For some time SAP has been promoting its product lifecycle management (PLM) solution. We should say at the outset that we don’t find the term PLM very useful. Yes there are lifecycle implications to the software, however this category of software could more accurately be described as bill of material management software. However, there is no fighting city hall, so PLM it will continue to be known as.

Analyzing SAP PLM

When we did an analysis of SAP PLM for a client, we learned that PLM was not an actual product, but was in fact a “solution.” What his means is that various pre-existing modules have been Jerry-rigged around the material master in order to meet PLM requirements. This is much like SAP’s non-existent digital asset management solution – where digital media are entered as materials into SAP. Actually digital asset management and PLM have a lot in common because both solutions require a lot of functionality in terms of multi-media files. For PLM these files take the form of images and schematics, while in digital asset management the files take the form of images, music and video. However, the material master functionality in SAP is not designed to manage these files, or make them easy to find or reference. There is no big surprise why. The material management functionality was first and foremost designed to hold textural data on products for the purposes of accounting and supply chain management. Changing this functionality around to meet the needs of asset and document management is no easy task.

Lifecycle Planning in SCM

SAP lifecycle planning exists in the supply chain planning suite offered by SAP. For instance, in Demand Planner, which is the forecasting module of SAP SCM, lifecycle planning exists. DP allows you to introduce an existing product at a different location – using profiles to base historical data from current locations. Phase in profiles allows the reduction of the forecast for the period of introduction. We describe this more fully here:

http://sapplanning.wordpress.com/2009/04/21/plm-and-lifecycle-planning-in-scm-dp/

However, this capability in DP, and the product interchangeability functionality that is available in other modules of the SCM suite (notably SNP, CTM, PPDS and GATP) is quite a bit different from the integrated PLM solution that SAP pitches to clients. Again, this gets back to the problem we have with the term “PLM.” PLM functionality can exist in different areas of supply chain applications, however, it does not mean that the solution is offering advanced bill of material management functionality which includes:

• Multimedia file management
• Document management
• Engineering change management
• Collaboration management (between marketing, engineering and production)

SAP Has Had Its Shot in PLM

SAP PLM has not taken off, and it does not appear to be an area they have or intend to put real development effort behind. However, they still make their white papers available on the topic, but the white papers and literature ring a bit hollow at this late date. SAP entry into the PLM market’s main effect has been to discourage companies from implementing real PLM solutions and hurting PLM’s image more generally.

Here you can see one of the main graphics for SAP PLM (listed under Life-Cycle Data Management at the top). However the flaw in this diagram is apparent. PLM is based upon document management, but SAP does not have any serious document management capability. The best evidence of this is the state of SAP Solution Manager that is causing project heartburn on SAP projects globally as we write this. We have first hand experience with Solution Manager and consider only Microsoft SharePoint to be a worse document management solution. (see this link for details)

http://infoknowledge.wordpress.com/2008/12/17/why-sharepoint-for-rss/

This is a market SAP would be wise to cede to other vendors and strengthen their core offerings which more development attention. Our recommendations for how to do this are listed here.

http://sapplanning.wordpress.com/2009/04/10/sap-should-stabalize-functionality-focus-on-quality/

PLM and Service Parts

PLM is of course extremely important for service parts. Many of the service parts planning applications have built in control fields in the form of things like shelf life; and of course supersession is a manifestation of product life cycle needs (out with the old – in with the new). While doing some research on PLM for service parts we came upon a company called Arena Solutions and we have tested their software extensively. We think its time many other companies gave it a try. It is extremely easy to use, offers hosted solutions and just has tons of PLM functionality.

SAP’s Approach

As for SAP PLM, its time to give up on it if you have significant PLM needs. It is dysfunctional for these different software verticals for SAP to use marketing literature and personal relationships with executives and major consulting companies to push their way into software areas for which you really have either no product, or a vastly inferior product to offer. Our view is if many companies had adopted Arena Solutions several years ago they would be way ahead of the game and would have a real solution for their BOM management and life-cycle issues. If these companies are concerned about integration issues with SAP ERP, it is most definitely worth the extra effort given all of the functionality your gain.

For more details on Arena Solutions see this post.

http://spplan.wordpress.com/2008/12/12/arena-solutions-and-where-used-view/

References

http://www.amazon.com/Sales-Inventory-Planning-SAP-APO/dp/1592291236

In our previous post we discussed the different vendors and services offered for reliability testing and prediction. One of the important issues with relation to MTBF management is the product structure. The product structure is the hierarchy (or at least at first glance) of materials that make up an overall product. This has different names depending upon the application. In SAP ECC it is referred to as a Material BOM or an Equipment BOM. In MCA it is referred to as the product indenture network.

BOM and PLM Software

Being able to deal with the BOM in a flexible and distributed manner is increasingly a capability with what is referred to as PLM software. We dislike this term and would prefer “BOM management software,” but we don’t make the rules.

Companies like Agile are leaders in this area. Having powerful BOM management software is important for many reasons that include improving the efficiency of product development and building quality into products as well as product costing for contract development. However, it is also important for service parts planning and MTBF. MTBF calculation integrates with the BOM.

ERP for BOM Management

There is increasing evidence that BOM management greatly benefits from specialized software. ERP software manages how the BOM relates to execution and planning, but does not tend to have advanced capabilities with regards to BOM management. (of course Oracle purchased Agile in 2007, a leader in PLM, however, software mergers often kill the aquired company’s innovation and product. Look how little Oracle has done with the PeopleSoft functionality). Here is an interesting quotes regarding ERP for PLM from Arena Solutions.

There is a misconception that Enterprise Resource Planning (ERP) systems can be used to manage all product information after design, including changes and communication. Unfortunately, even though the final production BOMs, the Item Master, and costing information are ultimately loaded into ERP systems, these systems do not have integral processes for ECOs or file management. Therefore they cannot be used to control BOM or item changes or manage associated files. Furthermore, as a tool primarily for internal groups, ERP systems cannot be used by external partners and suppliers to obtain product information. – http://www.arenasolutions.com/images/pdf/rc_docs/whitepapers/Arena_Turning_Great_Designs_Into_Great_Products_Whitepaper.pdf

ERP systems are not designed to be change control or file management tools, and must be manually updated to reflect approved product changes. To update and change product information across electrical and mechanical CAD tools and ERP systems, many companies employ spreadsheet software, such as Microsoft® Excel, to manage part changes, SOPs and BOMs and to communicate them to project teams.” – http://www.arenasolutions.com/images/pdf/rc_docs/whitepapers/Arena_WP_Med_Device_Doc_Control.pdf

Reinforcing this statement is the poor track record of SAP PLM. We personally analyzed this “solution” several times only to find that it did not involve new software as much as simply leveraging the old structures with a few bells and whistles added in.

http://www.sap.com/solutions/business-suite/plm/index.epx

(in the past several years, SAP product management and marketing is increasingly following the Oracle model of presenting vapor or stretching pre-existing functionality to fit new solutions)

Spreadsheets for BOM Management

Exporting BOM information to a spreadsheet and managing it there for MTBF and other purposes is not a very competitive solution with the other alternatives that are present. In fact, even using an on line spreadsheet like Google Spreadsheets, while better than using Excel with its isolated files, is still not really capable of managing the complexity of BOMs. Furthermore with the rise of contract manufacturing and distributed product development and manufacturing, islands of data created by Excel are even less useful. Amazingly PLM software is still lightly implemented out in the marketplace.

Graphic from Arena Solutions – taken from an online webinar – not a formal study.

As far as ERP systems, while ERP systems have BOM functionality, it is not the functionality offered by Arena. Rather ERP BOM management was developed in order to support transaction processing. This is quite a bit different from what specialized BOM management software does.

Arena Solutions

Arena Solutions’ website is quite good and for anyone interested in PLM and BOM management we recommend a visit. It is of course selling a service, however it is also very educational and most the statements made on the site are reinforced by our consulting experiences.

http://www.arenasolutions.com

In one of their white papers we found a very good explanation of the needs of modern BOMs.

“As the design progresses toward production, the part-list-like engineering BOM must transition into a detailed manufacturing BOM that includes all the items required to make sub-assemblies and the final product. During this process, numerous project teams contribute to the BOM and item changes (Figure 2). The resulting manufacturing BOM is highly relational and includes various associated data and files, such as design drawings, software files, item files, costing information, compliance status, specification data, and supplier information.” – http://www.arenasolutions.com/images/pdf/rc_docs/whitepapers/Arena_WP_Beyond_BOM_101.pdf

The Relational Model for BOM Management

One easy way of understanding this is that one sub-component often is part of more than one parent component. Therefore, by using a relational BOM configuration (which is different from a relational database, you can use a relational database, but still follow a restricted hierarchical model in your BOM configuration.), when the sub-component is changed once in one location it affects all parent components immediately. This is the desired end state, that all parent products be instantly updated when a change to a sub-component is rolled out.  This relates to all life-stages of a product’s existence. This updated part data is then sent over the planning system where a flag is changed that tells the planning sytem this part should no longer be planned. Having this data updated is as important as the algorithms you use to produce a forecast.

This complexity really requires a software specialized software solution. Furthermore, this is perfect application for a hosted application. (we increasingly wonder why companies continue to ask for software they have to install and manage, particularly when the application is shared.) With hosted applications, as long as the software provides a standardized feed of some type (such as RSS), application integration can be managed completely on line, so a BOM Management – PLM service provider like Arena could be integrated with an on line version of a transaction processing system and the service parts planning system. To learn more about RSS feeds and their relationship to application integrating see this article in another one of our blogs. (http://semanticwebs.wordpress.com/2008/12/10/rss-and-application-integration/)

Application Screen Shots

Arena has a nice interactive demo on their website, so we decided take a few screen shots. This screen shows the different status of notifications.

Below we have a listing of notifications for particular BOM numbers. We also see the people (users) that have the ability to view or edit or comment on the BOMs.

When we select one of them we get taken into the detail.

Here we can see who is part of the notification distribution list.

Here we have a flowchart of the process status.

Here we can see that suppliers are involved in this process and can log in.

Also, the individual products that make up the BOM are listed as well.

For each product, there is a coding for the items compliance requirements as well whether the prase of the item (if its in production, obsolete, etc..)

If we select the files, we can see all the attachments to each product.

In conclusion, we find this software very compelling. Furthermore they offer a fully hosted solution which they call on-demand. In our consulting experience, Arena is providing answers for a lot of problems that plague BOM management at many a company.

Open Question

One of the questions we do have is where an MTBF value is located. For the purposes of service parts planning, Arena just needs to feed one number per part. Both SAP SPP and MCA can perform their forecasting (if the option is selected) from a simple MTBF value associated with every product record. This is called leading indicator forecasting in SPP and causal forecasting in MCA. At least MCA has some involved ways of calculating the overall service level, and one of the inputs is the MTBF of the underlying items – related to the inventory coverage for each item.This is something that should naturally be maintained in Arena. How this value is obtained is a different topic and is covered here.
http://spplan.wordpress.com/2008/12/09/vendors-and-software-for-determining-mtbf/

However as far as how Arena holds the MTBF, we will update this post when we find out.

References

Wikipedia on PLM
Arena Solutions

<img class=”alignnone size-medium wp-image-909″ title=”Forecast” src=”http://spplan.org/wp-content/uploads/2009/06/forecast1.jpg?w=300″ alt=”Forecast” width=”300″ height=”225″ /><strong>Different Approaches</strong><span style=”color:#000000;”>There are several different approaches to generating the forecast in MCA SPO. Each Location-Part combination can be configured to follow one of these approaches:</span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Computed: Based upon historical demand and leading indicators such as causals and installed population. Blends the history based and causal forecasts. The blending of these two forecast streams is called composite forecasting</span></li><li><span style=”color:#000000;”>Replacement: Forecasts are computed as a function of parent Part forecasts using replacement rates</span></li><li><span style=”color:#000000;”>External: Forecasts are uploaded from an external system</span></li></ol><span style=”color:#000000;”>These are defined in the tables (Computed, Replacement, External) in the DEMAND_FORECAST_TYPE field in the LP_ATTRIBUTE interface.</span><span style=”color:#000000;”><strong>LP ATTRIBUTE Table</strong></span><span style=”color:#000000;”>LP_ATTRIBUTE fields include:</span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Location</span></li><li><span style=”color:#000000;”>Part</span></li><li><span style=”color:#000000;”>Condemnation Rate</span></li><li><span style=”color:#000000;”>Passup Rate</span></li><li><span style=”color:#000000;”>Criticality</span></li><li><span style=”color:#000000;”>Variance to Mean Ratio</span></li></ol><span style=”color:#000000;”>The types of forecasts include</span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Moving average</span></li><li><span style=”color:#000000;”>Constant with smoothing parameters (parameters can be set in the PARAMETER table) however overrides can be provided using the Forecast Detail View</span></li><li><span style=”color:#000000;”>MCA smoothing forecast is a variant of the single exponential smoothing forecast tailored specifically for sparse and intermittent demand forecasting.</span></li><li><span style=”color:#000000;”>Trend (factors here are also set in the PARAMETER table)</span></li><li><span style=”color:#000000;”>Seasonality Forecast (factors here are also set in the PARAMETER table</span></li><li><span style=”color:#000000;”>Trend Seasonality (factors here are also set in the PARAMETER table)</span></li></ol><span style=”color:#000000;”>SPO uses a best fit to select the best of the available forecasting methodologies</span><span style=”color:#000000;”>The composite forecasts (Time Series + MCBF/MTBF) using parameters in the PARAMETER table</span><span style=”color:#000000;”>____________________________</span><h2><span style=”color:#3366ff;”>MTBF Development</span></h2><span style=”color:#000000;”>Developing an MTBF is much more work than commonly thought. Because not a lot of companies do causal forecasting, they often do not maintain good data for even one MTBF. However there is another reason for this related to the companies interest in investing in the long term. This is described in this post. </span><a href=”http://spplan.wordpress.com/2007/07/22/service-parts-and-mtbf-forecasting/”>http://spplan.org/2007/07/22/service-parts-and-mtbf-forecasting/</a><span style=”color:#000000;”>There are companies that can help develop and capture MTBF data. See this post to see a description of one. </span><a href=”http://spplan.wordpress.com/2008/12/09/determining-mtbf/”>http://spplan.org/2008/12/09/determining-mtbf/</a><span style=”color:#000000;”>____________________________
</span><span style=”color:#000000;”>Forecasting will be done for reparable parts. The flag for this is set in the PART.IS_REPARABLE field (set to T for reparable) in the PART table. The PART table has a large number of fields that are critical:</span><span style=”color:#000000;”><strong>PART Table
</strong></span><ol style=”list-style-type:decimal;”><li><span style=”color:#000000;”>Part Type</span></li><li><span style=”color:#000000;”>Cost</span></li><li><span style=”color:#000000;”>Begin Date</span></li><li><span style=”color:#000000;”>End Date</span></li><li><span style=”color:#000000;”>Is Planned (T or F)</span></li><li><span style=”color:#000000;”>Is Seasonal (T or F)</span></li><li><span style=”color:#000000;”>Is Reparable (T or F)</span></li><li><span style=”color:#000000;”>Repair Cost</span></li><li><span style=”color:#000000;”>Is Order Policy ROQ Based</span></li><li><span style=”color:#000000;”>Holding Cost Rate</span></li><li><span style=”color:#000000;”>Fixed Order Cost</span></li><li><span style=”color:#000000;”>Decay Rate</span></li><li><span style=”color:#000000;”>Generate New Buy (T or F)</span></li><li><span style=”color:#000000;”>Generate Repair (T or F)</span></li><li><span style=”color:#000000;”>Generate Allocation (T or F)</span></li><li><span style=”color:#000000;”>Generate Transshipment (T or F)</span></li><li><span style=”color:#000000;”>Max Qty Allowable</span></li><li><span style=”color:#000000;”>Max Total TSL</span></li><li><span style=”color:#000000;”>Is Exempt (T or F)</span></li><li><span style=”color:#000000;”>Ignore Weight and Volume (T or F)</span></li><li><span style=”color:#000000;”>Material Class</span></li><li><span style=”color:#000000;”>Is Cannabalizable (T or F)</span></li><li><span style=”color:#000000;”>Partial One Way Supersession</span></li></ol><span style=”color:#000000;”>By default SPO includes demands for non stockable parts such as exempt parts (see Is Exempt field above) or parts with fixed overrides, in Fill Rate Optimization. This causes SPO to increase Target Stock Levels of other stockable parts while trying to meet a Location Fill Rate.</span>

Generally service parts planning differs from final product planning in the following ways:

1. A high number of low volume irregular demand items in the planning database
2. Inapplicability of traditional measures of forecast error (service parts management has much higher month by month forecast error than finished good forecasting. A service part can go many months with no demand at a product/location)
3. A higher necessity to manage many locations as a single inventory “pool” – this means more transshipments between various inventory holding locations
4. More complexity in procurement (end of life, lifetime buy, phased out suppliers) leading to different inventory holding strategies
5. High variability in repair lead times (due to un-serviceable items which require inspection prior to repair lead time estimation)
6. Inapplicability of common high volume forecasting and inventory management techniques (such as high volume forecasting algorithms and EOQ or POQ)
7. Higher emphasis and need to handle obsolescence supersession and substitutability.

Service parts for this airplane can be predicted based upon installed base and usage. The math for doing this is simple and present in multiple service parts planning applications. However, the problem is that most companies do not invest in the data maintenance.

What Type of Demand?

All service part demand is dependent demand. That is the demand for service parts is based upon purchases that have already been made. Service parts can be forecasted using simple demand history, as with finished goods, or they can take advantage of the installed based and usage of the equipment that is in the field.

There are certain factors that can be leveraged to help predict the demand for service parts. These include:

1. Population of Serviced Items
2. Usage Rates of Serviced Items

Prevalence of MTBF Data

Many companies talk about forecasting using MTBF data, but few of them are interested in doing the work to maintain the data. Obviously, there can be no causal forecasting without causals. This type of data should be elementary to maintain, but it is often not maintained. John Snow, in his Uptime Blog, which is associated with Engima, provides some good insight as to why below.
It seems that the natural inclination of many service departments is to focus on quickly getting equipment back in service, with less concern for proper equipment maintenance and calibration. During a break-fix event (unscheduled maintenance) this is a rational response: the equipment is down, revenue generation has stopped, so get the machines working again. However, even during scheduled service events mechanics can become overly focused on speed. This is an example of reacting to the urgent rather than resolving the important. The problem is that service departments are often measured more on productivity than on quality.

See the full article here.

http://www.uptimeblog.com/tag/mtbf/

What is Part Supersession?

Supersession is one of the most important functions in any service parts planning system. Supersession is used to both:

1. Substitute one part for another part
2. Obsolesce parts due to engineering changes driven by PLM (Product Lifecycle Management) that need to be replaced by newer versions

The supersession configuration in service parts planning systems allows this to be performed automatically during the planning. In MCA SPO this supersession is handled by configuring whether the part is subject to supersession and the type of supersession (One Way or Two Way that applies). We will use the description of supersession in the MCA Service Parts Optimizer Glossary of Terms:

Supersession in MCA

Used to specify that a Part should be replaced with a different Part (referred to as a Planned Part). Supersession processes are part of the forecasting batch process. They transform demand, population and inventory data to reflect it on the currently planned versions of the Part. Three types of supersession processes are performed on data within SPO: Demand Supersession, Contract Population Supersession and Inventory Supersession – MCA Glossary

Supersession Type

Indicates the type of Supersession applicable to a Part. This value (ONE-WAY or TWO-WAY) is used to determine if inventory of the superseded Part can be used for satisfying demands for the superseding Part. Inventory of TWO-WAY superseded Parts is added to the inventory of their superseding Parts, whereas inventory of ONE-WAY superseded. – MCA Glossary

Supersession in SAP

When an external system that is specialized for service parts planning tells SAP what to do, SAP can simply execute the recommendations made by the external system. However, the question arises what SAP ECC’s capabilities are with supersession.

According to SAP web sources, supersession resides in:

1. Advanced Planning and Scheduling (in SCM)
2. Supply Chain Management
3. Service Parts Management (within SCM)
4. In ECC

Supersession in SAP SCM/APO

SAP documentation states that its SCM module has supersession capability. However, the SAP Service Parts Planning solution is so lightly installed (as of mid 2007) that it does not well represent the supersession capability on a typical SAP install, specificially SAP ECC. However, outside of SPP, APO has supersession (called substitution or interchangability outside of service parts). The way to arrive at it as of SCM 5.0 is to goto

APO – Master Data – Application-Specific master data – Product and Location Interchangeability – Maintain Interchangeability group

You can apply the substitution here or if you are using CTM, in the CTM profile. (see our sister blog  for an explanation of CTM)

http://sapplanning.wordpress.com/2009/05/09/ctm/

This is fairly simple, you can see from the screenshot that we have populated the following information:

1. The Group Type (supersession chain)
2. The Group name – SNAPP_GROUP
3. The Group description
4. What the supersession is relevant for (for both planning and ATP)
5. Next set the preceding part and the succeeding part

Finally we save this and we will have just created an Interchangeable Group.

Next I need to assign a location. What this means is we can create supersession relationships that just apply for particular locations but not for others.

We have not been able to verify this, (as we presently lack access to a SCM 2007 aka SCM 5.1 system), however the functionality of supersession – interchangability has been enhanced and is now located at:

Advanced Planning and Optimization (SAP APO) – Service Parts Planning (SPP) – Master Data and General Functions for SPP – Product Interchangeability in SPP

The enhancement relates to the ability to use form fit function classes in addition to product supersession. “That is you can define a product as the leading product for each subgroup of a form fit function class. DRP then consolidates the demands and stock of the location products by adding the demand and stock of the non-leading location products with substitute orders to the demand and stock of the leading location product. – SAP SCM 2007 Release Notes

Supersession in SAP ERP

Within SAP ECC, supersession is approximated by the Material Determination functionality. However, within SCM, SAP states that the
rule based Available to Promise check does provide this functionality. In ECC product substitution functionality is called Material Determination (MD). The SAP definition of Material Determination is:

“Material determination enables the automatic substitution of materials in sales documents during sales order processing. For example, during the course of a sales promotion, the system can, during sales order entry, automatically substitute a material that has promotional packaging. A consumer product may have a special wrapper for, for example, the Christmas season. Using material determination, the system substitutes the material only during the specified period. Material determination is used for:

• Customer-specific product numbers with your own material numbers
• International Article Numbers (EANs) with your own material numbers
• Substituting discontinued materials with newer materials” – SAP Help

Interesting features of material determination

1. MD happens during the sales order process
2. Sales document types (A&D Contract, Repair Quotation, etc.) can be set for MD

Where Should Supersession be Performed?

Supersession logic can be maintained in both the planning system and the execution system. That is both in MCA and SAP. They can be for different purposes however. A few options are:

• Planning supersession can be performed in MCA, while execution supersession can be performed in SAP ECC (for sustainment, production supersession is a different matter).
• Planning supersession can be performed in MCA with no sustainment supersession data maintained in SAP ECC. However inventory planners can still use MCA’s user interface to determine the superseeded part, and then execute the supersession in SAP.

In either case SAP will respect the supersession that is performed in SAP as it would be inherent in the New Buy List that came from MCA. The basic questions are:

1. Is having the execution supersession available in SAP (allowing automated supersession within SAP ECC) worth the additional effort in configuring MD and in the continual maintenance of this supersession list in SAP?
2. Is the MD functionality capable of providing similar functionality as comes with MCA? That is, is the substution functionality, which is fairly basic, and which would provide automated supersession worth maintaining instead of looking at the MCA user interface and reading supersession relationships from MCA?

Supersession in SAP Documentation

The document below from SAP is light on details.

sap%e2%80%a6service_parts_management.pdf

The best write up on supersession in SAP that we have seen is at:

http://help.sap.com/saphelp_dimp50/helpdata/EN/f7/a62238b497a552e10000009b38f842/content.htm

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