ConfigurablePurchasedMaterials: FinishedGoodsAndRawMaterials

October7,2008 KevinMeyer

CompanyProfile
Haworthoperates24whollyownedmanufacturing facilitiesin10differentcountries. 55salesofficesand600independentdealers worldwide. Nearly8,000membersareemployedbyHaworth worldwide. In1994Haworthreachedthe$1billionmark,andin 2000surpassed$2billion. Afocusoninnovationhasresultedin250+patents. Alongstandingcommitmenttotheenvironmenthas broughtmanyawards.

WhyConfigurePurchasedParts?
Samereasonweconfiguremanufactured parts
Toomanyoptionstodefineasuniquematerials Reducecarryingcostsofpurchasedstockparts Noconsistencyincustomerdemand Priceofpurchaseditemsvariesbasedonoptions Peggedordersareeasiertotrack Reducedoverallmaintenance

MaterialsconsideredforConfiguration
FinishedGoods
Desks WoodCasegoods ElectricalComponents

RawMaterials
SteelTubingandAluminumExtrusions Fabrics Paints PlasticMoldedpartsinmultiplecolors Laminates

PURCHASEDCONFIGURED FINISHEDGOODS

PurchasedFinishedGoods
Veryfewbusinessissueswithconfiguring purchasedFinishedGoods Businessrequirementsmatchedupwellwith CTOstrategy RequiredHaworthtorethinktheWewillnot usethepurchasinginforecord decision Makesevenmoresensewhentryingto coordinatedropship orders

FinishedGoodExample
CommunicationOutletTap,PreTerminated Insertsintoaconsolidationpointpatchpanel toprovideacommunicationsoutlet
Wirelength(6),WireRating(2),DataTransmission Speed(2),CordColor(10),WireJacket(2) 6x2x2x10x2=360combinations

EnteraSalesOrder

SpecifyCharacteristics

DemandTransferandMRP
Aftertheorderhas beensavedand holdsreleased, demandisvisiblein MD04 MRPisthenrunto generatethePurRqs

RequisitionValidation
Fromtherequirements list,yourcan:
1. Clickonthedetails buttonnexttothe requisition 2. Clickonthe configurationbutton

toseethecharacteristics enteredinthesalesorder.

CreatePOfromtheRequisition

Afterclickingonthedetailsbuttonfortherequisition (asonthepreviousslide)youcanchoosetoconvert theRequisitiontoaPO.

RequisitionassignedtoVendor

ChangestoPurchaseOrders
Characteristicsonthe POcanalsobechanged ifrequiredduringthe conversionprocessby clickingonthe configurationbutton Onlymakechangesif theconfigurationcan notbesourcedas defined

PO PriceConditions

UsingtheSetPricingFactorSyntax

15240x150x(.50/1000)=$1143.00

PO Allcharacteristicsvisible

CharsGroup PurchasingPrintouts

PO Onlyrequiredcharsdisplayed

POConversioncomplete

MRPnowupdatedwithPOinformationfromthe Requisitionconversion AllthatremainsistoreleasethePO,receivethe materialandallocatetoSalesOrderStockupon receipt.

DataSetupforPurchasedFG

DataSetupforPurchasedFG contd

DataSetupforPurchasedFG contd

ConditionRecordConversionFactor
ForVariantconditionswith alternateuoms (1.)youneed todefinetheconversion factor(2.) Thiscanbecanbedoneby clickingontheConversion Factorbutton(3.) Thesystemwillpromptyou foraconversionfactorifthe conditionisbeingcreatedin theinforecord

PURCHASEDCONFIGURED RAWMATERIALS

ConfiguredPurchasedRawMaterials
Desperatelywantedtotreatconfiguredraw materialsasstock materialsininventory Currentbusinessandinventorymanagement processesruncountertothestandardSAPCTO strategy Purchasedpricescalculatedwithformulaswasa foreignconceptanddifficultforthebusinessto understand. BatchManagedmaterialshavetobemanually assignedtoMfg.orders noautomaticselection

PurchasingConcernswithConfigured PurchasedRawMaterials
Cannotdrivesourcingofamaterialbasedoncharacteristics Characteristicscannotbeassignedtoamaterialinthesource list InforecordsupportsasingleSupplierMaterialMaster relationship SourcingisnotContractbased Suppliersunabletomanagevariantcharacteristicsand variableorderquantitiescosteffectively Requisitionsmustbemanuallyassignedtoasupplier Receivinginspection/lotapprovals

PlanningConcernswithConfigured PurchasedRawMaterials
Configuredmaterialsarenotanonymous stock. SalesOrderStockismoredifficulttoreassigntoahot customersmanufacturingorder CTOmaterialsdontlikeminimumbuyquantities MRP/Planningpoliciescannotbemadespecificto characteristicvalues Noinventorytraceabilitytothecharacteristiclevelwithout batchmanagement GoodsissuetoManufacturingOrdersisdonemanually Replenishmentofscrapmaterials

ExpectedBenefitsofConfiguredRaw Materials
ReducedEngineeringdocumentation Fewerpartstomanage/maintaininSAP Increasedinventoryturnsandreduced inventorycarryingcostsonCTOmaterials Improvedvisibilitytovendorpricing ReducedmaintenanceinPurchasingforprice moves Pegged materialdemands

OptionswithConfiguredPurchased RawMaterials
ImplementDiscreteIndustries MillProducts solutionfromSAP(DIMP)
Enablesassignmentofcharacteristicstobatch managementclasscharacteristics(023)andallowsyouto treatconfiguredmaterialsasmorestocklike

CustomizationofcoreSAPcomponentstomake stock materialsontheflybasedoncharacteristics Abandoneffortandcreatestockrawmaterials AcceptcurrentCTOlimitations andchangeyour businessprocesses

OurDecision
Createmostpurchasedrawmaterialsinourpilot plantasstockmaterials Selectarepresentativepartinourpilot planttotest theconceptofconfiguredpurchasedrawmaterials:
SteelTubing usedonraisedfloorpedestalbases
Infrequentorderswithlargerorderquantities LinearPricingformulabasedonlength Purchasedintwodifferentdiameters
Oneconfigurablematerialcreatedforeachdiameter

ImplementingAPO minimizeissuesforplanningof purchasedrawmaterials Carryinventoryon10fttubesectionsforrapid materialscraprecovery(inhousecutoffoperation)

RaisedFloorPedestalBaseTube
1.25 or1.50 Diameter VariableHeight:3 27 in1 increments Specialsinany incrementupto~60 Weldedtoasteelplate Top4oftubeis swedged toasmaller diameter.

EnterOrderforPedestalBase

EnteringtheCharacteristics

Characteristics contd

ConfiguredPurchasedRawMaterial
Byclickingonthe lowerlevel configured component(1.) intheConfig Structure,wecan seetheHeight Characteristic(2.) beingpassedto thetubematerial

DemandTransfer PreMRP
Hereweseethevisible inMD04onthetop levelmaterial SinceMRPhasnotrun, evenwiththemulti levelconfigurationon theCP,nodemandsare visibleforthelower levelcomponentyet

DemandTransfer PostMRP
Plannedordershave nowbeengeneratedat thetoplevel

MRPdemandhasalso explodedthedemand tothelowerlevel configuredpurchased material

VerifythePlannedOrder
ClickontheDetails buttonforPldOrd onthe Stock/RequirementsList Clickonthe Configurationbuttonto seethetransferred characteristics(including thevariantPrice Condition)

CreatethePurRqs fromthePldOrd

CreatethePurOrd fromthePurRqs

NetPriceCalculation/Conditions

POisCreated

DataSetupforPurchaseRawMatl

DataSetupforPurchaseRawMatl
Needamapping rule ontheCPofthe configuredrawmatl Needapricingruleto selectthevariant conditionandfeedthe pricingfactor

SpecialNotes
AConstraintwasnoteffectiveatmappingthe heightcharacteristictothelowerlevel configuredcomponentbecauseithaditsown ConfigurationProfile Aprocedurewasneededontheconfigured rawmaterialsconfigurationprofiletofetch theheightcharacteristicfromtheparent

Questions?
Haveotherstriedconfiguringpurchased materials? Whatissuesdidyouneedtoaddress? Whatresistance(ifany)wasthereandfrom whatareasofthebusiness? Whatotheroptionsdidyoupursueifnot configuredpurchasedmaterials? OtherQuestions?

ThankYou