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May 25, 2018 at 08:29 PM

Owning the inventory at vendor location with extra twist

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I have a strange requirement of which is related to the meat industry.

High-level process:

  • Company 1000 (our company) sells meat produces (finished goods). The raw material for meat are meat cuts that come from a live animal.
  • Company 1000 will order the animals from vendor XYZ
  • XYZ will ship the animals to vendor ABC. XYZ will be paid for each animal shipped.
  • ABC will process the animals and convert to raw materials which will be sent to Company 1000. ABC will be paid for the service provided to process the animal.

Detailed process:

  • Company 1000 will get requirements for finished goods in the number of trays. Every tray will have the meat weight (in pounds) information and that information will be used to calculate how many animals are needed to cover the demand.
  • MRP will run and create the Purch Req which will have the information on how many cows are needed to cover the demand. Order unit will be in terms of number of animals needed.
  • The purchase order will be sent to Vendor XYZ. XYZ will deliver the animals to vendor ABC. ABC will also have the copy of the purchase order which was sent to XYX. Once these animals arrive in ABC, company 1000 will own them.
  • ABC will process the animal to convert to raw materials.
  • Step 1: One animal will be converted to 2 Carcass
  • Animal (1ABC) ---->Carcass (2ABC)
  • Step 2: Each carcass will be processed to generate multiple raw materials
  • Carcass (2ABC) ----->Raw Materials (3ABC,4ABC,5ABC,6ABC and so on)
  • ABC uses a legacy system which will be used to send inventory information (1ABC, 2ABC, 3ABC, 4ABC) to our ECC system daily.
  • Upon receipt in company 1000, the raw material will be used to produce the finished goods which will be shipped in Trays.

We will have BOMS which will have the relationship between finished product (Trays) and raw materials.

Since we own the cow once vendor XYZ ships to vendor ABC, the business needs to have visibility of all inventory (i.e., animal, carcass, raw materials) sitting in vendor ABC. I am thinking to create a separate storage location in our ECC system which will be updated daily with inventory which is coming from ABC.

All the purchase order which are generated in company 1000 for XYZ will have GR posted automatically once we get the number of animal information from ABC. We expect ABC to send us the animal inventory with respect to purchase orders (one which sent to XYZ) and that will be used to do the GR in our ECC system.

Can you guys please tell me what’s the best way to design this in SAP and what issues/challenges you see with above process?