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Session 2:Innovation Management & Manufacturing
Scenarios
SAP Industry Business Unit Chemicals
Manoj Narang
September 30, 2009
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1. Innovation Management
1.1. Definition, Overview and Relevance for Chemicals
1.2. Scenarios coverage in SAP Best Practices for Chemicals
2. Manufacturing Execut ion
2.1. Manufacturing in Chemical Industry
2.2. Production Models, Scenarios in SAP Best Practices for
Chemicals
3. Demos
3.1. Transformation of General Recipes (942)
3.2. Bulk Manufacturing (with PI Sheet and SAP ODA
Integration)(908)
4. Useful Links
Agenda
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Terminology
SAP Business All-in-One for Chemicals
SAP implementation with defined scope and price
Available from SAP and qualified partners
SAP Business All-in-One for Chemicals
SAP implementation with defined scope and price
Available from SAP and qualified partners
SAP Best Practices for Chemicals
Preconfigured Industry Template
SAP Best Practices for Chemicals
Preconfigured Industry Template
SAP ERP
SAP ERP
Partner Packaged Services
Implementation offering
Partner Packaged Services
Implementation offering
+
+
=
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SAP for Chemicals : Chemical Solution Map
Suppliers &Partners
Customers &Channels
Develop Plan Source Make Deliver Sell & Serve
Enterprise Management & Support
Innovation Management
R & D Management
Product Development
Supplier Collaboration
Strategic Sourcing
Procure to Pay
Supply Chain Planning & Execution
Collaborative Demand & Supply Planning
Logistics & Fulfillment PlanningWarehouse & Inventory Management
Manufacturing
Manufacturing Planning
Manufacturing Execution & Collaboration
Manufacturing Visibility
Enterprise Asset Management
Sales & Marketing
Sales and Operations Planning
Opportunity Management
Inquiry to Contract
Order to Cash
Customer Service & ComplaintManagement
Quality Management & Compl iance
Quality Management
Environmental, Health & Safety Compliance
REACH Compliance Management
Corporate Compliance
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SAP Best Practices for Chemicals –
Scenario Overview
Stock Handling: Scrap and Blocked
Stock (131)
Repetitive Manufacturing with Co-
Products and QM (906)
Bulk Manufacturing (without PI
Sheets) (907)
Bulk Manufacturing (with PI Sheet and
SAP ODA Integrati on) (908)
Make-to-Stock (Process Industry) with
WM (909)
Make to Order (Process Industry) (910)
Multiple Product Campaign Run withMQC (911)
Acti ve Ingr edien t Pro cessin g (912)
Blending (913)
Repackaging (914)
Relabeling (915)
Storage Tank Management (916)
Subcontracting (External & Internal)
(918)
Enterprise Management &
Support
General Ledger (156)
Accoun ts Receiv able (157)
Accoun ts Payab le (158)
Period End Closing Financial
Accoun ting (159)
Cash Management Status Analysi s
and Cash Concentration (160)
Cost of Sales Accounting (161)
Asset Ac count ing (162)
Asset Ac qui sit ion for Con struc ted
Assets (164)
Segment Reporting (166) General Cost Center Planning (175)
Internal Order for Marketing and Other
Overhead Planning (180)
Overhead Cost Accounting - Actual
(184)
Internal Order for Marketing Expenses
and Other Overhead Actu al (186)
Time Recording (211)
SAP ERP Reports for Accounting (221)
Period End Closing Activities (224)
Operational Maintenance (929)
Preventive Maintenance (930)
Investment Management in PlantMaintenance (932)
Parallel Accounting (leading HGB,
+IFRS) (943)
Manufacturing
Supplier Collaboration
Quotation for Procurement (128)
Consumable Purchasing (129)
Procurement without QM (130)
Procurement Contract (133)
Return to Vendor (136) Procurement & Consumption of
Consigned Inventory (139)
Procurement of Batch-Managed Stock
Materials (901)
Procurement of WM-Managed Stock
Materials (902)
Procurement of Pipeline Materials (903)
Procurement of External Services (904)
Quality Management in Procurement
(905) Quality Management &
Compliance
Engineering Change Management(934)
EH&S Product Safety (935)
EH&S Dangerous Goods Management
(936)
EH&S Industrial Hygiene & Safety
(937)
EH&S Waste Management (938)
EH&S Business Compliance Services
(939)
REACH: Substance Volume Tracking
(940)
REACH: Substance Volume Tracking
for Non-EU Suppliers (944)
Supply Chain Planning &
Execution
Lean Warehouse Management (124)
Stock Transfer with Delivery (134)
Stock Transfer without Delivery (135)
Physical Inventory / Inventory Count &
Adjus tmen t (137)
SAP ERP Reports for Logistics (222)
Supply & Demand Planning (900)
Tank Trailer Filling (919)
Outbound Logisti cs (923)
Totes Handling (927)
Vendor-Managed Inventory (928)
Innovation Management
Internal Order R&D Planning (177)
Internal Order R&D Actual (185)
Transformation of General Recipes
(942)
Sales & Marketing
Sales Processing using Third Party
(with Shipping Notification) (107)
Credit Management (108)
Sales Order Processin g: Sale from
Stock (109)
Free of Charge Delivery (110)
Returns and Compl aints (111)
Sales Quotation (112)
Sales Order Processing fo r Prospect
(113)
Sales Processing using Third Party
(without Shipping Notification) (114) Sales of Non-stock Item with Order
Specific Procurement (115)
Debit Memo Processing (116)
Sales Order Processing with
Customer Down Payment (201)
Sales: Period End and Closing
Operations (203)
Credit Memo Processing (204)
Sample Processing (917)
Presales Activities (920)
Sales Order Processing (incl. PoD and
CoA) (921)
Sales Order Processing with WM (922) Returns and Complaints (including QM
and Batch Recall) (924)
Chemicals: Credit Management (925)
Rebates Handling (926)
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1. Innovation Management
1.1. Definition, Overview and Relevance for Chemicals
1.2. Scenarios coverage in SAP Best Practices for Chemicals
2. Manufacturing Execution
2.1. Manufacturing in Chemical Industry
2.2. Production Models, Scenarios in SAP Best Practices for Chemicals
3. Demos
3.1. Transformation of General Recipes (942)
3.2. Bulk Manufacturing (with PI Sheet and SAP ODA Integration)(908)
4. Useful Links
Agenda
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Innovation Management - Definition
Creativity and Imagination applied in a business context is Innovation”, “ Innovation is Imaginative Problem-Solving”
Textbook definition indicates that, “Innovation is the first successful commercialization
of a new idea”.
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Product Development for Specialty Chemicals
(Example)
Opportunity
identificationFinancialevaluation
Determination
of resources,timeframe,and so on
Product and
processspecification
Laboratory
work
Final productdefinitionProduct pricingMarketingactivities
Pilot plantscale-up andadjustments
Customer sampleevaluation
Internalsampleevaluation
External and
internalrequirements
Customers Markets
Full-scaleproductionadjustments
Sample evaluation
Product and process adjustments
Concept
Development
Specification
Initiation
Specification
DevelopmentSpecification
Conversion
Specification
Management
Initiate Phase-
Gate ProcessInitiate Phase-
Gate Process
Enter Product
DefinitionEnter Product
DefinitionSpecification
SpecificationVendor
CollaborationVendor
Collaboration
Label
ManagementLabel
Management
RecipeDevelopment
Recipe
Development
Create Plant
Operating FormulaCreate Plant
Operating Formula
ChangeManagement
ChangeManagement
Link to Materials/
BOM Gen.Link to Materials/
BOM Gen.
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Integrated Product DevelopmentEnd-to-End Process – Chemicals Industry
Portfolio and Customer Requirements Management
Ramp-upto Production
ProductDevelopment
Marketing
Manufacturing
DevelopmentHead of R&D
Portfolio
ManagementHead of Marketing
Head of Manufacturing
ProcurementHead of Procurement
Quality
Engineering
and
Improvement
Concept /
Business Case
Mgmt
Strategic
Supplier
Identification
“New Product”
Initiative
Management
Production
Scale-up and
Handover to
Manufacturing
Project
Mgmt
Integrated Product Development integrates Product Development, Customer
Requirements Management and Ramp-up to Production to streamlineprocesses, unify product data and reduce time to market.
Collaboration
with
Customers
and Partners
Compliant
Recipe
Development
Lab Trials and
Samples
Product /
Process Data
Change
Management
Head of ManufacturingHead of Marketing Head of R&D
Product Division Head
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Suppliers & Partners Customers &
Channels
Develop Plan Source Make Deliver Sell & Serve
Innovation Management
R & D Management
Product Development
SAP ERP Solution:
Specification Management
Recipe Management and Trials
R&D Project Management Knowledge & Document Management
Collaboration tools
Business Issues:
Meet regulatory & complianceneeds
Manage capital investments
Manage resources and stagegate projects
Visibility in developmentactivities
Develop new markets
Meet customer formulationneeds
View of all R&D portfolio
Cross functionalcommunication & planning
Document product formulas
Minimize R&D costs
Knowledge retention
Benefits:
Faster time to market
Streamlined Development Processes
Minimize R&D spend
Stronger program management
Knowledge retention & sharing
Easy regulatory compliance
Innovation Management in Chemical Solution
Map
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Recipe Management as per ISA 88.01
Separates the recipe that describes how the batch is to be made from the equipment used tomake the batch
Standard covers four basic concepts:
How to depict what you have in the plant (physical model)
How to define what you would like to accomplish in the plant (recipe)
Implementation of what you can do in the plant (equipment logic)
How to put the three pieces mentioned above together in an intelligent, reusable and
successful way The Recipe is the necessary set of information that uniquely defines the production
requirements for a specific product
One General Recipe per produced material, maintained at theenterprise level (1000 company wide products)
One Site Recipe per site and produced material, maintained atthe site for local materials, language, or segment of production(10,000 site recipes for 10 sites)
One Master Recipe per Process Cell and produced material(50,000 master recipes for 5 cells per site)
One Control Recipe per batch that describes the custom optionsand formula values for one specific batch of product (1,000,000
batches per year)
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1. Innovation Management
1.1. Definition, Overview and Relevance for Chemicals
1.2. Scenarios coverage in SAP Best Practices for Chemicals
2. Manufacturing Execution2.1. Manufacturing in Chemical Industry
2.2. Production Models, Scenarios in SAP Best Practices for Chemicals
3. Demos
3.1. Transformation of General Recipes (942)
3.2. Bulk Manufacturing (with PI Sheet and SAP ODA Integration) (908)
4. Useful Links
Agenda
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Chemical Solution Map - Scenario Alignment
Suppliers &Partners
Customers &Channels
Develop Plan Source Make Deliver Sell & Serve
Innovation Management
R & D Management
Product DevelopmentSAP Best Practices Scenario:
Internal Order R&D Planning (177)
Internal Order R&D Actual (185)
Transformation of General Recipes (942)
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Scenario 177 - Internal Order R&D Planning
DataCorrect?
ExpenseInternal Order
(188)
AOP – Genera lCost Center
Planning(175)
Confirm AllOrders HaveBeen Settled
Correctly
AnnualOperating
Plan
Credit Internal Order Planned Values
Debit Profitability Analy si s, e.g. R& D
by Product Line
No
Enter R&DOrder Plan
Data by CostElement
Internal Order Planned Values
Yes
AOP= Annu al Ope rati ng Plann ing
Settle R&DOrder Costs to
Profitability Analy si s
R & D P l a n n e r
E v e n t
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Scenario 185 - Internal Order R&D Actual
Create R&D
InternalOrder (155.12)
Settle Order Coststo CO-PA
New InternalProjects(for R&D)
Profitability(CO-PA) Update
CO-PA = Profitability Analysis
Thistask
done atend of month
Need ExternalServices
Month EndNeed Material
fromInventory
ConsumablePurchasing
(129)
Post Goods Issueto R&D Order
InventoryExpense
Thesetasks
onlydone asneeded
C o s t A c c
o u n t a n t
W a r e h o u s e C l e r k
B u y e r
E v e n t
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This Scenario depicts transfer of experimental data of a general recipeinto master recipes for production.
The following processes are provided to support the Transformation of General Recipes scenario:
Displaying general recipe
Transforming general recipe to master recipe
Maintaining and finalizing master recipe Creating process order with transformed recipe
Transformation of General Recipes (942)
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Scenario 942 - Transformation of General Recipes
Maintaining andFinalizing Master
Recipe
Creating ProcessOrder
Performing
Process Order Confirmation
TransformingGeneral Recipe to
Master Recipe
DisplayingGeneral Recipe
E n g i n e e r i n g S p e c i a l i s t
S h o p F l o o r S p e c i a l i s t
P r o d u c t i o n P l a
n n e r
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Manufacturing In Chemicals – A Complex
World
Source
Enterprise
C u s t o m e r D e m a n d
Plan
S
u p p l i e r s
Material Supply
Delivery to
Distribution
Centers andCustomers
Planning
Quality Mgmt.
Maintenance Inventory Mgmt.
Plant Mgmt,
KPI-Reporting
Raw Materials Finished Products
Production
Make Deliver
Financial Services
Enterprise Services
Strategic Decisions
Factory
Manufacturing is the process of converting raw materials intohigher valued finished products to meet customer demands
Specifics of Chemicals Manufacturing:
Batch & continuous processes
Bulk & packaged products
Few raw materials = many products
Co-products
Fixed yields for processes Production campaign planning
Compliance: emissions, waste,hazardous materials handling
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Role
Plant Manager
Production Planner
Production Supervisor
Production Operator
Quality Inspector
Quality Manager
Store / Dispatch Clerk
Maintenance Engineer
EH&S Professional
ForecastDemand
A Typical Chemicals Manufacturing Scenario
Net Forecast Against Orders
Develop Supply NetworkPlan for Manufacturing
Develop Detailed MonthlyProduction Plan
Report Up
Update Production Plans(Measure Plan vs. Actual)
Create detailed Production Planand Schedule
Release ProductionOrders
View Work list &Select Order Sequence
Move Goodsto Line & Manu-facture Product
Create QualityInspection Orders
Approve and ReleaseProduced Batch/Order
Record Production (time, material,labor, cost) Results
Monitor, Review and Approve Quality
Pack and StoreDispatch Product
Create PreventiveMaintenance Plan
ScheduleMaintenance
MaintenanceExecution
Publish new documents asneeded – MSDS, FDA letters,
etc.
Log Exposure and Handling for Compliance
Invoke Safety andHandling Instructions
based on MSDS
Approve Production Plan andTargets
A Complicated Environment!
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Constant re-work, overtime, expedites, shortages
High inventory carrying, material, labor, energy costs Low labor productivity and asset utilization
Production personnel lack necessary decision support
Higher operating costs lowers margins andperformance
ObservationsKey Issues
Must expand size of addressable market or better penetrateexisting market
Commoditization & competitive pressure forcing down price-points in specialty chemicals
Rising material, energy, quality & EH&S costs a concern for all.Basic producers must preserve margins
Flat market growth with downward pressure onmargins
Manufacturing moving offshore to distant locations – lower visibility to events & exceptions
Lack of consistent standard manufacturing processes andsystems in a heterogeneous landscape
Lack of integration across multiple plants or acrossmanufacturing and supply chain nodes
Coordination and control across outsourcedmanufacturing increases lead times
Excessive inventory on the plant floor and across the supplychain
Low production yields and asset/ labor utilization
High levels of waste and inefficiency
Key Issues for Manufacturing in Chemicals
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Lack of analytics on product profitability to determine the rightproduct mix
No insight into economical implications of scheduling decisionswith conflicting optimization objectives
Recovery of business driving production tocapacity limits
Time consuming compliance and reporting
Manual/paper based process
Knowledge management processes inefficient
Industry regulations driving up costs of
quality/EH&S compliance
Lack of analytics and KPI data to support continuousimprovement processes
Knowledge management processes inefficient
Inability to institutionalize best practices or continuous improvement
ObservationsKey Issues
Learning too late re: machine/material/quality exceptions
Customer orders “lost” on the factory floor
Lack of automated/workflow based exception resolution
Reduced customer responsiveness
Key Issues for Manufacturing in Chemicals
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Suppliers &Partners
Customers &Channels
Develop Plan Source Make Deliver Sell & Serve
Business Issues:
Pack and Make to order planning
Understand plant capability Maintenance planning & control
Accurate asset records
Interface with plant control systems
Produce to plan
Visibility of data
Cost con trol and reporting
SAP ERP Solution
Materials RequirementsPlanning (MRP) process
Production planning,scheduling & execution
Batch management
Subcontracting
Shop floor integration
Enterprise asset management
Predictive maintenance
Preventive maintenance
Work order processing
Shutdown management
Failure mode analysis
Work clearance management
Mobile asset management
Benefits: Integrate production & planning
Less inventory
Longer production runs, increased
uptime
Lower maintenance costs
Faster maintenance shutdowns
Integrated reporting
Manufacturing
Manufacturing
Manufacturing Planning
Manufacturin g Execution & Collaboration
Manufacturing Visibility
Enterprise Ass et Management
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MRP and Capacity Planning- SAP ERP uses MRP techniques to create un-
constrained production plans. Several different planning strategies are supported, MTO(make-to-order) and MTS (make-to-stock) being the most prominent ones. With capacityplanning and leveling, technically feasible production schedules can be created
Key Functionality
Material requirements planning
Evaluation of MRP results
Interactive planning of planned orders
Conversion of planned orders to process orders
Conversion of planned orders to purchaserequisitions
Planning strategies: Make-to-order, Make-to-stock
Resource planning and capacity leveling
Key Benefits
Improved delivery against promised date
Reduced inventory carrying costs
Improved raw material availability
Increase capacity utilization
Improved order fill rates
Capacity load determination
Creates feasible schedules
Reduced administration, improve businessprocess
Reduced transaction costs
MRP and Capacity Planning
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Material forecast Sales & distribution
C a p a c i t y
R e q u i r e m e n t s
P l a n n i n gDemand program
MRP
Work scheduling
Production execution
Goods receipt of product
Settlement / Batch Record
Planned order S C M
& M f g P l a n n i n g
M f g E x e c u t i o n
Goods issue of comp.
Purchase requisition
Purchase order
Goods receipt
Invoice receipt
P r o c u r e m e n t
Plnd.ind.req.
Stock
E
A C D
B
Customer req.
Q M / e L I M
S
I n t e g r a t i o n t o P l a n t f l o o r
Manufacturing Execution and Planning
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Manufacturing Execution - Supports all steps to execute the production schedule
for continuous and batch oriented manufacturing. Control recipes are generated withprocess instructions and the process is executed phase by phase. Finally, goods issuesand goods receipts are conf irmed and the order is settled.
Key Functionality
Production orders
Process order management
Batch management
Goods issue and goods receipts
Product costing and settlement
Integration to process control and shop floor
information system
Electronic batch recording
Integration to MES and shop floor systems
Dashboards and shift reports
Key Benefits
Improved actual vs. planned execution of
process orders Manage production processes, workforce and
resource deployment on the plant floor
Cost transparency
Reduced administration, paper work andspreadsheets
Automated documentation Improved control and monitoring of the
production
Fewer unexpected events
Manufacturing Execution
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Event Mgmt
QM
Maintenance
Control
Recipe
Process
Order
Master dataRecipes
Resources
Materials
Plant f loor
Process
Messages
PI-Sheet
Alarm Server
Material
Movements
BatchManagement
Further Destinations
R-02
R-01
Planned
Order
PI-PCS
Interface
/
SAP MII
OPC Data Access
OPC Alarms & Events
Business Warehouse
Dashboard
Information Flow in SAP Process
Manufacturing
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Process Order Management - Process orders are used for the production of
materials for a specific quantity on a specific date. They enable the planning of resources,control of process order management, and specify rules for account assignment andorder settlement. They are the main control instrument in production.
Key Functionality
Availability checks
Manufacture of co-products
Material quantity calculation
Active ingredient management
Master recipes management
Creation of control recipes and inspection lots
Process instruction sheet for operators with
digital signatures
Material staging & reservations
Confirmation of quantities, activities and timeevents
Costing and period-end closing, order settlement
Key Benefits
Improved reliability through availability checksand material reservations
Reduced administration, paper work andspreadsheets
Improved control of manufacturing process
Documentation of production process
Process Order Management
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Ware-house
Processorder Ware-
houseSales order
Warehouse Mgmt
Batch
assignment
Batch determination
Batchassignment
Purchaseorder
Batch determination
A
B
A
B
Warehouse Mgmt
ManufacturingManufacturing SDSDProcurementProcurement
Batch Management
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Batch Information CockpitBatch where-used list
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Manufacturing Collaboration - Automated electronic collaboration to rapidly
communicate work orders as new demand is received, to negot iate and to makeadjustments necessary for responsive execution.
Key Functionality
Subcontracting purchase orders
Goods issue of components to subcontractor
Third party subcontracting (components provided bythird party)
Negotiation of delivery, quantity and details*
Visibility of inventory including in-transit stock*
Timely visibility of work order progress at thesubcontractor updates execution systems andtriggers alerts if necessary*
Traceability of batches and component batches*
Notification of product shipment and generation of ASN*
* Requires SAP Supply Network Collaboration (SNC)
Key Benefits
Lower lead times and administrative costs due toautomated collaboration processes
Early detection of exception conditions enablesbrand owner to replan or expedite responsively
Enables brand owners to make accuratecommitments to their customers, enhancingservice and perfect order performance
Seamless process and common data betweeninternal planning and execution and the external
procurement process
Manufacturing CollaborationOutsourced Manufacturing / Subcontracting
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1. Innovation Management
1.1. Definition, Overview and Relevance for Chemicals
1.2. Scenarios coverage in SAP Best Practices for Chemicals
2. Manufacturing Execut ion2.1. Manufacturing in Chemical Industry
2.2. Production Models, Scenarios in SAP Best Practices for
Chemicals
3. Demos
3.1. Transformation of General Recipes (942)
3.2. Bulk Manufacturing (with PI Sheet and SAP ODA Integration) (908)
4. Useful Links
Agenda
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Acti ve Ingredien t
Processing(Sales)
Co - Product
By - Product
Repetitive ManufacturingPipeline Material
Handling
Blending
Tank Trailer
Granulate SAPulat/GranuSAP blue
Overview V1.603
Plant 1000
Filling
Pressure and Temperature Polymerization
Ethylen Gas, C2H4
YQPM
CH-1410
Catalyst (Grade A)
YQRM
CH-1420
Description
Mat type
Mat Nr
WM managed
QM active Batch managed
Solvent (Grade B)
YQBP
CH-7100SAPulat (Batch B)
YQBM
CH-2200
Pigment, blue
YQRM
CH-1440
SAPulat
Raw Granulate
YQFP
CH-6400
SAPalyst
YQFP
CH-6500
Filling
SAPulat (Batch A)
YQBM
CH-2200
Solvent (Grade A)
YQRM
CH-1430
GranuSAP, Blue
YQBM
CH-3200
Catalyst (Grade B)
YQCP
CH-9100
Extruder Mix Nozzle Chop (Avrg 2x3 mm) Add Pigment
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Totes Handling
Bag 10 KG
VERP
CH-4100
Bag 25 KG
VERP
CH-4110
BigBag 500 KG
VERP
CH-5100
Shrink Foil
VERP
CH-4600
Pallet
VERP
CH-4500
Granulate SAPulat/GranuSAP blue
Overview V1.603
Filling in Bags/BigBags and Delivery
GranuSAP Sample
YQSM
CH-0100
Repackaging
GranuSAP, 25 KG
YQFP
CH-6200
GranuSAP, 500 KG
YQFP
CH-6220
External Subcontracting
GranuSAP, 100 KG
YQFP
CH-6210
Container 100KG
VERP
CH-4120
Label GranuSAP
ROH
CH-1100
GranuSAP, Blue
YQBM
CH-3200
GranuSAP, 1000 KG
YQFP
CH-6230
Container, 1000 KG
VERP
CH-4130
Label GranuSAP
ROH
CH-1100
Plant 1000Description
Mat type
Mat Nr
WM managed
QM active Batch managed
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Product
Substitution by QM
Usage Decision
Paint, blue (Grade B)
YQBM
CH-3001
Paint SAPcolor blue
Overview V1.603
Plant 1000
Batch Production : Filling, Heating, Grinding, Disperging
Addi ti ve BG99
YQAI
CH-1020
Pigment, blue
YQRM
CH-1440
Description
Mat type
Mat Nr
WM managed
QM active Batch managed
Acryl ic Resin
YQRM
CH-1010
Solvent (Grade A)YQRM
CH-1430
Acryl ic Resin
(residue)
YQRM
CH-1010
Acryl ic Resin
(new delivery)
YQRM
CH-1010
Active Ingredien tProcessing
(Procurement &Manufacturing)
Al ternat ivePosition in BOM
Paint, blue (Grade A)
YQBM
CH-3000
Mixing inStorage Tank Solvent (Grade B)
YQBP
CH-7100
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Paint SAPcolor blue
Overview V1.603
Canister, 5 kg
VERP
CH-4200
Canister, 10 kg
VERP
CH-4210
Contain er, 1000 kg
VERP
CH-5200
Shrink Foil
VERP
CH-4600
Pallet
VERP
CH-4500
SAPcolor, blue
Sample
YQSM
CH-0200
Product Substitutionin SD
Paint, blue (Grade B)
YQBM
CH-3001
Paint, blue (Grade A)
YQBM
CH-3000
SAPcolor blue,
10 kg (Grade B)
YQFP
CH-6001
SAPcolor blue,
1000 kg
YQFP
CH-6100Paint MagicBlue,
10 KG
YQFP
CH-6010
Label MagicBlu e
ROH
CH-1110
Label BlueSky
ROH
CH-1120
Label BlueStar
ROH
CH-1130
Paint BlueSky,
10 KG
YQFP
CH-6020
Paint BlueStar,10 KG
YQFP
CH-6030
Relabeling
SAPcolor blue,
10 kg
YQFP
CH-6000
Filling in Canisters
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Additional Paints
Overview V1.603
Filling
Paint, red
YQNM
CH-0500
Canister, 5 kg
VERP
CH-4200
Internal
Subcontracting
PowerPaint, red
YQFP
CH-6800
SAPcolor green,
10 kg
HAWA
CH-6300
Third Party
Processing
SAPcolor white,
10 kg
HAWA
CH-6310
Plant 1000
Description
Mat type
Mat Nr
WM managed
QM active Batch managed
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Paint, black
YQBM
CH-3110
Additional Paints
Overview V1.603
Plant 1000
Batch Production : Filling, Heating, Grinding, Disperging
Description
Mat type
Mat Nr
WM managed
QM active Batch managed
Acryl ic Resin
YQRM
CH-1010
Add it ive BG99
YQAI
CH-1020
Solvent (Grade A)
YQRM
CH-1430
Pigment, blackYQRM
CH-1442
Pigment, yellow
YQRM
CH-1441
Acryl ic Resin
(residue)
YQRM
CH-1010
Acryl ic Resin
(new delivery)
YQRM
CH-1010
Active IngredientProcessing
(Procurement &Manufacturing)
Paint, yellow
YQBM
CH-3100
Mixing inStorage Tank
Multiple ProductCampaign Run
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CreateProcess
Order
ConvertPlanned to
ProcessOrder
ReleaseProcess
Order SendingControlRecipes
ProductCosting
Delivery
GoodsIssue
GoodsReceipt
MRP
Capacity
Planning /Leveling
SupplyChain
Planning
Sales
(OTI)
MRP and
CapacityPlanning
Manufacturing
ProcessingPI-Sheets
ConfirmProcess
Order
In ProcessControl
SAP Best Practices for Chemicals –
MRP and Capacity Planning / Manufacturing
PostProcessControl
MaterialStaging
fromWarehouse
Putawayof Produced
Material
PlantMaintenance
© SAP 2009 / Page 42
Supplier Collaboration
Supply Chain Planningand Execution
Manufacturing
Enterpris e Management
and Support
Innovation Management
Quality Management and
Compliance
Sales and Marketing
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Suppliers &Partners
Customers &Channels
Develop Plan Source Make Deliver Sell & Serve
Chemical Solution Map - Scenario Alignment
Manufacturing
Manufacturing Planning
Manufacturing Execution & Collaboration
Manufacturing Visibility
Enterprise Asset ManagementSAP Best Practices Scenarios:
Stock Handling: Scrap and Blocked Stock (131)
Repetitive Manufacturing with Co-Products and QM (906)Bulk Manufacturing without PI Sheets (907)
Bulk Manufacturing with PI Sheet and SAP ODA Integration (908)
Make-to-Stock (Process Industry) with WM (909)
Make to Order (Process Industry) (910)
Multiple Product Campaign Run with MQC (911)
Acti ve Ingredient Proc essi ng (912)
Blending (913)
Repackaging (914)
Relabeling (915)
Storage Tank Management (916)
Subcontracting (External & Internal) (918)
© SAP 2009 / Page 43
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In SAP Best Practices for Chemicals, continuous production is used tomake the semi-finished product SAPulat on a continuous basis.
The characteristics of continuous production (long runs) are:
The product is produced in a continuous process over a long time (inparticular single-product lines).
Component materials are provided constantly, and the finishedproduct is constantly being completed.
Rough capacity leveling and continuous planning of consumption arepossible by means of the planning table.
Summary confirmation of quantities, times and material withdrawals.
Scenario 906 - Repetitive Manufacturing with Co-
Products and QM
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Scenario 906 - Repetitive Manufacturing with Co-
Products and QM
MRP = Material Requirements Planning, RFQ = Request for Quotation, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase Price Variance
Display /Change
planning table
CreateInspection lotfor In process
Inspection
RecordInspectionresult for In
processInspection
Usage Decisionfor In process
Inspection
Backflushrepetitive
Manufacturing
RecordInspection
result for coproduct
Usage Decisionfor co product
P r o d u c t i o n P l a n n e r
S h o p F l o o r S p e c i a l i s t
Q u a l i t y M a n a g e m e n t
© SAP 2009 / Page 45
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This scenario covers the manufacturing of a bulk product (Bulk paint
SAPcolor CH-3000).
Within this scenario material staging of components with WM as well asseveral QM functionalities such as
In-Process-Control of the manufactured product with usage decision
Post-Process-Control of manufactured product with samplemanagement and usage decision
Recurring inspections are included.
Scenario 907 - Bulk Manufacturing without PI
Sheets
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Scenario 907 - Bulk Manufacturing (without PI
Sheets)
MRP = Material Requirements Planning, RFQ = Request for Quotation, GR/IR = Goods Receipt/Invoice Receipt, PPV = Purchase Price Variance
ConvertPlanned order
of CreateProcess order
Stage materialfrom
warehouse
Record resultsfor In process
inspection
Record usagedecision for In
processinspection
Confirmprocess order
Record resultsfor GR
inspection
Record usagedecision for GR
inspection
Record resultsfor recurringinspection
Record usagedecision for
recurringinspection
Createrecurring
inspection lot
P r o d u c t i o n P l a n n e r
W a r e
h o u s e C l e r k
Q u a l i t y S p e c i a l i s t
S h o p F l o o r S p e c i a l i s t
© SAP 2009 / Page 47
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This scenario covers the manufacturing of a bulk product - granulate
GranuSAP, blue CH-3200.
Within this scenario material staging of components with WM as well asseveral QM functionalities such as
In-Process-Control of the manufactured product with usage decision
Post-Process-Control of manufactured product with usage decisionare included
This scenario also covers the creation and usage of PI sheets.
SAP Best Practices for Chemicals introduces the XML-based PI sheetand a Process Manufacturing Cockpit.
In addition the functionality SAP ODA (OPC for Data Access) is
integrated. This allows to read out and process sensor values within thePI sheet.
Scenario 908 - Bulk Manufacturing with PI Sheet
and SAP ODA Integration
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Scenario 908 - Bulk Manufacturing (with PI Sheet
and SAP ODA Integration)
Convertplanned order
or Createprocess order
Stage materialfrom
Warehouse
Sendingcontrol recipes
Processing PIsheet
Record resultfrom PI sheetfor In process
inspection
Record UsageDecision for In
processInspection
Evaluate logsfor DigitalSignature
Use SAP ODAfunctionalities
Send processmessage
Record resultsfor GR
inspection
Record usagedecision for GR
inspection
Use Batchwhere used list
P r o d u c t i o n P l a n n e r
W a r e h o u s e C l e r k
S h o p F l o o r
S p e c i a l i s t
Q u a l i t y S p e c i a l i s t
E n g i n e e r i n g
S p e c i a l i s t
© SAP 2009 / Page 49
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Scenario 909 - Make-To-Stock (Process Industry)
with WM
This scenario describes a standard make-to-stock manufacturing processwith included Quality Management and Warehouse Management.
This scenario covers the filling of granulate GranuSAP, blue CH-3200into 500 kg pack size to produce GranuSAP, 500 KG CH-6220.
After creation and confirmation of a process order, post-process-controlis carried out.
Finally the putaway for the manufactured materials into WM is described.
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Scenario 909 - Make-to-Stock (Process Industry)
with Warehouse Management
Convert PlannedOrder
or Create Process
Order
Createinspection lot
manuallyRecord results
Record UsageDecision
RecordInspection
result for coproduct
Usage Decisionfor co product
Confirm ProcessOrder
DisplayStorage Bin
Create transfer order
ConfirmTransfer Order
P r o d u c t i o n P l a n n
e r
S h o p F l o o r S p e c i a l i s t
Q u a l i t y M a n a g e m e n t
W a r e h o u s e M a n a g e m e n t
© SAP 2009 / Page 51
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Scenario 910 – Make to Order (Process Industry)
This scenario describes a Make to order filling of granulate GranuSAP,blue CH-3200 into 25 kg pack size to produce GranuSAP, 25 KG CH-
6200. Packed product is filled and packed only after a sales order isreceived.
The filled material is planned to plan the dependent requirement of the
bulk. The MRP run is used to plan the dependent requirements.
Material requirements’ planning is controlled via Planning Strategy 52
(Planning w/o Final Assembly and w/o MTO) Bulk is manufactured and kept in stock based on the dependent
requirements of the filled material.
On receipt of the sale order for the filled material the MRP triggers a
planned order for the filled material for the sale order quantity. This
planned order can be converted into a process order to execute the fillingprocess.
The filled material is goods received to sale order stock and thendelivered the customer.
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Scenario 910 – Make to Order (Process Industry)
Create plannedindependent
Requirements
Record Usage
DecisionRecord Results
Post GoodsIssue
MRP Run
Convert PlannedOrder
Confirm ProcessOrder
Release ProcessOrder
Create SalesOrder
Create Delivery
P r o d u c t i o n P l a
n n e r
S a l e s
A d m i n i s t r a t i o n
S h o p F l o o r S p e c i a l i s t
Q u a l i t y S p e c i a l i s t
W a r e h o u s e C l e r k
© SAP 2009 / Page 53
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This scenario covers production of multiple products run on a common manufacturing
resource.
Black & Yellow Paint are being produced on a common resource. A cleanout processis undertaken after a run for a colored paint (like Yellow Paint) is finished on theresource.
A cleanout order is proposed when final confirmation for a processing step (phase)identified with Cleaning Reqd checkbox ticked (defined by user fields) is being saved.
This is set up through user exit - CONFPI05 (Process order conf.: Cust. spec.enhancements when saving)
Common Resource Cleaning is mapped through creation & release of Cleanout Order (Process order without material). It is used to record and account activities & materialsconsumed during the cleaning process.
The Cleanout order can settled to a cost center or to paint being manufactured in nextrun
Completion of common Resource Cleaning is ascertained through activation of User Status – ZCL (Resource Cleaning Completed). This user status is set when the
process order is fully confirmed (CNF) Material Quantity Calculation (MQC) formula is used to calculate quantity for solvent
(CH-1430) to be added in the manufacturing process. It is calculated based on activeingredient proportion in batch selected for additive (CH-1020)
Formula defined for solvent (CH-1430) ensures that solvent to paint ratio is maintainedto maxm 40%. If solvent quantity calculated using Active ingredient content in batch of additive (CH-1020) is more than 40 % then keep original ratio (35%) otherwise use thecalculated value. This ensures that solvent to paint ratio is maintained appropriately
Scenario 911 - Multiple Product Campaign Run with
Material Quantity Calculation
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Enter Plannedproductionquantities
Run MRP
Check Stock /Requirements
List
CapacityOverload
CollectiveConversion of
Planned Orders
Run MRPCheck Stock /Requirements
List
CapacityOverload
Changeconverted
Process orders
ExecuteProduction as
per Schedule
Confirm end of a run –final
Confirmation
CleaningRequired
ExecuteProduction for
same color paint run asper schedule
CreateCleaning /
Change-over Order
ExecuteCleaning /
Change-over activities
CreateCleaning /
Change-over Order
Yes
Yes
No
Yes
No
No
Scenario 911 - Multiple Product Campaign Run with
Material Quantity Calculation
P r o d u c t i o n
P l a n n e r
S h o p F l o o r S p e c i a l i s t
S t r a t e g i c P l a n n e r
© SAP 2009 / Page 55
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In Chemical industry, in some cases, materials consist of one or more
active ingredients. The potency of these active ingredients varies from
batch to batch of materials (KAI (kilograms active ingredient)).
The total mass of the active ingredients and the carrier materials, is thephysical quantity or weighted quantity.
Goods movements and stock movements for these materials are carried
out in physical quantities. Valuation, costing, availability checks, andplanning, however, are carried out on the basis of the active ingredient
quantity.
The active ingredient proportion (ratio of active ingredient quantity to total
or physical quantity) remains constant for each batch. The active ingredient
quantity can therefore be calculated from the physical quantity and viceversa.
The process in this scenario comprises the valuation of the Co-Product(that results from the repetitive manufacturing of SAPulat.), filling and sales
Scenario 912 - Active Ingredient Processing
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Scenario 912 - Active Ingredient Processing
Create ProcessOrder
ConfirmProcess Order
Create SalesOrder
Create DeliveryGoods issue
Delivery
Billing
S a l e s A d m i n i s t r a t i o n
S a l e s B i l l i n g
W a r e
h o u s e C l e r k
S h o p f l o o r S p e c i a l i s t
P r o d u c t i o n P l a n n e r
© SAP 2009 / Page 57
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This scenario describes business processes related to Blending of in-spec and off-spec batches in the chemical industry.
Within this scenario, two batches of colorless granulate SAPulat (one
involved batch is in-spec and the other one off-spec) will be mixed in aseparate resource in order to get an in-spec batch of CH-2200 (SAPulat)
Scenario 913 - Blending
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Scenario 913 - Blending
BatchInformation
Cockpit
CreateProcess
Order
ConfirmProcess
Order
Recordresults
UsageDecision
S h o p F l o o r
W a r e h o u s e C l e r k
Q u a l i t y M a n a g e m e n t
P r o d u c t i o n P l a n n e r
© SAP 2009 / Page 59
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The Re-Packaging scenario is used for re-packing on-stock materialsfrom one packing unit into another one.
The necessity for this Re-Packaging scenario is mainly based on specificcustomer requirements, e.g. the need for 25 kg bags on pallets.
This scenario also includes following WM and QM processes:
Material Staging
Post-Process Inspection and Usage decision
Putaway of Produced Materials
Batch Derivation
Scenario 914 - Repackaging
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Scenario 914 - Repackaging
CreateProcess
Order
SelectTransport
request andconvert toTransport
order
Select openTransport
order
ConfirmTransport
order
ConfirmProcess
Order
Resultrecord
worklist
UsageDecision
CreateTransfer Order for producedMaterial
Select openTransport
order
ConfirmTransport
Order
BatchDerivation
S h o p F l o o r S p e c i a l i s t
E n g i n e e r i n g
S p e c i a l i s t
Q u a l i t y S p e c i a l i s t
W a r e h o u s e C l e r k
P r o d u c t i o n P l a
n n e r
© SAP 2009 / Page 61
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The Relabeling-scenario is used to transfer inventory from the stockedmaterial (generic label) to a different material which will be labeledaccording to customer requirements.
The physical and chemical properties of the material remains the same
throughout the process as well as the container respectively the canremains the same. Only the label-sticker will be replaced.
The process is triggered by an actual sales order for the relabeledmaterial and a relabel-process order is used to transfer the inventory andmonitor the process.
This scenario also covers printing of Certificate of Analysis at outbound
delivery and Batch Derivation (from bulk paint CH-3000 to filled paintCH-6010 and from CH-6010 to CH-6020/CH-6030)
Scenario 915 - Relabeling
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Scenario 915 - Relabeling
Manually MRPplanning
Create SalesOrder
ConvertPlanned Order
for Filling
Change andRelease
process order for fi l l ing.
Confirm ProcessOrder
ConvertingPlanned Order into Process
Order for Relabelling
ReleasingProcess Order for Relabeling
ConfirmingProcess Order for Relabeling
Create OutboundDelivery
Delivery for shipping the
material to thecustomer is
issued.
Certificate fo r Delivery
Monitor theBatches
S h o p F l o o r
S p e c i a l i s t
Q u a l i t y
M
a n a g e m e n t
W a r e h o u s e C l e r k
P r o d u c t i o n
P l a n n e r
E n g i n e e r i n g
S p e c i a l i s t
S a
l e s
A d m i n i s t r a t
i o
n
© SAP 2009 / Page 63
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The storage tank management process reflects the mixing of two different
batch quantities to produce one new batch quantity in a tank storagelocation with a special process order type.
This scenario covers material CH-1010 (Acrylic resin) which is stored in the
storage tank 10Q3.
The regular procurement process leads to multiple material batches in the
storage tank although physically only one homogeneous material batch is
available.
The scenario describes how two batches of one material in the storagetank 10Q3 can be merged into one batch using a process order for mixing.
Stock determination is carried out automatically by a Process Control
System (values for fluid levels). In SAP Best Practices for Chemicals this
step is carried out manually
Scenario 916 - Storage Tank Management
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Scenario 916 - Storage Tank Management
Creating p rocess order
Display stockoverview
Confirming processorder
Analy ze batc h-w here-
used list
P r o d u c t i o n P l a n n i n g
E n g i n e e r i n g
S p e c i a l i s t
S h o p F l o o r
S p e c i a l i s t
W a r e h o u s e
M o n i t o r
i n g
© SAP 2009 / Page 65
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External Subcontracting covers manufacturing steps outsourced to a toll-manufacturer
Scenario 918 - Subcontracting (External and
Internal) (external part)
Vendor: S-1003
Plant 1000 Vendor: S-9000
(subcontractor)
Purchase order for
components with
delivery address tosubcontractor
Invoice
Invoice
Delivery t osubcontractor
Goods delivery
Delivery o f components
Purchse order
CH-6210 (GranuSAP, 100 kg)
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Scenario 918 - Subcontracting (External and
Internal) (external part)
ReceiveMaterial at
Dock
Delivery PickList
GR/IR PPVVendor
MRP = Material Requirements Plann ing, PO = Purchase Order, GR/IR = Goods Receipt/Inv oice Receipt, PPV = Purchase Price Variance
IncomingVendor
Invoice
Delivery Note
Invoice Receipt
PickConfirmation
Goods ReceiptPost GoodsIssue
Create DeliveryRequest
CreateSubcontract PO
Inventory GR/IRSubcontracting
Services/Consumption
Print GR Slip
Requirement o f Subcontracting
Material
QualityInspection
Record Results
Stock transfer for subcontractor
Create PO for Special Stock
SubcontractPO
Requirement of Material
(Component)
Appr ov e PO
SubcontractPO
B u y e
r
W a r e h o u s e C l e r k
V e n d o r
Q u a l i t y
S p e c i a l i s t
T h i r d P a r t y
E
v e n t
A c c o u n t s
P a y a b l e
© SAP 2009 / Page 67
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In internal subcontracting, our company is provided with non-valuated
materials. Using existing resources and packaging materials, finishedmaterials are sent back.
The subcontracted receives the red paints (Paint, red; CH-0500,) as bulk,performs the filling of the Paint, red into canister CH-4200 and sends thefinished product (PowerPaint, red; CH-6800) back to the customer.
The material CH-4200 (Canister) is purchased by the subcontractor itself.
Manufacturing Planning for finished product (PowerPaint, red; CH-6800) iscontrolled through Planning Strategy YL (Assemble to Order strategy)
In Planning Strategy YL, a fixed planned order is created when a customer order (for finished product (PowerPaint, red; CH-6800)) is entered(assembly processing).
Special planned orders are created for PIR of finished product(PowerPaint, red; CH-6800) , which are converted into a process order when the sales order for the finished product CH-6800 is created
Planned Independent Requirements (PIR) for finished product(PowerPaint, red; CH-6800) are used to plan all dependent materials
Scenario 918 - Subcontracting (External and
Internal) (internal part)
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Customer
Needs to BuyProduct
InventoryCOGS
AR= Acco unt s Recei vabl e, COGS = Cost of Good s Sol d, MRP = Mater ial Req uir ement Plann ing
Delivery NoteOrder
Confirmation
Pick List
BillingDocument
Billing
MRP
MRP List
PlannedOrders
Creating PlannedIndependent
Requirements
InventoryConsumption@ Standard.
Cost
ConvertPlanned Order
to ProcessOrder
Process Order Confirmation
Create DeliveryRequest
Post GoodsIssue
Beginning of
PlanningCycle
Avai labi lit yCheck of Non
ProvidedMaterials
Sales Order Entry
C u s t o m e r
S a l e s
A d m i n i s t r a t i o n
S a l e s B i l l i n g
W a r e h o u s
e
C l e r k
P r o d u c t i o n P l a n n e r
S h o p F l o o r
S p e c i a l i s t
E v
e n t
Scenario 918 - Subcontracting (External and
Internal) (internal part)
© SAP 2009 / Page 69
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Scenario 131: Stock Handling Scrap and Blocked
Stock
E v e n t
A c c o u n t i n g
Q u a l i t y I n s p e c t o r
/ W a r e h o u s e C l e r k
Returnsand
Complaints(111)
Stock Transfer:Unrestricted to
Blocked
Non-Customer Related
Disposition(Production,
MRO)
StockScrapping:
Goods Issue toCost Center
StockScrapping:
Goods Issue toCO-PA
Stock Transfer:Blocked to
Unrestricted
Scrap ExpenseInventory
Scrap ExpenseInventory
Returnsand
Complaints(111)
InspectProduct
InspectProduct
InspectProduct
Miscellaneoustransfers
InspectProduct
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SAP Best Practices for Chemicals – Highlights
Recipe management
Transformation of general recipes into PPPImaster recipe
Batch management
Classification
Automatic batch number generation
FEFO batch determination
Batch derivation (from bulk to finished)
Production
Continuous production for bulk (rate routing)
Discontinuous production for filling
Process order creation
Process order confirmation
Special batch number assignment
Paperless production (PI sheet) SAP ODA (alerts and events)
Warehouse management
Full WM
Production supply areas
© SAP 2009 / Page 71
Quality management
Sample management
In-process controls
Automatic lot creation at process order release
Post-process controls
QM notifications
Quality certificates check at goods receipt
Batch recall
Inspection costs coverage
Quality certificate at goods issue
Batch derivation
Results recording (incl. Digital signature)
Jump from PI sheet
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