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More documents in SAP ERP - Logistics Materials Management (SAP MM)

1

created by Ramesh Babu Nagarajan on Apr 11 2012 809 AM last modified by Ramesh Babu Nagarajan on Apr 11 2012 145 PM

Applies to SAP ECC 60SummaryRecently I came across a business process requirement on inventory management for Semi-conductor industry thatlooked like requires a niche software package but I found that by innovative usage of existing SAP functionalities thesame can be achieved thus enabling a cost saving potential This article explain how this can be achieved

ScenarioThe business process scenario that will be solutionized in this article is from Semiconductor Industry Thesemiconductor manufacturing is basically on silicon fabswafers Wafers are unique products that contain within itelectronic chips that can be of multiple statuses So in a single wafer there can be a number of chips while the qualityof each chip can be different even though they are all part of the same wafer It is this peculiarity that makes optimizedinventory management very challengingHere is the business requirement Inventory has to be managed at Wafer level while each wafer has electronic chipswhich are divided into three categories

1 Good Ones2 Low Speed Ones3 Scrap Ones

So each wafer should inventoried as single entity while the inventory of chips within each of the wafers are also to beinventoried as standalone items during production process but until the production process the chips will continueto part of the wafer Only after being picked for issue to production the wafer will be cut into of number of chips So thechips inventory is basically in-process inventoryThe selection of wafers for issue to production should be based on optimization rule that maximizes the utilization ofldquoGoods Onesrdquo and ldquoLow Speed onesrdquo The complexity here is that only the whole wafer can be issued to productionso whatever ldquoGoods Onesrdquo amp ldquoLow speed onesrdquo used by that specific production process will decide whether all ofthem are used or some of them are used while the goal is to pick wafers in a such a way that all the chips that can beused are usedAdditional variability is the production requirement on the need for type of chips It can be only ldquoGood Onesrdquo or ldquoLowspeed onesrdquo or a mix of both So the optimization should take into account this kind of variability also

Can this kind of inventory management possible in SAP ECCFirst question is whether this kind of inventory management is supported by standard SAP or only niche products arecapable of supporting such inventory management processes My initial analysis pointed towards niche products onlybut I was able to design a solution using standard SAP functionalities by reducing requirement complexity Here is thesolution proposal with options and details about the most feasible option

Option 1 ndash Using BOMsRepresent Wafer and chip inventory as Bill of Material Manage the inventory of both wafer (as BOM header material) ampchips (as BOM component materials) as separate materials Use alternate BOMs to represent different componentmaterial quantities as it is dynamic and will change from wafer to waferPros

No special customization required pure standard SAP solutionInventory management will be plain amp simple

ConsBOM is a master data to fulfill the requirement this process would need creation of alternate BOM after wafer ismanufactured as only then the actual proportion of chips are known

Such reactive master data will be big road-block for planningThe number of alternate BOMs can become too big to manage properly resulting in unnecessary maintenanceissues

Option 2 ndash Using Batch specific UOM amp Batch search strategyCreate material master data for Wafer which is inventoried like a normal material and then enable inventory at thelevel of chips by usage of Batch specific UOM functionality and Batch classificationPros

Uses standard SAP functionalityNeeds minimum master data ndash Just one material torepresent both wafer amp chips

Innovative way to utilize Batch ManagementFunctionality

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How to setup batch specific UoM amp Batch searchstrategy

Version 1

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represent both wafer amp chipsCost effective solution

ConsUsage of standard SAP functionality not specifically designed for Semiconductor industry so can have un-intended issues

It is the option 2 that I am detailing out on how to achieve in this articleRequired Configuration Steps

1 Configuration of for Batch Specific UOMDefine Batch LevelSPRO -gt Logistics General -gt Batch Management -gt Specify Batch Level and Activate Status ManagementTransaction Code -gt OMCT

Define Batch Number AssignmentBased on the requirement of having an internal or an external batch number appropriate number ranges have be toconfigured and assigned

If the desired number range is to be internal then there has to be an internal number range defined andassignedIf the batch number is decided to be external an external number range can be created and assigned or therecan be no external number range too in which the system will accept any alphanumeric batch numbersprovided externally

SPRO -gt Logistics General -gt Batch Management -gt Batch Number Assignment -gt Activate Batch NumberAssignmentTransaction Code -gt OMCZ

SPRO -gt Logistics General -gt Batch Management -gt Batch Number Assignment -gt Maintain Batch NumberAssignmentTransaction Code -gt OMAD

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Activate Batch Specific Material Units of MeasureSPRO -gt Logistics General -gt Batch Management -gt Batch Specific Material Units of MeasureTransaction Code -gt OMWS

Now to activate inventory at semiconductor chip level 3 new unit of measures are required These are GPC ndash Good piece LSP ndash Low Speed Piece SCP ndash Scrap

Each of the UOMs as the name itself suggests will be used to represent the number of good chips low speed chipsand scrap chips within each wafer and individually they represent the inventory at chip level

2 Custom UOM ConfigurationCreate the new UOMs using transaction code CUNIGPC ndash Good Piece

LSP ndash Low Speed Piece

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SCP ndash Scrap Piece

Now these new UOMs have to be enabled for usage as Batch specific UOM This can be done using the followingconfiguration pathSPRO -gt Logistics General -gt Batch Management -gt Batch Specific Material Units of Measure -gt Edit Batch SpecificUnit of MeasureTransaction Code -gt BMA1

Using the New entries button add the UOMs in this table so that these UOMs can be used as Batch specific UOMsNow we have to configure how these UOMs will be linked to material UOM SAP terminology for this linkage isProportion factorSPRO -gt Logistics General -gt Batch Management -gt Batch Specific Material Units of Measure -gt CalculateProportional Factors -gt Define calculation of Proportion Quantity from Base QuantityTransaction Code -gt BMA3

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Now the three batch specific UOMs are fully configured and ready for usage in transactions3 Class amp Characteristics

We have to now create batch class and the characteristics that will be part of this batch class We need onecharacteristic for each batch specific UOM Batch class is of class type 023I am not going to detail out the process of creation of class amp characteristics You can learn it from SAP help itself Sohere are the batch class and characteristics that are required for our functionality

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What is the important is that the characteristics should have the new batch specific UOMs assigned as units

4 Batch search strategy configurationWe now have the new UOMs and the necessary batch class amp characteristics the next step is the design of batchsearch strategy where-in we will configure the chips optimization rules It is this batch search strategy which is goingto provide the unique wafer inventory management solution which I have outlined earlierI am going to use the standard batch search strategy already available as part of standard configuration In general abatch search strategy configuration would require the following configuration steps

Define Condition TablesDefine Access SequenceDefine Strategy typesMake Batch search procedure definitionCarry out Batch search procedure Allocation and check Activation

The batch search strategy type ldquoME01 ndash MovTypePlntMatNordquo is the one I have picked for usage in this processSPRO -gt Logistics - General -gt Batch Management -gt Batch determination and Batch check

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You can see this batch strategy type uses Access sequence ldquoME01 ndash MovTypePlantMaterialrdquo which in-turn hasmultiple condition tables defined as part of the sequence

4 Define Sort RulesNow we have to define the sort rules which represent the wafer inventory optimization ruleTransaction code ndash CU707172SPRO -gt Logistics - General -gt Batch Management -gt Batch determination and Batch check -gt Define Sort RulesI have defined the sort sequence ZPMC that represents the wafer inventory optimization rule Basically I have taken asimple rule that wafer is picked for production based on higher the number of goods chips and in descending orderto finally achieve the total number of goods chips that are required for the specific production process Here is the sortsequence set-up

Now click on tab ldquoCharacteristicsrdquo to check the rule

This shows that the batch search rule will be on the characteristics ldquoGOOD_CHIPSETSrdquo which is based on the batchspecific UOM GPC This UOM represents inventory of goods chips in each wafer By selecting the ldquoDescendingrdquo check

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specific UOM GPC This UOM represents inventory of goods chips in each wafer By selecting the ldquoDescendingrdquo checkbox the rule specifies that batch search procedure has to pick up wafer which has the highest number of goods chipsand go on selection of wafers in a descending order until the total number of goods chips becomes greater than orequal to the required number of chips for the specific production process

5 Assign batch search strategy type to movement typeIn this process we are focusing on wafer inventory optimization at the time of production process Hence the relevantmovement type is ldquo261 ndash Goods Issue to Order (Production order)rdquo

Basically you have to assign the batch search procedure for each movement type that is relevantThis completes the necessary configuration required for the process Now let us move to master data set-upRequired Master data set-up

1 Material Master Set-upHere are the primary requirements on material master1Classification view has to be activated2Material has to be activated for batch management3Batch Classification has to be assigned4Batch specific UOM needs to be assigned in the PropProd unit screen under Additional data tabFinished goods material ndash 235

This material is manufactured in-house and accordingly the MRP set-up is done It has a production version andRouting which are created as simple as possible with single operation Also this finished good material is the BOMheader material with semi-finished goods material 236 as the componentemspSemi-Finished Goods material ndash 236

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This material is procured and this is the material on which the wafer inventory rules are applied As required thismaterial has batch classification activated and batch specific UOMs defined at material master level

2 BOM Routing amp Prod VersionMaterial 235 which is the finished product should have BOM Routing and production version defined as these aremandatory master data for production process Accordingly these are created and below screen shot provide thosedetails

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3 Condition record set-up for batch search strategy selectionIn this set-up we will assign the already configured batch search strategy to the required materialplant andmovement type configuration under inventory management option so that the batch search procedure is activatedduring inventory postingTransaction Code MBC123

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While creation of condition records both the batch class and the sort rule also have to be assigned The abovescreen shots show these stepsThis completes the data set-up necessary for this process Now let us go to the actual execution of transactionsScenario TestingFor this testing I have actually created planned independent requirements on the BOM header material 235 and thenran MRP with BOM explosion followed it up with creation of purchase orders for the material 236 (BOM component)and production order for material 235 (BOM header)Against the purchase order the material 235 is received and batches are created while posting of goods receiptThe above steps are pretty standard so have not included screen-shots on these process stepsemspHere is the stock data for material 236

24 batches with 1 wafer per batch representing total 24 wafers of stock

The same stocks now represented in good pieces of chips are 2198 GPCs (The amount of GPCs per wafer isobtained through values entered in the batch classification during GR posting) Out of these 1000 GPCs are neededfor one production order 100060 to manufacture 5 pieces of finished good material 235As per the BOM set-up one piece of material 235 requires 200 GPCs of material 236Now while issuing material 236 for production order 100060 the system will execute the batch search strategy toidentify the wafers for issues as per the optimization rule we have established as part of the batch search strategyHere is the list of 24 batches with the corresponding stock values in GPCs

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The wafers should be identified by the descending order of stock amount in GPCs Applying this rule we see thefollowing batches to be picked up for Goods Issue to satisfy the requirement of 1000 GPCs as per the BOM explosion

Batch No GPCs0000000403 95

0000000406 95

0000000407 95

0000000408 95

0000000409 95

0000000415 95

0000000418 95

0000000419 95

0000000420 95

0000000421 95

0000000423 92

Here is the batch determination process during the goods issue posting

This is the result of the optimization process While I have taken a simple optimization rule we can configure slightlycomplex rules too if supported by batch search strategy configurationFor very complex rules involving say more than one UOM then we have to go a for a user exit solution It will still be abatch search strategy process but through custom code maintained through user exit For example in the currentcase itself we can see that from batch 423 only 50 chips are needed so instead picking the wafer with more number

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case itself we can see that from batch 423 only 50 chips are needed so instead picking the wafer with more numberof good chips we can pick one with less number of good pieces of chips like say batch 425 which has only 85 goodpieces of chipsFor such kind of a mixed strategy a user exit solution is the way to proceedemspHere is the final inventory document posted

ConclusionBy innovative way of utilizing the standard SAP functionalities was able to satisfy a complicated inventory managementrequirement This aspect is the best part of this whole solutionSome of the known issues arebullGoods Issue reversals can become very complex as the stock assigned to batches post reversal may not be sameas beforebullEven through user-exit solution not sure whether very complex optimization rules can be implementedbullMultiple UOMs being used on the same material can cause issues in MRP runHaving identified the above issues I still feel that only the second one can be real issue while the other two shouldhave standard SAP solutions through SAP notes

2564 ViewsProducts sap_erp_logistics_materials_management Topics enterprise_resource_planning Tags inventory_optimization

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6 Comments

Like (0)

Prabhu Sundararaman Apr 21 2012 921 AM

Hi Ramesh BabuThat was a good one You have taken great pains to explain the business case and the setuprequired for batch classification batch determination etc Great goingPrabhu

Like (1)

Ramesh Babu Nagarajan May 9 2012 907 AM (in response to Prabhu Sundararaman)

Hi Prabhu Thx for you comment I hope somebody will use it in a real situation Ramesh

Like (0)

Sachin Jain Apr 23 2012 1047 AM

Hi Really very good presentation amp very helpful document This Document involves usage of various concepts collectively to meet up a complex requirement inan innovative way Gr8 work once again Honey

Like (0)

Ramesh Babu Nagarajan May 9 2012 922 AM (in response to Sachin Jain)

Hi Sachin Thx for you comment I hope you will use it in resolving some customer requirements Ramesh

Like (0)

A M K May 9 2012 1004 AM

Dear Ramesh Its a really good document We have used batch specific UOM for one situation in our company Butyour document covers good number of topics in batches RegardsAyyallas

Like (0)

Ramesh Babu Nagarajan May 9 2012 1033 AM (in response to A M K)

Hi Ayyallas Thx for you comment Batch specific UOM is unique funcationality and can be harnessed toresolve complex requirements Ramesh

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