The SAP R/3 Warehouse Management (WM) is well integrated with the R/3 Production Planning-Process Industry (PP-PI) module via a WM-PP interface. This interface ensures that production materials needed for production or process orders are available in the right quantities at the right time.

Despite the high level of integration, you face a number of potential trouble spots when setting up the interface. Companies face many problems big and small that often undermine the purpose of the WM-PP interface. These problems include:

• The right materials are not in the production supply areas (PSAs).
• Material quantities in the PSAs are insufficient or excessive.
• The wrong materials or material batches are consumed out of the PSAs.
• The materials are not supplied in time for production to start or continue.
• Negative stocks are in the PSAs.
• You have numerous failed goods movement transaction (COGI) entries.
• You experience time-consuming analysis to fix problems on a daily basis.
• The physical inventory processes in the PSAs are unreliable.

The WM-PP interface can work smoothly by using the correct configuration. The interface is also sensitive to master data. An incorrect or missing control cycle record will prevent the creation of material requirements. This causes delays or cancelations in production processes even when the materials are present in warehouses. Furthermore, the bill of materials (BOM) and routings information must match the control cycle records. Otherwise, incorrect or no materials will be consumed from the PSAs. This has important implications for the backflushing process, as you must do a lot of research to analyze wrong transactions to correct material consumptions.

To see how these problems affect the WM-PP interface, it is important to understand how the interface works. After I describe the inner workings of the interface, I will offer tips on design, configuration, master data, and operational procedures for avoiding the problems listed previously.

How the WM-PP Interface Works

The WM-PP interface works to enable staging of all production materials by using the material staging process. The materials are staged to PSAs using different staging methods. The PSA/bins, where the materials are staged, are dependent on the master data — i.e., control cycle records. What follows is a description of how the interface and its associated processes work.

Material staging process: Figure 1 shows a simplified diagram of the material staging process. The production order/process order has components as per the BOM or recipe copied when the order is created. The component materials and quantities on order are required in production areas before the scheduled start or continuation of a production/process order. These materials are warehouse-managed — i.e., they are available in the warehouse and need to be staged. The requirements are created in the form of transfer requirements (TRs). These TRs need to be converted into transfer orders (TOs), which tell the warehouse what materials need to be physically staged.

Figure 1

The material staging process: (1) The required components in the production order are placed in a transfer requirement. (2) The transfer requirement is converted into a transfer order, (3) which tells the warehouse what materials to stage.

PSAs: The PSA is the physical location in production where the materials are staged for use by production personnel. There can be any number of PSAs, depending on the organization, layout, and responsibility considerations for efficient management of materials within the production areas. The PSAs are linked to work centers and resource and plant storage locations (Figure 2). One storage location can have any number of PSAs.

Figure 2

The production supply area (PSA). Note that each PSA has to be linked with storage location and, in turn, to a warehouse according to a plant-storage location assignment. Think of a PSA as a group of work centers for which the components are to be supplied. The components are staged to PSAs.

The PSA is a virtual extension of the warehouse. Consider it a part of the warehouse. It has a specific storage type and bins. A PSA may have one or more bins. Material is staged in these bins and can only be consumed out of these bins, and not the bins in the warehouse.

Material staging methods: The staging methods work with different business requiremnts of production/ process orders. The demands within R/3 are created automatically at creation or release of production/process orders. SAP R/3 provides the following material staging methods (Figure 3):

• Pick parts are provided in the exact quantities as specified in the process order component list. For this type of material staging, TRs can be created manually or automatically when the production order is released. Examples of pick parts are crank shafts, coloring agents, plastic sheets, or batteries.
• Crate parts are commonly used materials and not staged for individual production/process orders. They are used over many production/process orders. Crate parts are demanded using a manual trigger — e.g., when a crate is almost empty. The materials are staged if and when production sees that it needs additional materials. Examples of crate parts are cleaning agents, welding rods, nuts and bolts, nitrogen gas, or benzene drums.
• For release order parts, the transfer quantity is calculated based on the quantities of components in released process orders. The material quantities in the PSA and the replenishment storage types are reduced from the requirement. A big advantage of this method is that the total quantity is cumulated and the staging is done for the total quantity of various materials needed in the PSAs. If required quantities are already present in the PSA, no TR is created. This method is widely used in process industries. Examples of release order parts are plastic granules, prestage mix, and bulk precipitate.
• Manual staging of components is applicable in situations where the components may be used to stage materials, rather than in the BOM or recipe. It may also be used to stage additionally required materials.

Figure 3

Four possible methods for material staging

Master data, control cycle records: The control cycle record establishes how and where a material is to be supplied within a PSA. The control cycle record is master data for production supply and consists of the plant, production supply area, and material, and determines the production storage bin and the material staging method (staging indicator). It decides the specific PSA in the production facilities (bin in terms of warehouse storage type) where the different materials on the production/process order are staged (Figure 4). The PSA is linked to the work center/resource in the PP system.

Figure 4

A control cycle record. Notice the combination of plant, supply area, and material. The staging method — say, pick parts — is decided by the staging indicator, and bin information (storage type, bin) is contained within the control cycle record.

Figure 5 shows the main steps needed to configure and activate the WM-PP interface.

Figure 5

WM-PP interface configuration. (1, 2, 3) Maintain PSAs. (4) Activate the creation of TRs at release or at creation (WM request). (5) Activate the PP interface for the warehouse.

Consumption of materials from PSAs: Once the materials have been staged according to the requirements generated by production/process orders, the further processing of materials consumption is automatic. The materials are consumed as a result of a goods issue process for the components of the production/process orders (transaction MB1A, movement type 261). This transaction works at the level of Inventory Management (IM). Also, if the materials (material and batch, if batch-managed) are present in the PSA, the materials are consumed without any intervention by the user.

The goods issue process may be manual (as part of the production/ process order confirmation transaction) or automated through the process of backflushing of materials. For the most efficient and effective operations, backflushing is the preferred option. The backflushing takes place at the IM level by consumption at the plant-storage location level. The materials are also backflushed from the PSAs at the WM level. However, this process is not always smoothly performed, as I explain later.

Figure 6 shows the typical material staging and consumption processes for the process industry.

Figure 6

Material staging and consumption processes in process industry. Process order 1 for manufacturing bulk material uses raw materials from bulk tanks (IM-managed) and the WM- managed warehouse. Process order 2 for finished goods uses IM-managed work-in-process (WIP) and packaging components from the warehouse. Materials are staged to PSAs using transaction LP12 (also LP10 and LP11 for pick/crate parts) and consumed by backflushing processes from IM-managed storage locations and WM-managed PSAs.

Material Consumption Considerations

Now that I've explained how the WM-PP interface works, let's look at some the important considerations for material consumption out of PSAs:

• Control cycles must exist for all materials in the BOM when the process orders are released.
• Materials must be staged by the warehouse according to material staging requirements (transactions LP10, LP11, and LP12). The transactions should be run at designated time periods.
• Material consumption in goods movements should be equal to or less than the quantities on production/process order.
• For BOM items, if a material is not present at the IM level, the transaction fails and the failed goods movement goes to the failed goods movement transaction, COGI.

If materials are not present in a PSA bin, the failed goods movement creates negative stock in the PSA (if negative stocks are allowed). Otherwise, the goods movement transaction fails and the system goes to transaction COGI. These failed goods movements need to be corrected after ensuring that correct materials are staged to PSAs.

• Any additional materials or unplanned goods issue of components not on the BOM issued at the stage of confirmation of production/process orders are:
  • Consumed out of the PSA if a control cycle exists and materials are available in PSA.
  • Issued from inventory and a TR for movement type 261 is created if a control cycle does not exist and the material is present at the IM level but not in the PSA. This TR needs to be converted into a TO, allowing consumption of the material from the PSA.
• A TR for movement type 261 is created for cancellations of process/ production order confirmations. This TR needs to be converted into a TO, placing material back in warehouse.

Common WM-PP Interface Problems

In addition to the above concerns, you might experience the following problems, for which I've offered solutions:

Materials consumed are not in inventory stock (COGI error). Production personnel should check stock prior to a goods movement transaction in the case of manual goods postings (MMBE stock).

Materials/batches consumed are not moved to PSAs, creating negative stocks in PSAs. The warehouse must use transaction LP10, LP11, or LP12 for material staging at specified time intervals and for stage materials.

Material batches consumed are different from those actually used on process orders. Check that the PSA stock has the correct batch number. If not, resolve the problem with production to ensure that the correct batches are consumed for the process order.

Material demands — i.e., TRs — not created due to missing control cycle. You need to ensure that master data (control cycle records) is updated in a timely manner.

Material demands are not created for the correct PSAs — i.e., the materials needed in specific PSAs either are not demanded at all, are demanded in incorrect quantities, or demanded for the wrong PSA. Review the BOMs or recipes and routing with reference to the control cycle records. The reasons for it may be one or more of the following: You have the wrong PSAs on the control cycle records! The control cycle records and BOMs do not match. You probably have the wrong routing leading to the work center/resource.

The warehouse is not using transaction LP10, LP11, or LP12 to stage all materials needed in the PSAs, or the staging materials are short. Instead, you resort to ad hoc staging by bin-to-bin movements using transaction LT01. Use transaction LP10, LP11, or LP12 for material staging.

Vijay Garg

Vijay Garg, PMP, has more than 14 years of SAP project management and implementation experience with Fortune 500 companies in the high-tech, chemicals, CPG, and engineering industries using various SAP Business Suite applications as well as SAP APO. Prior to working in SAP, he had vast experience in the engineering industry, including software development and applications.

You may contact the author at vgarg@crestron.com.

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