Scenario Overview:ETO - Project Manuf. - Sales Order Processing with ProMan

SAP AG 2005

Engineer-to-Order (ETO): Environment

Engineer-to-order (ETO) activities involve customer-specific manufacturing ofa product, such as the construction of a plant. Both complexity and uniqueness characterize the product. The products require large order-specific project and engineering services that carry considerable risk for technical solutions, costs, and deadlines. A project therefore processes a customer order.

The following features characterize engineer-to-order activities:

Extensive quotation phase (over several month)

Order-Specific Engineering Services

Complex and Dynamic Product Structures

Internal and External Procurement

Complex Information and Communication Structure

Long Lead-Times

Calculation and Cost Control

Milestone Billing

Assembly, Start-up and Warranty

SAP AG 2005

Engineer-to-Order (ETO): Environment

- Order probability is not very high

Contractual negotiations have to be documented

Risk analysis – technical and commercial evaluation is necessary

- Very extensive order processing phase (over several years)

Order-specific engineering services

Engineering Change Management/ Claim Management

Complex and dynamic product structures

Long lead-times procurement

- Very expensive unique products Joint Ventures are necessary

Milestone billing

Installation and Assembly on site

Make or Buy decisions have to be made

Billing, results analysis and costing

SAP AG 2005

ETO - Project Manuf. - Sales Order Processing with ProMan

Summary Content

Machinery and Equipment Value Chain 4Machinery and Equipment Value Chain 4

O v e r v i e w C o n t e n tE84

Industrial Machinery & Components

ETO - Project Manuf. - Sales Order Processing with ProMan - Sales order creation - Linkage set between project and SD order - Material procurement through PRO-MAN - Milestone transferring from project to SD order - Progressive billing with milestones - Component planning and production in PRO-MAN - Re-work processing with claim and debit memo - Delivery through project - Assembly and acceptance test at customer controlled by netwok activities - Cost/revenue analysis through project infomation system

ETO - Project Manuf. – Order Proc. with ProMan

SAP AG 2005

ETO - Project Manuf. - Sales Order Processing with ProMan: Component ViewCustomer

SAP R/3

Manufacturer

Project tuning bases on the detail business situation, and confirm the project start with the 1st milestone.

Execute long-lead time procurement by Pro-MAN, create the purchase order.Release the purchase order.

Process R&D work of the project by release the related WBS element, then confirm the related activities.

Create customer order copying the 2nd quotation created in ETO quotation processing,and adopt the variant configuration result.

Initial stock for the raw materials, and some of them need to be posted to project stock.

Production processing using Pro-MAN, for all the semi-finish goods.

Finish the production part of project by confirm the related activities.

Customer specification change to change the component of BOM.

Release 3rd milestone then settle the 3rd invoice.

Start delivery work of project and delivery creation from the project.

GR for long-lead time procurement component to the project stock.

Start Production work of the project by release the related WBS element.

Milestone transferring from the project to the SD order.

Invoice the down payment billing since the first milestone reached.

Down payment.

Release 2nd milestone then settle the 2nd invoice.2nd advance payment.

Scrap one component from the project stock.

Re-work of the component using Pro-MAN.

Create debit request to customer to charge the special cost for the re-work.

Create claim document to record the cost of re-work, and link the claim to production WBS element.

2nd advance payment.

Delivery process and GI.

Finish the Delivery work and release the last milestone.final payment.

Cost and revenue analysis by PS reports.

Link related business documents to record management model.

The step before is the acceptence of a customer quotation. This is subject of E83 – ETO Quotation Processing with BOM-PS and Record Management

SAP AG 2005

Project structuring/execution via project system Clear definition of deliverables and responsibilities Clear definition and milestones to break down the work by project phases Centralized control for project costing and revenueMilestone billing Determines the percentage of completion (milestone technique forearned value analysis) Determines dates in the billing plan for sales orders (cost control)

PRO-MAN Centralized control of components consumed during the project Control and monitor MRP, procurement, production through a single interface

Change Management in Project Control the material scraping and re-work through PRO-MAN Control the cost of re-work by claim Charge the cost of re-work to customer by debit request

Delivery through Project/Final Assembly on Customer Site Deliver the main items to customer through project Control the assembly work and customer acceptance test by networkactivities

Business Benefits

SAP AG 2005

BoM Structure

E83-1100

Switchgear Cabinet

E83-1211

Base Frame

E83-1212

Rotating Column

E83-1210

Basis System

E83-1220-XXX

Control Cabinet

E83-1231

Picker Arm

E83-1232

Spot Welding Gun

E83-1233

Tox Pliers

E83-1230

Enhancements

E83-1200

Robot

E83-1000

Robot Route

E84E84 Order Processing Engineer-to-Order

E83-1212-HALBRotating Column

- Raw Material

SD BOM(Variant Configurable)

PP BOMPP BOM

SAP AG 2005

Material Master Data

E83-1000 Robot RouteE83-1100 Switchgear cabinetE83-1200 RobotE83-1210 Basis systemE83-1211 Base frameE83-1212 Routing columnE83-1212-HALB Routing column - RawE83-1220-110 Power supply 110VE83-1220-230 Power supply 230VE83-1220-380 Power supply 380VE83-1230 EnhancementsE83-1231 Picker armE83-1232 Spot welding gunE83-1233 Tox pliers

SAP AG 2005

Project Structure

SD OrderItem

Billing WBS linked tothe SD Order item

to handle the revenueof the project

Activities in central WBSelement linked to

different WBS elementsto control the project

phases centrally

SAP AG 2005

Milestone with Progressive Billing

Milestones linked toSD order item to

control the progressivebilling

SAP AG 2005

PRO-MAN

Centralized control of components consumed

during the project

Control and monitor MRP,procurement, productionthrough a single interface

SAP AG 2005

Change Management in Project

Claim is built, and theassignment goes to

related WBS inthe project

Debit Memo Request isbuilt, and assignment also

goes to related WBS inthe project

Project

Costof the change

Chargeof the change

PRO-MAN toHandle the change

In logistic side

SAP AG 2005

Delivery through Project/Final Assembly on Customer Site

Deliver the main itemsto customer through

project

Item Category DLPstands for the deliveryitems generated from

a project