. In both of these examples, the manufacturer needs specific information as these need to be procured / manufactured specifically to fulfill this requirement. E.g. For a pre calibrated speedo, the current speedo mileage is required and for a particular key the Key Lock ID is required.
The linked order is a special type of order and it requires capturing of extra information (such as VIN numbers, Lock numbers or specific text for T-shirts) to be entered along with the order/order line item material & quantity information.
In automobile industry, materials which are normally treated as Linked materials are Frames with specific chassis number, Crankcases with engine number impregnated, Speedos with pre-calibrated mileage, key with a particular key code, Imprint material (T Shirts with specific text printed on them) etc.
One can use material groups when maintaining a material master record. Since these material groups are not used in the standard SAP R/3 System, you can use them as required, for example- To differentiate these special parts codes in SAP, “Material Group” fields can be used. We used “Material Goup4” to categorize different kind of part codes which can be ordered by dealer as linked part. Based on these settings, certain validations can be maintained so as to allow ordering of only certain parts in linked order documents.
Linked order materials are not held on stock at the Distribution Centers (DC) as these materials are especially manufactured /procured from 3rd party vendors and shipped via the DC to the dealer that placed the order. At the same time as the sales order is created a purchase requisition is triggered and then purchase order is raised for this kind of material.
A one to one relationship between sales order and purchase order has to be maintained to ensure that inbounding and delivery for that specific material is one to the correct dealer that has submitted that order. Also, the enhancement ensures that all necessary detail information for these kinds of orders are captured, stored and validated on an order line item basis within SAP. Few examples have been given below to differentiate various kinds of linked parts.
Differentiate Linked Orders from Standard Sales Orders in SAP:
All of these products being linked to particular vehicle, each part has got specific feature/specification which needs to be considered while manufacturing these parts. So while capturing order from dealer, additional enhancement needs to be carried out to make sure capturing all mandatory feature/specification which are critical to manufacture the same.
As standard SAP we don’t have additional fields to capture such information, enhancement can be carried out on “Additional Data B” screen in SAP transaction VA01 to capture critical information like VIN number, mileage, lock code etc.
Additionally, validation logic needs to be implemented as enhancement to make additional fields (added to “Additional Data B” screen in SAP) as mandatory field so that Business can capture critical information during order entry.
Imprint Material (Material Group 4 =X1)
Imprint material can be identified in the material master by “Material Group 4” as ‘X1’. All goods that can be imprinted (e.g. T-shirts) will be orderable either with no imprint (with the appropriate order type) or with the ability to enter the correct number of lines and characters per line for the item. The Number of lines and characters varies from product to product and will be held as information values in the material master data. The imprint information entered has to be validated that it matches the 1.)Imprint line size, 2.) Imprint characters per line. Preferable an additional window reflecting these values will be used to capture this information. Storage of this data has to be related to SO/line item information as it will be used when the related PO is submitted to OEM. The development will need to incorporate language characters from all relevant countries.
Calibrated speedometers and keyed-to-match locks (Material Group 4 =ZZ)
These materials have value ‘ZZ’ coded in the “Material Group 4” information. Order entry will be done for speedos and keyed to lock parts allowing 1 item per order with order quantity of 1. In case of a speedo part the mileage entered in a separate field of the order detail information as a numeric value is required (maximum 8 digits ,missing leading zeroes to be concatenated ). In case of a key lock item the 4 digit alphanumeric key code has to be specified. (e.g.: ‘000XY000’ or ‘XYZ1’). These entries will be mandatory.
Below table can be referenced to have validation logic for ordering various parts & accessories under Linked Order flows, the combination of check1 and check 2 can be programmatically harnessed to control the linked order creation in SAP ECC.
E.g.: Limited edition motorcycle parts can only be ordered in SAP, if the combination of VIN # and Edition or Key number is entered on Order entry screen.
A typical Business flow of Linked Order is explained below:
Assumptions: The Vehicle manufacturer is using SAP ECC system. The sales process involves Dealer, Supply Centre, Distribution Centre and Original Equipment Manufacturer. The warehouse activities are monitored by Third Party Logistic provider (3PL). The OEM, RDC and SC are under different company code and the transactions in between them are under Intercompany Business scenarios.
**There is a field in the Sales Order to capture the VIN number.
**Step 4: Custom Program to create Sales Order based on the PO Creation in step 3
**PO Number field: Original Linked Sales Order Number
Step1: An automobile dealer will place a linked order for specific part, say a pre calibrated Speedo, Frame with specific chassis number, Crankcases with engine number impregnated, key with a particular key code, Imprint material (T Shirts with specific text printed on them) etc. at the Supply Centre as per his
geographical location. (Order for a pre-calibrated speedo for a vehicle sold from his dealership to an end customer).
During Sales order entry the dealer will be automatically prompted by the ECC system (as per customization) to enter the linked order information related the particular linked part in the additional information sales tab (such as VIN numbers, Lock numbers or specific text for T-shirts). This is the information which is specific to the particular vehicle sold by the dealership to the end customer which needs to be forwarded to the OEM in order to make this part available for the customer vehicle.
Step2: The Linked Order which created at the Supply Centre is now having the specific information about the linked part (speedo) to be supplied to the dealer. An automatic purchase requisition is created from this linked order from Supply Centre (SC) to the Regional distribution Centre(RDC) due to the third party settings maintained at the material master level (item category group: BANC). This PR will carry the linked order specific information from the original sales order.
Step3: The PR is then converted in a purchase order and sent to the RDC which acts as a vendor to the Supply Centre.
Setp4: A custom Program will create another linked sales order based on the Creation of PO in step 3 this sales order will carry the PO number from which it is generated at the header level for further processing and mapping activities during shipment of this part. This sales order will be the source for the procurement of the linked material at RDC from the OEM.
Step 5: An automatic purchase requisition is created from this linked order from RDC to the OEM because the third party settings maintained at the material master level (item category group: BANC). This PR will again carry the linked order specific information from the original sales order to the OEM.
Step6: The purchase requisition is then converted in a purchase order and sent to the OEM which acts as a vendor to the RDC.
Step7: The OEM receives the part either from the 3rd party vendor or manufactured it themselves and then configures them as per the specific linked information from the additional data tab of sales order. Typically a standard part is received from the vendor and then it is configured internally at the shop floor as a part of best practice and quality management norms followed by different OEMs.
Step 8 & 9: An automatic inbound delivery is triggered at RDC via Intercompany invoice output and the IC invoice is also received at RDC.
Step10: The Goods are then sent from OEM to the 3PL Location RDC.
Step11 & 12: Goods receipt confirmation is sent to RDC & Goods receipt is done in SAP at RDC.
Step13: IC Invoice settlement is done between the OEM and RDC as per the agreed method like Transfer Pricing, Cost + Profit margin, etc.
Step14: Once the Linked part is available at the RDC, an outbound delivery for the sales order,supplying Goods from RDC to DC is created. The Goods are then sent from 3PL of RDC to 3PL Location of DC.
Step15: Intercompany invoice and ASN is triggered from Invoice output.
Step16: An automatic inbound delivery is triggered from the ASN at DC and the IC invoice is also received at DC.
Step17: Goods receipt is manually done once the Goods are received at 3PL location of DC.
Step18: IC Invoice settlement is done between the RDC and DC as per the agreed method like Transfer Pricing, Cost + Profit margin, etc.
Step19: Outbound delivery is created and the linked parts are sent to the respective Dealer.
Step20: Invoice is issued to the Dealer in lieu of the Goods supplied and the business flow is complete on receipt of payment from the dealer.
- Business process reference from an Auto Major