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Author's profile photo Markus Florian Oertelt

Discrete Industries in SAP S/4HANA Cloud 2105

Discrete Industries are described as the production of a discrete category of goods or items. This means goods or items can be individually or separately produced.

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Figure 1: Discrete Industries in SAP S/4HANA Cloud 2105

Currently, SAP S/4HANA Cloud focuses on solutions for the following two discrete industries: Industrial Machinery and Components and Automotive. For the later, specific focus is given to suppliers.

This blog post is intended for everyone who struggles to find all relevant 2105 release update information on Discrete Industries in SAP S/4HANA Cloud. 

In the 2105 release, the scope item Produce and Sell Standard Products – Inventory Management (‏54U‏) was enhanced and two new scope items, Produce and Sell Standard Products – Warehouse Managed (‏54V‏) and Automotive Supply to Customer – Inventory Management (‏55F‏), were introduced.

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Figure 2: Produce and Sell Standard Products – Inventory Management (54U)

This scope item enables production planning and execution for a serial-number-managed finished good in make-to-stock scenarios, and prompts reactions to incoming sales orders (sell from stock). The process starts with the creation of a demand forecast for finished goods, represented by planned independent requirements (PIRs). Based on PIRs, material requirements planning (MRP) creates a production plan for finished goods and explodes the entire bill of material (BOM). As a result, raw material demand is planned. Production planners can analyze and manually change the planned order-based production plan. Raw material demand leads to component demands that trigger procurement scenarios (external procurement via purchase orders and inbound delivery as well as procurement based on scheduling agreements). The production process itself covers conversion of planned orders into production orders, order release, material staging and picking, confirmation of order operations, and goods receipt posting. Order-based target and actual cost is created, ensuring fully integrated material and value streams. For an additional subassembly, repetitive manufacturing is executed. The process continues with the creation of a sales order, performing the delivery with picking and quality inspection at goods issue, invoicing, and ends with the clearing after incoming payment.

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Figure 3: Produce and Sell Standard Products – Inventory high level process overview

There are two significant enhancements that came with Discrete Industries for SAP S/4HANA Cloud 2105 release and they are the following:

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Figure 4: Produce and Sell Standard Products – Inventory Management (54U) enhancements

Procurement Based on Purchase Scheduling Agreement

With the integration of purchase scheduling agreements you can now create, manage, and view purchase scheduling agreements to ensure that you get the ordered items on time, at the correct location, and in the required quantity in our end-to-end scenario. Here is a quick glimpse of what it looks like:

Repetitive Production Execution for Semi-Finished Component

This implementation in the whole end-to-end process gives the possibility to perform production planning and control in a repetitive manufacturing environment. Business users can now create and revise production quantities on a period and quantity basis (reduction in individual lot and order-specific processing). Also, business users can now reduce production control effort and simpler back flushing tools (with the option of using the full scope of the PP functionality in S/4HANA Cloud). Please check out a summary here: 

SAP Best Practice Reference Scripts for Scope Item 54U

The scope item 54U is based on the following reference scripts with its own master data:

For further details on scope item 54U, please refer to my blog post Discrete Industries in SAP S/4HANA Cloud 2102

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Figure 5: Produce and Sell Standard Products – Warehouse Managed (54V)

This scope item enables production planning and execution for a finished good in make-to-stock scenarios, as well as prompt reactions to incoming sales orders (sell from stock) as in scope item 54U. The production process itself covers the conversion of planned orders to production orders, order release, material staging and picking, confirmation of order operations, and goods receipt posting. Upon acceptance of quality inspection results, the finished product is moved to unrestricted stock. The process continues with sales order creation, performance of the delivery satisfied from the stock present in a warehouse-managed location, invoicing, and clearance after incoming payment. All products used in this scenario use warehouse-managed storage locations. Quality inspection is triggered during goods receipt for production order.

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Figure 6: Produce and Sell Standard Products – Warehouse Managed high level process overview

As we use warehouse-managed storage locations in 54V scenario; the following processes focus on the main difference in that respect to scope item 54U (inventory management):

Inbound Deliveries from Procurement

In our end-to-end process, we integrated in the procurement process e.g. for raw materials the put away of goods into the warehouse bin. This is done via warehouse task. Check out this video here to see what it looks like:

Production Staging from Warehouse

Staging in the end-to-end manufacturing process is also included into the whole end-to-end scenario. The assumption is that components required for production have already been produced in-house or procured externally and now merely need to be moved from their current storage location bin in the warehouse to the production storage location.

In the app “Run Outbound Process – Production the corresponding delivery is used to stage materials for production:

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Figure 7: Run outbound process – production

The first step in the staging process is to create a warehouse task for picking the materials:

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Figure 8: Create missing warehouse tasks

The next step in the staging process is that the warehouse clerk looks at open tasks and can either delegate the task to somebody in the warehouse, or goes out into the warehouse and starts picking themselves:

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Figure 9: Open warehouse tasks

 

The picking process is handled via the app “Process Warehouse Tasks – Picking”. This can be seen here:

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Figure 10: Process warehouse task – picking

In the warehouse task details (figure 11), the destination bin is the production supply area (PROD-SUPPLY for storage type Production Supply called S105. This is where the materials have to be staged in order to be included into the assembly process.

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Figure 11: Confirm warehouse task to destination bin

Once the goods leave the warehouse to the production supply area, goods issue can be executed.

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Figure 12:Goods issue preparation

The staging process for our delivery can be seen in the operational document flow. Here we see that goods issue from the warehouse was executed, and the materials can now be used in the production process.

Figure 13: Goods issue delivery to production (supply) operational document flow

Inbound Deliveries for Production Order

Once the production of a product is complete, the finished materials will be placed into warehouse for further processing or storage. In the app “Inbound Deliveries – Production,” the warehouse representative sees that, for this particular delivery, the completion status has not started yet. This is depicted below:

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Figure 14: Inbound Deliveries Production

With the 2105 release, we can assign serial numbers to a product in the warehouse. This is a relatively uncommon process, to assign serial numbers in the warehouse when goods arrive from production, but companies can use this feature now. The serial number information is shown in the detail section:

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Figure 15: Change Inbound Deliveries from Production

By clicking on the serial numbers, the serial number assignment is then visible:

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Figure 16: Serial Number Assignment

The goods can be packed on a handling unit for storage. The packaging material can be assigned to a material as well and, as a result, packing is automated. The create handling unit screen can be seen here:

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Figure 17: Create Handling Units

Once the goods have been packed in the warehouse, the goods receipt can be executed. Thereafter, the goods can be moved to the respective destination bin.

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Figure 18: Goods Receipt from Production

By using a warehouse task, goods can be moved and stored into the warehouse destination bin. That said, the respective warehouse task can be created automatically or manually.

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Figure 19: Create Warehouse Task

Once the goods from production are stored into the right destination bin location in the warehouse, the warehouse task can be confirmed.

Figure 20: Confirm Warehouse Task

The entire operational document flow of our inbound process, from producing the goods, to confirming the production order, as well as the goods receipt execution in the warehouse, is illustrated below:

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Figure 21: Operational Document Flow – Inbound Production to Warehouse

Outbound Deliveries from Warehouse

This outbound process for warehouse management was included into the end-to-end scenario with the 2105 release as well. Warehouse Tasks can be created and, as a result, the picking process is triggered. Once complete, the goods issue is posted. Have a look at the video below to see how this is done:

 

SAP Best Practice Reference Scripts for Scope Item 54V

The scope item 54V is based on the following reference scripts with own master data:

1E1,1MP, 2TX, 3BR, 3BS, 3BT, 3BW, 3DV, BD9, BJ5, BMD, J45, J59, J60, BJH and 41U.

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Figure 22: Automotive Supply to Customer – Inventory Management (55F)

In this scope item, a sales scheduling agreement is created. Forecast delivery schedules are maintained manually. Planning delivery schedules can be generated to smoothen the demand handed over to production. The required components are material requirements planning (MRP) planned and procured from external suppliers with purchase scheduling agreements. Subsequently, inbound deliveries are created, the goods receipt is posted, and supplier invoices are created. MRP generates planned orders for the material to be produced. The confirmation of repetitive manufacturing triggers multiple activities, such as finished material goods receipt, backflush of component materials, and posting of costs to the cost collector. Outbound deliveries to the customer are created based on open quantities in the delivery outbound monitor. After the completion of picking and packing, the goods issue is posted. The delivery can be invoiced once goods are delivered. Optionally Self-Billing can be executed. Therefore the self-billing message from the customer is received. The supplier validates the message and simulates results. If there are differences, credit and debit memos are created respectively to settle the account. All incoming and outgoing payments are posted. All the products in this scenario are inventory managed.

Sales Scheduling Agreement

Sales scheduling agreements are an outline agreement between buyers and suppliers. As this is an important aspect in the automotive world, it was included into the end-to-end process.

Sales Scheduling Agreements can be created by using the app “Manage Sales Scheduling Agreements”:

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Figure 23: Creating Sales Scheduling Agreements

Internal sales representatives can also have an insight of customer demand on different delivery schedule versions to help them understand if customer demand fluctuates in certain periods. This is done via the app “Sales Scheduling Agreements – Product Demand” and can also be done on material level. In this app the internal sales representative can navigate from high level demand view into detail level view as well as fulfillment overview, to get a better overview of delivery reliability on sales scheduling agreement. Also, open schedule lines for scheduling agreements can be analyzed to find challenges, as well as demand fluctuations, on the schedule line level.

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Figure 24: Sales Scheduling Agreements – Product Demand

Procurement of Semi-Finished Material Based on Purchase Scheduling Agreement

With the integration of purchase scheduling agreements, you can now create, manage, and view purchase scheduling agreements to ensure that you get the ordered items on time, at the correct location, and in the required quantity in our end-to-end scenario. A short video can be found for scope item 54U in this blog post.

Repetitive Production Execution

With repetitive manufacturing, planned orders can be used to trigger production. The advantage is that the planned orders do not have to be converted into production or process orders. Repetitive production execution has been integrated into this end-to-end scenario. A short video can also be found for scope item 54U in this blog post that shows an overview of the repetitive production execution.

Deliver to Customer

Business users can create an outbound delivery for the previously received delivery schedule (scheduling agreement) in this end-to-end scenario. Included is a picking process that involves taking goods from a storage location and staging the right quantity in a picking area where the goods are prepared for shipping. Picking can be done via the app “Pick Outbound Delivery”:

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Figure 25: Pick Outbound Delivery

Automatic packing for delivery items right in a outbound delivery can also be executed if wanted (automatic packing allows you to use packing instructions to create handling units automatically in outbound deliveries).

 

Self-Billing

SAP Self-Billing Cockpit enables suppliers to efficiently process self-billing documents received from the buyer and prepares documents for clearing in accounts receivable. We use this functionality in our end-to-end process (reference scope item is 4H2). The solution is based on SAP Business Technology Platform. If you want to know more about how to set up integration between SAP Self-Billing Cockpit and SAP S/4HANA Cloud click here and deep dive here. Watch this short introduction video:

 

Finance

To sum up this end-to-end process, accounts receivable accounting is used to process open customer invoices and monitor incoming payments as well as accounts payable accounting (invoices are created in purchasing and submitted to accounts payable).

A video that shows this process can be found in my Blog Discrete Industries in SAP S/4HANA Cloud 2102 under the heading Finance.

SAP Best Practice Reference Scripts for scope item 55F

The scope item 55F is based on the following reference scripts with own master data:

1J1, 2TX, 3NR, 4H2, 4MM, BET, BJH, BMR, J44, J59 and J60.

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Figure 26: The End

Feel free to drop me a line in the comment section if you need any further help, have questions or would like to offer any suggestions on how to improve this blog for Discrete Industries in SAP S/4HANA Cloud 2105.

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      4 Comments
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      Author's profile photo Pascal Renet
      Pascal Renet

      This is a great summary blog Markus, thanks for sharing.

      Author's profile photo Markus Florian Oertelt
      Markus Florian Oertelt
      Blog Post Author

      Thanks a lot Pascal!

      Author's profile photo AIG Functional Team
      AIG Functional Team

      Dear Oertelt,

      Thanks for sharing,

      Can we have similar documents for the Process industry specifying Pharma solutions

      Br

      Tallha

      Author's profile photo Markus Florian Oertelt
      Markus Florian Oertelt
      Blog Post Author

      Dear Tallha

      thanks for reaching out! The option for choice for LS customers who run GxP-critical processes is currently SAP S/4HANA Private Cloud Edition. We are currently investigating concepts of how “public” cloud can be used for GxP-regulated industries.

      Hope this helps you further.

      Best regards,

      Markus