Managing Supply Chain with Third Party Logistics Provider an Overview of the Integration

Transcription

1 Managing Supply Chain with Third Party Lgistics Prvider an Overview f the Integratin Applies t: Supply Chain Management Summary Businesses have t manage their Supply Chain effectively t prvide Rapid Respnse t the custmers while being cst-effective and cmpetitive. In rder t implement lean Supply Chain and achieve peratinal efficiency, cmpanies frms partnership with the Third Party Lgistics Prviders. Lgistics Prvider can help with transprtatin as well as managing the Warehuse and related transactins. Third Party Lgistics Partner brings in the expertise that it psses in efficiently managing Prducts and Materials within the Warehuse. Third Party Lgistics Partner has the expertise when managing different type prducts requiring special handling and strage such as Hazardus Materials and Cntrlled Substances. Alng with the managing Inbund and Outbund Lgistics prcesses, Third Party Lgistics Partner ffers services such as Kitting, Cnslidatin and ther Value Added Services. This helps the cmpany t bring the flexibility in their services and achieve Custmer Delight. This Article discusses imprtant transactins and integratin that is required between bth the systems. Authr: Ygesh Balel Cmpany: Intelligrup, Inc. Created n: 28 th December 2010 Authr Bi Mr. Ygesh Balel has mre than Sixteen years f ttal prfessinal experience including Twelve years f SAP experience. He has executed varius SAP prjects which include Implementatin, Rll-ut, Applicatin Develpment, Onsite Supprt and Feasibility studies. He has wrked in different industries such as Autmbile, Electrnic cmpnent manufacturing (Discrete), Petrchemicals, Autmtive cmpnents suppliers and Life Sciences. He has expertise in SAP MM, WM, PP, Lgistics Executin and APO SAP AG 1

2 Table f Cntents Business Benefits... 3 Integratin between bth Systems... 3 Receipt Advice... 4 Gds Receipt... 4 Shipping Advice... 5 Shipping Cnfirmatins... 5 Inventry Adjustments... 6 Related Cntent... 7 Disclaimer and Liability Ntice SAP AG 2

3 Business Benefits Third Party Lgistics Prvider strives t achieve and excel fllwing Key Perfrmance Indicatrs (KPI) Order Fill Rate Service Level Inventry Accuracy Turnarund Time By Partnering with Third Party Lgistics Prvider, Cmpany can wrk twards achieving: Imprved Efficiency Rapid Respnse Time Best Utilizatin f Resurces Reduced Csts Integratin between bth Systems Cmpanies can integrate their SAP system with the Third Party Lgistics Partner s system which ensures that SAP ECC system is updated with the mst recent infrmatin abut Inventry, Shipments t the Custmer and Prcurement dcuments. Integratin with Third Party Lgistics Partner s system keeps cmpany s SAP ECC system updated and which in turn helps in the Supply Chain Planning and Frecasting. Cmpany can manage the inventry in the Plant and Strage Lcatin that is assciated with Third Party Lgistics Partner s Warehuse at MM-IM (Inventry Management) level in their wn system since it need nt knw the exact Bin lcatin f the Prducts r Materials within Third Party Lgistics Partner s premises. Third Party Lgistics Partner manages Stck wned by the Cmpany at the Strage Bin level in their system. Integratin with Third Party Lgistics Prvider Material Shipment Supplier SAP ECC Purchasing Dcument Receipt Advice Gds Receipt Ntificatin Gds Receipt Putaway Third Party Lgistics Prvider WMS Business Gds Mvement Shipping Advice Inventry Adjustments Outbund Delivery Pick Cnfirmatin Pack Cnfirmatin Picking Packing Shipping Cnfirmatin Sales Dcument Shipment Custmer Material Shipment 2010 SAP AG 3

4 Receipt Advice SAP IDc message type ORDERS / ORDCHG EDIFACT Standard EDI 856 Purchase Orders are created in ECC fr getting the materials frm the External Suppliers. The materials being prcured with reference t these Purchase Orders can be received in the Warehuse which is managed by Third Party Lgistics Partner. Such Purchase rder cntains address f Third Party Lgistics Prvider s Warehuse as the Delivery Address. These Purchase Orders can be transmitted t the Supplier using EDI. At the same time, anther cmmunicatin as Receipt Advice can be generated which is directed twards Third Party Lgistics Partner. Receipt Advice is used as reference by Third Party Lgistics Prvider t receive the material frm External Supplier. Changes t the Purchase Orders are als transmitted t Third Party Lgistics Partner. Stck Transprt Orders and Intercmpany Purchase Orders created in the Stck Transfer prcess are als transmitted t the Third Party Lgistics Prvider. Fllwing is sme f the imprtant infrmatin cntained in the message: Purchasing Dcument Number Vendr Details Purchasing Dcument Item Number Material Number Quantity Gds Receipt SAP IDc message type MBMGCR EDIFACT Standard EDI 944 Supplier delivers Materials as per the Purchase Orders t Third Party Lgistics Partner. Material is received in the Warehuse with reference t the Purchase Order r Receipt Advice cmmunicated t Third Party Lgistics Prvider. Received materials are putaway int destinatin strage bins as per the rules cnfigured in the Third Party Lgistics Partner s system. Infrmatin message cntaining the Gds Receipt is generated and sent t the Cmpany. Cmpany receives Gds Receipt infrmatin and it is recrded against the SAP Purchasing Dcument. GR updates the Inventry in the Cmpany s SAP ECC bring visibility t the Stck that in wned by the Cmpany. GR is further used in the 3 Way matching r Invice Verificatin and Payment prcessing t the Supplier. Fllwing is sme f the imprtant infrmatin cntained in the message: Material Plant Strage Lcatin Batch Quantity Mvement Type Reference Dcument Number 2010 SAP AG 4

5 Shipping Advice SAP IDc message type CARNOT EDIFACT Standard EDI 940 Cmpany receives the Orders frm Custmers. Orders can be received and entered in SAP ECC system by different ways such as Telephne, Fax r EDI. Outbund Deliveries are created in SAP ECC system by using Delivery Due List transactins. Apprpriate Batches can be determined and assigned t Outbund Delivery during creatin. Outbund deliveries are cmmunicated t the Third Party Lgistics Partner using the Outbund Message as Shipping Advice. Shipping Advice frms basis f the utbund fulfillment prcess fr the Third Party Lgistics Partner s Warehuse. Fllwing is sme f the imprtant infrmatin cntained in the message: Outbund Delivery Number Outbund Delivery Item Number Material Number Quantity Batch Ship-T Party s address Shipping Cnfirmatins SAP IDc Message type SHPCON EDIFACT Standard EDI 945 Shipping prcess at Third party lgistics prvider uses the Shipping Advice. Infrmatin such as Sales dcument, Delivery, Batch and Custmer s address infrmatin is used during the fulfillment prcess. Materials pertaining t the Outbund Delivery are picked up frm the Strage Bin. Third Party Lgistics Partner may utilize the Picking Strategy cnfigured in its system. Picking strategies that are cmmnly used in Warehuses are as fllws: Prcedure based Order Picking Zne Picking Wave Picking Level based Pallet Picking Case Picking Split-case Picking Third Party Lgistics Partner can prvide update t the cmpany in the frm f Shipping Cnfirmatins n each step f the utbund prcess such as Picking, Packing and Shipping. Final Shipping cnfirmatin is transmitted nce material leaves the Third Party Lgistics Prvider Warehuse drstep. Third Party Lgistics Partner can als send the Advanced Shipping Ntificatin t the Custmer n behalf f the Cmpany. Shipping and Packaging dcuments and labels are als generated by Third Party Lgistics Partner. Outbund Deliveries in SAP ECC are updated with the actual Picking and Packing infrmatin received frm the Third Party Lgistics Partner as Inbund Shipping Cnfirmatin. Gds Issue is psted nce GI 2010 SAP AG 5

6 Cnfirmatin is btained and Inventry balances are updated accrdingly. Cmpany can keep track f the utstanding quantities, if any, with reference t the Outbund Delivery. Fllwing is sme f the imprtant infrmatin cntained in the message: Outbund Delivery Number Outbund Delivery Item Number Material Number Batch Picked Quantity Inventry Adjustments SAP IDc Message Type MBGMCR EDIFACT Standard EDI 947 Third Party Lgistics Prvider stres and manages the Materials in its Warehuse facility. Managing the Warehuse als invlves Internal Lgistics management apartment frm the Inbund and Outbund supply chain activities perfrmed n behalf f the Cmpany. In rder t be a cntributing and value creating partner f the Supply Chain, Third Party Lgistics Prvider has t achieve peratinal excellence and strive t maintain r imprve the Key Perfrmance Indicatrs (KPI). Frm time t time, Third Party Lgistics Partner may be carrying ut certain activities such as Rerganizatins and Replenishment. Internal material transfer frm Strage Bin t anther Strage Bin n accunt f these activities may nt necessarily need an update in the Cmpany s SAP ECC system. Hwever depending upn the interface that has been designed fr bth the systems, certain internal mvements may als have t be cmmunicated back t Cmpany s SAP ECC system. Few examples f such mvements culd be any transfer invlving the area demarcated as Restcking lcatin, Dem r lan equipment lcatin r materials kept aside fr further Quality related inspectin. Infrmatin related t Material mvements invlving these internal transfers can be transmitted back t Cmpany s SAP ECC system. Third Party Lgistics Partner emplys varius techniques f Physical Inventry t ensure the Accuracy f the Stck level. Sme f the cmmn inventry methds are Cycle Cunting and/r Peridic Physical Inventry. Any differences such as Shrtages r excesses that are bserved during the Physical Inventry are cmmunicated t SAP ECC system thugh the EDI interface. During the prcess f handling the Materials r Prducts, damages r spilages can take place. Any lss due t handling r Quality related defects are cmmunicated back t SAP ECC system using the EDI message. Inventry Adjustments messages cntains the infrmatin which is used by SAP ECC system t pst the material mvement and adjust the inventry. Fllwing is sme f the imprtant infrmatin cntained in the message: Material Plant Strage Lcatin Batch Quantity Mvement Type Reference Dcument Number 2010 SAP AG 6

7 Related Cntent Fr mre infrmatin, visit the Supply Chain Management hmepage SAP AG 7

8 Disclaimer and Liability Ntice This dcument may discuss sample cding r ther infrmatin that des nt include SAP fficial interfaces and therefre is nt supprted by SAP. Changes made based n this infrmatin are nt supprted and can be verwritten during an upgrade. SAP will nt be held liable fr any damages caused by using r misusing the infrmatin, cde r methds suggested in this dcument, and anyne using these methds des s at his/her wn risk. SAP ffers n guarantees and assumes n respnsibility r liability f any type with respect t the cntent f this technical article r cde sample, including any liability resulting frm incmpatibility between the cntent within this dcument and the materials and services ffered by SAP. Yu agree that yu will nt hld, r seek t hld, SAP respnsible r liable with respect t the cntent f this dcument SAP AG 8