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Today's companies are finding it increasingly necessary to outsource much of their manufacturing work. Outsourcing is a process whereby one or more external companies are contracted to supply materials for or manufacture the end product. The company that outsources its work is known as the brand owner, and the companies to which the work has been outsourced are called suppliers and contract manufacturers.

The Outsourced Manufacturing Collaboration solution leverages Supply Network Collaboration (SNC) 2007  (or higher release) and Collaboration Folders (cFolders) 4.5 to enable brand owners to better collaborate with suppliers and contract manufacturers.

The Outsourced Manufacturing ES bundle, which contains a subset of the functionality of the Outsourced Manufacturing Collaboration solution, provides enterprise services  that simplify interfacing SNC 2007 (or higher release) and cFolders 4.5 (or higher release) with SAP ERP  or other backend systems. The ES bundle provides services relating to two main collaborative processes in which the brand owner and supplier need to share up-to-date, detailed information, integrate workflows, and make vital decisions. These processes are:

  • Work order collaboration
  • Engineering change collaboration

It complements and reuses the enterprise services made available with the ES bundles Procure to Pay(SAP ERP) and Supplier Collaboration for the Supply Chain ( SAP SNC).

Outsourced Manufacturing
(click to enlarge)

Work Order Collaboration

Work order collaboration enables brand owners, suppliers, and contract manufacturers to collaborate on production milestones, providing brand owners with greater visibility into work in progress.

After a purchase order is created in ERP and subsequently propagated to SAP SNC, it can be used to create a work order. The work order is a business object that exists only in SNC, not in SAP ERP. It functions as a lean production order. The work order specifies the product to be manufactured, the quantity of products to be manufactured, the start and finish dates, the number and type of milestones to be monitored, and so forth. The number and type of milestones to be monitored is configurable and can include those related to the assembly, test, inspection, and packing, for example.

The system landscape for work order collaboration places SNC as the collaboration platform between the ERP systems of the brand owner and that of the suppliers and contract manufacturers. The ERP system in this case can be SAP ERP, another ERP system, or other software system or systems that include relevant data (accounting systems, production order handling systems, or both, for example).

All work order-related services are compliant with RosettaNet's industry standard Partner Interface Processes (PIP) contained in Cluster 7 manufacturing.

Mainly, this ES bundle offers high-volume electronic communication between ERP and SNC, so user intervention is required only for exception handling. The potential roles that will use the services in this ES bundle on an exception basis include:

  • Commodity managers and their staff
  • Purchasing clerks
  • Material planners

Engineering Change Collaboration

An engineering change request is sent to the brand owner when an engineering manager or manufacturing engineer from the contract manufacturer wishes to modify a bill of material (BOM) or specification because of a recent improvement to the product, because a part has been discontinued and must be replaced, or sometimes because some part of the product is not functioning as planned. If the engineering change request is approved by the brand owner, it will be converted into an engineering change order.

The system landscape for engineering change collaboration features SAP ERP and SAP PLM cFolders 4.5 (or higher release). SAP ERP is required only for the brand owner. cFolders provides an effective means for sharing product-related data such as bills of materials and engineering documents and drawings. Suppliers can submit engineering change requests along with the proposed changes to bills of materials, drawings, materials or manufacturer parts in cFolders for review by the brand owner.
Roles in the organization that will use the services in this ES bundle include all those involved in handling engineering change requests, both on the brand owner side and on the supplier and contract manufacturer side, including:

  • Product managers
  • Engineering managers
  • Manufacturing engineers

    For details on Service Operations, Business Objects and Process Components, please check the ES Workplace.


How To Use This ES Bundle

Because a single company can now simultaneously buy from numerous suppliers and manufacturers, and because their supply chains have become so fast moving and complex, their production volume is frequently too large to handle without the support of sophisticated enterprise system software. Though the arrival of advanced technologies has boosted their capabilities, it has become increasingly necessary for global companies to go still further, expanding the transparency and flexibility in the supply chain systems by establishing close, two-way links between all parties across the extended supply chain---a form of collaborative commerce.

The pain points with which brand owners have had to contend without this visibility are manifold. Collaboration typically occurred via fax, e-mail, or telephone. Sometimes investments were made in EDI technology and custom coding to support particular high-volume partners, but there wasn't a standardized way to reach large numbers of partners. The Outsourced Manufacturing Collaboration solution, built on SNC and cFolders, provides these collaboration capabilities and is supported by the enterprise services in the Outsourced Manufacturing ES bundle, which provide standards-based communication and much easier integration than has been possible in the past.

The following sections explore three use cases for the Outsourced Manufacturing ES bundle. Each use case provides concrete examples and shows how different outcomes can be achieved by using the enterprise services in different combinations. While these examples illustrate a few of the ways that this ES bundle could be used, the intention is to show the flexibility and reusability of these business objects and enterprise service operations so that you will have a clearer understanding of how to best deploy them in your own environment. This wiki is also a space for you to share knowledge and collaborate with others who are implementing the Outsourced Manufacturing ES bundle.

Use Case 1: Collaborating on a Work Order

When a purchase order is released on ERP-side to request production from a contract manufacturer, it is published to SAP SNC where a work order is automatically created. For details about purchase order creation with SNC, see use case 2 in the related ES bundle, Supplier Collaboration for the Supply Chain.

Depending on the requirements of the contract manufacturer's system, the purchase order may then be sent to the collaboration partner along with the work order, which could be mapped to a contract manufacturer production order if needed.

The work order in SNC specifies the product to be manufactured, the quantity of products to be manufactured, the start and deadline dates, the number and type of milestones to be monitored, and so forth. The number and type of milestones to be monitored are flexible, and can include those related to the assembly, test, inspection, and packing phases, for example. All of these specifications, from the required production volume to the process milestones that will be monitored, have been collaboratively predetermined, as have any notifications and alerts that are to be generated.

Transmitting a Work Order from Brand Owner to Supplier

Once the work order has been created in SAP SNC, the contract manufacturer gets alerted by triggering the Request Manufacturing Work Order service operation, which uses the Collaboration Manufacturing Work Order business object.

Transmitting Work Order Confirmation from Supplier to Brand Owner

After the contract manufaturer has reviewed the Work Order details he can acknowledge it, which triggers the Change Manufacturing Work Order based On Manufacturing Work Order Confirmation service operation.

Use Case 2: Updating the Status of the Work Order

Anytime a process milestone has been met, the contract manufacturer notifies the brand owner by triggering the Manufacturing Work Order Work In Process Notification In service operation, which uses the Collaboration Manufacturing Work Order business object.

Transmitting Updates from SAP SNC to SAP ERP

Updates on intermediate component consumption can be communicated to SAP ERP with the Notify of Manufacturing Work Order Work in Process service operation. On the ERP side, these updates can be processed with the Create Production Confirmation based on Manufacturing Work Order Work in Process service operation, which uses the Production Confirmation business object.

Transmitting Updates from SAP SNC to External Systems

Updates pertaining to all aspects of the production process, especially those related to purchases, quality control, and the like, can be regularly sent to back-end systems with the Inform of Manufacturing Work Order service operation, which uses the Collaboration Manufacturing Work Order business object.

Use Case 3: Collaborating on an Engineering Change Request

A resistor in the laptop is out of date and the part has been discontinued. The contract manufacturer needs to make a change to the specifications to reflect this replacement part.

Creating an Engineering Change Request in cFolders

The contract manufacturer enters the engineering change request in cFolders 4.5 (or higher release). The relevant engineer on the brand owner's side is alerted to review the engineering change request. After reviewing it and validating it in principle, the brand owner publishes it to SAP ERP by invoking the Create Engineering Change Request service operation, which uses the Engineering Change Request business object.

Reviewing an Engineering Change Request

The engineer in charge of this project for the brand owner, begins to review the Engineering Change Request, identifying the product data that is affected by it. After approving it, the brand owner updates the Engineering Change Request in SAP ERP, converting it to an Engineering Change Order and publishing it to cFolders using the cFolders API (no enterprise service is involved at this stage).

Future Directions

Possible future directions for this ES bundle may include the ability to utilize production information from external manufacturing sites to provide near real-time updates to planning systems and to link external manufacturing information directly with internal manufacturing data to provide a holistic view of all the manufacturing activities for an enterprise.

System Requirements

The enterprise services in this ES bundle were delivered in different releases and ERP enhancement packages. Please check in the list of enterprise services of this bundle when these became available.

Related ES Bundles

End-to-end Processes Where This ES Bundle Is Used

SOA Homepage on SDN
May 2007 SAP Info article by Dr. Andreas Schaffry that mentions SAP Supply Network Collaboration

RosettaNet