You can use this business process to shift net replenishment planning and execution from the customer to the supplier. The supplier uses gross demand (dependent requirements) and stock balance to calculate a replenishment plan based on minimum-maximum inventory level logic, and subsequently converts the plan into purchase orders (POs) and ASNs at time of shipment. The POs and ASNs are sent back to the customer's ERP system as an indication of a supplier commitment to deliver goods. POs are optional in the SMI process. The replenishment plan can be converted directly into ASNs if needed. For more information, see Supplier Managed Inventory.
The main business value is derived from the fact that the customer no longer has to perform the MRP net planning and replenishment activities for the purchased components or raw materials and the supplier can better utilize his own capacity by conducting both the planning and execution pieces of the replenishment process.
A general requirement for the SMI with PO Processing business process, is the added use of the Inbound Processing and Receipt Confirmation business process in the ERP system. This business process deal with the receiving process in the ERP system, containing receipt of the ASN message from SAP ICH, the put away and goods receiving steps in SAP ERP, and sending the proof of delivery message to SAP ICH.
1. Provide and distribute stock and demand information (SAP R/3)
This process step takes place in SAP ECC using an ABAP report called RSMIPROACT created specifically for the SMI business process in SAP ICH. The main purpose of the report is to extract gross demand (dependent requirements) and stock balance data from the customer’s ERP system and send this data to SAP ICH. An IDoc is used to carry the demand and stock balance data. The demand and stock balance data drives the SMI with PO business processes as it serves as input for the supplier’s planning and execution activities. The extraction report offers selection criteria for material, plant, MRP type, MRP controller, procurement type, storage location, consigned and own stock, unrestricted, blocked, and QI stock. Depending on customer needs, the extraction and sending of demand stock data is done periodically, usually through automated time set jobs.
2. Check exceptions in Alert Monitor (SAP SCM)
The supplier is alerted to exception situations, for instance though an e-mail notification or by logging onto the SAP ICH system to view the current alerts on the Alert Monitor. SAP ICH has a web user interface for the suppliers, allowing them to log on using only a web browser. The supplier can search for alerts via search criteria, such as product, location, or type of alert (show all Out of Stock alerts for example). Once an SMI alert has been found, the supplier can display the details of the alert, including date, time, location, and product affected. There are several alerts available to support the SMI with a PO process, such as Out of Stock, Below Min, and Above Max (for both planning data and physical stock balance), referring to the stock balance minimum and maximum set limits for each location-product combination. The Inventory Monitor Details screen can be accessed directly from a particular alert on the Alert Monitor without navigating through the menu.
3. Display product details in Inventory Monitor (SAP SCM)
To display the detailed planning situation, navigate to the Inventory Overview screen in the SAP ICH web user interface. Search for the particular characteristics (for example Location, Product) for which you want to see the inventory situation in more detail. Then select the details view for the inventory situation for a particular location-product combination. This will show the stock balance, demand and current planned receipts, and projected stock in a time bucketed view. If you select one entry from the Overview screen, then you will see the detailed view for that particular location-product combination. If you select several entries from the Overview screen, you will see several products and locations on one screen (time bucketed view).
4. Simulate and save planned receipts (SAP SCM)
On the Inventory Monitor Details screen, the supplier can now create the shipment schedule or fill out the Planned Receipts key figure in the planning grid. This is the only key figure open for manual input. As you fill out quantities for different days for this key figure, choose Simulate to have the Projected Stock key figure indicate whether the planned receipts report a certain resulting stock level as per the minimum and maximum levels set. Projected out of stock, below-minimum, and above-maximum situations are displayed in different colors. By switching the “grid arrangement”, you can create planned receipts from one or multiple Ship-From Locations. Once the Planned Receipts key figure results in the Projected Stock turning green, save the ship schedule. This saves the values to the database. The purchase orders can be viewed here as a key figure called Firm Receipts and the ASNs can be viewed as In Transit quantities. In the Inventory Monitor Details – Product View, the same actions and steps can be carried out as explained above. The difference being that you can do it for several Ship-To Location-Products on the same screen. Additional features include views of existing POs and ASNs, add free text notes, download to Excel and changes of the time bucket profile and master data for minimum and maximum levels.
5. Display due list for planned receipts (SMI) (SAP SCM)
Once the planned receipts are saved as described in the “Simulate and save planned receipts” step, the supplier can create purchase orders based on the planned receipts. From the Inventory Monitor Details screen, choose Due List. This will copy the current planned receipts into the Due List for Planned Receipts (SMI) screen, for the given ship-to location and product. This screen can be accessed not only from within the Inventory Monitor Detail screen, but also directly from the menu. One or several entries in the Due List for Planned Receipts (SMI) can be selected for inclusion in one PO. The Due List for Planned Receipts (SMI) is used for the SMI business process only. It offers the option of not using purchase orders at all, instead you can create ASNs directly from the planned receipts values. For more information, see Supplier Managed Inventory.
6. Create purchase order (SAP SCM)
Still in the Due List for Planned Receipts (SMI) screen, and after selecting one or more planned receipt entries in the results list, choose Create PO. This will copy the selected entries into the PO Create screen which can also be accessed directly through the menu. The PO data can be changed if needed at this stage. When it is deemed complete, it must be saved. However, this does not send the PO out of SAP ICH. The supplier can change the PO after saving, if necessary.
7. Publish purchase order (SAP SCM)
Once the PO is ready for sending, the supplier publishes it, triggering the sending of the PO out of SAP ICH and into the SAP ERP system. The PO will be created in the SAP ERP system via a standard inbound IDoc message.
8. Display due list for purchasing documents (SAP SCM)
The purpose of the Due List for Purchasing Documents screen in SAP ICH is to search for the POs that are due for shipment, in order to create the advance shipping notifications (ASN) and perform the goods issue or delivery on time. The supplier can use the Create ASN functionality inside individual POs when shipping or creating ASNs. Alternatively, the user can directly access the Create ASN screen and manually reference or assign the correct PO and item number to each item. The Due List for Purchasing Documents allows selection of SMI with PO items from different POs (also from releases or regular POs) when creating an ASN, as long as the ship-from and ship-to locations are the same in the various order documents (POs). The Due List for Purchasing Documents keeps track of already created ASNs so that only the outstanding quantities are displayed here. Generally, partial shipments are possible in SAP ICH. The supplier can search for outstanding purchasing documents via several criteria, such as product, location, and goods recipient. Once the search results are displayed in the list, the supplier can select one or many items for inclusion in the ASN.
9. Create advance shipping notification (SAP SCM)
Once the supplier has selected the items for the ASN (in the results list for the Due List for Purchasing Documents), choosing Create ASN will copy the items into the Create ASN screen in SAP ICH. The supplier can complete the ASN with additional information as needed. Examples of additional header data are Grouping ID, Bill of Lading ID, Freight Invoice No., Means of Transport, Incoterms, Carrier Party, Weight and Volume, and Unloading Point data. Examples of additional item data are Batch No., Manufacturing Date, Best Before Date, Country of Origin, and Dangerous Goods Class. There is also packaging capability as optional functionality in the ASN. Using this functionality (which requires added configuration and master data set up not covered in this process description) the supplier can organize the ASN items into handling units that describe how the products are to be packaged for the physical shipment (for example 10 products in a box, 20 boxes in a crate, and 4 crates in a pallet). The functionality includes label printing with bar codes.
10. Publish advance shipping notification (SAP SCM)
The ASN can be created and first saved as a draft, meaning it is not yet sent to the customer. In this status the supplier can change or delete anything in the ASN. To send or publish the ASN message from SAP ICH to the customer’s ERP system, choose to save or publish. This will send the ASN message to the ERP system, were it is will be stored using standard confirmation functionality in SAP ECC (confirmation of type shipping notification on the PO item). For more information about ASN handling and the subsequent goods receipt process in SAP ECC, see Inbound Processing and Receipt Confirmation with Warehouse Management in SCM.
11. Receive proof of delivery (SAP SCM)
Once the goods receipt processing has taken place in SAP ERP, the customer sends a message to SAP ICH indicating this fact. The message is called Proof of Delivery and is a standard IDoc in SAP ERP. For more information about ASN handling and the subsequent goods receipt process in SAP ECC, see Inbound Processing and Receipt Confirmation with Warehouse Management in SCM. The Proof of Delivery message changes the status of the ASN from Published to Goods receipt complete in SAP ICH, indicating to the supplier that the shipment has arrived at the customer’s site.
Alternatively, the customer can set the goods receipt status on the ASN in SAP ICH manually via the web user interface of SAP ICH intended for ad hoc situations. This does not update the customer’s SAP ERP system, it is a setting in SAP ICH only. Partial goods receipts on ASNs are also possible in SAP ICH.