How to Setup Outsourced Manufacturing Scenarios

Applies to:
SAP ERP 6.0 EHP4+EHP5 and SAP SNC 7.0 (EHP1) For more information, visit the Operations homepage.

Summary
This configuration guide covers the two main end-to-end processes of Outsourced Manufacturing: „Subcontracting‟ and „External Processing‟. In both cases SAP‟s focus is to support the OEM (Original Equipment Manufacturer) in orchestrating the supply network. This can be achieved by using the Materials Management and/or Production Planning functionalities of ERP in combination with the „Work Order Collaboration‟ scenario in SNC. Author: Uwe Pfisterer

Company: SAP AG Created on: 16 March 2010

Author Bio
Uwe Pfisterer is a SAP Product Manager for ERP Manufacturing and Logistics topics. Special focus area: Outsourced Manufacturing.

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How to Setup Outsourced Manufacturing Scenarios

Table of Contents
Collaborative Subcontracting Process ................................................................................................................ 3 Configuration of the collaborative Subcontracting Process ............................................................................ 4
Necessary Master Data in ERP ................................................................................................................................... 4 Necessary Master Data in SNC ................................................................................................................................... 5 Necessary XI-Settings ................................................................................................................................................. 7 Customizing ............................................................................................................................................................... 10

Collaborative Manufacturing Process (External Processing) ........................................................................... 15 Configuration of the collaborative Manufacturing Process (External Processing) ........................................ 16
Necessary Master Data in ERP ................................................................................................................................. 16 Necessary Master Data in SNC ................................................................................................................................. 19 Necessary XI-Settings ............................................................................................................................................... 19 The following BADIs need to be activated to perform the scenario ............................................................................ 19 Customizing ............................................................................................................................................................... 19

Related Contents .............................................................................................................................................. 21 Copyright........................................................................................................................................................... 22

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boc.com | BPX . can identify bottlenecks earlier and receives reliable data about component usage.uac.bpx.sap.com 3 . By integrating this process with the SNC „Work Order Collaboration‟ scenario the OEM gains full visibility of the production progress at the subcontractor.sap.com | UAC .sap.How to Setup Outsourced Manufacturing Scenarios Collaborative Subcontracting Process The first process is based on the classic Subcontracting scenario starting in the Materials Management area.com | BOC .sdn.sap. Outsourced Manufacturing – Process Variants Procurement SAP ERP-MM Collaboration Subcontracting ‘Core’ Collaborative Manufacturing SAP SNC External Processing Manufacturing SAP ERP PP SAP COMMUNITY NETWORK © 2010 SAP AG SDN .

In order to activate the integration model you need to use transaction CFM2. batch where-used data) Create Inbound Delivery (BAPI DespatchedDeliveryNotification Supplier: Create Advanced Shipping Notification Post goods receipt (VL32N or MIGO) Configuration of the collaborative Subcontracting Process Necessary Master Data in ERP .com | BPX .com 4 . vendor.com | BOC .sap. In case the component consumption should be posted in-time (separately) the flag “RT Consum.com | UAC .The integration model can be created using transaction CFM1.sap. Additionally the Sales views must be maintainted as we want to ship these components to the subcontractor.Create a semi-finished or raw material which represents a regular component for the Primary product. (Ensure that the sales views are maintained in case you want to create an outbound delivery to ship the component to the subcontractor.sdn.sap.bpx. .Create a vendor master (transaction XK01).sap.Create a Subcontracting Info Record (transaction ME11). When the scenario is up and running SAP recommends to use an Integration Model in order to keep the following master data in sync between ERP and SNC: material. purchasing info record and Classes/Characteristics.uac. Optional: You can also assign several components to the primary product .” needs to be set .Create a semi-finished material (transaction MM01). This represents the Primary Product we want to receive from our subcontractor. After these steps the ERP system will automatically transfer the master data to SNC (using the CIF interface) each time the master data is changed.) .How to Setup Outsourced Manufacturing Scenarios The following graphic shows a process example: Outsourced Manufacturing – Subcontracting Collaboration Scenario ERP SNC Create Subcontracting Purchase Order (ME21N) PurchaseOrderERPReplenishmentOrder CollaborationNotification CO Prod.Create a BOM (Usage „1‟ or „3‟) for the Primary Product .boc. SAP COMMUNITY NETWORK © 2010 SAP AG SDN .Order is created in background Create Purchase Order Create Work Order Provisioning of components (ME2ON) Updating SC Stock in SNC (RCMPROACT2) ProductActivityNotification Inventory Overview is updated Post Component Consumption (BAPI) ManufacturingWorkOrderProduction ProgressNotification Supplier: Confirm Production Progress Analyze Component Consumption (ME2COMP) Supplier: Complete Phase (incl. .containing the component (transaction CS01).

sdn.sap.sap.com 5 .How to Setup Outsourced Manufacturing Scenarios Necessary Master Data in SNC . Here‟s an example where the supplier has users assigned to: - A customer should be created in SNC (or use an existing one).sap.uac.bpx.com | BOC . Ensure that the customer is assigned to your plant location.com | BPX . This can be done in transaction “BP”.boc.g. Normally the transportation lane is created automatically when the material/plant/purchasing info record data is transferred via SAP COMMUNITY NETWORK © 2010 SAP AG SDN .The user must be assigned to the partner roles (supplier or customer).: - A transportation lane needs to exist in SNC for the respective customer-supplier-product combination (Supply Network CollaborationMaster DataTransportation Lane). e.com | UAC .sap.

com | UAC . For this task 2 reports are available 1.sap.sap.boc.) To transfer the unrestricted-use stock (= inventory of the customer) incl.) To transfer the subcontracting stock (=stock provided to vendor) incl.com 6 .sap. batches: ROEMPROACT2 (actually not needed in this scenario) 2.sdn.uac.com | BPX .sap.How to Setup Outsourced Manufacturing Scenarios CIF to SNC! The only thing that needs to be done here is to create the “means of transport”: - Now the stocks can be transferred to SNC.bpx.com | BOC . batches: RCMPROACT2 Example (RCMPROACT2): SAP COMMUNITY NETWORK © 2010 SAP AG SDN .

e. e. Skip the installed products step SAP COMMUNITY NETWORK © 2010 SAP AG SDN .com | BOC . Enter the name of the Business System. Q48_720.sap.sap.com 7 . Q48 720.sap. 2.g.sdn.uac.bpx. means that in the System Landscape Directory of the XI both backend systems are represented as technical system. Create a Business System Call the System Landscape Directory (SLD).How to Setup Outsourced Manufacturing Scenarios Necessary XI-Settings At least the following service connections must be configured. Logon Logon to the XI system (X7T) and start the Integration Builder from the Easy Access Menu.com | BPX .     Select Web AS ABAP as system type. Perform the following steps on the Integration Server: 1. Click on Business Systems and the button New Business System.sap.boc.com | UAC . ERP Service Interface ProductActivityNotification_Out PurchaseOrderERPReplenishmentOrderC ollaborationNotification_Out ManufacturingWorkOrderProductionProgre ssNotification_In ManufacturingWorkOrderInformation_In SNC Type A A A A X X FEH     Service Interface ProductActivityNotification_In PurchaseOrderERPReplenishmen tOrderCollaborationNotification_In ManufacturingWorkOrderProducti onProgressNotification_Out ManufacturingWorkOrderInformati on_Out Type A A A A FEH - Prerequisite: The ERP and SNC system are connected to the Integration Server (XI). Select the technical system and enter the client.g.

sap. On the following popup skip the step Assign Partner.sdn. This step is optional but very helpful to find the objects later on. Create a Scenario Create a Scenario to cluster the objects that will be created in the next steps. Enter a name for the scenario a  Save the scenario.    Start the Integration Directory Click on the icon Create Object and select Configuration Scenario on the following popup.com | BOC .sap.bpx. and call the context menu by clicking the right mouse button on the Business System node.com | BPX . 4. Assign Business System to Scenario and create Communication Channels      Select your scenario that you just created before expand the structure. Objects that must be activated are marked with pen icon (see picture on the left) SAP COMMUNITY NETWORK © 2010 SAP AG SDN .sap. In the next step select your Business System and switch on Create Communication Channels Automatically. Activate your changes either in the change list or by calling the context menu on the created objects.How to Setup Outsourced Manufacturing Scenarios   Enter Application System as System Role and select the XI system you are logged on as related Integration Server.com 8 . 3. Repeat these step also for the other backend system Close the SLD. Select Assign Business System.com | UAC .boc.sap.uac.

On the following popup enter your sender Business System into field Service and your Service Interface into the interface field or select it from the value help.sap.   Call the wizard (Icon with the magical wand) in the icon bar and select Internal Communication.sap.com | BPX .   Do the same for the receiver interface Skip the sender and receiver agreement.com 9 . Delete all communication channels unequal to the ones you see in the picture.sdn.sap. Create the Service Connection Perform the following steps for all services listed in the table above.sap. means with the correct namespace. Perform these steps for both systems (ERP & SNC). 5. In case a service interface exists multiple times be sure to select the right one.How to Setup Outsourced Manufacturing Scenarios In case you cannot find your Business System.bpx. cancel the creation and select Environment -> Clear SLD Cache in the menu.uac.boc.com | UAC .com | BOC . SAP COMMUNITY NETWORK © 2010 SAP AG SDN .

Thus in transaction "/n/sca/mfgcfg" you need to check for the relevant customer-vendor-product relationship if the right settings are set up.com | BOC .com 10 . This can be done via menu path Supply Network Collaboration Master DataApplication-Specific Master DataWork OrderWork Order Configuration. Customizing The integration between ERP and SNC needs to be set up.e.com | BPX . needs to be transferred to SNC automatically. in the details the field "Send Production rogress Notification" needs to be set to: "S When actual Data is updated".sap. which was created with reference to the external operation.uac.2. Outsourced Manufacturing: ESOA Interfaces Outsourced Manufacturing SAP SCM SNC Subcontracting Vendor Work Order Collaboration Inventory Component Consumption Production Progress + Batch Usage ManufacturingWorkOrder Information ASN (Goods Issue) Finished Product PurchaseOrderConfirmation_In PurchaseOrderERPReplenishment OrderCollaborationNotification PurchaseOrderERPRequestV1_In ProductActivityNotification DespatchedDelivery ManufacturingWorkOrder ProductionProgressNotification Notification Core Subcontracting SAP ERP MM My Company SAP ERP / MM Reservation Components Subcontracting Purchase Requisition Goods Issue Components Consumption Components Inbound Delivery Goods Receipt Subsequent Adjustment Invoice Verification MRP Subcontracting Purchase Order Analyze Consumption In general business function LOG_MM_OM_1 should be activated in the ERP system. i. A certain mapping object between the service interfaces is in this case not necessary Select your communication channel Add the objects to your scenario Activate the created objects after finishing the wizard.com | UAC . For this scenario he needs to allow the in-time consumption postings on ERP side. that the WorkOrder customizing in SNC supports the in-time consumption process.How to Setup Outsourced Manufacturing Scenarios     Skip the interface mapping. i. With regards to SNC the following things need to be considered:External Confirm Settle Planned Production Analyze Operation in in order to ensure that 1. SDN . the PO.e.sap.sap. Additionally it needs to be ensured. see also chapter 2.sdn.sap. © SAP 2008 / Uwe Pfisterer / Page 10 SAP COMMUNITY NETWORK © 2010 SAP AG External Operation SAP ERP PP Basically the OEM (Original Equipment Manufacturer) has the possibility to let his component inventory be updated automativally by the subcontractor via SNC.boc. In SNC a work order must be created automatically for this PO (eSOA Services need be set up for this .bpx. The work order configuration must be done a WO can be created based on a Operation Order Order Order Consumption PP Order Purchase Order.2 “XI-Settings”).

Here you can specify the phases (milestones) you want to track at a certain subcontractor for a certain product.sap.sap.sdn.com 11 . Next thing is to create a phase structure.How to Setup Outsourced Manufacturing Scenarios 2.bpx.com | BPX .uac.com | UAC .sap.boc.sap.com | BOC . SAP COMMUNITY NETWORK © 2010 SAP AG SDN .

com 12 .bpx.com | BPX .uac.How to Setup Outsourced Manufacturing Scenarios If you choose the option “S Use Comp.sap. At WO creation the components will be taken from the PO and they will be available in the WO.sap.com | BOC . as Input.sap. 3.boc.sap. Then the Master Data Assignment needs to be set up for your combination of customer/supplier/customer location/supplier location/Product/Phase structure SAP COMMUNITY NETWORK © 2010 SAP AG SDN .sdn.com | UAC . Prodcut and Co-Products as Output” for your phase you don‟t need to specify components in this transaction.

In order to use the new”inventory overview” transaction in SNC the Visibility Control needs to be set up for your user or business partner via transaction /SCF/VISCTRLPROFASSN.sdn.com | BPX .boc.sap. The inventory overview displays all the relevant stocks for components and/or final products and the corresponding batches.sap.com 13 .com | BOC .bpx.sap.uac.sap.How to Setup Outsourced Manufacturing Scenarios 4. Here‟s how to set up the visibility control profile: SAP COMMUNITY NETWORK © 2010 SAP AG SDN .com | UAC .

com | BPX .sdn.sap.com | BOC .com 14 .sap.bpx.com | UAC .How to Setup Outsourced Manufacturing Scenarios Example for a visibility control profile: Example for assigning a user to a visibility control profile: SAP COMMUNITY NETWORK © 2010 SAP AG SDN .sap.sap.uac.boc.

Outsourced Manufacturing – Process Variants Procurement SAP ERP-MM Collaboration Subcontracting ‘Core’ Collaborative Manufacturing SAP SNC External Processing Manufacturing SAP ERP PP SAP COMMUNITY NETWORK © 2010 SAP AG SDN .boc.com | UAC .g.com | BOC .How to Setup Outsourced Manufacturing Scenarios Collaborative Manufacturing Process (External Processing) The second process variant is based on the External Processing scenario starting in the Production Planning area.sap. automate the production confirmation process (in case he also uses Work-In-Process batches) and receive the batch assignment data recorded by the subcontractor in SNC.uac.com 15 .sap.com | BPX . By integrating this process with the SNC „Work Order Collaboration‟ scenario the OEM gains the same benefits mentioned above plus some further advantages.sap. This variant is used in case certain operations within the production process need to be performed by an external supplier. The OEM can e.bpx.sap.sdn.

Check Purchase Requisition (ME53N) PurchaseOrderERPReplenishment OrderCollaborationNotification Create Purchase Order XI SNC Confirm Internal Operations (CO11N) Create Work Order External Operation: Convert PR to PO (ME21N) New BADI: Transfer WIP-Batch Component to PO Customer: Publish/Save Work Order Transfer Components to Subcontractor (ME2ON) New BADI: Transfer WIP-Batch to SC Stock Transfer SC Stock to SNC (RCMPROACT2) Post Component Consumption (BAPI) ManufacturingWorkOrderProduction ProgressNotification ManufacturingWorkOrderInformation Supplier: Confirm Production Progress ProductActivityNotification Inventory Overview New BADI: Confirm external operation. on the 'Work scheduling' tab strip indicator 'Batch Management' has to be enabled. etc… Supplier: Complete Phase (incl. The Reference Material needs the „Sales Views‟ in the Material Master.0 EHP4 SAP only delivfers an example implementation in a BADI for the external processing scenario with WIP batches.com | BPX . batch where-used data) Create Inbound Delivery (BAPI) DespatchedDeliveryNotification Post Goods Receipt (VL32N or MIGO) © SAP 2007 / Page 1 Supplier: Create Advanced Shipping Notification Configuration of the collaborative Manufacturing Process (External Processing) Necessary Master Data in ERP Create a vendor master (transaction XK01). This business function is available with ERP 6. After each production operation a new WIP batch can be created. Thus we need the loading and transportation groups in the sales views to process the outbound delivery correctly. Release and Save PP Order (CO01) New BADI: Transfer Material no.bpx. The reference material will be later on used at the creation of the WIP batches. Material' using the Reference Material created before. write whereused information.com 16 .sap.uac.com | UAC . Additionally maintain the field 'OB Ref.e. This represents the Primary Product we want to produce.sap. This is necessary because at a certain production step it will be sent out to a subcontractor via delivery. to Purchase Requ. Note: The XML message “ManufacturingWorkOrderInformation” does only update the ERP system automatically if the business function LOG_MM_OM_2 is activated. In ERP 6.sdn.0 EHP5. SAP COMMUNITY NETWORK © 2010 SAP AG SDN . Create a semi-finished material (transaction MM01) which is suitable for WIP-batches.com | BOC .sap. i.How to Setup Outsourced Manufacturing Scenarios The following graphic shows a process example: Outsourced Manufacturing – External Processing and Work Order Scenario ERP Create.sap. Create a „Reference‟ Material (Material type UNBW -->Non-Valuated material).boc. In this scenario the WIP batches are created for the reference material number.

purchase group. - - Create a BOM (Usage „1‟ or „3‟) for the Primary Product .” needs to be set (recommended for testing!).sap. The Material and the material group are determined automatically in the new BADI Implementation.sap. The external operation should have set the "Subcontracting" flag. Ensure that the sales views are maintained as we want to create an outbound delivery to ship the component to the subcontractor. Purchase org. In case the component consumption should be posted in-time (separately) the flag “RT Consum.com | BPX ..sap.bpx. SAP COMMUNITY NETWORK © 2010 SAP AG SDN .containing the component (transaction CS01).com | BOC .com 17 . Create a Routing with at least 1 internal and 1 external operation (transaction CA01).How to Setup Outsourced Manufacturing Scenarios - Create a semi-finished or raw material which represents a regular component for the Primary product.com | UAC .uac. vendor.sap.boc. Furthermore batch management should be activated for this component.sdn. Create a Subcontracting Info Record (transaction ME11).

bpx.uac.sap.boc.sap.com | BPX .sdn.How to Setup Outsourced Manufacturing Scenarios The external operation also needs a control key which requires WIP-Batch Management: SAP COMMUNITY NETWORK © 2010 SAP AG SDN .sap.sap.com | BOC .com | UAC .com 18 .

com 19 .sap. 3.com | BOC . The example class CL_IM_PP_OM_PO_COMPONENTS can be used as template when implementing BAdI ME_PROCESS_PO_CUST. Necessary XI-Settings See Page 7 The following BADIs need to be activated to perform the scenario 1. That means for all process variants and options the full batch traceability can always be tracked and monitored in the SNC system.uac. This document describes the settings that need to be done in EHP4 for detailed batch traceability in ERP. The example implementation CL_EXM_IM_MB_INSM_WIP_CHANGE for BAdI MB_INSMK_WIP_CHANGE must be implemented and activated in order to transfer the WIP-Batch component from blocked stock into subcontracting stock.sap. The example implementation PP_OM_BI_BANF_HEADER_MAT_DEMO for BAdI PP_OM_BD_BANF_HEADER_MATERIAL must be implemented and activated in order to transfer the header material (or the corresponding reference material) of the production order to the purchase requisition. Customizing See page 10 In SNC the contract manufacturer can enter the exact assignment which component batch was used to produce a certain primary product batch. The example coding creates the production order header material (or the corresponding reference material) as component in the purchase order.e. In ERP the the tracking of batches in the subcontracting processes could only be done on purchase order level up to EHP5.com | BPX .sdn. vendor. I. This information is stored in the work order and can be displayed at any point in time. purchasing info record and Classes/Characteristics. In order to activate the integration model you need to use transaction CFM2. But more and more customers need a detailed batch traceability.boc.How to Setup Outsourced Manufacturing Scenarios When the scenario is up and running SAP recommends to use an Integration Model in order to keep the following master data in sync between ERP and SNC: material. 4.sap. The integration model can be created using transaction CFM1. Necessary Master Data in SNC See Page 4. The example implementation PP_OM_BI_WOINF_IN_CONF_DEMO for BAdI ICH_BIF_WO_INF_IN must be implemented and activated in order to receive the data from SNC and create the PP-order confirmation and WIP-batch. Thus SAP provided an example implementation for the scenario “Exernal Processing with WIP batches” in EHP4 and delivers comprehensive detailed batch traceability in standard for all subcontracting processes. 2.bpx. After these steps the ERP system will automatically transfer the master data to SNC (using the CIF interface) each time the master data is changed. For most customers this granularity was sufficient in the past. the system could only store the information about component batches that were used for a certain PO and about finished product batches that were created for this PO.sap.com | UAC . SAP COMMUNITY NETWORK © 2010 SAP AG SDN .

com | BOC .sap.0 EHP4 by using one of the following business process variants: .External processing: Use backflushing of components at GR OR use WIP-Batch Functionality! On the SNC-side it has to be ensured that only one assembly phase exists where all the components are assigned to (in order to have an exact match with the external operation of the PP order).uac.com 20 .sap.com | UAC . I.bpx.Subcontracting Variant: Use Backflushing of components at GR (+ create a separate material document for each primary product batch!). the in-time consumption needs to be switched off in the info record in this case.sap.e.How to Setup Outsourced Manufacturing Scenarios Note: In the ERP-SNC scenario the n:m assignment of component batches to primary product batches can be achieved in ERP 6. SAP COMMUNITY NETWORK © 2010 SAP AG SDN . As of EHP5 the business function LOG_MM_OM_2 is available which provides features to store the detailed batch information coming from SNC automatically in ERP.sdn.boc.sap.com | BPX . With this set up the n:m batch assignment information can be transferred automatically to ERP! .

visit the Operations homepage.com | BOC . SAP COMMUNITY NETWORK © 2010 SAP AG SDN .sdn.uac.com 21 .com | UAC .sap.How to Setup Outsourced Manufacturing Scenarios Related Contents For more information.com | BPX .sap.bpx.sap.boc.sap.

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