SAP S4 HANA

Variant Configuration
in
Make to Order
Scenario
Course Context
 Table of Contents
1 Course Context................................................................................................................................ 3
1.1 Overview of Variant Configuration ......................................................................................... 3
1.2 Illustration ............................................................................................................................... 3
1.3 Solution for making and selling multiple features of same product ...................................... 7
1.4 What will you learn from the course ...................................................................................... 9
1 Course Context
Welcome to Introduction lecture on variant products in make to order environment.
The session will include the concepts as well as the demo in SAP S4 HANA 2020.
This course is on Variant configuration in S4 HANA.

1.1 Overview of Variant Configuration

Variant configuration is a tool that simplifies the complex manufacturing process
when manufacturers receive various specifications for the same Product.

Examples include Furniture, Fast food, Electronic Products, automobiles, typewriters

and laptops etc.
In all these cases you offer standard equipment or product as a base. On top of this
offering, you provide options to the customer for choosing some or all of them as
additions to base product.
Similarly customer may be offered with a base version of vehicle. Customer may want
a custom addition such as carrier on top of vehicle, or a special musical system.
In short, Choice can be for upgrade of existing features or additional features.
Also, get some.
In such cases when choice of customers is so wide, Variant configuration will enable
simplified design with ease of maintenance.
Many times with small changes to existing products manufacturer can greatly satisfy
the customer expectations, just by adding new attributes and features to the existing
products.
Variant configuration is one response where we create multiple features for a finished
product and configure this material to provide alternatives that match customer
expectations.
Variant configuration will be able to design all of the options available for a specific
product and define logic for costing, pricing and generation of BOM and Routing etc.
For each product derived from Customer selection, Variant Configuration dynamically
performs actions such as:

• compute the cost of variant product

• compute the price of variant product
• generate bills for variant product
• generate Task list for variant product
• helps forecast and planning at the level of configurable material itself to cover
all variants
• helps analysis to identify the most popular variants which can be converted to
Make to Stock products

1.2 Illustration
I will explain the importance of Variant Configuration using this simple example
followed by a business scenario for showing how it works in SAP HANA environment.
You look the case of an Automobile with all standard components with additional
features as options. For this example, options offered are Color of car, type of Seat
covers and position of speakers for musical system. Seat covers can be of synthetic
leather or pure leather. Body color can be picked from 36 colors given. Position of
speakers can be front, rear or at both.

With this kind of combinations, what happens when customer asked for synthetic
leather of car sears, blue color body, rear speakers ?
You need given special identity to vehicle of this combination to distinguish from other
combinations. In addition, the vehicle will have a Bill and Routing according to these
additional components added to other standard components. Depending on cost and
effort of placing speakers at rear of vehicle, cost of synthetic leather and blue color
body; cost and price of vehicle is calculated.

Now, if another customer opts for different speakers with other selections unchanged.
It will be Blue color body, Synthetic leather and front positioned speakers.
Even though the change is just for one feature, you need to have another identity for
this vehicle. In addition, depending on materials and used and operations performed
for assembly BOM and Routing will change.
For every such varied selections, you need to create a new unique Material to identify
Vehicle, generate BOM and Routing specific to the combination and compute Cost and
Price.
In this way,
• how many Bills are to be created for same Product?
• How many routing to be created?
• How Many Finished materials are to be created?
• How many costs and prices calculated for every combination?

As you know, for every software such as SAP, there is a limitation to have alternative
Bills. For Many products, the number of Alternative bills is limited to 99 only. For this
simple scenario, the alternative bills will be 36X4X2 to say the least.
• How do you define and maintain them?
• How do you manufacture and track their progress?
• How do you forecast and plan for delivery?
• How do you sell such large number of variants of same Product?
• How do you maintain the pricing of each variant?

1.3 Solution for making and selling multiple features of same product
The solution is through what is called Variant Configuration in SAP.

Variant Configuration tool helps you define the Super BOM which contains all standard
components like in any other Production BOM. But in addition, this BOM contains all
components corresponding every option offered to market on top of standard product.

Similarly it helps you define Super Routing or Super Task list which contains all
optional operations along with standard operations. Optional components and
optional operations are picked up according to selection of options offered to
customer.

You will maintain the Configurable material, SuperBOM and SuperRouting instead of
large number of Finished Materials and their alternative Bills and Routings.
Variant Configuration tools helps you to create all the intelligence to pick the right
components in bill, right operations in Routing, correct cost and price of each variant
item after customer makes the selection.

Customer makes the selection through an interface called Configurator. The choice is
given in the form of physical components of vehicle or user friendly names of features.

Offering choice through user friendly and guided path is more appealing to customer
for multiple reasons.

Customer doesn’t need to know the complex names of components in product. For
example, customer doesn’t need to know the components such as electronic control
unit, Torque converter or Planetary gear system etc. Instead she can just choose Auto-
gear vehicle while selecting the right car.

In both cases, the customer selection is translated to customer specific BOM and
customer specific routing. All the logic to create BOM and Routing is defined much
before the Product is offered to customer for selection.

The logic may include selections as well as constraints. For example, a constraint says
Auto-gear choice for gear system can be made only for Petrol based vehicles.

In this example, customer selected Synthetic leather for seat covers, Blue color for
body of car and rear speakers. The bill generated from the selection looks as shown.
This variant is identified uniquely on basis of a naming convention. Corresponding bill
and routing are mapped to this variant material.

In summary,
 • SAP enables the solution for make to order manufacturing of multiple variants
of same product
• You can define the Configurable Bills and Routings
• You can define dependencies and Constraints
• You can define Pricing
• You can facilitate guided selling through configurator. Customer selects the
right options and according to selection of option the rest of options can be
populated.
• Enables dynamic generation of bills and routings according to selection made
by the customer. These bills and Routings will go as input to Production team
to make the right product asked by customer.

1.4 What will you learn from the course

At the end of this course,

• You will understand business challenges in Making and selling large number of
Product variants for same Product
• You will understand a few methods of Variant Configuration in SAP
• You will get an idea on how the Configuration setup can be validated through
simulation as well as other means
• You will experience how Business transactions such as Production and Sales
of configurable Materials happen in SAP
• You will know a few Error-prevention and fixing tips