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Quality Notification process for Ariba Supply Chain Collaboration

Quality Notification process for Ariba Supply Chain Collaboration

Introduction

The purpose of this blog is to provide a comprehensive view of the Ariba SCC Quality Notification process end to end in SAP ERP and Ariba Network. This blog will help the Ariba SCC consultants in envisage the end-to-end process flow for Ariba SCC Quality Notification process.

Quality Notification is the feature which helps customers and suppliers to achieve real-time collaboration on the quality management processes like Defect deviation notification and resolution, Quality inspection and usage decision and Quality review.

Quality notification collaboration which is part of Ariba SCC solution is a process of where buyers and suppliers can communicate about the quality of goods shipped. Buyers and supplier could simply use the telephone or email to notify the other party about the quality issues. But by using the Quality Notification features that are built in SAP ERP and also in the SAP Ariba Supply chain Collaboration, buyers and suppliers can systematically track quality issues. Further more features available in quality management can be used internally by an organization, even if they are not communicating with the buyer or supplier. The main concept is the quality management allows an organization to track the quality issues.  The Quality Notification also consists of the Quality Review and Quality Inspection processes.

Below pictures depict the Quality Notifications briefly.

Fig. 1: Quality Notification Collaboration

Quality notifications contain capabilities for recording and processing different types of problems for example problem resulting from core quality goods receipt services, we can use the notifications analyze and record defects and monitor the correction of these problems. In particular notifications help process internal and external problems such as customer complaints, complaints against vendors and company internal problems.

The Quality notifications can be buyer initiated or supplier initiated.

The thing to remember is that the quality notification is initiated by whomever receiving the goods. So for a standard purchase order, when the buyer is purchasing goods from the supplier, the supplier ships those goods and they are received by the buyer and the buyer may notice that there are quality issues with the parts or goods or wrong size. This will be a buyer initiated quality notification. This is applicable for standard Purchase orders.

Fig. 2: Quality Notification Collaboration Overview

But sometimes suppliers receive goods, for example when we are doing subcontracting where the buyer ships components to the supplier to do part of the manufacturing process in that case suppliers receive the goods components and may find the quality issue with those components this is an example of supplier initiated quality notification and there could be other scenarios. Quality Notification help track problems discovered by whomever receives the goods whether it’s the customer or the vendor or internal issue. This information is then tracked right in the system that has the information.

Fig. 3: Supplier Initiated Quality Notification Process Flow

Let’s look at a simple overview of the process, the buyer in the case of buyer initiated quality notification can create a quality notification and send it to the supplier. The supplier can then respond with information about the defect what the causes might be, some activities that they are taking care of or tasks that may be assigned. And these Quality Notifications can be sent back and forth multiple times until finally issue is resolved and then the Quality Notification is closed.

Below is the screenshot from the supplier account for the Quality Notification search.

Fig. 4: Quality Notification Search

The below screenshot shows the different statuses and priority for a particular Quality Notification.

Fig. 5: Quality Notification Priority with the Statuses

As, another example, let’s take a Quality Notification that is the result of the PO, so the standard purchase order processed, the buyer sending the PO to the supplier where the supplier responding with the OC and ASN, then the goods are delivered to the buyer, the buyer receives them generates the GR, but then notices that something wrong with the defective part which could be wrong size, incorrect color or damage, whatever it is and so then the buyer issues a Quality Notification and this process begins with the notification information sent back and forth until resolution is received and is often a RCA done a cause is identified sent back to the buyer and the issue is completed and closed.

Fig. 6: Quality Notification Process Flow(Buyer Initiated)

Supplier Initiated Quality Notifications Process Flow:

Supplier Initiated: Contract Manufacturer or Distributor or 3PL when they find a part returned or damaged, this will initiate the Quality Notification process to determine the warranty status from the buyer.

Fig. 7: Quality Notification Process Flow(Supplier Initiated)

Elements of Collaboration

The Quality Notification consist of a header and line items. The line items are optional. You could have a Quality Notification without any line items, but you can have one or more-line items in each of these line items as a defect and the information that we find on the header is general data about the Quality Notification, but tasks and activities can be created at the header level. At the line-item level where these defects exist we can create causes, tasks and activities for each item, there can be zero or more for each of these. So the given defect may zero causes, 2 tasks and one activity. At any given time as the Quality Notifications are sent back and forth between the buyer and seller information is added to that, it might start up with 1 task and another task be added and so forth.

Causes generally describe what was the root cause of the problem.

Tasks are assignment that are given to to the buyer or the supplier that they are supposed to carry out as part of defect process.

Activities are where we report activities or something which has been done, often reporting on the activities associated with the task but again we can have zero or more causes, tasks, and activities with each of the defects.

Fig. 8: Elements of Quality Notification Collaboration

Business Case:

The quality collaboration gives early visibility to product defects and production yield and provides visibility into quality issues to drive quick resolution. This can promote compliance and transparency by alignment with the supply chain on quality information and compliance with transparency into rework or returns of non-compliant products.

Business Benefits

Quality notifications can help businesses process internal or external issues such as:

  • Complaints filed by customers.
  • Complaints against vendors
  • Company internal problems
  • Warranty determination for returned parts.
  • Identify the defective material with the customer location, part number and other reference objects which are PO and Advanced Shipment Notice.
  • Record individual defect items that are defective and analyze their causes.
  • Record the name of the individuals who are involved with the product defect.

Process Flow

  • Identify Defect after the material is received.
  • Create Defect
  • Activate Notification
  • Process Notification
  • Supplier responds to the Quality Notification on Ariba Network and analyzes the issue with the material and
  • Buyer updates the Quality.

Business users can use this application to create Notification to the suppliers for defective materials that they have received in SAP ERP. Below are the key features on this application.

  • Create Defect for damaged material received.
  • Update an existing defect.
  • Display list of Inspection lots
  • Activate the Quality notification for the defect.
  • Process the Quality Notification for the defect which is sent out to the suppliers on Ariba Network
  • View the detailed information about the defect on S/4
  • Display the history of all the inspection lots for which the defects are created.

Quality Review

Quality review collaboration as buyers and suppliers exchange information to evaluate quality issues. One of the advantages of the quality review collaboration is its independent of the buyer and suppliers’ system. Quality review collaboration exists entirely on the Ariba Network, so one of the great advantages is that you can implement quality review pretty much out of the box of doing any integration. Let’s look at the processes to support the quality users.

  • Batch review: Collaborate on batch-record reviews, finalize batch record information, and allow quality releases of product bulk materials.

The supplier can initiate the batch record process after the quality inspection process is completed for the final batch documentation.

  • Change Request: Collaborate on material changes, processes ore equipment.
  • Customer Complaint: Collaborate on product complaint investigation from the buyer’s customer. Buyers usually receive complaints through a third-party system but reports them to suppliers and CMO’s through quality reviews.
  • General: Collaborate on quality process type definitions.

 

Quality Review Business Case and Solution overview.

Business Case:

Quality is an important factor in perfect order fulfillment, both on component and finished product level. Due to an increase in outsource manufacturing, close collaboration and manufacturing control is required to maintain the quality.

Unstructured communication between buyers and sellers for batch record, change request and customer complaint (and other use case) is done via phone or email outside the system, which is inefficient and time consuming.

Communications may or may not related to a transaction, which makes it hard for buyers and suppliers to reference, access, and share. It is unclear who to contact in the buyer/ seller org.

Buyers and sellers want to share communication/document with others within their organization to facilitate handoff during vacation or when somebody leaves the company.

Solution:

  1. Ability for the quality users to support the collaboration on Batch record, Change request, customer complaint and general use cases.
  2. Buyer admin can also define further review type for other use cases and ability to hide standard use case based on supplier.
  3. Buyers/Supplier quality users’ ability to opt for email notifications based on customer/ supplier, Review type and product family.
  4. Buyers’ admin ability to upload Line of business, product family, part and plant to allows users to collaborate even if customer/suppliers are not exchanging Purchase Orders.

 

Benefits

  • Easier communication (threaded conversation) between buyer and supplier users.
  • Reduction in cycle time for review, eliminate administrative burden.
  • Allow users to get the relevant email by opt for email per supplier/customer, review type and event based.
  • Easy to find the review based on different criteria and keyword search.

Fig. 9: Quality Review Process Flow

We will now review the Quality Notification process as you recall from the process flow diagram, we are going to begin by creating the quality review on the buyer side and send it to the supplier who can then update to in-process these notifications can go back and forth until finally the supplier will mark it as complete send to the buyer who can close it and send the status back.

Quality Inspection

Quality inspection process allows buyers to request that the suppliers do a quality inspection and send back results. During the delivery of the components, buyer and supplier can collaborate quality inspection of the finished goods or subcontracting components to achieve improved overall metrics. The fundamental difference of quality inspection and quality notification is the quality inspection is more of a proactive approach where the buyer is requesting that an inspection be done at the time of order or before order goods are received. Whereas quality notification is usually a reactive approach where goods are received, a defect is identified and then a QUALITY NOTIFICATION is created.

Fig. 10: Quality Inspection

Let’s define some Quality Inspection terms. The inspection lot is created on the ERP side and the inspection Lot record is created, and this contains the request that is sent to the supplier to perform quality inspection, the inspection lot contains details of the inspection characteristics, the inspection result and the usage decision.

The inspection characteristics are the things that need to be inspected and measured and recorded. The inspection characteristics fit into 2 categories, one is quantitative characteristics and the qualitative characteristics. Quantitative characteristics are ones which can be measured such as length or weight or viscosity. Whereas qualitative characteristics are things that are accepted or rejected.

Fig. 11: Quality Inspection Terms

Inspection results are the values that are recorded by the supplier during the inspection process. These values are recorded and sent back to the buyer.

The Usage decision is where the buyer based on the results that they received that were part of the quality inspection, the buyer then makes the decision whether to accept or reject the goods.

There are 2 different workflows for quality inspection. There is a quality inspection that is requested before the ASN and quality inspection requested after the ASN. When the QI is reported before the ASN, the inspection lot must be created manually. But if the quality inspection is created after the ASN, then the Inspection Lot can be created automatically.

Fig. 12: Quality Inspection Scenarios

Let’s walk through the process flow for the inspection request which happens before the shipNotice. We start by PO is created and the inspection lot is created and sent  to the supplier. The initial inspection status is Pending, and the Usage decision status is set to Not Valuated. The supplier will then do the inspection and record the result, these results are then shared or submitted back to the buyer when that’s done the inspection status is updated to submitted, the usage decision is not updated and still in the Not Valuated status , the buyer receives the results of inspection as a valuation and sends the valuation back to the supplier and the status is updated to reviewed and Usage Dec is updated to Valuated. The other thing that the buyer can do is to lock these values in the place so that so no additional results can be sent or updated in the inspection lot. The final step is then is the buyer to do the usage decision so based on the results that were given from the supplier to the buyer the buyer can then make a decision about whether to accept or reject the goods. So, the inspection status stays at reviewed but the usage decision is updated to either accepted or rejected based on the usage decision provided by the buyer. And after these steps are done then the ASN can be created, and rest of the procurement process can go on.

Quality Inspection Process Flow

The buyer starts the quality inspection collaboration process in one of the following ways:

By creating an inspection lot before the goods receipt (source inspection) with inspection lot origin 01

By creating a goods receipt document. This can be used to reflect a virtual goods receipt, for example during a subcontracting process.

The process runs as follows:

An inspection lot is created in SAP ERP, either because a goods receipt is created or because a user creates an inspection lot origin with origin 01 – Goods Receipt.

The supplier can see inspection lot in the Quality Inspection area on the Ariba Network.

After performing the quality inspection, the supplier provides the results to the buyer.

Once the buyer has received the results for some of the characteristics in an operation, the buyer can close the characteristic and prevent the supplier from changing the results or from providing further results.

The collaboration concludes with the buyer making the final usage decision, based on the inspection results. The usage decision can be to either accept or reject the material.

Fig. 13: Quality Inspection collaboration flow

Inspection Details header

Displays key header data for Inspection Document

  • Inspection status and progress
  • Batch and Purchase Order
  • Inspection Lot No and Qty
  • Inspection Type

Certificate section shows the certificate requested for the inspection lot.

Fig. 14: Quality Inspection details

Inspection detail characteristics

Provides Inspection characteristics data by operation for inspection document.

  • ID & description
  • Sample size
  • Type (qualitative or quantitative)
  • Minimum/Maximum
  • Required/optional.
  • Status

Fig. 15: Quality Inspection details characteristics 1(2)

Inspection detail characteristics

Provides interactive results entry for the below

  • Auto-calculates mean, below and above average values
  • Percentage passed.
  • Non-conformance

Fig. 16: Quality Inspection details 2(2)

The following Usage Decision status is available.

Usage Decision status Description
Not Valuated Usage decision is not done yet.
Accepted Usage decision is accepted by the buyers.
Rejected Usage decision is rejected by the buyers.

 

The following Inspection Status is available.

Inspection Description
Pending Inspection request is received by supplier and no inspection result are pending.
Submitted Inspection results are submitted by supplier. Supplier can still update the results.
Reviewed Inspection results are submitted by supplier and supplier cannot any more edit the inspection results.

 

Conclusion

This content will make it easier for the consultant who are looking for the understanding and envisage of the Ariba SCC Quality Notification end-to-end process via Fiori Apps.

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