Introduction:
This blog post will provide the detailed process on Two-Tier ERP solution for the process of Equipment Refurbishment with sales & services integration in SAP S/4HANA Cloud from headquarters to subsidiary which run on two different instances of SAP
There are two scenarios-One is, where the equipment is owned by headquarters and is leased out to the subsidiary for usage and maintenance, is sent to Headquarters in case of refurbishment. Second scenario is where a customer has rented the equipment, and servicing
happens at the subsidiary and in case the equipment needs to be refurbished it is sent to headquarters for refurbishment. This scenario supports organizations running on Two-Tier setup to have better coverage on Refurbishment process between Tier 1 and Tier 2 systems.
Overview:
In an ever-evolving business model customers require product or equipment for their manufacturing activities for specific machine manufactures for long term on rent /Lease basis to avoid capital expenditure. Hence OEMs or headquarters provide equipment on rental basis for a particular lease duration. Since the machine is owned by the headquarter periodic maintenance must be ensured.
Scenario 1:
Headquarters leases out a high value equipment to the subsidiary on lease basis for a particular time with subsidiary paying monthly rents and spending on equipment maintenance. There is an equivalent lease-in contract at the subsidiary with automatic creation of asset master and manual creation of Equipment master. During Asset maintenance in case the equipment needs refurbishment, it is sent to headquarters for Refurbishment
Scenario 2:
To understand better, customer places a contract with the subsidiary for an equipment. Equipment is delivered to the customer as a consignment and updated in master as equipment at customer location. The parameters or indicators are maintained in the equipment master. The subsidiary is informed of the repair or service required with the customer and equipment details. Monthly rentals are charged against the contracts for the period equipment is at customer location. Between the customer and subsidiary, vendor invoicing is done for the service or repair carried out on the equipment. The subsidiary decides if the equipment needs repair or refurbishment in during annual equipment maintenance through service order. In case of repair, in-house repair is carried out at subsidiary and in case of refurbishment, the damaged equipment is sent to headquarters for Refurbishment with headquarters sending the replaced equipment back to customer via subsidiary.
Business Enterprises implemented with Two-Tier ERP scenario involving Equipment refurbishment and setup wherein the subsidiary runs on SAP S/4HANA Cloud, public edition acting as Tier 2 and the Headquarter running on any deployments such as SAP S/4HANA Cloud, private edition, SAP S/4HANA, or SAP ECC or any other ERP system acting as Tier 1 which can cater to refurbishment of Leased/Rented equipment.
SAP S/4HANA Cloud, public edition system plans the refurbishment schedule for the equipment and notifies the Headquarter whenever the equipment is due for refurbishment. The Headquarter on the other hand refurbishes the equipment.
Two-Tier Solution:
Scenario 1
To achieve the above s requirement, SAP’s Two -Tier ERP Solution provides direct integration between SAP S/4HANA Cloud, public edition system at the subsidiary and SAP S/4HANA / SAP S/4HANA Cloud public edition / SAP ECC/other ERP system at the Headquarter.
Let’s see the process flow,
Two- Tier Refurbishment : Scenario 1
Glossary
Tier-2
An equivalent leased in contract is created at subsidiary along with an asset master. An equipment created manually referencing to the asset.In due course if the maintenance team sees a need that requires the equipment to be refurbished a maintenance order for refurbishment is created at subsidiary.This maintenance order will create an event. This event is sent to Event Mesh and is replicated to Tier 1. The data replication is done by capturing the event using an AMQP adapter in an integration flow and then replicating the maintenance order to Tier 1 via an OData service to create the Refurbishment orderAt subsidiary, with reference to maintenance order a subcontracting Purchase requisition and purchase order is created for replacement material and material to be refurbished as a componentA transfer posting is done to transfer the damaged material to Vendor stockOn Goods Receipt of Purchase order will move the damaged material out of vendor stock and receipt of replacement materialThe lease on damaged material can be ended and lease can be created for replacement material.The maintenance order will be completed and settled.
Tier-1
Let’s see here the activities at Tier 1 system which is notified of the equipment that is due for refurbishment.
Tier 1 system receives the notification with maintenance order that the damaged material has to be refurbishedNow, a refurbishment order is created by the Headquarters to carry out the in house refurbishment process for the equipment.Refurbishment process in carried out and refurbished material is maintained at the stock.
This way we can cater to refurbishment services provided by Headquarters for the Leased equipment with Two-Tier scenario.
Scenario 2:
In this scenario we have a rented equipment at customers location and the servicing happens at subsidiary that is on SAP S/4HANA Cloud, public edition and refurbishment happens at headquarters which is on SAP S/4HANA Cloud, private edition.
Two-Tier Refurbishment : Scenario 2
Tier 2
Customer places an order and rental contract is created with the material, contract duration and monthly rental to be paid as a periodic plan.Consignment Fill-up order is created against the rental contract. Delivery Document is created for shipping the material to the customer. During PGI serial number is added.Post PGI, equipment status for the serial number is updated to customer location with the customer details.An annual maintenance plan is created that creates the periodic service ordersFor servicing of the equipment through consignment pick up the equipment is moved to the subsidiary and in case of repair a repair order is created and if it needs a refurbishment, a maintenance order for refurbishment is created.This maintenance order will create an event. This event is sent to Event Mesh and is replicated to Tier 1. The data replication is done by capturing the event using an AMQP adapter in an integration flow and then replicating the maintenance order to Tier 1 via an OData service to create the Refurbishment orderAt subsidiary, with reference to maintenance order a subcontracting Purchase requisition and purchase order is created for replacement material and material to be refurbished as a componentA transfer posting is done to transfer the damaged material to Vendor stockOn Goods Receipt of Purchase order will move the damaged material out of vendor stock and receipt of replacement materialThis replacement material will be sent back to the Customer via consignment return with respect to service order which was created earlier.With respect to replaced material a new rental contract will be created and the rental contract for damaged material will be terminated.
Tier-1
Let’s see here the activities at Tier 1 system which is notified of the equipment that is due for refurbishment.
Tier 1 system receives the notification with maintenance order that the damaged material must be refurbishedNow, a refurbishment order is created by the Headquarters to carry out the in-house refurbishment process for the equipment.Refurbishment process in carried out and refurbished material is maintained at the stock.
Business Benefits
When implementing Equipment Refurbishment as a process across a Two-Tier ERP architecture, especially with sales & services integration between headquarters and a subsidiary running on different ERP instances, there are several strategic and operational benefits.
End-to-End Process Visibility: Integration between HQ and subsidiary ERPs ensures real-time tracking of equipmentOptimized Refurbishment Workflow: Refurbishment requests can be initiated at the subsidiary (where equipment is handled) and approved/tracked by HQ.Seamless Sales & Service IntegrationProcess Automation & Reduced Manual Errors: With API /Advanced event mesh technology data is exchanged automatically:Reduces manual data entry and errors common in disconnected systems.Efficient Inventory & Logistics Coordination: Minimizes downtime and maximizes refurbishment throughput.
Thanks for reading this blog post, hopefully the blog post was informative.
Two-Tier ERP Accelerators can be downloaded from best practice explorer
Introduction:This blog post will provide the detailed process on Two-Tier ERP solution for the process of Equipment Refurbishment with sales & services integration in SAP S/4HANA Cloud from headquarters to subsidiary which run on two different instances of SAPThere are two scenarios-One is, where the equipment is owned by headquarters and is leased out to the subsidiary for usage and maintenance, is sent to Headquarters in case of refurbishment. Second scenario is where a customer has rented the equipment, and servicinghappens at the subsidiary and in case the equipment needs to be refurbished it is sent to headquarters for refurbishment. This scenario supports organizations running on Two-Tier setup to have better coverage on Refurbishment process between Tier 1 and Tier 2 systems.Overview:In an ever-evolving business model customers require product or equipment for their manufacturing activities for specific machine manufactures for long term on rent /Lease basis to avoid capital expenditure. Hence OEMs or headquarters provide equipment on rental basis for a particular lease duration. Since the machine is owned by the headquarter periodic maintenance must be ensured.Scenario 1:Headquarters leases out a high value equipment to the subsidiary on lease basis for a particular time with subsidiary paying monthly rents and spending on equipment maintenance. There is an equivalent lease-in contract at the subsidiary with automatic creation of asset master and manual creation of Equipment master. During Asset maintenance in case the equipment needs refurbishment, it is sent to headquarters for RefurbishmentScenario 2:To understand better, customer places a contract with the subsidiary for an equipment. Equipment is delivered to the customer as a consignment and updated in master as equipment at customer location. The parameters or indicators are maintained in the equipment master. The subsidiary is informed of the repair or service required with the customer and equipment details. Monthly rentals are charged against the contracts for the period equipment is at customer location. Between the customer and subsidiary, vendor invoicing is done for the service or repair carried out on the equipment. The subsidiary decides if the equipment needs repair or refurbishment in during annual equipment maintenance through service order. In case of repair, in-house repair is carried out at subsidiary and in case of refurbishment, the damaged equipment is sent to headquarters for Refurbishment with headquarters sending the replaced equipment back to customer via subsidiary.Business Enterprises implemented with Two-Tier ERP scenario involving Equipment refurbishment and setup wherein the subsidiary runs on SAP S/4HANA Cloud, public edition acting as Tier 2 and the Headquarter running on any deployments such as SAP S/4HANA Cloud, private edition, SAP S/4HANA, or SAP ECC or any other ERP system acting as Tier 1 which can cater to refurbishment of Leased/Rented equipment.SAP S/4HANA Cloud, public edition system plans the refurbishment schedule for the equipment and notifies the Headquarter whenever the equipment is due for refurbishment. The Headquarter on the other hand refurbishes the equipment.Two-Tier Solution:Scenario 1To achieve the above s requirement, SAP’s Two -Tier ERP Solution provides direct integration between SAP S/4HANA Cloud, public edition system at the subsidiary and SAP S/4HANA / SAP S/4HANA Cloud public edition / SAP ECC/other ERP system at the Headquarter.Let’s see the process flow,Two- Tier Refurbishment : Scenario 1 GlossaryTier-2An equivalent leased in contract is created at subsidiary along with an asset master. An equipment created manually referencing to the asset.In due course if the maintenance team sees a need that requires the equipment to be refurbished a maintenance order for refurbishment is created at subsidiary.This maintenance order will create an event. This event is sent to Event Mesh and is replicated to Tier 1. The data replication is done by capturing the event using an AMQP adapter in an integration flow and then replicating the maintenance order to Tier 1 via an OData service to create the Refurbishment orderAt subsidiary, with reference to maintenance order a subcontracting Purchase requisition and purchase order is created for replacement material and material to be refurbished as a componentA transfer posting is done to transfer the damaged material to Vendor stockOn Goods Receipt of Purchase order will move the damaged material out of vendor stock and receipt of replacement materialThe lease on damaged material can be ended and lease can be created for replacement material.The maintenance order will be completed and settled.Tier-1Let’s see here the activities at Tier 1 system which is notified of the equipment that is due for refurbishment.Tier 1 system receives the notification with maintenance order that the damaged material has to be refurbishedNow, a refurbishment order is created by the Headquarters to carry out the in house refurbishment process for the equipment.Refurbishment process in carried out and refurbished material is maintained at the stock.This way we can cater to refurbishment services provided by Headquarters for the Leased equipment with Two-Tier scenario.Scenario 2:In this scenario we have a rented equipment at customers location and the servicing happens at subsidiary that is on SAP S/4HANA Cloud, public edition and refurbishment happens at headquarters which is on SAP S/4HANA Cloud, private edition.Two-Tier Refurbishment : Scenario 2Tier 2Customer places an order and rental contract is created with the material, contract duration and monthly rental to be paid as a periodic plan.Consignment Fill-up order is created against the rental contract. Delivery Document is created for shipping the material to the customer. During PGI serial number is added.Post PGI, equipment status for the serial number is updated to customer location with the customer details.An annual maintenance plan is created that creates the periodic service ordersFor servicing of the equipment through consignment pick up the equipment is moved to the subsidiary and in case of repair a repair order is created and if it needs a refurbishment, a maintenance order for refurbishment is created.This maintenance order will create an event. This event is sent to Event Mesh and is replicated to Tier 1. The data replication is done by capturing the event using an AMQP adapter in an integration flow and then replicating the maintenance order to Tier 1 via an OData service to create the Refurbishment orderAt subsidiary, with reference to maintenance order a subcontracting Purchase requisition and purchase order is created for replacement material and material to be refurbished as a componentA transfer posting is done to transfer the damaged material to Vendor stockOn Goods Receipt of Purchase order will move the damaged material out of vendor stock and receipt of replacement materialThis replacement material will be sent back to the Customer via consignment return with respect to service order which was created earlier.With respect to replaced material a new rental contract will be created and the rental contract for damaged material will be terminated.Tier-1Let’s see here the activities at Tier 1 system which is notified of the equipment that is due for refurbishment.Tier 1 system receives the notification with maintenance order that the damaged material must be refurbishedNow, a refurbishment order is created by the Headquarters to carry out the in-house refurbishment process for the equipment.Refurbishment process in carried out and refurbished material is maintained at the stock.Business BenefitsWhen implementing Equipment Refurbishment as a process across a Two-Tier ERP architecture, especially with sales & services integration between headquarters and a subsidiary running on different ERP instances, there are several strategic and operational benefits.End-to-End Process Visibility: Integration between HQ and subsidiary ERPs ensures real-time tracking of equipmentOptimized Refurbishment Workflow: Refurbishment requests can be initiated at the subsidiary (where equipment is handled) and approved/tracked by HQ.Seamless Sales & Service IntegrationProcess Automation & Reduced Manual Errors: With API /Advanced event mesh technology data is exchanged automatically:Reduces manual data entry and errors common in disconnected systems.Efficient Inventory & Logistics Coordination: Minimizes downtime and maximizes refurbishment throughput.Thanks for reading this blog post, hopefully the blog post was informative.Two-Tier ERP Accelerators can be downloaded from best practice explorer Best Practice Explorer Read More Technology Blog Posts by SAP articles
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