What is SAP AFS? (2)

Following the first post about SAP AFS, in this one we are going to go on with an overview of this Industry Solution (mainly in the PP functionality).

 

BILLS OF MATERIALS

In SAP AFS it is possible to define two different types of BOMs:

  • Standard BOMs -> They can include Pre-packs
  • Assortments

In some occasions it is required to sell different products together, so they can be grouped through the Assortments.

 

But the most important new functionalities in PP can be used in Standard BOMs:

  • For AFS Materials we can define how Component Dimensions are going to be distributed from the Manufactured AFS Material (it is not possible to define this for standard Materials, which also can be part of these BOMs).

 

  • On the other hand, it is possible to define if some components are going to be part of a manufactured Material based in the Category for which we are producing.

For instance, for some lower quality levels, it might be possible to use fewer Materials in order to reduce the cost.

 

 

ROUTINGS

It is also possible in Routings to define that some Operations won’t be performed for some Categories or Quality Levels.

 

 

PLANNED INDEPENDENT REQUIREMENTS

The main novelty in Planned Independent Requirements (also in Sales Orders) is that it will be possible to select which Category is needed for each of one.

With the Coverage Strategy the system will know to which Stock Category match each of them. So it will allow to manage different Quality Levels or Country of Origins without the need of creating unnecessary extra Material records.

 

 MATERIALS REQUIREMENTS PLANNING

The MRP will be always run at SKU Level.

It will take into account:

  • Grid Values
  • Categories (based in Coverage Strategy)

Not all MRP parameters, however, will be defined at SKU level. Being possible to define some of them for all the different dimensions of the Material.

It will be possible to define at SKU level:

  • Safety Stock
  • Rounding Value
  • SKU Group
  • Discontinuation

 

It will possible to group all SKUs required quantities in same Planned Orders or disaggregate them.

 

PLANNED ORDERS & PRODUCTION ORDERS

It is only possible to define one Category for each Planned / Production Order, as all quantities processed by it must have the same Quality Level or Country of Origin.

But it will be possible to define different Grid or Dimension Values. So we can create a Production Order for a set of the different sizes/colors we manufacture and sell together.

It will also be possible to group different Production Orders and manage them as one. This will be very useful for defining how to cut in order to save Raw Materials and make te process more efficient.

What is SAP AFS? (1)

There are some industries that due to their peculiarity, the standard SAP is not able to fulfill their requirements.

One of them is the Apparel and Footwear Industry.

In order to adapt SAP ECC to this industry, SAP has added the functionality SAP AFS (Apparel and Footwear Solution).

It is built over the standard SAP ECC, so most of functionality does not change. In this post and the followings about this topic  we are going to see the main features that introduce, specially in the Logistics and Production modules.

 

  1. MATERIAL MASTER
    • The Fashion market demands to launch new and different products in short periods of time, requiring then to maintain a large number of Materials. But, in addition to that, for each product, it is necessary to have different sizes, colours, … and other characteristics.

By one hand, it is necessary to specify the exact characteristics (size, colour, …) for all Materials that are managed in stock (called Stock Keeping Units – SKUs).

On the other hand, all different specific SKUs of one model, share a lot of information, that would not be efficient to maintain in each of them.

In the Standard SAP it would be necessary to create a different Material for each SKU or use a mix of the batch management and classification system.

But with SAP AFS, it is possible to handle this complexity through the use of the Master Grid. In it and with the use of characteristics it is possible to define for each Material the range of characteristic values that will define each SKU

    • In addition to that, the same model can be quite different depending in different features. For example, it is very common to have different quality standards for the same product or to differentiate them depending on the country of origin.

For dealing with this issue, in SAP AFS it has been introduced what is called the Categories.

When a Forecast or Sales Order is entered, it has to specify the required Category. And through what is called the Coverage Strategy, this Requirement Category is matched to a Stock Category in order to deliver the right products.

    • Another of the particularities of this Industry are Seasons.

Even the same Material, can have different features and different price depending if it was manufactured or it is going to be sold in one season or another.

So the season has been also added to the SAP AFS functionality.

In following posts we will talk about SAP AFS functionality in other Master Data and other processes.

 

What is SAP?

SAP AG is a german software company whose initials at first standed for Systemanalyse und Programmentwicklung (System Analysis and Programms development). But later they meaning changed to Systeme, Anwendungen und Produkte in der Datenverarbeitung (Systems, Applications and Products for the Data Process).

 

Normally, when somebody talks about SAP, he is talking about its star product, an ERP that is world wide spreaded, specially in big companies. This one has been named in different ways as it evolved: R/1, R/2, R/3 and ECC.

The rest of the products of this company are mainly funcional extensions of this ERP, in the supply chain (for instance easing the interaction with Vendors and Customers) or adding new industry specific versions (Retail, Media, Oil, …)

The Company

In 1972 five former IBM employees founded the company SAP with the vision of developing a standard software application to support all business processes in real time.

At first, it was focused in the account and financial funcionality, which was launched a year later with the R/1 release. Later on, in 1979 it was launched R/2. New added functionality gave birth to the release R/3 in 1992. And finally in 2004 it was launched the current version ECC.

Since the beginning the growth has been constant, in offered functionality, in number of implementations and in geographical scope.

In 1998 SAP AG went live in Frankfurt and Stuttgart exchanges. In 1995 it was included in the german index DAX and in 2003 in the Dow Jones Stoxx 50.

In addition to the software development and sales, SAP supports a wide structure for giving support to all active implementations and for giving training to consultants and developers that help to its customers.

Products

Alghough as commented above, SAP ECC (ERP Central Component) is the star product, there are other products that complements it or that are focused in an specific segment or industry.

On one hand, based on the company size, we can distinguis three different products:

  • mySAP Business Suite: Focused in big companies. It is the one that allows more options and customizations
  • mySAP All-in-One: Vertical solutions for a specific industry sector, developed in colaboration with partners. Some of the options come already preconfigured, making it easier the implementation for companies with no many employees and simple processes.
  • mySAP Business One: Solution focused in small companies with an interface similar to the Windows one and integration with Word and Excel.

On the other hand, and only talking now about the first of these three products, mySAP Business Suite is built from different individual applications.

Each one of them is focused in a specific business area and offers tools to support it in a flexible way.

All applications are based in the SAP Netweaver platform, which integers and supports the evolution of mySAP Business Suite to an arquitecture based in services.

This platform supports Java 2 Enterprise Edition and ABAP (the programming language of SAP)

 

Inside it, we can distinguish common applications to all industry sectors:

  • mySAP ERP. Which inludes the main functions:
    • mySAP ERP Financials
    • mySAP ERP Human Capital Management
    • mySAP ERP Operations
    • mySAP ERP Corporate Services
  • mySAP CRM (Customer Relationship Management)
  • mySAP PLM (Product Lifecycle Management)
  • mySAP SCM (Supply Chain Management)
  • mySAP SRM (Supply Relationship Management)

And, on the other hand, specific industries solutions:

  • Automotive
  • Banking
  • Chemicals
  • Healthcare
  • Logistics Service Providers
  • Mining
  • Oil and Gas
  • Public Sector
  • Retail

These solutions maintain many of the common functionalities. But in the areas where these industry processes differ from the rest, they incorporate new funcionality to ease its management.

It is not necessary to implement all their functionality. Normally only some parts of it is implemented.

The first phase in SAP implementation project consists precisely in identify those processes not covered by the standard SAP or specific SAP solutions. What is called the GAP analysis.

In this step, the implementation team will decide which of these functionalities will be implemented, for which a process reingeneering will be necessary and for which a customized program will have to be developed.

Also, in this step it must be defined the implementation scope. Stating which processes will be covered in SAP and which ones will be maintained outside of this ERP.

What is an ERP?

SAP is an ERP but, what is exactly that?

The word ERP stands for Enterprise Resource PlanningBut, nowadays its funcionality is extended beyond only Planning, its name remains due to its origin.

 

An ERP is a system that covers all processes of a company. Used for the management of all of its resources and sharing the needed data among the different departments in an unique database.

 

Instead of a big custom development, where a new programm is created from zero for a determined company, an ERP package is an standard program that offers the most used and common functionalities in all type of industries and that allows different levels of configuration for its customization to each one where it wants to be implemented.

 

It is normally built of different modules with the different process funcionalities which communicate to each other. I this way, an ERP will cover all processes from Finished Goods Sales Orders to Raw Materials Purchase Orders of components ot be used in Production Orders. Including the registration of labour hours, stock transfers, accounting, etc.

 

The ERP will register all of this information, and in case the action is relevant, it will update automatically the accounting records. The goal is that data is only entered once in the system and it is available for all involved people.

 

ERP Origin

The origin of ERP is in the MRP (Materials Requirement Planning) that later on it evolved to MRP II (Manufacturing Resource Planning) and finally to ERP.

 

In the inital stage, different programs where developed for different processes inside the company. For executing certain calculations, for the accounting processes, for calculating of raw materials to consume, …

 

The MRP is a functionality used for planning Materials Requirements in the Production Process. For that it explodes to lower levels (Raw Materials and Components) the needed requirements for being able to manufacture and deliver it in a certain date.

 

This application did not have into account Machines or Labour Capacity. So, it could be possible that all Materials were available but Production was not able to take place due that not enough employees or machines were available. For that, new functionality was added given birth to MRP II.

 

On the other hand, and once Production dates have been established, other different program is needed to register consumed Materials, actual costs, and all the rest of needed information for controlling and managing the process. Some of this information should be registered in Accounting.

 

Due to that, the next logical step was to integrate all of these different functionalities in the same system for avoiding the entering of the same data more than once. Avoiding in this way incurring in more administrative costs, manual errors and having obsolete information.

 

This integration gave birth to ERPs.

 

ERP Characteristics

  • They Integrate all company information
  • They share information in real time
  • They allow certain customization

 

Once a piece of information is entered in the system, for instance the delivery of some Finished Goods to a Customer by Warehouse, automatically all the rest of departments have access to this actual data.

So, Sales Deparment will know that this Material quantity is not available for sale, Account Deparment will see this transaction registered and start the Accounts Receivable process, and so on all affected people in the company by this action.

 

An ERP allows the immediate use of different best practices around different industries for each of the different areas. But each company is different and has different specific requirements.

For that is necessary that the company customize or configure its ERP based in on its requirements. This process is taken out during the implementation.

 

The configuration goes from basic data about the company structure (number of warehouse, plants, work centers, …) to way of doing different processes (make-to-stock planning, purchase orders release strategies, …).

 

Due to the involved complexity, specially in big companies, sometimes available configuration options is not enough. It appears what is known as a gap between what the ERP offers and what the company needs.

 

In this case it is needed to make a custom development, sometimes it is worth to do it inside the same ERP, other using an external software. For instance, developing interfaces to communicate with other specific software packages or programs.

 

ERP pros and cons

The advantages of having an integrated system are obvious.

What also is a great advantage is to use from the first day a software that has been developed and debuged during years offering a great reliability and a much faster implementation period than if it had to be developed from scratch.

 

On the other hand, some special companies, due to their specific requirements, find it very difficult to adapt them. The gap is too big.

And that can make them to incur in high costs during its implementation.

 

For solving this issue, ERP software companies are developing industry specific packages that covers these odd processes.