Use of Sales BOM to force ATP against Bulk Material?

[Former Member]

Background:

Our business was recently acquired, and we have migrated to the parent company's R/3 system. In our previous MRP system (R/2), we planned, produced, and shipped a single bulk Material ID in Trucks, Rail Cars, Flexi-Bags, and Iso-Tainers. In the new system, specific Material IDs are now required for each of these modes. However, we do not store the inventory in these modes, nor do we wish to plan at this detailed level.

Considered So Far:

Initial suggestion was to use A.T.O. to look through a BOM and automatically create production orders for each customer order. However, this seems to add additional complexity that we do not really need, and makes changing order dates more challenging (have to move both the order and the accompanying Prod. Order).

Desired Outcome:

Order is entered and priced based upon the mode-specific Material ID, but inventory is relieved from the Bulk material. In our previous R/2 system, there was a field on the material master called "Std.Prod." which stood for Standard Product Link. We used it for synonymous products where we produced and inventoried under one name, but sold under several different names. The customer materials were set up as type SALE and referenced the inventoried material, set as type FINI, in this Std. Prod. field. Thus, at the header level, the user saw the SALE material, but for planning and at the batch level, the system showed the FINI.

Options?

I am told that, due to the amount of custom coding and user exits surrounding outputs and interfaces to EDI and other external systems, the use of Material Determination would require too much testing and potentially too much development work. But, is it the best / correct solution to the problem? Because right now, I don't have the ability to perform ATP against the inventoried Material, so nothing confirms. Would the use of a 1 to 1 Sales BOM offer anything different?

Many Thanks in Advance,

J.P.

[Former Member]

Hello J.P.

Simply use Alternate Units of Measure (UOM) functionality in the Material master- Additional Data Tab/ Units of Measure subtab. I am assuming the conversion is constant and standard ( 1 Truck = 10 Metric Tons and so on). Try to use standard supplied UOMs, but if required create your own custom Z-ones using T code CUNI.

Base UOM will remain what you used for the current Bulk Material ( Tonnes for weight or Gallons for volume for example). In the tab I mentioned above, maintain the conversion parameters, for example, assuming Ton is the base UOM:

I truck = 10 Tonnes

1 Rail Car = 100 Tonnes

and so on.

Inventory is always maintained in Base UOM but you can enter orders with sales Unit as 2 trucks or 3 flexibags and system can convert and do the math. You can also set up pricing for the sales Units 1 Flexi-bag costs $100 and so on)and/ or for the base UOM and system can work out the pricing also using the conversion factors.

Like I said I am hoping that these are standard containers, you know the conversion rate and that is standard and fixed.

Also may there be no rounding issues during conversion!!

Let me know if this works for you.

[Former Member]

I may not have been clear in my initial posting. The problem is not one of Units of Measure. In fact, all modes use LBS as the UOM. The problem is caused by the corporate requirement to have entirely different Material IDs for the different modes. For example, even though the material is the exact same, the Bulk Tank has material ID 1234, the Truck has 4567, and the Rail has 5432, etc. Because of the use of the Transportation Group field on the material master in countless outputs and external interfaces, I am told that we cannot use a single Material ID for all bulk modes and the bulk inventory.

Kind Regards,

Jason

[Former Member]

Hello Jason

I understood you fully and I was suggesting, rather questioning, the need to create a separate material for each UOM. Transportation Group is mainly used for route determination and you could potentially use some user exits to change the Transportation Group to match the sales Unit. I am wondering Why do you need to create separate materials just for transportation group? I think your Master Data (config) folks are trying to make thier lives easier and push others to unknown territories!

That said and if multiple material numbers for the same exact physical material is a fait-accompli, I see no difference in pros and cons for either approach broadly speaking - Material Determination or sales BOMs where the Lower level (component) item is eligible for Delivery and/or Pricing. Personally I prefer Material Determination as it is cleaner and resembles the actual process happening- Customer orders a truckload, you enter order with 'Truck' Material and that is replaced with 'Bulk' material for which Inventory is maintained and ATP is performed. Let me start the comparison thought process for you.

Both require set up of master data ( VB11 vs. CS01) as many times as the number of alternate materials. But BOM setup has more screens/fields and potentially take longer.

Both have validity periods, but with BOM you can invoke Engineering Change Management (ECM) and effectivity parameters, but I don't think you need it.

You may also have to see impact on potential add-on SAP solutions (CRM) and external interfaces. For example, SAP CRM was not supporting BOMs till recently and material Determination was supported with limited functionality.

Hope this helps.

[Former Member]

Continuing the thought on Material Determination, my technical folks tell me that the functionality makes use of a specific set of Item Categories. They say that the stock SAP Consignment functionality also has it's own set of Item Categories, and that the two are not compatible. Is this true? Can we not use material determination with Consignment Orders?

There was also mention of a problem with Material Ledger in that the Sale would go against the finished good (Truck / Rail material) while the production costs go against the Bulk, with no clear way to reconcile. Any thoughts here?

As for the multiple Material IDs for a single bulk substance, I am told that the decision to do this was made under SAP 2.2g which was implemented back in '95. At that time, they say there was no way to capture a lot of the regulatory information, which may vary by mode, except in the material master. So, the decision was made to have a different Material ID by mode. Because many of the custom outputs were programmed to take this design into consideration, to change now would require way too much effort, and would cause tremendous problems in reporting. So, we're basically stuck with it.

Kind Regards,

Jason Patrick

[Former Member]

Hello JP

Material Determination (MD) works with Consignment orders, only you need to assign a MD procedure to the requisite sales document type in config ( TO code OV14). Product substitution, which is a specialized form of MD, makes use of special item cats like TAX and TAPS or TAPA and TAN for main and substitute items respectively, but you can always make copies of them and use them with consignment orders also in conjunction with item category usages like PSHP. PSEL, PSA1 and PSA2. There could be resultant issues, but unless you test you won't know them all.

Your second question about 'Sale would go against the finished good (Truck / Rail material) while the production costs go against the Bulk', brought a new realization in me. You are ordering, pricing and delivering Truck or Rail materials, but those requirements have to be converted to Production orders for bulk material, so from a Sales and Distribution (SD) point of view you don't need anything extra, therefore work with you Production Planning (PP) consultant to convert the requirements at PP end?? May be without resorting to MD or BOMs in Sales, you can work with your PP consultant and with standard config or custom development, you may realize your desired outcome.

Also as long as cost is maintained in the sales Material (Truck for example) with due regard to the additional costs in converting Bulk to truck, you should be fine. Follow the example below:

Standard cost of 1 ton , say X, is stored in Bulk Material master.

Now if there is no additional cost and you just load the bulk material into a truck and if a Truck is 10 ton, then Truck material would have 10X in its material master for cost.

But if there is some other material and/or labor involved in converting bulk to Truck and their cost is y, then you will have (10x+y) in your truck material. Also it is worthwhile to capture the additional cost in the Production/Assembly order via components and operations.

Your problem is not insurmountable, but you need to assemble a team of SD. PP, MM and CO experts to design an integrated solution for you.

[Former Member]

JP

Further explore if you can use the concept of 'Planning Material'. This figures MRP3 view of the Material Master data. So assign Bulk as the Planning material to "truck" material for example. Though it is meant for BOMs with non-variable components, I think you can still use it for your situation. There is also field to specify the conversion from the planned material to planning material, very convenient. Also pay attention to other fields in the Planning window - Strategy Group, Mixed MRP and use them to hilt.