Jörg T. Dickersbach Michael F. Passon Service Parts Planning with SAP … · 2016. 2. 12. · containing SAP CRM, SAP SNC, and SAP EWM was seldom used—in most cases, it was only

Management for Professionals

Service Parts Planning with SAP SCM™

Jörg T. DickersbachMichael F. Passon

Processes, Structures, and Functions

Second Edition

Management for Professionals

More information about this series athttp://www.springer.com/series/10101

Jörg Thomas Dickersbach • Michael F. Passon

Service Parts Planningwith SAP SCMTM

Processes, Structures, and Functions

Second Edition

Jörg Thomas DickersbachLandau, Germany

Michael F. PassonHeidelberg, Germany

ISSN 2192-8096 ISSN 2192-810X (electronic)Management for ProfessionalsISBN 978-3-662-45432-9 ISBN 978-3-662-45433-6 (eBook)DOI 10.1007/978-3-662-45433-6

Library of Congress Control Number: 2015937186

Springer Heidelberg New York Dordrecht London# Springer-Verlag Berlin Heidelberg 2015This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or partof the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformation storage and retrieval, electronic adaptation, computer software, or by similar or dissimilarmethodology now known or hereafter developed.The use of general descriptive names, registered names, trademarks, service marks, etc. in thispublication does not imply, even in the absence of a specific statement, that such names are exemptfrom the relevant protective laws and regulations and therefore free for general use.The publisher, the authors and the editors are safe to assume that the advice and information in this bookare believed to be true and accurate at the date of publication. Neither the publisher nor the authors or theeditors give a warranty, express or implied, with respect to the material contained herein or for any errorsor omissions that may have been made.

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Preface

The first edition of this book in 2006 was also the first edition of the SAP Service

Parts Planning solution, and there was little experience of using the solution in

practice. Meanwhile, there is a broad adoption of the solution, mainly in the

automotive and mechanical engineering industry, especially the renewable energy

sector, and in the aircraft industry. A typical trait seems to be the global rollout to all

organizations of a company, and due to the large number of organizations involved,

the projects might take some time—currently there are projects running with a

planned timeline until 2019.

Also the solution itself has become more mature with the latest releases—up to

now release SAP SCM 7.0 EHP3—and has both extended its functional scope—

especially in the areas of DRP, deployment, and forecasting—and improved its user

experience. For the latter, the planner’s worklist is the most significant improve-

ment. The reality check in the implementations also showed that the originally

intended “full-blown” system architecture for Service Parts Management

containing SAP CRM, SAP SNC, and SAP EWM was seldom used—in most

cases, it was only SAP SPP and SAP ERP, which can be implemented much faster

than the “full-blown” system architecture.

We were fortunate to have Michael F. Passon as the co-writer who has both the

experience from numerous projects as of course the up-to-date detailed functional

knowledge to update and significantly extend the first edition. This edition contains

a lot of changes and extensions; however, we have not updated all screenshots but

only those that contain significant differences to the previous version.

Much of the credit for this second edition goes to Michael Krenbauer, the

product owner for SPP. Without him this book literally would have not been

possible. He did not only provide us generously with advice and information but

even took the initiative to convince us to update this book. We would also like to

thank Mikael Tängemo, Gerhard Gschwender, Christian Werner, Andreas

Leinenbach, Zoltan Zavodi, Gabor Nagy, Zsolt Csoka, Sandor Miklos, and Tibor

Paulinusz for their help and comments.

Jörg Thomas Dickersbach and Michael F. Passon

Landau and Heidelberg/Germany, August 2014

v

ThiS is a FM Blank Page

Contents

1 Service Parts Planning Overview . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Supply Chain Management for Service Parts . . . . . . . . . . . . . 1

1.2 Overview on Systems and Processes for Service

Parts Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.3 Processes for Service Parts Planning . . . . . . . . . . . . . . . . . . . 5

1.3.1 Scope and Limitations of This Book . . . . . . . . . . . . . 12

2 Master Data, Services and Basis Functions . . . . . . . . . . . . . . . . . . . 132.1 Master Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.1.1 Bill of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.1.2 Virtual Location for Consolidated Ordering . . . . . . . . 18

2.1.3 Contract Packager . . . . . . . . . . . . . . . . . . . . . . . . . . 21

2.1.4 Product and Product Group . . . . . . . . . . . . . . . . . . . . 23

2.1.5 Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

2.1.6 Rounding Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2.2 Planner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

2.3 Planning Service Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

2.4 Transactional Data Layer . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

2.5 Simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

3 Capture and Manage Demand History . . . . . . . . . . . . . . . . . . . . . . 493.1 Process and Data Flow Overview . . . . . . . . . . . . . . . . . . . . . . 49

3.2 Capture Demand History . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

3.2.1 Data Flow Overview . . . . . . . . . . . . . . . . . . . . . . . . 50

3.2.2 Processing of the Demand History . . . . . . . . . . . . . . 54

3.3 Manage Demand History . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

4 Stocking Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

4.2 Replenishment Indicator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

4.3 Rules and Decision Tables . . . . . . . . . . . . . . . . . . . . . . . . . . 71

4.4 Stocking and De-Stocking Service and Approval . . . . . . . . . . 77

vii

5 Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 815.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

5.2 Planning Book, Forecast Profile and Forecast Service . . . . . . . 84

5.2.1 Planning Book for Forecasting . . . . . . . . . . . . . . . . . 84

5.2.2 Forecast Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

5.2.3 Forecast Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

5.3 Model Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

5.3.1 Historical Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . 97

5.3.2 Tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

5.3.3 Tripping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

5.4 Model Selection and Parameter Tuning . . . . . . . . . . . . . . . . . 107

5.4.1 Model Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

5.4.2 Parameter Tuning . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

5.5 Calculation of the Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . 110

5.5.1 Forecast Horizons . . . . . . . . . . . . . . . . . . . . . . . . . . 110

5.5.2 Forecast Model Overview . . . . . . . . . . . . . . . . . . . . . 111

5.5.3 Standard Deviation . . . . . . . . . . . . . . . . . . . . . . . . . . 121

5.5.4 Outlier Correction . . . . . . . . . . . . . . . . . . . . . . . . . . 121

5.6 Forecast Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

5.7 Life Cycle Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

5.7.1 Phase-In Forecasting . . . . . . . . . . . . . . . . . . . . . . . . 125

5.7.2 Phase-Out Forecasting . . . . . . . . . . . . . . . . . . . . . . . 127

5.8 Leading Indicator Based Forecasting . . . . . . . . . . . . . . . . . . . 129

5.8.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

5.8.2 Basic Settings and Prerequisites . . . . . . . . . . . . . . . . 131

5.8.3 Determination of the History of the Leading

Indicator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

5.8.4 Determination of the Forecast of the Leading

Indicator and the Relevant Service Parts . . . . . . . . . . 136

6 Economic Order Quantity and Safety Stock . . . . . . . . . . . . . . . . . . 1396.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

6.2 Economic Order Quantity and Safety Stock . . . . . . . . . . . . . . 140

6.2.1 Economic Order Quantity . . . . . . . . . . . . . . . . . . . . . 140

6.2.2 Safety Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

6.2.3 Interdependency of EOQ, Safety Stock and TSL . . . . 145

6.2.4 EOQ and Safety Stock Planning Service . . . . . . . . . . 147

6.3 Planning Book for Inventory Planning . . . . . . . . . . . . . . . . . . 151

6.4 Additional Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

6.4.1 Deployment Indicator Determination . . . . . . . . . . . . . 153

6.4.2 ABC Classification . . . . . . . . . . . . . . . . . . . . . . . . . . 153

viii Contents

7 Surplus and Obsolescence Planning . . . . . . . . . . . . . . . . . . . . . . . . 1557.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

7.2 Surplus Quantity Determination . . . . . . . . . . . . . . . . . . . . . . . 157

7.2.1 Overview and Common Steps . . . . . . . . . . . . . . . . . . 157

7.2.2 Surplus Quantity Determination for Current

Model Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

7.2.3 Surplus Quantity Determination for Past

Model Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

7.3 Surplus Disaggregation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164

7.4 Surplus Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

7.5 Obsolescence Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

8 Distribution Requirements Planning . . . . . . . . . . . . . . . . . . . . . . . . 1718.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

8.2 DRP Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

8.2.1 DRP Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

8.2.2 Forecast Versus Customer Requirements . . . . . . . . . . 181

8.2.3 Rounding to Days of Supply . . . . . . . . . . . . . . . . . . . 183

8.2.4 Fixed Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 185

8.3 Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

8.4 Horizons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

8.5 Stability Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

8.6 DRP Features for Seasonality . . . . . . . . . . . . . . . . . . . . . . . . 204

8.6.1 Anticipated Demand Coverage . . . . . . . . . . . . . . . . . 204

8.6.2 Pre-season Safety Stock Shift . . . . . . . . . . . . . . . . . . 207

8.7 Procurement Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

8.7.1 Sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

8.7.2 Product Group Procurement . . . . . . . . . . . . . . . . . . . 210

8.7.3 Supplier Shutdown . . . . . . . . . . . . . . . . . . . . . . . . . . 214

8.8 DRP Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

8.9 Repair or Buy Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

8.9.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . 218

8.9.2 Repair or Buy Planning Logic . . . . . . . . . . . . . . . . . . 223

8.10 Kit to Stock Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

8.10.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

8.10.2 Kit to Stock Planning Logic and Parameters

(Determinants) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236

8.11 Reorder Point-Based Planning . . . . . . . . . . . . . . . . . . . . . . . . 240

9 Procurement Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2499.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

9.2 Approval Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252

9.3 Procurement Approval Service . . . . . . . . . . . . . . . . . . . . . . . 253

9.4 Mass Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254

9.5 Interactive Approval in the Schedule Board . . . . . . . . . . . . . . 256

9.6 Release Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

9.7 Procurement Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258

Contents ix

10 Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26510.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

10.2 Pull Deployment and Push Deployment . . . . . . . . . . . . . . . . . 267

10.2.1 Difference Between Pull and Push Deployment . . . . . 267

10.2.2 Event Driven Quantity Assignment . . . . . . . . . . . . . . 270

10.3 Available Quantity and Demands for Deployment . . . . . . . . . 272

10.4 Priority Tiers, Fair Share and Sequence Rules . . . . . . . . . . . . 277

10.5 Push Deployment from Supplier . . . . . . . . . . . . . . . . . . . . . . 284

10.6 Multi-level-Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

10.6.1 Multi-level Push Deployment . . . . . . . . . . . . . . . . . . 295

10.6.2 Multi-level Tier Processing . . . . . . . . . . . . . . . . . . . . 302

10.7 Express Shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308

10.8 Deployment Simulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309

10.9 Stock Transfer Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313

10.10 Stock Transfer Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . 314

10.11 Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316

11 Inventory Balancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32511.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

11.2 Inventory Balancing Area . . . . . . . . . . . . . . . . . . . . . . . . . . . 327

11.3 Excess and Need Determination . . . . . . . . . . . . . . . . . . . . . . . 330

11.4 Cost and Benefit Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 333

11.4.1 Cost and Benefit Analysis Overview . . . . . . . . . . . . . 333

11.4.2 Inventory Savings . . . . . . . . . . . . . . . . . . . . . . . . . . 334

11.4.3 Warehouse Space Savings . . . . . . . . . . . . . . . . . . . . 335

11.4.4 Service Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337

11.4.5 Move Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340

11.5 Inventory Balancing Services . . . . . . . . . . . . . . . . . . . . . . . . 340

11.6 Inventory Balancing Stock Transfer Approval . . . . . . . . . . . . 341

12 Interchangeability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34312.1 Process Overview of Supersession . . . . . . . . . . . . . . . . . . . . . 343

12.2 Interchangeability Master . . . . . . . . . . . . . . . . . . . . . . . . . . . 345

12.3 Supersession Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

12.4 Realignment for Supersession . . . . . . . . . . . . . . . . . . . . . . . . 364

12.5 Stocking/De-Stocking with Supersession . . . . . . . . . . . . . . . . 365

12.6 DRP with Supersession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365

12.7 Deployment with Supersession . . . . . . . . . . . . . . . . . . . . . . . 368

12.8 Inventory Balancing with Supersession . . . . . . . . . . . . . . . . . 370

12.9 Interchangeability with FFF-Classes . . . . . . . . . . . . . . . . . . . 370

13 Sales Order Fulfilment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37713.1 Process Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377

13.2 Sales Order Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378

13.2.1 Basic Sales Configuration for SAP CRM™ . . . . . . . . 37813.2.2 Sales Order Taking in SAP CRM™ . . . . . . . . . . . . . 380

x Contents

13.3 ATP Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382

13.4 Processing of Unchecked Deliveries . . . . . . . . . . . . . . . . . . . . 385

13.5 Goods Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385

14 Monitoring and Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39114.1 Monitoring and Reporting Overview . . . . . . . . . . . . . . . . . . . 391

14.2 Planner’s and Customer’s Worklist . . . . . . . . . . . . . . . . . . . . 392

14.2.1 Overview of Planner’s and Customer’s Worklist . . . . 392

14.2.2 Action Required Queries in Planner’s Worklist . . . . . 394

14.2.3 Alert Queries in Planner’s Worklist . . . . . . . . . . . . . . 396

14.2.4 Monitoring Queries in Planner’s Worklist . . . . . . . . . 398

14.2.5 Customer’s Worklist and its Queries . . . . . . . . . . . . . 400

14.2.6 Configuration of Worklists . . . . . . . . . . . . . . . . . . . . 402

14.3 Shortage Monitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410

14.4 Alert Monitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414

14.5 SPP Cockpit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419

14.6 Product Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421

14.7 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423

15 Original Equipment Manufacturer Managed Inventory . . . . . . . . . 42715.1 OEM MI Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427

15.2 Master Data for OEM MI . . . . . . . . . . . . . . . . . . . . . . . . . . . 430

15.3 Capture and Manage Demand for OEM MI . . . . . . . . . . . . . . 432

15.4 Inventory Planning for OEM MI . . . . . . . . . . . . . . . . . . . . . . 437

15.5 Forecasting for OEM MI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437

15.6 DRP for OEM MI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437

15.7 Deployment and Inventory Balancing for OEM MI . . . . . . . . . 440

15.8 Supersession for OEM MI . . . . . . . . . . . . . . . . . . . . . . . . . . . 443

16 Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44516.1 Current and Future Improvements: “Customer Connection”

Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445

16.2 SPP on HANA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446

16.3 SPP and EIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447

OSS Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451

Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461

Contents xi

Service Parts Planning Overview 1

1.1 Supply Chain Management for Service Parts

Supply chain management is the process of planning, implementing, and

controlling the operations of the supply chain with the purpose to satisfy customer

requirements as efficiently as possible. SCOR structures the supply chain manage-

ment processes into plan, source, make, deliver and return (SCOR 2006). Another

way to structure the processes is to differentiate between goods movements within

the company and goods movements to the external customer resulting in a structure

as demand planning, order fulfilment, distribution, production and procurement

(Dickersbach 2008). These structures fit for most of the companies—at least we are

not aware of any counter-example—even though the supply chain and the supply

chain management might look very different from company to company—

especially across different industries. From this point of view, the same approach

fits for service parts as well. Nevertheless there are several specific features for

service parts planning which have justified SAP AG in alliance with Caterpillar

Logistics Services, Inc. and Ford Motor Company to build a completely new

solution for Service Parts Management (SPM). According to the nature of the

development partners, the primary industry focus within the SPM solution is

engineering, construction and automotive.

High Number of Service PartsSupply chain management for service parts deals usually with a very high number

of SKUs. This becomes plausible when comparing the number of finished products

of an automotive or an engineering company with the number of service parts for

their primary products. Differing from the production, the service parts have to be

available at several warehouses in order to ensure a fast delivery. This leads to a

multiplication of SKUs.

Another factor is that service parts have to be available for quite a long time after

the production of the primary product has ended. There are legal retention periods

for service parts but many companies keep service parts available even longer.

# Springer-Verlag Berlin Heidelberg 2015J.T. Dickersbach, M.F. Passon, Service Parts Planning with SAP SCM™,Management for Professionals, DOI 10.1007/978-3-662-45433-6_1

1

Mercedes-Benz e.g. guarantees an availability of 10 years after the production end

date (Arnold et al. 2002).

Authorized Stocking ListService parts logistics combines a high number of service parts with a high number

of warehouses. At the same time many of the service parts are slow movers.

Therefore the decision whether to keep a service part on stock at the different

warehouses is more significant than for normal logistics. These stocking decisions

are combined in the authorized stocking list.

Sporadic DemandOne of the most distinct characteristics for service parts is the high portion of

products with sporadic demand. Most of the service parts are required if there is a

failure in the primary product—due to wear, accident or other. These failures are

hardly predictable, and there is a multitude of possibilities for failure. Therefore the

failures which relate to a specific service part are usually comparatively seldom,

which results in a sporadic demand. Naturally there are also fast movers among the

service parts.

Availability and Safety StockIf a vital or an essential part of the primary product fails, an immediate substitution

(and repair) is required. The costs associated with the downtime of the primary

product might be very high—in the case of a bottleneck machine up to the

production downtime a complete factory, in the case of an automotive this might

lead to a significant loss of customer satisfaction. Therefore the availability of the

service part on stock is of high importance in SPM. Taking into consideration that

there is a high portion of sporadic demand (which is difficult to predict) and that the

service part has to be on stock in case of need, the importance of safety stock

planning becomes obvious.

Preventive MaintenancePreventive maintenance based on the operating time or the mileage (which is

essential e.g. for aerospace) is not the focus of this solution. Naturally some service

parts are requested for preventive maintenance as well—e.g. gear belts for

automotives—but in the current release of SAP SCM™ 7.0 there is no link toderive the demand from the installed base.

Service Parts ProductionMost companies have a separation between their main business—the production of

the primary goods—and their service parts business. Often the service parts are

produced in the manufacturing plant like the components of the primary product,

but sales and distribution of the service parts belongs in most cases to a separate

organization (Arnold et al. 2002). In line with this organizational structure, the SPM

solution focuses on the distribution and the availability of the service part at the

2 1 Service Parts Planning Overview

warehouses within the supply chain. All service parts are considered as externally

procured—either via scheduling agreements or via contracts.

Repair/RemanufacturingDepending on the value of the service part, repairing and overhauling is an

alternative to new procurement. This is especially the case in the aerospace and

automotive industry. A common concept is to have remanufactured parts—e.g.

engines—in a stocking and repair cycle. The planned availability of the

remanufactured service part depends on the number of ‘old’ parts, the repairability

and the repair capacity.

ProfitabilityAnother reason that justifies a new solution especially for service parts is the high

profitability of the service parts business.

1.2 Overview on Systems and Processes for Service PartsPlanning

The purpose of service parts planning is to determine and to ensure the required

inventory levels at the distribution centers of the supply network in order to meet

the target service levels and to plan the procurement of the service parts from

external suppliers and their replenishment within the supply network. In-house

production is not considered in this solution—if the company produces the service

parts itself, the production has to be modelled like an external supplier. Service

parts planning is however only one part of the SPM solution. Besides service parts

planning, the SPM solution covers additionally the following areas:

• sales, claims and returns, and entitlement management

• procurement execution

• stock transfer execution

• warehouse management

• monitoring and reporting of the service parts supply chain

The functions for the SPM processes are available based on the system landscape

containing SAP ERP™ 6.0, SAP CRM™ 7.0 (Customer Relationship Manage-ment), SAP APO™ (Advanced Planner and Optimizer), SAP SNC™ (SupplierNetwork Collaboration) and SAP EWM™ (Extended Warehouse Management)within SAP SCM™ 7.0 and SAP Netweaver™ 7.4 including SAP PI™ and SAPBI™ (Business Information Warehouse).

Figure 1.1 provides the overview of the systems for the full scope of SPM.

Service parts planning—which is the focus of this book—is entirely within SAP

APO™. Monitoring—e.g. the alert monitor—is done in SAP SNC™ based oncommon tables within SAP SCM™. SAP BI™ offers reports for the measurement

1.2 Overview on Systems and Processes for Service Parts Planning 3

of the supply chain performance towards the customer, within the supply chain and

from the supplier based also on the data within these common tables.

However, the experience from the SPM project shows that most customers

prefer to use a more simple landscape over the full blown functionality. The most

frequently applied system landscape contains only SAP ERP™ for execution, SAPAPO™ for service parts planning and optionally an external SAP BI™ forreporting. Figure 1.2 shows this simplified system landscape.

Fig. 1.1 System landscape for full scope service parts management

Fig. 1.2 Most frequently used system landscape for service parts management


1.3 Processes for Service Parts Planning

Service Parts ExecutionSales order taking, claims and returns and entitlement management is based on SAP

CRM™. Other parts of the order fulfilment process are the ATP check in SAPAPO™, the processing of the delivery in SAP ERP™ and the goods issue in SAPEWM™. The order fulfilment processes include sales from stock and sales from athird party vendor to the customer as triangular business. Chapter 13 provides a

brief overview of the sales from stock process.

Procurement execution starts with the releases for scheduling agreements or the

purchase requisitions for contracts and involves SAP ICH™ (where the suppliercreates ASNs), SAP ERP™ for the validation of the ASN and SAP EWM™ for thegoods receipt. The procurement execution is sketched in Sect. 9.7 subsequently to

the procurement approval and the release creation.

The execution of stock transfers is based on stock transfer orders that are created

by service parts planning (in deployment or in inventory balancing). The stock

transfer orders are sent from SAP APO™ to SAP ERP™. Goods issue at the sourcelocation and goods receipt at the target location are performed in SAP EWM™.Section 10.8 gives a short description about the stock transfer execution.

Service Parts Planning Within SAP APO™The focus of this book is the service parts planning processes which are entirely

within SAP APO™. Though service parts planning covers similar processes asDemand Planning and Supply Network Planning in SAP APO™, it relies oncompletely new functions. Therefore there is no process interface with the ‘normal’

SAP APO™ functions. Apart from that mixing service parts planning with the SAPAPO™ modules DP, SNP or PP/DS for the same location product is not intendedand might lead to inconsistencies.

Service parts planning does however use the same master data objects for

location, product, transportation lane and procurement relationship—though in

most cases separate fields. All these master data objects are enhanced with new

fields. The integration of service parts planning with SAP ERP™ is done via CIFlike for ‘normal’ SAP APO™. Compared to DP and SNP in SAP APO™, serviceparts planning offers some additional functions, but is also missing some

functions—e.g. aggregated planning and macros in forecasting—and uses a differ-

ent logic for similar functions.

SAP APO™ can be used as an add-on of SAP-ERP. The installation of a separateSCM server can be avoided then. However, if the service parts planning functions is

deployed then a separate SCM server installation is necessary.

Service Parts Planning OverviewService parts planning is concerned with the forecasting, inventory planning,

procurement and distribution of the service parts to the customer facing locations

in order to keep the target service levels. The planning functions and processes for

service parts planning are shown in Fig. 1.3 and range from the capturing and

managing of the demand to the planning of the procurement and the stock transfers.

1.3 Processes for Service Parts Planning 5

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The processes for the tactical planning scenario span the medium- to long-term

range and are based on time buckets of months, fiscal year periods or even weeks.

The processes starting from the capturing of historical demand to the stocking

decision, the adjustment of the demand history, the forecasting and the determina-

tion of the economic order quantity and the safety stock levels (and optionally

surplus and obsolescence planning) are considered as tactical. The results of the

tactical planning are

• decision about stocking or de-stocking

• forecast based on the demand history

• safety stock and economic order quantity

for each location product and—optionally—the scrapping of surplus quantity.

This information is used by the operational planning processes which are based

on daily buckets. DRP (distribution requirements planning) determines the required

procurement quantity depending on the stock and order situation in the network.

The procurement proposals are checked in the procurement approval process and

released. Sending the releases to the supplier, receiving ASNs from the supplier and

posting goods receipt are parts of the procurement execution. Based on the received

inventory the service parts are replenished to the warehouses in the deployment

process. In case that lateral stock transfers between warehouses are required,

inventory balancing is used. In both cases stock transfers are created and sent to

SAP ERP™ for execution. The result of service parts planning is that the stocked

Capture Demand

History

Stocking &

De-Stocking

Manage Demand

History

Forecasting

EOQ & Safety Stock

Surplus &

Obsolescence Planning

DRP

Procurement

Approval

Tactical Planning Operative PlanningM

on

ito

rin

g &

Re

po

rtin

g

Deployment

Inventory Balancing

Stock Transfer

Execution

Procurement

Execution

Service Parts Planning Service Parts Execution

Fig. 1.3 Overview of service parts planning processes


customer facing warehouses have sufficient inventory to fulfil the customer

requirements. Each of these processes is described in the following chapters.

Chapter 12 explains how supersession—i.e. the replacement of one service part

with one or more other service parts—is applied for service parts planning.

Service parts planning is almost entirely based on forecast, and sales order

fulfilment is not part of service parts planning. Nevertheless Chap. 13 gives a

brief overview of the order fulfilment process for sales from stock. Monitoring

and reporting finally are sketched in Chap. 14.

Business Scenarios and Business Processes Available in SPPThe SPP processes as described above can be combined into different end-to-end

scenarios. The designed end-to-end scenarios are applied at most of the existing

SPP-using service parts companies.

Among others the main business scenarios and business processes supported by

SPP are the following:

Figure 1.4 gives an idea of where these processes flow through the company’s

network and the surrounding elements. It shows that the organizational units

involved are locations within the planning-network (i.e. bill of distribution

(BOD)) as well as external partners like product suppliers and suppliers of

subcontracting services like repair or kitting. Other external suppliers are contract

packagers. Contract packagers could also be internal departments of the respective

service parts company. The green arrows show the different material flows between

the different units that are planned by SPP.

Table 1.1 Overview onthe main planning streams

and the most relevant

processes

1. Inbound Planning Scenario

1.1. Procure to stock process

1.2. Kit to stock process

1.3. Repair/remanufacture to stock process

2. Outbound Planning Scenario

2.1. Sell from stock process

2.2. Internal Outbound of stock process

2.3. Bypass process

2.4. OEM-managed inventory process

3. Tactical Inventory Planning Scenario

3.1. Stocking-decision making process

3.2. Safety stock and lot-size determination process

4. Life Cycle Planning Scenario

4.1. Interchangeability planning Process

4.2. Phase-in and Phase-out Forecasting Process

5. Monitoring and Exception Management Scenario

5.1. Alert monitoring process

5.2. Short supply management process


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The process “procure to stock” is mainly represented by the services and

functions around DRP. DRP generates the procurement plan based on scheduling

agreements (which are represented by external procurement relationships). The

outcome is schedule lines exclusively towards external suppliers, i.e. supplying

locations which are situated outside the BOD, as shown with the number 1.1 in

Fig. 1.5.

Subsequently the creation of the releases is executed as well as their issues.

Further steps like ASN creation, validation and goods receipts are covered by the

respective functions in SAP ERP. The receiving location is the entry location that

originally ordered the product. If a contract packager is organizationally attached to

the entry location then the delivery is received at this contract packager-location.

Fig. 1.4 Overview on the main material flows planned by SPP


The process “kit-to-stock” is indicated with the number 1.2 in Fig. 1.5. In

contrast to the process “procure to stock”, several products are involved in the

procurement process. One is the header product, whose independent requirement

has to be fulfilled. The header product is the kit that consists of several other parts.

This fact is represented by a BOM (in SPP: production data structure (PDS)). The

replenishment of the kit takes place via planning and creating work orders, if

in-house kitting is applied. The dependent requirements for the parts of the BOM

are usually procured externally (via the process “procure to stock”). The process

“kit to stock” can have two variants. In-house and external kit to stock. In the latter

also the kit is procured externally but not with a “normal” purchasing process but

with a kind of subcontracting process. The master data involved there are PDSs for

exploding the BOM at the subcontractor side and purchase info records of type

subcontracting in order to plan the procurement of the kit via DRP. Figure 1.5

illustrates the external kitting with the green big circles (number 1.2) on the level of

the entry location. The small green circle illustrates the in-house kitting process.

However the in-house kitting process can also be modelled at a location below the

entry location, whereas the external procurement in case of the “kit-to-stock” as

well as in the “procure-to-stock” takes always place on entry location level.

The process “repair to-stock” is very similar to the “kit to stock”-process. It deals

with products which need to be repaired or remanufactured in order re-sell them and

change their status during repair from ‘unserviceable’ to ‘serviceable’. The repair

Fig. 1.5 SPP-processes in inbound planning stream


can be executed also in-house or externally at subcontracting partners. In both cases

BOMs are needed as master data, where the unserviceable part is the

BOM-component of the serviceable part (which is repaired and re-newed part).

This process can be combined in SPP with repair-or buy decisions where SPP might

decide to apply a procure-to stock process (and order a new part) instead of the

default repair-to-stock process.

The second stream in SPP is about outbound planning, as shown in Fig. 1.6. The

process “sell from stock” (process number 2.1) deals with business relations to

external customers (that are represented by locations that are not part of the BOD

and also outside the legal company code of the service parts company). This process

requires some features that are not entirely covered by SPP but offered as part of

full-scope in SPM.

The process “Internal outbound of stock” (process number 2.2) is mainly

covered by the SPP-service deployment as described in Chap. 10 in this book.

Based on demand and supply within the company’s network, stock transfers are

created between the corresponding locations involved as result. This happens only

downstream the BOD, whereas the receiving location can be considered as internal

customer. The last internal customer is the customer facing location, from where on

the process “sell from stock” (number 2.1.) continues within this scenario.

The process bypass (number 2.3) has the most variants. There are BOD-internal

bypasses. Under normal circumstances deployment supplies locations from

Fig. 1.6 SPP-processes in the outbound planning stream


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locations of immediately previous levels. Under certain circumstances it is neces-

sary to leave the standard path of delivering internally and to skip some steps in the

supply chain down to the customer. This process is covered in the function multi-

level-deployment and can skip as many levels of location as necessary.

Another variant of the bypass process is focused on skipping the replenishment

of the entry location, even though the entry location was the ordering unit. In this

case the external supplier supplies directly to one of the internal customers, i.e. any

demand-carrying location below the entry-location level. Even though effectively

this process combines an inbound feature with outbound features, it is subsumed

under the outbound planning stream since the main focus is on the distribution.

Another reason is that in SPP this process is supported by the deployment type

“Push Deployment from Supplier” that is used to fulfil the respective demand on

different child locations. The planning results are nevertheless schedule lines

coming directly from the external suppliers.

Another variant of the bypass process is a direct delivery from a contract

packager—no matter whether it is in an external or an internal contract pack-

ager—to one of the demand carrying child locations within the BOD. The contract

packager is modeled as a location (derived from anMRP type in SAP ERP) which is

attached to its master location in the BOD. The contract packager itself is not part of

the BOD in any case. Under normal circumstances the contract packager would

supply only to his master location where he is attached to. If the contract packager’s

master location does not have an own demand the supplying the master location can

be skipped and a bypass takes place directly to the child location. This bypass is

supported by the SPP service “Push deployment from contract packager”

(described in Chap. 2 in this book). The result of this planning service are stock

transfers. The further processing of this stock transfers including outbound

deliveries and inbound deliveries as well as goods movements are done in

SAP ERP.

The fourth variant of the bypass process is “third party order processing”

(TPOP). This process circumvents the whole BOD—physically as well as

planning-wise. Even though for this process—like in the case of “sell from

stock”—SPP is only partly responsible, nevertheless e.g. the demand history of

products that are always delivered directly to the customer are captured and

managed in SPP. There are TPOP-specific SPP- forecast services which are dealing

with these specially indicated products. This forecast is then published to the

external supplier via collaboration, so that their target service can be reached also

if the delivery does not come directly from the service parts company.

The process “original equipment manufacturer managed inventory” (OEMMI) is

based on an extension of the BOD as shown as number 2.4 in Fig. 1.6. External

customers—e.g. if they are service provider—are integrated and participate in most

of the planning services and functions as so-called OEMMI-locations. Demand

history is captured and managed directly in the OEMMI-location, which acts

technically like the customer facing location. Like for any customer facing location,

forecast is calculated, DRP plans replenishment and deployment plans the delivery

to this customer location. In this process the external customer acts as internal


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customer in the SPP-System and the planning result consequently are stock

transfers with the customer location as receiving location. Since the customer

location is modelled in SAP ERP as an external customer and corresponding

business partner, in one of the next steps within this process the stock transfers

are converted into sales orders in SAP ERP.

The third planning scenario as shown in the Table 1.1. is the tactical inventory

planning. As already described in the section earlier in this chapter this is comprised

of decisions, which are focused on more aggregated time horizons—like weeks or

months. These activities and planning steps are also made on a weekly or monthly

recurring basis. In this manner the process of stocking decision for every SKU takes

place. Once this decision is made for e.g. stocking, a stability period is applied to

stabilize this decision. If the stocking process has decided to stock a certain SKU

then the following process is to determine the figures for the safety stock that should

be kept stable as well as the lot size—either network-internally from the parent

location or network-externally from the external product supplier.

The fourth scenario supports the introduction as well as the end of life of a

service part from the planning point of view. Supersession as a type of interchange-

ability controls the use up of products which are phased-out and complementarily

the planning start of a succeeding new product right in time in order to ensure the

overall target service level. In addition there are processes like phase-in forecasting

and phase-out-forecasting, which are responsible to safeguard smooth ramp-up of

new products in respect to forecast and replenishment planning. Vice versa phase-

out planning can be applied for the corresponding discontinuing product.

1.3.1 Scope and Limitations of This Book

Not all functions of the SPM solution are described in this book—even not all

functions for service parts planning. The focus of this book lies on the planning

functions, therefore monitoring and reporting is not explained in their due depth—

apart from the so-called planner’s worklist. Even within planning some topics as

virtual locations for consolidated ordering and contract packagers are explained

only very briefly. Planning with future BODs, remanufacturing and push deploy-

ment from the supplier are skipped altogether. For a complete picture of the service

parts planning functionality please have a look into the SAP online documentation

for service parts planning.


Master Data, Services and Basis Functions 2

2.1 Master Data

2.1.1 Bill of Distribution

One of the specifics of the service parts solution is that the supply chain network has

a tree-like structure with one or more entry location—this is where the supplier

delivers to—and for each entry location (optionally) one or more child locations.

Looking from the demand side, there is a strict single sourcing. This fix and

hierarchical distribution structure is modelled as a bill of distribution (BOD). The

BOD is used throughout the whole service parts planning solution—from capture

demand to inventory balancing.

Virtual Child LocationAnother characteristic of the BOD is that there is a functional separation between

locations that deliver to the customer (also called customer facing locations) and

locations that deliver to other locations (also called parent locations). If one location

does both, a virtual child location is created for this location. All customer related

data—e.g. forecast, safety stock, customer orders—are assigned to the virtual child

location, and the location keeps only the transactional data for its role as a parent

location. This implies that a stock transfer is modelled from the location to its own

virtual child location in order to cover the customer related demand.

Example for a Bill of DistributionThe modelling of the supply chain with the BOD is clarified with the example of a

supply chain as shown in Fig. 2.1.

# Springer-Verlag Berlin Heidelberg 2015J.T. Dickersbach, M.F. Passon, Service Parts Planning with SAP SCM™,Management for Professionals, DOI 10.1007/978-3-662-45433-6_2

13

Each of the distribution centres—except Frankfurt—sell service parts to

customers. Figure 2.2 shows the BOD to model this structure.

In this case Stuttgart is the entry location of the BOD, and all locations except

Frankfurt are customer locations. The locations Stuttgart, Lille and Frankfurt are

parent locations because they deliver to other locations within the network.

Stuttgart and Lille have virtual child locations in order to separate their role as a

parent and their role as a customer facing location. All locations except the entry

location Stuttgart are child locations to their parent.

Restrictions in the modelling of the BOD are that the tree structure must be

respected and that a location can only be used once within one BOD. It is however

possible to have multiple entry locations within one BOD—e.g. to model different

supply networks in Europe and America. Figure 2.3 shows some alternatives for the

modelling of a BOD.

Stuttgart

Vendor

Lille FrankfurtLyon

London Köln Berlin

Fig. 2.1 Example for a supply chain

Stuttgart

Frankfurt

Virtual ChildLocation

Entry Location

LilleLyon

Köln BerlinLilleLondon

Stuttgart

Virtual ChildLocation

Fig. 2.2 Bill of distribution for the example

14 2 Master Data, Services and Basis Functions

Hierarchy StructureThe BOD is a kind of location hierarchy and is therefore based on the hierarchy

structure. The hierarchy structure is defined with the customising path APO !Master Data ! Hierarchy ! Define Hierarchy Structure, Fig. 2.4.

Note that the edge table name has to be /SAPAPO/RELDHBOD or else it is not

possible to set the flag for virtual child locations. The hierarchy structure is linked to

the transaction for creating the BOD by an entry in the customising setting as shown

in Fig. 2.5 (customising path APO ! Master Data ! Product ! MaintainProduct-Relevant Hierarchies and Hierarchy Structures).

BOD 1 BOD 2 BOD 3

BOD 4

Fig. 2.3 BOD modelling alternatives

Fig. 2.4 Hierarchy structure for the BOD

2.1 Master Data 15

BOD MaintenanceThe BOD is maintained with the transaction /SAPAPO/BOD001. With this trans-

action the hierarchy structure is selected automatically, Fig. 2.6.

The tree structure of the locations is maintained in the bottom part of the screen.

If a location has a virtual child location, the according indicator is set in the top right

area. To display the location in this area, its parent has to be selected in the bottom

Fig. 2.5 Product-relevant hierarchy structures

Indicator for Virtual Child Location

© SAP AG

© SAP AG

Fig. 2.6 BOD maintenance


area. When saving the BOD, it is checked whether transportation lanes exist. After

saving, the BOD must be assigned to the active model 000 in the same transaction.

There is no integration of the BOD from SAP ERP™, but usually there are just afew BODs per company.

Product Assignment to the BODThe BOD is defined independent of the products. The assignment of the products to

the BOD is performed with the transaction /SAPAPO/PROD2BOD_M as shown in

Fig. 2.7. A product can be assigned to one BOD only.

The validity date of the assignment must not be in the past. The assignment of

products to BODs is displayed with the transaction /SAPAPO/PROD_DISP

(products for BOD) or /SAPAPO/PROD2BODDISP (BOD for a product).

Flexible BODIn SPP exists the possibility to choose between two BOD types: static BOD and

flexible BOD.

The main characteristic of a static BOD is that the product assigned to a BOD

must have existing location product per every location of this BOD.

If one or more corresponding location products were missing the assignment to a

BOD would not be possible at all. If a necessary location product would be deleted

after the assignment of the product to BOD, an error would occur and a

corresponding message would be logged. In case of e.g. a DRP planning, the

whole planning of the respective product would be ceased.

The activation of either static or flexible BOD—as shown in Fig. 2.8—is made

and valid for the whole SPP-system, i.e. for all BOD’s and all products involved.

Fig. 2.7 Product assignment to BOD

2.1 Master Data 17

The customizing setting can be accessed via APO!Master Data! Product!Product Group ! Define Product Group Type.

2.1.2 Virtual Location for Consolidated Ordering

Virtual locations for consolidated ordering (VLCO) are used to group locations

which are geographically close and have only a small demand. This way the virtual

consolidation location is considered like one location in DRP planning and all

transactional data—stock, demand and fixed receipts—is aggregated to the pre-

ferred location. The preferred location is the location with the longest lead time and

determines also the calendar, the deployment indicator and the rounding rules. As a

consequence, netting is performed within the locations of the virtual consolidation

location and only orders for the net demand are created.

The distribution to the real locations is done in deployment and inventory

balancing. If a virtual consolidation location has registered a net demand, deploy-

ment delivers to the locations according to the demand of the individual locations.

Using virtual consolidation locations has the benefit that netting is performed

within these locations and that the data basis for planning is aggregated.

Regional Pattern Virtual locations for consolidated ordering are defined using aregional pattern. The prerequisite for defining the virtual locations for consolidated

ordering is that all locations have the same parent. The regional pattern is a

hierarchy structure like the BOD but has a different edge table (/SAPAPO/

RELDHRGP), Fig. 2.9.

Fig. 2.8 Setting of BOD type in customizing


Documents

Jörg T. Dickersbach Michael F. Passon Service Parts Planning with SAP … · 2016. 2. 12. · containing SAP CRM, SAP SNC, and SAP EWM was seldom used—in most cases, it was only