Project Atlas

PROJECT SIRIUS EU ROLLOUT

Solution Design Document:Tolling SolutionPrepared By:

Craig Bramhald

Prepared Date:

24/10/12Issued By:C. Bramhald

Issue Date:

Document Control

VersionDateChange RequestChanged ByDescription of Change

1.024/10/12C. BramhaldInitial Draft Of Document

Table of Contents

31Introduction

32Purpose

33Audience

34Document Name and Location

45Background

46Business Functional Requirements

47Prerequisites

58Tolling Process Overview

59Proposed SAP Solution

59.1Organisational Structure and Data

69.2Demand Requirements

69.3Intra Company Stock Transfer

69.4Delivery Processing (goods issue)

69.5Sub Contract Purchase Order & Provision of Components to the Vendor

79.6Goods Receipt

79.7AP Invoicing (LIV)

79.8Shipments of Finished Materials

710Master Data

710.1Material Master Data

1010.2Bills Of Materials (BOMS)

1210.3Purchasing Information Records (PIR)

1410.4Source Lists

1511Tolling Process Transactional Flow

1511.1Create Stock Transport Order Component materials from Kalschuren to Tolling Vendor

1611.2Create Delivery

1711.3Delivery Change

1811.4Create Sub- Contract Purchase Order at the Tolling Vendor

1911.5Goods Issue of Component Materials To Vendor

2011.6Stock Position at Vendor

2111.7Goods Receipt of Finished Materials in the Tolling plant

2111.8Stock Position at Vendor

2211.9Shipments of Finished Materials

1 Introduction

Project SIRIUS is to enable SAP ECC multiple regions, based on a core model template that was implemented in the USA in July 2012. The first rollout is to the EU region which includes the sites in Germany, Portugal, France, Poland, Sweden and Italy. This region will go-live in November 2012.The Project will deliver the MM, SD, WM, PM, FI, CO, and PP modules of SAP.2 Purpose

The purpose of this document is to capture the solution design of standard SAP functionality, which will be introduced as part of Project Sirius. This document covers the SAP standard solution for tolling, (sub-contract) processing.

This document details the recommended SAP solution(s) and it provides a reference and a guide to any associated functionality that is relevant to the issue.

This document details the standard SAP postings that are created when component goods are issued free of charge to vendors, (Tollers) with the goods still being owned by OEC. The Toller carries out re-processing or a re-packaging process and the final saleable material is produced. This is the material that is sent from the Toller direct to the customer, or back to Talke and then the customer, or back to Kalschuren then to the Customer.

This document captures the standard configuration set up, key master data objects and their related settings across and the Materials Management, (MM) module, the Production Planning, (PP) the Sales and Distribution, (SD) and the Finance and Controlling modules. (FICO)

This document may contain the business rules and logic that are required in order to meet the business objectives.

This document will not contain detailed SAP functional nor technical development specifications.

This is a not an official training document although it can be used as a guide to what the solution actually delivers and how it will work in operation.

This document is not be used as the official configuration guide nor is it a detailed master data process document.

This document is not the formal work instruction but is the basis on which future business processes and training documentation should be built.This document does not detail any interim solutions, whereby only one plant is live on SAP.3 Audience

The intended audience for this document is the STP team, RTR Team, OTC team and the PTP team.4 Document Name and Location

NameLocation

Solution Design Document TollingN/A

5 BackgroundOEC have vendors that provide tolling (sub- contract in SAP speak) services. The process is as follows: Raw material stock, (Carbon Black FERTS from OEC) is free issued to the vendor. This stock belongs to OEC. Forecasts are demand are placed directly on the Toller and the vendor manufactures finished products based on these forecasts and orders taken directly, and the raw materials are consumed due to the tolling process.The finished goods are then either shipped directly to the customer from the tolling vendor or transferred back to the OEC site, or Talke, (non OEC - distribution hub) and then shipped to the final customer. The vendor is then paid for the tolling services they have provided. The tolling sites in OEC are:

Lankwitzer (DE) Hubron (GB)

Schulmann (FR)

QolorTech (NL)

Schrim (DE)

ATL (GB)

NB: PPG France may possibly be a Toller, but the full operations carried out at this site are still unknown.

6 Business Functional RequirementsThe OEC business requirements for the tolled products are as follows:

OEC have a requirement to have stock visibility of both the finished goods and raw materials at the Toller, Be able to place purchase orders for the tolling services, Pay for the tolling service, and add freight costs if required. Ship finished products from the tolling site, direct to the customer, or to Talke, or back to Kalschuren

Process stock adjustments at the vendor site, for the component parts and the finished materials at the Toller. 7 PrerequisitesThe assumption is that the organisational structure, (company codes, sales orgs, purchase orgs, plants and storage locations) and associated master data, (vendor, customer, material, purchasing info record and source list) are in place prior to beginning the process.8 Tolling Process Overview

9 Proposed SAP Solution9.1 Organisational Structure and Data

The tolling site will be represented as both a vendor master record and a plant within SAP.

The tolling plants in OUP will be:

1170 Lankwitzer 1171 - Hubron (International) Limited 1172 - A. Schulmann Plastics S.A. 1173 QolorTech 1174 - Schirm GmbH 1196 ATL

Being a plant gives the Toller the ability to forecast, execute demand planning, carry procurement, manage inventory, sales and distribution and financial control.

The same entities will also be represented as vendor masters in SAP. In OUP the vendor master records will be:

2003121 Lankwitzer 2004370 - Hubron (International) Limited 2004369 - A. Schulmann Plastics S.A. 2004388 QolorTech 2002173 - Schirm GmbH 2005590 ATLBeing a vendor master record allows the Toller plant to place purchase orders with the Toller vendor master, (the two objects are the same thing) so sub contract purchase orders can placed and component and finished materials can be managed and controlled at the Toller.

9.2 Demand Requirements

Demand, (forecasts) will be placed on the Tolling plant for the finished material. The final item has a Bill of Materials, (BOM), consisting of the component parts and the quantity per finished material. The BOM will automatically explode dependant requirements for the component materials. The BOM shows the relationship between the level 1 material, (saleable item) and the level 2 materials. (Component parts) The BOM holds the quantity required of component parts in order to manufacture the final item.

MRP will be run overnight and depending on demand, current stocks and outstanding orders, recommended requirements will be generated automatically. Requisitions will be created automatically from MRP for the finished material and will be placed on the Toller plant, (source being the Tolling vendor) and for the component materials. (Source being the Kalschuren site)9.3 Intra Company Stock Transfer

The Kalschuren site will move the component parts from their plant, (1108) to the Tolling site. (Say 1170) This will be achieved via converting the purchase requisition into an intracompany purchase order (STO without billing.) This order will be a one-step stock transport order. A one step STO enables an automatic goods receipt at the receiving site, at the same time the PGI, (post goods issue) is executed at the issuing plant.NB: This means there will be no goods in transit, between the issuing site and the receiving site. Obviously the physical goods in transit time will not reflected in SAP, as the components will show in stock at the receiving plant immediately at point of PGI. If required this can be configured to be a two-step process, if such detailed inventory visibility is required.

The sourcing of the both the final assembly and the components will be determined by master data settings in the material master data the special procurement key, and also the source lists. 9.4 Delivery processing (goods issue)The Toller will physically receive the materials into their plant (actual FERT CBO products) with which it

produces the final end product. In SAP, the GR will have already been processed due to the auto GR in the single step STO process. At this point time the components will now show at the Toller plant.9.5 Sub Contract Purchase Order & Provision of Components to the Vendor

The Toller plant will place a purchase order for the end product, using a subcontract purchase order against the Tolling vendor master. (Say 2003121) This order type has an item category L.

In the item detail on the material data tab, the components are also captured due to the BOM. These are the components that the vendor needs in order to manufacture the end product. In inventory management, the components are posted to the stock of material provided to the Toller, (Toller vendor master record) via a specific inventory management transaction. The components will now show under the vendor stock segment of the Tolling vendor, under the Tolling plant, as opposed to being under the plant stock segment.This stock has the following features:

It is managed as part of the Tolling plant total valuated stock, and is available for MRP.

It is only managed at plant level, since it is not stored at the Tolling plant company but on the

Vendors site.

Two stock types are possible:

unrestricted-use stock

quality inspection stock

Stock can be transferred between the two stock types. Withdrawals can only be posted from unrestricted stock, however.

Physical inventory functionality of the stock of material to be provided to vendor is available.The purchase order price is the subcontract price for manufacturing the ordered material. This is a contained in a purchase information record, (PIR) and has the category of L subcontract.

Sub contract scheduling agreements and related schedule lines can be used in this scenario.9.6 Goods Receipt

The Toller performs its service, (re-processing or re-packing) and delivers the ordered saleable material back to the Tolling plant. This is a non-system virtual delivery as the vendor master and tolling plant are physically both the same thing.

The Toller plant receives the final assembly, referencing the original sub-contract purchase order placed on the Tolling vendor master. The outcome of the goods receipt is as follows: Stock increase of final assembly at Tolling plant

Automatic stock decrease of components at the Tolling vendor stock segment based on BOM quantities. Decrease of PO balance of the final assembly sub contract purchase order.NB: If, after the goods receipt has been posted, the vendor informs you that a larger or smaller quantity of the components was actually consumed than planned in the purchase order, you must make an adjustment to the stock in the vendor stock segment, via a specific inventory management movement.9.7 AP Invoicing (LIV)The vendor charges for their service. The invoice is posted in Logistics Invoice Verification. (LIV)The PO will be referenced during the invoice process and the purchase order history will be updated based on the goods receipt and associated invoice from the Tolling vendor. The sub-contract invoice will be for the actual service provided by the vendor and will not include the material cost of the components used in the tolling.9.8 Shipments of Finished Materials

The finished materials are then available to the customer at the tolling plant. Three options are available: Ship direct from the Tolling plant to the customer this is achieved via OTC, (SD) functionality

Transfer goods from the Tolling plant to the distribution hub, (Talke plant 1181) via a STO doc type UB, and then ship from the hub to the customer.

Transfer goods from the Tolling plant to the Kalschuren plant, (1108) via a STO doc type UB, and then ship from the site to the customer.The schematic below shows an overview of the material and transactional flows with the Tolling process:10 Master Data

This section details only the key fields that are required in order to support intra and intercompany processing. (All data is taken from OU2 client 100)

10.1 Material Master DataTransaction CodeMM01, MM02, MM03

Transaction Menu PathLogistics > Materials Management > Material Master > Material > Create (General) Change, Display

Both the component materials and the finished materials must exist as material master records and are both FERT finished goods, material type.

The component materials and the finished materials must exist at all plant sites, as they can be moved between the OEC site, the tolling plants, and the distribution hub. For example, the material must exist at plant 1108, (Kalschuren) plant 1170, and (Tolling plant) plant 1181, (Talke plant)

As well as the organisational structure of the record, the material must have as a minimum, the following views:

Basic Data 1

Basic Data 2 Classification Sales: Sales Org. Data 1

Sales: Sales Org. Data 2

Sales: General/Plant Data Sales: Foreign Trade

Sales: Text Purchasing Purchasing: Foreign Trade

Purchasing: Text General Plant Data / Storage 1

General Plant Data / Storage 2

Accounting 1

Accounting 2

Costing 1

Costing 2

Plant Stock

Storage Location Stock

The component materials are sourced from Kalschuren have the following key setting in the MRP 2 view under the Tolling plant:

The special procurement key is set to KL. This signifies that the component is sourced from the plant 1108. MRP will generate requisitions for this material with the supplying plant being 1108.

The finished material are maked as being a sub-contract material. This is done by assigning the special procurement key 30 to the material:MRP will generate requisitions for this material, and after being converted to a PO, the item category for the material will be L sub-contract.10.2 Bills of Materials (BOMS)

Transaction CodeCS01, CS02, CS03

Transaction Menu PathLogistics > Production > Bills of Material > Bill of Material > Material BOM > Create, Change, Display

A BOM is created for the finished material that consists of the component parts that are required in order to manufacture the material. Due to the BOM, MRP will automatically generate dependant requirements for the component parts based, on the quantity of finished materials required and the quantity per components.The BOM for the finished material is created on the tolling plant, in this case 1170:

In the BOM, the link is made between the compnent part and the finsihed material. In this example you can see 400KG of compnents are required to manufacture 1000kg of the finished material. (go to header details of the BOM)

10.3 Purchasing Information Records (PIR)Transaction CodeME11, ME12, ME13

Transaction Menu PathLogistics > Purchasing > Master Data > Info Record > Create, Change, Display

The PIR is used to link a material for a particular plant and purchasing organisation to a specific vendor. The PIR holds the purchasing PO price. For sub-contract materials the segment sub-contract must be selected. The PIR is created for the finished material at the tolling plant, against the Tolling vendor master record.

10.4 Source Lists

Transaction CodeME01, ME03

Transaction Menu PathLogistics > Purchasing > Master Data > Source Lists > Maintain, Display

Source lists are required to assign a particular vendor or supplying plant for a material over a set validity period. A source list is required for the both the component material from the OEC plant and for the finished material from the Tolling vendor.

Source List for the component material: (here you can it is sourced from a supplying plant 1108)

Source List for the finished material: (here you can see it is sourced from the Tolling vendor)

11 Tolling Process Transactional FlowThe following section shows the relevant transactions from a logistics viewpoint of sub-contracting processing. All transactions were executed in OU2 100. (Test data)

11.1 Create Stock Transport Order Component materials from Kalschuren to Tolling Vendor

Transaction CodeME21N, ME22N, ME23N

Transaction Menu PathLogistics > Materials Management > Purchasing > Purchase Order > Create > Vendor/Supplying Plant Known

The STO has several key attributes. As it is a plant to plant transfer with the same company code, (1108 to 1170) the document type is UB. Also as the materials will be shipped the shipping tab has to be available in the item detail of the PO.

11.2 Create Delivery

Transaction CodeVL10B

Transaction Menu PathLogistics > Logistics Execution > Outbound Process > Outbound Delivery > Create > Collective Processing of Documents Due for Delivery > Purchase Orders

In this transaction the STO is referenced a delivery is created.

The delivery is created in the background:

From the log the delivery document can be found.

11.3 Delivery Change

Transaction CodeVL02N

Transaction Menu PathLogistics > Logistics Execution > Outbound Process > Outbound Delivery > Change

In this transaction, the delivery is changed. The picked quantity, storage location and batch details are added.

The goods issue is posted, and stock is down dated at the issuing site and updated at the Tolling plant.The purchase order history is updated with both the delivery and the material document that was created with PGI, and the GR. For the site to Tolling plant movements the system has been configured to execute this transfer in 1 step the PGI and the GR happen at the same time. This is to reduce transactional processing within the solution.

11.4 Create Sub- Contract Purchase Order at the Tolling Vendor

Transaction CodeME21N, ME22N, ME23N

Transaction Menu PathLogistics > Materials Management > Purchasing > Purchase Order > Create > Vendor/Supplying Plant Known

The purchase order with the Tolling vendor has several key attributes. The document type is NB, and a vendor is referenced as opposed to a supplying plant. The item category of the PO is L, and on the material data tab, the component parts, (BOM) can be seen. The PO is raised between the Tolling plant and the Tolling vendor.

BOM Components:

11.5 Goods Issue of Component Materials to Vendor

Transaction CodeME2O

Transaction Menu PathLogistics > Materials Management > Purchasing > Purchase Order > Reporting > SC Stocks per Vendor

In this step the component materials are transferred from the Tolling plant stock to the Tolling vendor stock.

In the next screen the user selects the relevant PO, and posts goods issue.

The storage location is entered (Mvt type 541 is used to issue components to sub-contract vendor stock) and the PGI quantity is entered.

The PGI is processed and the stock now resides against the Tolling vendor segment.

11.6 Stock Position at Vendor

Transaction CodeMMBE

Transaction Menu PathLogistics > Materials Management > Inventory Management > Environment > Stock > Stock Overview

Stock at Vendor:

11.7 Goods Receipt of Finished Materials in the Tolling plant

Transaction CodeMIGO

Transaction Menu PathLogistics > Materials Management > Inventory Management > Goods Movement > Goods Movement (MIGO)

In the step, the user receives the finished materials back into the Tolling plant by referencing the sub-contract PO that was created in step 11.4

In the goods receipt, you can see the two lines, the first line is the GR of the finished material, (mvt type 101) and the second line is the goods issue of the components in the vendor segment stock. (mvt type 543) The goods issue will take place at the same time as the GR. 11.8 Stock Position at Vendor

Transaction CodeMMBE

Transaction Menu PathLogistics > Materials Management > Inventory Management > Environment > Stock > Stock Overview

Stock at Vendor:

11.9 Shipments of Finished Materials

The finished materials are then available to the customer at the tolling plant. Three options are available:

Ship direct from the Tolling plant to the customer this is achieved via OTC, (SD) functionality

Transfer goods from the Tolling plant to the distribution hub, (Talke plant 1181) via a STO doc type UB, and then ship from the hub to the customer.

Transfer goods from the Tolling plant to the Kalschuren plant, (1108) via a STO doc type UB, and then ship from the site to the customer.DraftPage 1 of 22Confidential to Project SIRIUSDate of Issue

24/10/2012