Supplier Managed Inventory (SMI) with Replenishment Order

Pre-requisites: I am assuming for the purpose of this post that you are familiar with the normal SMI process (without RO)
This post is a jumble of sorts to talk about all the little mysteries we uncovered while implementing SMI with RO process:

(1) Maintaining Numbers ranges
The Replenishment Order in standard SNC does 2 actions (i)sends a message to the Customer back-end to create a Purchase Order and (ii) sends a message to the Supplier back-end to create a Sales Order [this can be turned off]. Hence, in order for RO to be created number ranges need to be maintained.

• Number Range Attributes for PO & SO to define Prefixes/Suffixes in SNC WebUI > Master Data > Number Ranges > Number Range Attributes
• Purchase Order number range intervals – Has to be the same as ECC PO number range intervals (for the POs to be created via SMI)
• Sales Order Number Range intervals

(2) How do you turn off the Sales Order message to the vendor back-end system?

• In SPRO>Supply Network Collaboration>Basic Settings>Validation>Maintain Settings in Validation Profiles: Define Validation check “RO_NO_XML_TO_SUPPLIER” as Active for Validation Profile POS2

(3) How do you create the Replenishment Order in SNC?

• We start with Planned Receipts in SNC. You create Planned Receipts in the SMI Details Monitor (No Ship From Location view). These planned receipts generated Projected stock based on available stock information.
• The Menu > Delivery > Receipts and Requirements > Due List for Planned Receipts (SMI) will take you to the Due list screen. Filtering on Product, you can see the saved Planned Receipts in the Due List table. Select the Planned Receipt you want to replenish and click on the “Create RO” button. This will take you to the RO Creation Screen
• Since all the data is already pre-populated (you can ignore the SO number field if you have turned off messages to supplier back end), you can directly check & Save the RO. You will see the Delivery Date & Shipping date also populated based on Planned Receipt date & Transportation Duration based on MoT
• Next, “Publish” the RO which will generate the VendorGeneratedOrderNotification_Out message to the customer back-end (ECC).

(4) How does the Purchase Order get created in ECC?
Though all the SAP links talk about the VGON_Out mapping to the ORDERS05.ORDRSP idoc, its a bit frustrating when your PO steadfastly refuses to be created. Here’s where it gets interesting. These are settings that need to be maintained:

• Vendor Master: In the Purchasing Data tab of the vendor master (MK02) you need to check the box next to “Order Entry by Vendor”. “The system checks this indicator if a purchase order is created in the background as a result of an EDI order confirmation being received from the vendor (e.g. as part of a VMI scenario).”
• For the material – maintain the MRP Type in MRP1 View as “RE” (Replenishment plnd externally)
• In SAP Easy Access > Logistics >Purchasing >Environment >Order Entry by Vendor [WVM7]: Maintain the POrg/Plant/Purch Grp/PO doc type for when a particular vendor create a PO via EDI
• For the Partner Profile, maintain a Inbound parameter for ORDRSP. This should be an additional parameter if you are already using ORDRSP for PO Collaboration confirmations. For SMI, maintain ORDRSP with Message Code “SMI” and process code as ORDS (ORDRSP SMI Generate/Confirm Purchase Order)

(5) How does the VGON_Out xml get mapped to the correct ORDRSP [SMI] idoc type

Map the VGON_Out to idoc ORDERS05.ORDRSP with message code/message variant SMI. This should make the idoc process in ECC with the correct message variant [We still need to check this.. will be updated]

Supplier Managed Inventory (SMI)

The basis of SMI revolves around providing the supplier information about the customer’s dependent demand, the current stock level and minimum stock (safety stock) , maximum stock levels allowed. Based on this information the supplier can plan the deliveries through Advanced Shipping Notifications.

The supplier can the view this information through the SMI monitor which shows the demand, the min/max stock levels and the projected stock levels based on the demand. The supplier can then enter planned receipts – to see the effect on the proposed stock levels. Alternatively, you can ask the system to suggest planned receipts as well.

The basic flow of the SNC SMI process is explained below:

Master Data:

• Ensure Maximum Stock is maintained for the material in MRP1 View of the material master
• Ensure Safety Stock is maintained in the MRP2 View of the material master
• Check the current stock levels in MMBE in ECC for that material-plant
• CIF over the material, plant, vendor to SNC via CFM1-CFM2

Scheduling Agreement

• In the SMI scenario, the relationship between the material & vendor is maintained via a Scheduling Agreement (SA)
• Create a SA in ECC for the material-vendor-plant – with the quantity = 1 and Unlimited over delivery tolerance
  • Create Scheduling Agreement of type “LP”. Generally it is recommended to copy the LP doc type and create a ZSMI doc type to facilitate the SMI process
  • The Scheduling Agreement only serves as a reference for the vendor to create ASNs against. Since the vendor can create multiple deliveries based on demand and stock projections, the quantity on the SA cannot be determined beforehand. Thus the SA is created with qty 1 and unlimited over-delivery tolerance to accommodate the multiple vendor deliveries
  • However, this approach can sometimes create SOX issues. To take into account SOX issues, another method is suggested. Create a Scheduling Agreement with a ballpark qty that you estimate you will order this year based on previous years demand – with a validity period of a year. Let this go through an approval process. This can be used as a reference for the SMI process for that year against which the vendor can make deliveries. If the actual demand goes above the ballpark figure, change the SA, get it approved and resend to the vendor.
• Ensure that the Confirmation Control Key is maintained in the SA
  • The confirmation control key used for the Supplier Managed Inventory process should contain only the LA (Advanced Shipping Notification) Confirmation Control in its sequence – since no order confirmation is expected
  • Recommended – Copy Conf Control 0004 and create a ZSMI conf. control key
• CIF the SA to SNC via CFM1-CFM2 using the Scheduling Agreement number or SA doc type
  • The SA will create both a transportation lane and an external procurement relationship in SNC
  • The external procurement relationship in SNC is available at SAP Easy Access > Supplier Network Collaboration > Master Data > External Procurement Relationship > External Procurement Relationship
  • Read Sources for source category 1: Scheduling Agreement
  • The transportation lane will also show the SA doc. number.
  • You will need to manually create a Means of Transport for this Transportation Lane

Sending the Stock and Demand Data to SNC

• First we need to check what demand exists in the system. RSMIPROACT will pick all demand originating from LSF – Make-to-stock production, VSF – Planning with final assembly, VSFB – Planning for assemblies
• The easiest way to test this is to created planned independent demand via MD61

• Now, its time to send the Stock and Demand data to SNC – Send the stock and demand data to SNC via RSMIPROACT report
  • The RSMIPROACT report is accessed via SE38 > RSMIPROACT
• In the RSMIPROACT report – the SMI View needs to be active to get the correct selections. Since the layout might seem a bit confusing to a new user, this is how you get the correct SMI option
  • Enter the Plant, MRP area, Material and Target System
  • The 3 buttons should in the following status: “No Goods Receipt References” || SMI (Single Sourcing) OR SMI (Supplier dependent) || No Dynamic Replenishment
• SMI (Single Sourcing) OR SMI (Supplier dependent)
  • Either of these buttons will be used based on whether you have only a single supplier for this material to whom you are sending the demand and stock data or whether you have multiple suppliers
  • Source List: The source list will determine if it is single-sourcing or multiple supplier scenario – So ensure you have the source list maintained!
  • For multiple sourcing, the quota arrangement needs to be maintained so that the corresponding level of demand will be sent to the appropriate supplier

Viewing Stock & Demand Data in SNC – Supplier View

• The supplier can view the the stock and demand data in the Replenishment > SMI Monitor > SMI Details screen
• The SMI Monitor will display the min/max stock levels allowed, the current stock levels and the future demand. The supplier can enter/edit the Proposed receipts row  to see the effect on the Projected stock. Based on this the supplier can modify the delivery schedule. The supplier can edit the Proposed Receipts row by selecting the SMI Ship from location or SMI NO ship from location Grid Arrangement.
• The supplier then sends Advanced Shipping notifications to the customer via the SMI Monitor:
  • Go to Due List > Select the Product line due > And click on Create ASN

The ASN will create a Inbound Delivery in ECC. The customer will receive the goods against the Inbound Delivery and send a Proof of Delivery to the supplier