Module 1: Overvie · SC01_Mod1.doc Revised 11- ericssonz Module 1: Overview Introduction Supply Chain (SC) is a term used to describe part of the Customer Order Fulfillment (COF)

SC01_Mod1.doc Revised 1-1 ericssonz

Module 1: Overview

Introduction

Supply Chain (SC) is a term used to describe part of the Customer Order Fulfillment (COF) process flow. A supply chain is an integrated logistics process that starts with the purchasing of materials and goes all the way through inventory management to the delivery of goods to the customer. Materials Management (MM) is one of several modules used in SAP to help manage the supply chain. Because the MM module is such a big part of the supply chain, the term materials management is used synonymously with supply chain.

Objective

By the end of the supply chain overview module, you will have a better understanding of what supply chain and materials management is, and how they relate to the Customer Order Fulfillment process.

Outline

The following topics are discussed in this module:

Topic: Page number:

Customer Order Fulfillment (COF) process flows 1 – 2

Supply Chain Terminology 1 – 5

What is Supply Chain? 1 – 8

What is Materials Management? 1 – 10

Basic Data Maintenance 1 – 11

Material Requirements Planning 1 – 12

Purchasing 1 – 13

Inventory Management 1 – 14

Production Planning 1 – 15

Warehouse Management 1 – 17

SC Process Improvements 1 – 20

The Switch Supply Center (SC) and RBS Supply Unit (SU) 1 – 21

Enterprise Solutions 1 – 22

In-Transit Merge Process 1 – 23

Supply Chain courses 1 – 24

Knowledge Check 1 – 25

Summary 1 – 26

Supply Chain Overview Overview

Ericssonz 1-2 SC01_Mod1.doc Revised

Customer Order Fulfillment Scenarios

The diagrams on the following pages demonstrate two of the Inquiry to Cash scenarios from the Customer Order Fulfillment (COF) process.

These diagrams show only the “big picture” and are not all-inclusive.

In each diagram, notice the interaction of the different SAP modules, such as Sales and Distribution (SD), Finance/Controlling (FICO), Project Systems (PS), Materials Management (MM), and Production Planning (PP) within the process flow.

What is the Inquiry to Cash scenario? The customer “inquires” about Ericsson’s products

and/or services, the applicable COF processes take place and accounting receives “cash” from the customer for Ericsson’s products and/or services.

Various SAP R/3 modules are utilized in the following two, Inquiry to Cash scenarios:

Materials Only, High Level

Project-Related, High Level (Note: At Ericsson, a project-related scenario must incorporate materials and services)



Material Only, High Level, Inquiry to Cash Scenario

Inquiry

SD

Quote

SD

Sales Order

SD

Billing

FICO

Acounts Payable

FICO

Acounts Receivable

FICO

Purchasing

Process

MM

Inventory

Management

MM

Material

Requirements

Planning

MM

S

U

P

P

L

Y

C

H

A

I

N

Production

Order

Processing

PP

Shipping

SD

This flow chart shows a sample scenario only. An actual process flow will vary from organization to organization and from this illustration.



Project-Related, High Level, Inquiry to Cash Scenario

Inquiry

SD

Quote

SD

Sales Order

SD

Billing

FICO

Acounts Payable

FICO

Acounts Receivable

FICO

Purchasing

Process

MM

Inventory

Management

MM

Material

Requirements

Planning

MM

Production

Order

Processing

PP

Shipping

SD

S

U

P

P

L

Y

C

H

A

I

N

Forecasts a

WBS and

Network

PS

Execute

Project

PS

Release WBS

& Network

PS

Confirm

Activities &

Milestones

PS(TRIGGERS BILLING)

This flow chart shows a sample scenario only. An actual process flow will vary from organization to organization and from this illustration.



Supply Chain Terminology

Key supply chain terminology is listed below and on the following pages:

Term Definition

Advanced Ship Notice (ASN)

A document used for recording the planned pickup date of an order. This date carries forward into the Inbound Shipment Document to be transmitted to North American Logistics (NAL).

Availability Check Indicator code identifying whether or how the system checks material availability.

Backward Scheduling

The process of calculating sequential dates for a series of activities backward from the finish date of the last activity.

Base Unit of Measure

Unit of measure in which the stock of a material is kept. The system converts all quantities entered in other units into the base unit of measure, such as each (ea) or feet(ft).

Batch A number assigned at to a material at material/plant level for identification to a specific revision level or industry indicator. The classification system enables you to define descriptive characteristics for individual materials on a variable basis and to assign values to these characteristics for each batch.

Bill of Material (BOM)

A listing of all the parts that comprise a parent assembly showing the quantity of each needed.

Deliveries The process of shipping goods from the warehouse to the customer.

Electronic Data Interchange (EDI)

The means of exchanging data between different computers and companies on the global network. It is a standardized interface for receiving and acknowledging customer orders, sending bills and paying invoices.

Goods Issue (GI) Goods movement where material is shipped to the customer, scrapped, converted to available stock from an asset (consumption), or returned to the vendor.

Goods Movement An activity that results in a change in stock. Goods movement is divided into 3 areas: Goods Receipt, Transfer Postings, and Goods Issue.

Goods Receipt (GR)

Receipt of goods into inventory. This allows cost to post to the cost collector either a sales order or a project.

GR Blocked Items that are in the possession of, and belong to, the company but should not be used until released from this status. Financial documents are NOT created.



Term Definition

Inbound Shipment Document

A document used for placing an order with North American Logistics (NAL) and provides the date when a shipment will be ready for pickup.

Intra Company The sale and movement of goods within the different Ericsson companies.

In Transit Merge (ITM)

Developed to support the logistics and delivery goals of Ericsson in achieving a World Class Performance (WCP)Customer Order Flow process. This process provides the infrastructure to successfully perform a single, 100% complete, and on time delivery direct to our customer site without the need for regional warehousing.

Inventory Allocation

The process by which inventory is allocated to fill a customer’s sales order. Inventory may be allocated automatically by the SAP system or manually from any warehouse.

Master Data Data relating to individual objects (such as vendors, materials, or customers) that remains unchanged for a long period time. This differs from transactional data, which is the data entered to support a specific task (such as quantity amount or the ID of the person entering data).

Material Document A document describing a goods movement from the inventory view. Each material document is identified by its unique document number and document date.

Material Master Record (MMR)

The main record for a material used at Ericsson. The material master record contains the name, identification code, and business-related information for a material. This basic data is set up once and re-used throughout the system.

Material Type An indicator that subdivides materials into groups, such as raw materials, semi-finished materials, and operating supplies. Material type determines the sequence of screens, the numbering in the material master records, the type of inventory management, and the account determination for a material.

Movement Type A three-digit code used to differentiate stock movements.

Movement Type Reversal

For every movement type (odd number) there is an associated reversing movement type (even number). The reversing movement type is used to correct processing errors.

Maintenance Repair Operative Supplies (MRO) Purchasing

Purchased items (asset and cost center items) that are not received into inventory. The material is debited directly to the consumption point.

MRP Profile Code used to store material requirements planning (MRP) parameters.



Term Definition

Production Order Production orders are an essential part of the production planning (PP) system. A production order specifies which material is to be produced, where it is to be produced, using what activities and for what date. It also specifies what resources are needed in the production process, as well as how the order costs are to be settled.

Production Order Confirmation

Confirmations are used to monitor the progress of production orders. A confirmation documents the processing status of orders, operations, sub-operations, and individual capacities. A completion confirmation is used to record how much yield and how much scrap was produced in an operation, how much activity was used to carry out the operation, at which work center the operation was carried out, and who carried out the operation.

POD Proof of Delivery at the site. Confirmation category of ZD.

POR Proof of Receipt at the merge facility. Confirmation category of ZR

Storage Location A place where materials are stored. A storage location can be real or virtual. A goods receipt is processed by receiving goods into a storage location. An example of a storage location at Ericsson would be “0101- RBS” or “0201- Repair Center.”

Transfer Order A warehouse management document that indicates the quantity, material number and storage bin to which a material should be moved.

Transfer Posting A general term for stock transfers and changes in stock category of a material. Physical movement may or may not be involved. The process that does not involve physical movement of stock is referred to as a “Logical Transfer Posting.”

Transfer Requirement

A warehouse management document used to plan goods movements. The transfer requirement contains information regarding quantity of a material to transfer and the reason for transfer.

Transport Order Movement of materials between plants on an internal order.

Unrestricted Use Stock

Stock that is available for goods issue.

Vendor Master Record

A record of all the information required to process business transactions with the vendor.

Workflow A module within SAP used to automate certain business processes according to predefined procedures and rules. As events occur that trigger a process, a workflow item is initiated.



What is Supply Chain?

To some businesses, logistics (transportation, warehousing, and distribution) has not always been considered to be of significant strategic importance. But in today's economy business has changed, and the logistics function is at the heart of a new strategic focus called supply chain management. Supply chain management is the delivery of customer goods through synchronized management of the flow of physical goods and associated information from the source through to the consumption.

The following illustration shows the concepts of supply chain management.

Some of the market trends dictating the change in focus to supply chain management:

Shifting “channel” power. Powerful manufacturers once dictated the terms of business to retailers and now large retailers are able to dictate terms to manufacturers. This shift from a manufacturer push strategy to a consumer pull strategy dramatically alters the way in which manufacturers distribute and market their products.

Faster cycle-time-to-market. Cycle-time-to-market is the time required to design, manufacture, and distribute a product. In today's economy, factors such as lowering technology costs and ever-demanding consumers have caused dramatic reduction in product cycle time. Products quickly become outdated or are imitated by competitors.

Enhanced information technology applications. The decreasing cost of computing capacity has fueled a new wave of information technology. Applying the most up-to-date information technology is a critical element in the quest to compete in a global economy which places a premium on timely and efficient operation, as well as communications.

Customers Purchasing Suppliers Production Distribution

Material Flow

Information Flow

Enhanced

Customer

Value



Some benefits of supply chain management are:

Reduction of costs across the supply chain and more efficient management of working capital.

More efficient management of raw materials, work-in-process, and finished goods inventory.

Increased efficiency in the transactions between supply chain partners.

Enhanced customer value, often in the form of lower prices!



What is Materials Management?

As mentioned earlier, the supply chain encompasses the planning, purchasing, warehousing, inspection, delivery, and valuation of materials. Most of these tasks are done in the Materials Management (MM) module in SAP, with a couple being done in the Production Planning (PP)

module. Simply stated, managing materials successfully means having the right

material in the right place at the right time at the right cost.

The tasks of Materials Management falls loosely into the following 5 categories:

1. Basic data maintenance

Vendor master

Material master

Material master numbering

2. Material Requirements Planning (MRP)

3. Procurement (Purchasing)

Purchasing information records

Sourcing records

4. Inventory management

5. Production Planning

Bill of materials

Work centers

Routings

6. Warehouse management

MM hierarchy

Plant hierarchy and structure

Receiving

A brief overview of each of the 6 categories is discussed in this module. A more detailed overview on Master Data is covered in module 2.



1. Basic Data Maintenance

The processes within MM are based on various types of basic data. This data can refer to vendors or to materials and services. Vendor and material data is separated into “views” (or pages) of information because there is so much data contained in the data file. A Bill of Materials (BOM) is also a type of basic data.

Vendor Master

The vendor master database contains information about the vendors that supply goods and services to Ericsson. It consists of a large number of individual vendor master records, each containing the relevant vendor's name, address, and other data such as:

The currency used for ordering from the vendor.

Terms of payment.

Names of important contact persons (sales staff).

To Accounting the vendor represents an account payable so the vendor master record also contains accounting information, such as the control account number (reconciliation account) used in the general bookkeeping system. Therefore, both Accounting and Purchasing maintain the vendor master record. The vendor master is covered in more detail in module 3.

Material Master

Material data includes descriptions, Buyer identifications, and technical specifications. The material master contains all the information on all the materials that a company procures, produces, stores, and sells. It is the company's central source for retrieving material-specific data. The integration of all material data in a single database eliminates redundant data storage. Therefore, areas such as Purchasing, Inventory Management, Material Requirements Planning (MRP), and Invoice Verification can all use the same data. Material Master data is covered in more detail in module 2.

Material Master Numbering

Material master numbers are alpha/numeric, can be up to 18 characters in length, and are derived from two sources: 1.) PRIM, and 2.) SAP.

Material numbers are assigned through a system called PRIM, which is used for recording materials sold to commercial customers. Material numbers can also be assigned manually for numbers not stored in PRIM.

Maintenance repair operative (MRO) material numbers are non-meaningful alpha/numeric numbers generated by SAP. Assigning non-meaningful numbers to materials follow “best business practice” concepts. However, MRO service numbers are assigned to existing catalog numbers when possible, which must remain in place for customer ordering purposes.

Product Data Management (PDM) is responsible for entering numbers into the material master.



2. Material Requirements Planning (MRP)

The central roles of material requirements planning is to monitor stocks and, in particular, to automatically generate order proposals for purchasing and production (planned orders, purchase requisitions, or delivery schedules) when necessary. Monitoring stock levels and generating proposals is achieved through various material planning methods, with each method using different material planning procedures.

Material is procured from external or internal sources on the basis of the requirements determined by Material Requirements Planning. The delivery is entered in Inventory Management as a goods receipt. The material is stored (and managed under Inventory Management) until it is delivered to customers (Sales & Distribution), or is used for internal purposes (in production for example).



3. Purchasing

Purchasing functions range from processing purchase requisitions and generating request for quotes (RFQs), to printing out purchase orders. Purchasing decides whether orders can be placed using existing quotations, or if it is necessary to first issue additional RFQs. If necessary, an RFQ is created based on a purchase requisition. After a quotation is received from the supplier in response to the RFQ, the information (such as pricing and terms) is entered into the system. A purchase order can then be created for the material. Purchase orders can be created based on purchase requisitions, RFQs, or contracts. Purchasing information stored in purchasing information records is considered basic data for Purchasing. These records create a link between the vendor and the material or service.

Purchasing Information Records

Purchasing information records (info records) contain concise information about a vendor and the material currently being procured from that vendor. Therefore an info record represents a material-vendor relationship.

An info record indicates the unit of measure in which materials are ordered from the vendor and the applicable reminder levels. (Reminders are “urging” or “expedite” letters that can be automatically generated and sent out to vendors after the requested delivery date.) The info record also shows price changes made by the vendor for the material. This information can be useful in the process of evaluating quotations to determine the successful bidder.

Info records can be created automatically when you order a material. You can also manually create, change, and delete info records. Info records are discussed briefly in module 3, and covered more extensively in module 8

Sourcing Records

A record that allows (or restricts) selection of different sources to supply a material within a plant. A sourcing record indicates the time frame(s) for which a source may be valid, preferred, or blocked.



4. Inventory Management

Inventory management encompasses the following tasks:

Management of material stock by quantity and value

Planning, data entry, and documentation of all goods movements

Physical inventory

In the Inventory Management system, the physical stock reflects all transactions resulting in a change in stock and thus in updated inventory levels. An overview of the current stock of any given material can easily be obtained. For each material, the current amount of stock can be displayed for: the warehouse, the stock ordered but not yet delivered, the stock reserved for production or for a customer, and the stock in quality inspection.

A prerequisite for Cost Accounting is to manage stock not only on a quantity basis but also by value. The following values are updated with every goods movement:

Stock value for inventory management.

Account assignment for cost accounting.

Corresponding G/L accounts for accounting via automatic account assignment.

Some characteristics of Inventory Management are listed below:

Both the quantity and value figures are updated automatically when entering a goods movement.

Goods movement includes both "external" movements (goods receipts from external procurement, goods issues for sales orders) and "internal" movements (goods receipts from production, withdrawals of material for internal purposes, stock transfers, and transfer postings).

For each goods movement a document is created which is used by the system to update quantities and values and serves as proof of goods movements.

Goods receipt/issue slips are printed to facilitate physical movements and the monitoring of the individual stocks in the warehouse.

The adjustment between the physical stocks and the book inventories can be carried out independently of the physical inventory method selected.



5. Production Planning

Production orders are part of the production planning (PP) system. A production order specifies which material is to be produced, where it is to be produced, using what activities and for what date. It also specifies what resources are needed in the production process, as well as how the order costs are to be settled. Production orders are created either via an order proposal from MRP, that is by converting a planned order into a production order, or via an assembly order manually, that is without previous planning levels. As soon as a production order is created, the system carries out the following steps:

Selecting a routing and transfers the operations and sequences of the routing into the order.

Exploding the bill of material (BOM) and transferring the BOM items into the order.

Creating reservations for all the order components kept in stock.

Calculating planned costs for the order.

Bills of Material

A Bill of Material (BOM) is a complete, formally structured list of the components making up a product or assembly. The list contains the number of each component together with the quantity and unit of measure. BOMs contain important master data used in many different organizational areas, such as:

Material requirements planning (MRP)

Provision of materials for production

Product costing

Run MRPConvert Planned Order

to Production Order

Release Production

Order

Confirm Production

Order

Settle Production

Order

Production Planning Process for /B

Put Material away in

Warehouse



Work Centers

A work center is where an operation or activity is carried out within a production plant. A work center can represent a machine or a group of machines as well as a person or a group of people.

Routings

A routing is part of the production process specifying the sequence of individual operations needed for the step-by-step production of a finished product from raw materials. A routing contains information about the work centers where the individual work is carried out, and information about the tools and resources necessary for production. A routing contains the planned times for carrying out the individual operations (standard values). These standard values are the basis for lead time scheduling, product costing, and capacity planning. Just like material master records, bills of material, and work centers, routings are considered master data. Routings are created without reference to an order.

Operations, material components, production resources/tools, and inspection characteristics are the most important elements of a routing. Routings are used within SAP in production orders, in scheduling, in capacity planning, and in costing.



Plant PL01-EUS/RPlant PL01-EUS/R

0101 0102 Storage LocationStorage Location

101 WarehouseWarehouse

Primary Storage TypeStorage Type

1A 2A 3A Storage BinStorage Bin

6. Warehouse Management

The Inventory Management system can be extended by the Warehouse Management system (WM) which manages storage bins in complex warehouse structures.

While Inventory Management manages the stock by quantity and value, Warehouse Management further manages stock by reflecting the special structure of a warehouse, monitoring the allocation of storage bins, and monitoring transfer transactions in the warehouse.

MM Hierarchy



Plant Hierarchy and Structure

Plant Code Plant name and location

PL01 0101 0102

RBS Supply Unit - Lynchburg RBS Finished Goods RBS Material

PL02 0201 201 0202 0203

Repair Center - Plano Repair Center Component Material Repair Center Component Material Warehouse Scrap and Replace Buffer Stock

PL03 0301 0302 0303 0304

Central Distribution - Plano Central Distribution Material RWAP Material BMOA Switch Material Cable Assembly

PL04 0401

Switch Supply Center BMOG - Plano BMOG Switch Supply Material

PL05 0501 0502 0503 0504 0505 0506 0507 0508 0509 0510 0511

Enterprise Solutions MD110 Consono PWT freeset MOB server MRP storage Phoenix Riverside SoCal (Southern California) ISU ARK UMass Totowa

PL06 0601

NOG Wireline General



Receiving

As mentioned earlier, material is purchased from external and internal sources on the basis of requirements determined by MRP and through functions needing non-inventoried materials. The delivery of these materials is entered into inventory as a goods receipt. A goods receipt is a goods movement with which the receipt of goods from a vendor or from production is posted.

Deliveries from vendors are most likely the result of purchase orders initiated by the purchasing department. The purchase order is not only the document with which the purchasing department orders goods from the vendor, it is also an important tracking tool for the following departments: purchasing, materials control, and accounts payable (invoice verification).

The receipt of materials through SAP is as easy as going to the appropriate screen, clicking on the purchase order number and pressing ENTER. The purchase order is displayed listing all the materials ordered. If the order is complete, the information is copied and saved in order to post the receipt of goods in SAP. If the purchase order is incomplete, the receiver selects the items and indicates the quantities received before selecting the copy function and saving. The plant and storage location where the material is being received must be entered (or verified) in each case.

Ordered goods can have the following destinations:

Warehouse

Consumption

GR Blocked Stock

If the material is intended for the warehouse, the person ordering the material can define a storage location. This information is part of the master record for the material (Material Master Record). This storage location is then automatically proposed by the system during goods receipt and can be accepted or changed. If no storage location is entered in the purchase order, a storage location must be defined when the goods receipt is entered.

Goods receipts for the warehouse can be posted to three different stock types:

Unrestricted stock

Quality inspection stock

Blocked stock

The stock type may already be defined in the purchase order as to whether or not the material is to be posted to quality inspection. However, a decision can be made as to what stock type should be posted for the material at the time of goods receipt.

You can conditionally accept a delivery. You record such deliveries in goods receipt blocked stock. Unlike goods receipt to the warehouse, the receipts posted to the goods receipt blocked stock are not yet part of the valuated stock.

A material document serving as proof of the goods movement is created when a post goods receipt is performed. This document can be displayed from the Inventory Management menu.



Process Improvements

The key changes to the Materials Management process are summarized below.

Streamlined processes. The purchase requisition and PO processes have been streamlined, removing unnecessary approvals that add no value to the process and thus reducing cycle time. Cost center managers can give purchase requisition authority to individuals in their organization allowing them to order with minimal delays. Authority limits have been removed from the PO process; if a cost center manager has approved general ledger funds on a purchase requisition, the PO will be generated with no delay for additional approvals. This improvement gives buyers more time and flexibility to focus on supplier relations and perform market analyses.

Reduced purchase order types. The number of purchase order types has been reduced from more than twenty to six for all hardware, software, services, and leased purchase orders.

Material forecasting integration. Material forecasting is integrated with the material planning process and is used for customer order management, e.g. available to promise (ATP). Available to promise (ATP) is functionality within SAP R/3 that provides information on material availability and confirms promise delivery dates for sales orders. Complete visibility to materials and orders from quote to shipment is possible and drives accountability.

Accountability to product forecasting. A new business policy drives accountability into the Product Forecasting process; an improved fully integrated (in one system) forecasting process plays an important role in the organization’s ability to meet the reduced lead time objectives. The material forecast will be converted to a supplier allocation commitment for ATP. If a forecast is not received, the system will suggest the first available delivery date to fulfill the customer demand.

Product updates. An interface from PRIM to SAP R/3 has been established, allowing automatic product updates into SAP R/3. This improvement substantially reduces non-value-added work and captures R– state information of material managed in SAP R/3 through the “effectivity date” of an Engineering Change.

Staging locations phased out. The Executive Management Team has directed that all REWARDS and staging locations in the regions be phased out. A task force is in place to implement this plan. This effort facilitates the “Just in Time” (JIT) delivery philosophy, a key component of Ericsson’s “Time to Customer” (TTC) project, and yields significant warehouse cost savings.



Increased usage of Electronic Data Interchange (EDI). EDI is used for: EDI purchase orders, material tracking, transmitting inbound and outbound advanced shipment notices (ASNs), sending electronic proof of deliveries (PODs), allowing for visibility of third party shipments, and receiving vendor invoices. Increased usage of EDI will directly result in the reduction of cycle time.

Reduction of vendors. A major improvement in the Vendor Sourcing/Supplier Quality Management area is the ongoing effort to reduce the number of vendors from 1000 to 100. This allows Ericsson to negotiate the best prices and reduce time spent researching where to buy an item. Additionally, a shorter lead-time policy has been negotiated contractually with suppliers, and ninety percent of all vendors will be under a standard Ericsson contract. A feature called Vendor Evaluation in SAP R/3 substantially simplifies the vendor evaluation process.

Increased reporting functionality. A key functionality within SAP R/3 resulting in saving a substantial amount of time is reporting. Standard reports provided in SAP R/3 will be used, thus eliminating all customized individual queries and redundant reports.

Switch Supply Center and RBS Supply Unit

An RBS Supply Unit (SU) has been established in Lynchburg and a Switch Supply Center (SC) has been established in Richardson, which enables “one stop shopping” for customers. Equipment for Switch and RBS orders will be assembled, configured, and tested prior to shipment to the customer. The main objective of the SU/SC is to coordinate and ensure 100% complete delivery to the customer.



Enterprise Solutions

The SAP solution for the products supplied by Enterprise Solutions was to activate the Production Planning (PP) module. Activating PP enables plant PL05 to kit and manufacture material, and then consolidate material in stockrooms prior to shipment to the customer. Material returned after shipment can be received and processed.

Sales Order M R P

Planned Order

Purchase Requisition

PP

Manufacturing

Warehouse

Suppliers(s)

internal/

external

Delivery

Pick & Ship

Production Order

Purchase Order



In-Transit Merge

The in-transit merge process has been developed to support the logistics and delivery goals of Ericsson to achieve a World Class Performance (WCP) Customer Order Flow process. The in-transit merge provides the structure to successfully perform a single, 100% complete, on-time delivery to our customer site.

Material will be shipped directly to the customer site from the factory via in–transit merge. The in-transit merge facility consolidates orders and ships directly to site, eliminating multiple shipments per customer order. Shipping directly to the customer site eliminates field warehouses, as they will no longer be required to store materials.

The delivery will be updated in the SAP system via an electronic or manual proof of delivery (POD), which is provided by the carrier. Deliveries from third party vendors have the option to ship material directly to the site or through in-transit merge. The status of these orders will be updated via advanced ship notice (ASN) into SAP R/3 electronically or manually. Full visibility of the order is available from shipment to delivery at the site.

It is the responsibility of Procurement in the SU/SC to communicate the transportation and EDI requirements of the project to all third party vendors involved.

Purchase orders will be sent with the required site date. However, vendors need to acknowledge they can have their materials ready for pick-up to meet the required site date. This should be a standard five business days prior to the requested site date.

Vendors need to provide a primary contact to be responsible for coordinating pick-ups with North American Logistics (NAL).

All purchase orders should be created with a confirmation control key of 0003. This setting allows confirmations to be posted against the purchase order. The confirmations are used to store order acknowledgements, advanced shipping notifications (ASN), planned pick up, proof of pick-up, proof of receipt, and proof of delivery dates.

Identify purchase orders as ITM by typing “Hold for NAL pickup” within the header text of the PO. Check the shipping text of the sales order for any special packaging instructions required of the vendor and include this information in the Header of the PO.



Supply Chain Courses

There are 7 courses currently offered under the supply chain umbrella, with 8 more to be offered after system implementation (indicated with shading below):

Course name Topics covered

SC01 Supply Chain Overview Discussing Supply Chain and Materials Management, reviewing SAP navigation, and displaying the material master.

SC02 Purchase Requisitions Creating purchase requisitions.

SC03 Create Material Master Creating and maintaining material master records.

SC04 Bill of Materials Creating and maintaining bills of material and product groups.

SC05 Work Centers and Routings Creating and maintaining work centers and routings.

SC06 Purchasing Discussing the purchasing process and displaying purchase requisitions. Creating, displaying, changing, and deleting RFQs, outline agreements, purchase orders, and purchasing information records. Generating list displays and using the Report Tree.

SC07 Planning/Forecasting Displaying documents associated with materials forecasting.

SC08 MRP Performing material requirements planning.

SC09 Materials Movement Updating materials status and issuing goods to scrap

SC10 Receiving Performing goods receipts and transfer orders.

SC11 Customer Order Management

Displaying sales order, project information, purchase requisitions, purchase orders, and stock requirements.

SC12 Reports Displaying reports in the MM section of the Ericsson Report Tree.

SC13 Cycle Counting and Inventory Analysis

Performing physical inventory and inventory analysis.

SC14 Advanced Forecasting and Planning

Performing materials forecasting.

SC15 Production Order Management

Creating, changing, and displaying production orders as well as confirming, canceling, and displaying production order confirmation.



Knowledge Check

Answer the following questions based on the information covered in this module.

1. MM tasks fall into what 6 categories:

____________________________, ______________________________,

____________________________, ______________________________,

____________________________, ______________________________.

2. Name the 3 types of Basic data? _____________________________,

____________________________, ______________________________,

3. What are the names of the six “plants” in SAP and their plant codes?

____________________________, ______________________________,

____________________________, ______________________________.

____________________________, ______________________________.

4. Name two process improvements:

____________________________________________________________

____________________________________________________________

5. How can a Buyer impact the in-transit merge process?

____________________________________________________________

____________________________________________________________

____________________________________________________________

____________________________________________________________



Summary

The following topics were covered in this module:

Customer Order Fulfillment (COF) process.

SC terms.

What is Supply Chain?

What is Materials Management?

Basic data maintenance - Vendor master - Material master - Material master numbering

Material Requirements Planning (MRP)

Procurement (Purchasing)

- Purchasing information records

- Sourcing records

Inventory management

Production planning

- Bill of materials

- Work centers

- Routings

Warehouse management - MM hierarchy - Plant hierarchy and structure - Receiving

The RBS Supply Unit (SU) and Switch Supply Center (SC).

In-transit merge (ITM) process.

SC courses.

Please ask the instructor if you have any questions concerning these topics.

James

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Module 1: Overvie · SC01_Mod1.doc Revised 11- ericssonz Module 1: Overview Introduction Supply Chain (SC) is a term used to describe part of the Customer Order Fulfillment (COF)

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