Sell and Build complex Products and Solutions (part 2)
In the first part of this blog series I talked about the challenges customers have when selling and building complex products and solutions, as well as which building blocks and SAP solutions could be used. I emphasized SAP ERP as the backbone, or starting point, of all deployments.
Today, I would like to give you a closer view of SAP ERP Project System (SAP ERP PS). From my point of view, the SAP ERP PS is one of the best-integrated applications in the SAP product portfolio. The most relevant integration in the context of sell and build complex products and solutions is between the project and the product structure.
Different maturity levels how you can use SAP ERP PS
There are different maturity levels on how you can use SAP ERP PS:
Industry independent (not just for IM&C or other Discrete Industries), SAP ERP PS is often used to consolidate and report cost along a specific hierarchy/structure. At the basic level, the focus is on financials and the use of work-break-down-structures (WBS).
Activities and relationships begin to open the door to the logistical world. Basically, the WBS structure is representing the organizational model and the network, with all of its activities, is representing the operational organization. A project manager can perform network scheduling and check capacity availability to determine whether or not a work center has enough capacity on the date needed to meet delivery commitments.
The seamless integration of a bill of materials (BoM) with a project structure is a unique capability of SAP ERP. For a more detailed material planning for projects, the material can be assigned manually or automatically (based on a reference point system) to the network activities. Now the system is able to handle the direct procurement of materials as well as assemblies through material and production planning functionality.
Finally, the integration to SAP SCM (Supply Chain Management) can be used, either as an infinite planning or a finite planning, triggered by the project request.
For an SAP customer who sells and builds complex products and solutions, level 3 and level 4 are probably the right ones to focus on for your business.
On which level do SAP customers use the SAP ERP PS?
An analysis of our customer base, my long-time experience as an SAP consultant, and numerous conversations with customers shows that if a company is using the SAP ERP PS in the context of “Sell and Build complex Products and Solutions,” most of them have implemented level 2 at the very least. Roughly 2/3 of our customer base has level 3 running, while more than half of these, have reached level 4.
This means that just about 1/3 of all IM&C customers are using the SAP ERP PS at level 4 in the context of selling and building complex products and solutions.
Picture 1: ERP PS maturity levels and customer adoption
The picture shows how many IM&C customers are on the right path, but many do not go the last mile with direct integration to SAP Supply Chain Management applications.
Closer view on the relation of network activities with materials / bill of materials
Let’s take a closer look at the integration of material and bill of material to the network activities in the project structure. This functionality has been available for more than 15 years now.
Basically, the relationships can be built manually by assigning a material or a bill of material to the network activity, but optimally, a manufacturer would automate this process as much as possible.
- The linkage between the material and the network activity can automatically build by the reference point (see more details on SAP help : Assigning BOM Items using Bill of Materials Transfer).
- Another possibility is to use template WBS structures including networks which contain the relationship (see more detail on SAP help : Standard Structures).
- There are more options, like Assembly-to-Order (ATO), which is based on the project structure created by the sales order (see more detail on SAP help: Assembly Processing in the Project System).
- With SAP Variant Configuration (VC), the project structure is derived based on the material configuration during the sales process (see more detail on SAP help : Configuration
You see, there are many different options, which could support your business process.
As described in the first part of this blog series, the “backbone” for selling and building complex products is SAP ERP, which can easily cover most requirements a manufacturer may have. In this second part, we took a closer look at SAP ERP Project System (SAP ERP PS), one of the best-integrated applications in the entire SAP product portfolio. Depending on the maturity level of an organization, SAP ERP PS is the right solution when moving from making and selling products to building and selling complex solutions.
Bernhard Meyer is a Solution Manager for Industrial Machinery and Components at SAP