An Introduction to what is SAP Inventory Management, Solutions and Processes

Inventory Management is a part of the SAP Materials Management Module. Procurement process begins with requirements gathering and purchasing goods from vendors. Once the procured goods enter into the organization’s premises, the role of inventory management forays into the picture. SAP Inventory Management deals with the planning, entry and record keeping of all goods movement in the enterprise. It deals with the management of stock either in value or quantity basis. All stock quantity and value in inventory is maintained through a material document that is referred to a document number and document year.

A few terms to know about SAP Inventory Management Solutions and Processes:

Goods Movement
Goods movement is the transaction that results in the exchange of stock. This can be external movement such as ‘goods receipt’ issued to vendors or ‘goods issue’ issued for sales orders from clients. It can also be internal movements such as ‘goods receipt’ issued by the production department, withdrawing materials for internal usage, stock transfers, and transfer postings.

Goods Receipt
Goods Receipt (GR) is that phase in Inventory Management where the material received from the vendor is checked for quality and order quantity and an entry is posted in the inventory through a goods receipt document. The good receipt indicates an increase in warehouse stock and can be posted against other documents such as purchase orders, inbound delivery, material document etc.

Goods Issue
Goods issue (GI) is a goods movement where a stock is moving out of the inventory for material consumption for production, for material sampling, shipping goods to a customer or returning back some material to the vendor. Goods issue will lead to a decrease in stock quantity at the warehouse.

Stock Transfer
Stock transfer is said to take place when the goods are moved from one storage location to another or is delivered to the customer. For instance, goods can be moved from the storage location to the production or delivery area location. The stock transfer also involves plant to plant shift of materials.

Transfer Posting
Transfer posting is a general term used for stock transfers, changes in stock type and stock category of the material. For example, a material that is indicated as needing quality inspection can be changed as the material available for use by indicating a transfer posting.

This is a quick intro to what is SAP Inventory Management, solutions, and processes. If you’d like to know more about other functions in the SAP MM module, you may find these links interesting – Read more

SAP PO | SAP PR | Purchase Requisition Vs Purchase Order | Procure to Pay

Purchase Requisition Vs Purchase Order and the role it plays in the SAP Procure to Pay Process

Every business procures goods, raw materials and services to meet internal needs for operation and external need of production and supply. Purchase Order (PO)and Purchase Requisitions(PR) are an integral part of the Purchasing Department. Besides helping with managing costs and inventory, they help business avoid duplication of orders and missing orders, clarify important details, enable greater efficiency during financial audits and protect both purchasers and vendors. SAP PO and SAP PR are subprocesses in the Procurement function of SAP Material Management. We will see the role SAP PO and SAP PR plays in the entire Procure to Pay process once we understand the fundamental differences of Purchase Requisition Vs Purchase Order.Purchase Requisition Vs Purchase Order. How are they different in the Procure to Pay process?

Purchase Requisition Vs Purchase Order. How are they different in the Procure to Pay process?

SAP PR SAP PO
SAP PR is an internal document raised to the Purchasing department prior to ordering the goods/service SAP PO is a formal and legal document that is sent to the vendor for purchasing
It captures the internal requirement within the different departments of an organization. For e.g. Operations department needs 1200 notepads. It is a legally binding document sent to the vendor for purchasing. For e.g. A PO is sent to the vendor - Staples for 1200 notepads.
SAP PR is created manually or automatically through MRP. For e.g. MRP runs in a Shoe manufacturing firm will create PRs for leather for the next batch of shoes. It is created with reference to a PR or a contract once the requisition document is approved.
The PR document isn’t always specific about the vendor, it typically mentions the requirement. The SAP PO document is created specific to the vendor from whom the goods/service is needed

Procure to Pay process in the Procurement Cycle

There are seven steps to the process of Procurement under SAP Material Management that are listed below. The first step of Material Requirement Planning (MRP) is only for industries that involve Production Planning such as Manufacturing and CPG. Besides MRP, all other processes are applicable to all industries.

  1. Material Requirement Planning
    Material Requirement Planning abbreviated as MRP refers to the first step of projecting and calculating the materials needed and when they are needed through the manufacturing production schedule. The MRP procedure, pricing, and valuation are determined by the MRP type. The Materials Controller in the Production department carries out the Material Requirement Planning

  2. Selecting Vendors
    Suitable vendors are analyzed based on technical and business requirements, comparative evaluation of quotations, potential risks, and liabilities prior to selection.

  3. Request for Quotation
    Once a list of potential vendors are identified, they are requested to submit a quotation for the materials and services along with their terms and conditions.

  4. Purchase Requisition
    The purchase requisition is raised internally by staff to the Purchasing department with details like the material quantity, description of goods/ service, total value, department number, authorized signature, quote from vendors and delivery instruction. The PR is automatically created by MRP or is manually created. A PR is either approved or rejected by the business and to speed up the cycle instant mobile approvals are used for several actions in the procurement process.

  5. Purchase Order
    Once the PR is approved, the purchase order is the formal document sent by the company to the vendor to deliver the required goods/service under the terms and conditions specified. A PO mentions terms of payment, material quantity, delivery date, total value and may be created in reference to the PR, request for quotation or another PO.

  6. Goods Receipt
    The Goods Receipt (GR) is created once the goods are delivered by the vendor and verified for damage, quantity and payment terms. The goods movement are entered into the system against the purchase order and goods receipt and accordingly the general ledgers are instantly posted and stock accounts are updated.

  7. Invoice Verification
    After the goods receipt, the invoice for the vendor is created in reference to the PO, GR, and delivery note. The invoice is verified for required approvals by the project managers involved. Post the verification, the payment is made to the vendor as per payment terms.

Any further questions about Purchase Requisition Vs Purchase Order or the entire SAP Procure to Pay process? Leave us a note and we’ll get back to you.

When SAP Plant Maintenance Goes Mobile!

This blog aims to provide an overview of Plant Maintenance practices and Enterprise Mobility solutions available in the market for SAP Plant Maintenance module

For asset-intensive industries like Industrial Manufacturing, Consumer Product Goods, and Construction, plant maintenance contributes to a major portion of the operating costs. In the United States, traditional plant maintenance cost for labor and material increased from $600 billion to $800 billion between the 1980s and 1990s and to $1.2 trillion in the 2000s. Why do organizations spend so much on maintaining assets like equipment and machinery anyway? Because

  1. Machinery needs to be functioning optimally during production without interruption
  2. Avoid unplanned downtime leading to loss of productivity and profit per hour of output
  3. Prevent frequent repairs and faster wear and tear of expensive assets
  4. Restrain deterioration of product quality due to a sudden stoppage in the process.

Besides optimum plant maintenance is a crucial part of industrial safety to avoid major consequences like loss of life, injuries, and environmental impact on biodiversity. Major industrial accidents in the recent past have occurred due to human error and inefficient maintenance processes. The widely followed plant maintenance management practices are listed below:

Reactive Plant Maintenance Management
It occurs once a faulty issue or breakdown is reported and ensures the machinery is returned to its original working condition. Equipment downtime could be due to the failure of replacing worn out parts, lack of lubrication, or external factors of fluctuating voltage and wrong fuel. Once the Plant Maintenance Services department looks into the issue and the failure is rectified, they don’t attend to the same machinery again unless a further ticket is reported.

Preventive Plant Maintenance Management
Scheduled planned and timely maintenance to preserve and enhance equipment efficiency, for instance, oil changes, greasing, changing filters and belt tightening. It aims at keeping assets in optimum condition through periodic plant maintenance services and correct any conditions while it is still in a minor stage.

Predictive Plant Maintenance Management
Predictive maintenance is based on the actual working condition of the machine and not on a predefined schedule. It reports the operational capacity of machinery through physical variables like power consumption, vibration, temperature etc. It predicts the onset of system degradation and thereby allows any casual stressors to be eliminated.
Mobile Plant Maintenance, the need and where are we heading?

75% of manufacturing companies believe that digital transformation will help in leveraging their competitive position and 78% consider mobile technologies important to improve operational processes. Furthermore, by investing in predictive plant maintenance services including predictive technologies 33% – 50% of maintenance expenditures can be saved in most manufacturing and production plants.

Asset intensive organization are heavily investing in Mobility strategies as a part of their “Going-Digital” agenda and there are several apps for mobile plant maintenance services in the market that assure access to real-time data, instant notifications and critical equipment information. If you are an SAP user, then check out what Mobolutions’ Mobile Plant Maintenance App has to offer.

Specific gaps likely in SAP PM (Plant Maintenance module) prior to optimization effort may include

  • Incomplete work orders and pending SAP PM tasks due to manual systems in place
  • Limited use of SAP PM module due to restricted ability to access work orders on mobile devices
  • Huge demand and raising expectations around SAP PM operations
  • A highly standardized user experience that restricts the ability to make dynamic UI changes
  • Poor communication between various functions integrated within Enterprise Asset Management

In an effort to address the above challenges and to improve the efficiency of SAP Plant maintenance operations, the biggest opportunity Mobolutions has identified lies in eliminating work order management backlogs by integrating SAP Plant maintenance operations on the mobile and ensuring that information fields are more dynamic and customizable to the way users need it.

SAP Plant Maintenance App is built on the SAPUI5 platform allowing field technicians and maintenance managers to view, manage, and complete service work orders while on the field, service sites or elsewhere.

  • SAP Plant Maintenance App is built completely out of SAPUI5 and can be integrated with the Fiori Launchpad or deployed as a customized mobile app
  • Make changes dynamically and customizable right out-of-the-box without any coding effort
  • SAP Plant Maintenance App supports usage even in offline mode
  • Allows to create work orders, generate instant work order notifications on the spot
  • Spot functional locations of assets using GIS technology
  • Instantly capture equipment readings, details on materials and parts
  • Assign work orders, work centers, location, and due date/time instantly
  • Supports usage across all major SAP platforms, mobile devices
  • Provides a seamless and intuitive user experience

If you have any questions or comments about Mobile Plant Maintenance. Leave us a note below!

Resources:
www.mobolutions.com/mobile-plant-maintenance-app/
www.wwoa.org/files/publishedpapers/2012/Conference/Session%20B1%20Preventive,%20Predictive,%20and%20Corrective%20Maintenance.pdf
www.businessmanagementideas.com/industrial-engineering/maintenance/plant-maintenance-objectives-importance-and-types/9846
http://www.mantenimientopetroquimica.com/en/typesofmaintenance.html
www1.eere.energy.gov/femp/pdfs/OM_5.pdf
http://iotatoi.com/wp-content/uploads/2014/07/PredictivePrevMaint.pdf
www.de.capgemini-consulting.com/resource-file-access/resource/pdf/digitizing-manufacturing_0.pdf