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Author's profile photo BHAVNEET KAUR

Project based Engineer-to-Order with Two-Tier Integration in SAP S/4HANA Cloud

This blog is focused on providing a detailed process on two-tier ERP solution for project-based engineer-to-order with headquarters and subsidiary.

Most manufacturing companies spread their production across the globe. In this process, they struggle to maximize their operational efficiency when it comes to cost, time, and quality. It is mainly due to the lack of transparency during various stages of production.

The two-tier ERP model helps companies bring the organization together, spread across the globe. The companies can keep their existing first tier as ERP system at the headquarters and SAP S/4 HANA Cloud system as second tier at various subsidiaries/business units. The project-based manufacturing setup across the two-tier will help companies in organizing well the various production-related task allocated to different subsidiaries.

Image created by author and is owned by SAP. No external source referred.

 

Below are some of the key benefits which can be achieved using this approach:

  • Clear connect between the headquarters and subsidiary. This avoids the chances of miscommunication between two entities.
  • Regular updates related to project execution.
  • Proper utilization of resources.
  • Real-time cost analysis related to project. Bringing operational cost in alignment to company’s goal.
  • Proper production planning results in positive impact on revenue.
  • Easy management of inventory demands across various subsidiaries.

 

Process flow case 1:

The Integration can be setup with SAP Cloud Integration for data services and best practice explorer scope item 2EL. Material master needs to be replicated between headquarters and subsidiary.

  1. The headquarters creates a purchase order in SAP S/4HANA system.
  2. The purchase order in the headquarters SAP S/4HANA system creates an IDOC which triggers API in subsidiary running SAP S/4HANA Cloud public edition system.
  3. The API Enterprise Project – Create, Update is triggered to create Enterprise Project and WBS Element required to execute the project in subsidiary SAP S/4HANA Cloud public edition system.
  4. Upon successful execution of the project create API, Cloud integration triggers the creation of the Sales Order using Sales Order (A2X) – Create, Update.
  5. The fields required for creation of Enterprise Project, WBS Element and Sales Order can be derived by maintaining mapping in SAP Cloud Integration, the mapping will be maintained between the headquarter Purchase Order fields and the subsidiary Project, WBS Element and Sales Order fields.
  6. The production process is triggered by material requirement planning (MRP) run for BoM components. Once the finished product is manufactured (and confirmations entered and components issued) and received into stock, the delivery and final billing occurs.
  7. The flow of customer Invoice raised in subsidiary will be interfaced to headquarters via SAP Cloud Integration.

Image created by author and is owned by SAP. No external source referred.

 

Process flow case 2:

The Integration can be setup with SAP Cloud Integration for data services and best practice explorer scope item 2EJ. Material master needs to be replicated between headquarters and subsidiary.

  1. The headquarters creates a purchase order in the SAP S/4HANA Cloud public edition system.
  2. The Purchase order in the headquarters SAP S/4HANA Cloud public edition system automatically creates a sales order in the subsidiary SAP S/4HANA system.
  3. In subsidiary SAP S/4HANA system, the material has to be linked to a standard network and standard Work breakdown structure in CN09 to follow the Assembly processing.
  4. Project manager can be assigned to the project in subsidiary who can go ahead and create a detailed project plan.
  5. The sales order triggers the creation of an operational network and operational project in subsidiary SAP S/4HANA system.
  6. The production process is triggered by material requirement planning (MRP) run for BoM components. Once the finished product is manufactured (and confirmations entered and components issued) and received into stock, the delivery and final billing occurs.
  7. Based on the type of invoicing, subsidiary can proceed with the billing for the execution between headquarters and subsidiary.

Image created by author and is owned by SAP. No external source referred.

 

Please share your feedback or thoughts in the comments

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

  • OData API in SAP Cloud Integration for Beginners here
  • Best practices for SAP S/4HANA Cloud here
  • SAP S/4HANA Cloud, public edition community: follow for more
  • Help Portal Product Page here

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Source of all the images: Author’s own asset

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      2 Comments
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      Author's profile photo Saumitra Deshmukh
      Saumitra Deshmukh

      Great blog & explanation BHAVNEET KAUR

      Cheers

      - Saumi

      Author's profile photo Chandrashekhar Tipre
      Chandrashekhar Tipre

      Well explained Two-Tier scenarios leveraging 2208 released PS functionality of Project Control – Sales

      Thanks & Regards,

      CAT