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Intelligent ERP Update: SAP S/4HANA Cloud 1905 for Hybrid Deployment (2-Tier ERP)

As part of SAP S/4HANA Cloud 1905 release i would like highlight two major innovations in the area of the Just in Time (JIT) and Sales Schedule lines in my blog for hybrid deployment (formerly known as 2-Tier ERP)..

To get an understanding on Hybrid Deployment, i would suggest to visit Sven’s blog series on Hybrid Cloud.

Listen to Product Expert Arun Nair as he articulates the release highlights.

 

Just-In-Time Supply to Customer from Stock (Scope Item 2EM).

Let’s take up the first topic Just In Time. Just In Time is a technique of how you are going to manage your inventory. This is majorly adopted in the Automotive industry perspective. As part of JIT concept, you are not going keep the inventory of the components. On a need basis you are going to procure the raw materials, because of this your inventory carrying cost is reduced, you don’t need huge warehouse to store and wastage is minimal.

JIT call is a request from the customer side to supplier through the EDI message. JIT call contains required raw material, requested quantity, date and time and destination within the ship-to location for each item. There are various types of JIT calls (Summarised JIT call, Sequenced JIT, Just-in-Sequence (JIS) call and Order based JIT calls).

There will be long term contract existing between customer and supplier; Long term contract in the form of Schedule Agreement. Based on this customer will share the expected demand in the form of forecast. This becomes the basis for supplier’s internal planning, so that supplier is able to respond to JIT call immediately. As part of 1905 we framed this as separate scope item Just-In-Time Supply to Customer from Stock (2EM).

This is one of the Ecosystem scenario examples for Hybrid deployment. Where Customer is running on the On-premise system and Supplier is running on the S/4HANA Cloud.

 

High level Architecture On-Premise to Cloud Hybrid deployment using middleware.

 

Now let’s see how the JIT calls are replicated from customer system to supplier in a Hybrid deployment model. On the On-premise side it uses  the IDocs to transfer the  JIT calls  to SAP Cloud Platform (SCP).In SCP  the iDocs  gets processed and pushed into S/4 HANA Cloud system.

From the cloud system side, we use SAP_COM_0168 communication arrangement to replicate the JIT call from On-premise to Cloud.

Summarised JIT Call is successfully created at the supplier system. The JIT that’s are received at supplier are directly relevant for shipping. This is the starting point for the logistics execution process. The Shipping specialist picks the JIT call from the customer and create the outbound delivery from summarised JIT calls.

The follow-on steps are shipping process starts with delivery creation and ends with posting goods issue. After goods issue, the settlement is done from creating the billing document until receiving the payment.

Similar set up is required for the other scenarios like transfer of shipping notification and Invoice processing.

 

Sales Schedule Lines

This is another example for Hybrid deployment model under Headquarter – Subsidiary scenario. As of now we have a scenarios like Subsidiary as a production unit and internal supplier to HeadQuarters, enabling Subsidiary to manage assembly for Headquarters.

These scenarios are based on the business object Purchase order and Sales order. With 1905 release for the same scenario we have extended the scenario which supports the Two-tier integration for scheduling agreements ie Purchase Schedule lines to Sales Schedule line.

 

High Level Architecture of Purchase Schedule lines with Sales Schedule lines.

 

This scenario will also support the Automotive industry eco system. This scenario enables communication between (S/4 HANA On-premise) Customer and external Supplier ( S/4HANA Cloud system) through SOAP messages.

This scenario covers the end to end process B2B process between Customer and Supplier system running hybrid deployment model. The first level of integration happens at the Sales scheduling agreement delivery schedules level. Here buyer will share the Purchase Forecast/JIT delivery schedules with the Supplier. This will create the Sales schedule forecast/JIT delivery schedule at the supplier system.

The subsequent steps are same as above mentioned. The shipping process with outbound delivery creation, picking and Post goods issue. After goods issue, the settlement is done from creating the billing document until receiving the payment.  The settings like communication arrangements remains same for creating ASN (Advance shipping notification), Invoice creation.

You can watch out this space for a White paper on “Automotive Supplier subsidiaries on Hybrid Landscape” which is planned to be released soon.

 

For more information on SAP S/4HANA Cloud, check out the following links:

 

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