Processing with External Service Providers (ESP)

• IS-Automotive
• What are the use cases?
• What is the process flow?
• What are the functions involved?

IS-Automotive

Special companies (external service providers: ESPs) can manage holding stock and staging materials. A supplier and the manufacturer/customer can reduce warehouse stock, storage space and therefore storage costs. In this case, the stocks remain the property of the supplier up until they are staged. The ESP’s stock is then managed as supplier consignment stock in SAP.

What are the use cases?

1. Parts procured externally: the supplier stores the parts, that are required by the manufacturer, in the ESP’s storage location. The ESP delivers these to the manufacturer when they are required.
2. Parts procured externally and parts returned to storage: the manufacturer returns parts, that have already been received from the supplier (or ESP), to the ESP’s storage location.
3. Parts manufactured in-house: the manufacturer stores parts manufactured internally in the ESP’s storage location.

What is the process flow?

1. Forecast delivery schedule as requirement
• A manufacturer sends a forecast delivery schedule to the supplier as a plan for production (MM-SA: Release documentation, ME38). The forecast contains the unloading point for the materials to be delivered.
• The ESP receives a delivery from the supplier and sends an acknowledgement of receipt of goods back. 
• The ESP manages the stocks under the external supplier number provided by the customer.
• Schedule agrrement for Consignment process with the integration to 
2. Production supply using summarized JIT call
• The manufacturer sends a summarized JIT call over EDI to the ESP when there is a requirement for Production. 
• The summarized JIT call shows which material, from which supplier is to be delivered when, in what quantity, and to which unloading point at the manufacturer. 
• The ESP receives the summarized JIT call and sends a shipping notification to the manufacturer and a stock removal message to the supplier, so that the supplier can send an invoice to the manufacturer. 
3. Inventory management
• The information about the stock in the ESP’s warehouse is transferred as a stock report over EDI to the manufacturer and the supplier. 
• Inventory Management at the manufacturer can be used to view and evaluate all stocks at the ESP, split according to stock type and batch.
• ESP storage locations are not managed using WM or lean WM to be able to assign unloading points to the scheduling agreements.
• Plant and Storage Location Parameters for ESP Processing
• The manufacturer manages the stocks at the ESP that are still the supplier’s property as consignment stocks. 
• When consignment stock is withdrawn, that is, when the stocks become the property of the manufacturer, the stocks are posted from non-valuated stock to valuated stock.
• The stock reports are sent regularly or after every change in stock caused by stock placement, stock removal or a transfer posting. 
• As the ESP is responsible for the management of stocks in the ESP warehouse, the ESP sends stock reports to the manufacturer and the supplier using EDI (basic IDoc type STOACT01) about receipts and issues in the warehouse. 
• The receipt of the stock report at the manufacturer results in the posting of goods receipts or issues in the corresponding ESP stock.
• The supplier has responsibility for meeting the minimum range of coverage of stocks at the ESP. The range of coverage for the stocks is monitored by the MRP controller at the manufacturer also. 
4. Quota arrangement
• If a manufacturer uses multi-sourcing and the ESP then stores stocks of the same material for several suppliers, this material is included in quota arrangements. 
• The manufacturer gives to the supplier a quota-allocated quantity of the material to be delivered in the forecast delivery schedule. 
• The ESP splits the management of the stocks according to supplier.
•  As the ESP does not know the quota arrangements, it is not possible to use quota arrangements to remove stock. Due to this, the manufacturer’s delivery schedule determines which supplier stock the ESP uses to stage materials. 
5. Synchronization of cumulative figures: in call processing between the supplier and the manufacturer, the call data is synchronized through the use of cumulative quantities (CQ) which are compared with each other. 

What are the functions involved?

• Material requirements planning
• each ESP is assigned to a storage location and the supplier’s stocks in this storage location are consignment stocks. 
• In Customizing, we can set for the ESP storage location that the system excludes the consignment stocks in this storage location from the MRP run. 
• The range of coverage calculation should include all stocks at the ESP. The supplier should garantiue the stock availability on the request's time.
• The availability check takes into account the consignment stocks excluded from the MRP run. 
• ATP check must take place at plant/MRP area level (without checking storage location). 
• Availability check: Materials Management , Inventory Management , Goods Issue , Set up Dynamic Availability Check.
• Inbound logistics 
• An inbound delivery is created with reference to the summarized JIT call. 
• The storage location is transferred from the summarized JIT call to the inbound delivery item: This corresponds to the production storage location and the storage location in the scheduling agreement corresponds to the ESP storage location. 
• If the inbound delivery is going to another supplier than the supplier that has been accessed, the system determines the purchasing document.
• Inventory management
• stocks are posted to an ESP storage location only as a result of the ESP’s stock report. 

Package for Business Function Automotive Logistics.

The ESP’s stock report must contain the following data:

• supplier number, plant, storage location, material number
• indicator showing whether it is an absolute or relative stock report
• stock type, quantity (a negative quantity is only permitted in a relative stock report), external batch number for batch-managed material
• Negative quantities are only permitted in a relative stock report.
• date and time for reported stock
• document date, external document number

The system does the following during inbound processing:

• It uses the prefix for the quantity and the stock type to determine the movement type for the posting of the quantity entered by the ESP.
• It takes the stock type (unrestricted use, blocked, quality inspection) from the stock report.
• You can also use this stock comparison for stocks managed in batches. See Stock Report for Materials Managed in Batches .
• Depending on which indicator the ESP has set, there is an absolute or relative stock report.
• In the case of an absolute stock report, the system uses the same stock type as for the reported stock of the currently held stock and posts the difference quantity with the special indicator K and with the movement type assigned in Customizing.
• In the case of a relative stock report and dependent on the prefix of the reported quantity, the system posts without a prefix, with the special stock indicator K and with the movement type assigned in Customizing.

Segments:

• The segment type E1EDP41 contains the quantity qualifier that shows whether it is a relative or absolute stock: 1=absoute, 2=relative. 
• The segment type E1EDP42 contains information about material, plant and storage location. 
• The segment E1EDP43 contains the quantities. The field INSMK shows the stock type. If it is not listed, you are dealing with a posting in the unrestricted-use stock. ‘X’ indicates stock for quality inspection and ‘S’ indicates blocked stock.