Multisite example - LN enterprise model of the aircraft manufacturer

This diagram displays the enterprise units, sites, departments, and warehouses involved in the logistics, production, and financial flows of the aircraft manufacturer:

Companies

The aircraft manufacturer is modeled as a logistic company and a corresponding financial company.

The aircraft manufacturer is modeled as a logistic company because in LN, a logistic company is used to maintain companywide transactional data and logistic and commercial master data.

Because financial reporting is performed centrally, and all parts of the organization are part of one legal entity, one financial company is also defined for the aircraft manufacturer.

Enterprise units

To reflect the financial flow of the aircraft manufacturer, each production unit is modeled as an enterprise unit. Production unit A is modeled as enterprise unit EUA, production unit B is modeled as enterprise unit EUB, and production unit C is modeled as enterprise unit EUC.

Sales unit S is modeled as enterprise unit EUS.

Enterprise unit EUA includes all facilities, such as warehouses and work centers, involved in the production of the oxygen masks and the Eagle Long Range. It does not include the finished goods warehouses, from where the completed aircraft are shipped to the customers.

Enterprise unit EUB includes these entities:

• The warehouses and the production hall involved in the production of the Eagle Midrange, except for the finished goods warehouses, from where the completed aircraft are shipped to the customers.
• The warehouses involved in the receipt and the issue to production of the purchased oxygen masks.
• The purchase office responsible for the local purchase of the oxygen masks at production unit B.

Enterprise unit EUC includes these entities:

• The warehouses and the production hall involved in the production of the Buzzard Pro, except for the finished goods warehouses, from where the completed aircraft are shipped to the customers.
• The warehouses involved in the receipt and the issue to production of the purchased oxygen masks.
• The purchase office responsible for the local purchase of the oxygen masks at production unit C.

Enterprise unit EUS includes these entities:

• The sales office that handles the sale of the aircraft manufactured at each production unit.

• The finished goods warehouses, from where the aircraft manufactured at production units A, B, and C are shipped to the customers.

  This table displays the sites where the finished goods warehouses for each type of aircraft are located:

  Aircraft Type	Site
  Eagle Long Range	SA
  Eagle Midrange	SB
  Buzzard Pro	SC

In LN, an enterprise unit represents a part of an organization that is responsible for its own financial management. An enterprise unit thus reflects the financial flow of a business unit. Also, standard costs are defined by enterprise unit.

Each production unit, and the sales unit, must be defined as separate enterprise units. This is because the aircraft manufacturer performs management accounting at the unit level, and the standard costs are different at each production unit and the sales unit.

Sites

To reflect the production and logistics flow of the aircraft manufacturer, these sites are defined:

• SA

  At site SA, these parts of the organization are located:

  • All facilities, such as warehouses and work centers, involved in the production of the oxygen masks and the Eagle Long Range. These facilities belong to enterprise unit EUA.
  • The finished goods warehouses, from where the completed Eagle Long Range aircraft are shipped to the customers. These warehouses are part of enterprise unit EUS.
  • The sales office of sales unit S, which belongs to enterprise unit EUS.

• SB

  At site SB, these parts of the organization are located:

  Entities	Use	Belongs to enterprise unit
  Warehouses	Involved in production of Eagle Midrange	EUB
  Work centers	Production of Eagle Midrange	EUB
  Warehouses	Receipt and issue to production of purchased oxygen masks	EUB
  Purchase office	Local purchase of oxygen masks for production unit B	EUB
  Finished goods warehouses	Receipt of completed Eagle Midrange and shipment to customers	EUS

• SC

  At site SC, these parts of the organization are located:

  Entities	Use	Belongs to enterprise unit
  Warehouses	Involved in production of Buzzard Pro	EUC
  Work centers	Production of Buzzard Pro	EUC
  Warehouses	Receipt and issue to production of purchased oxygen masks	EUC
  Purchase office	Local purchase of oxygen masks for production unit C	EUC
  Finished goods warehouses	Receipt of completed Buzzard Pro and shipment to customers	EUS

The sites have been modeled to allow you to define this data:

• The logistics and production data specific for each production unit.
• The warehouses and departments located at each site.

Site subentity settings

For the sites, these subentity settings are required:

• Production

  For site SA, production subentity settings are required to set up work centers and define production data. Production data includes production order series, operation settings, and handling of materials for both the oxygen masks and the completed aircraft. For sites SB and SC, production settings are needed only for the completed aircraft.

• Warehousing

  For all sites, warehousing subentity settings are required to set up warehouses and define settings that control the inbound and outbound flow at each site. See Warehousing User Guide for Multisite.

• Sales

  For all sites, sales subentity settings are required to ship the completed aircraft based on sales orders.

• Procurement

  Sites SB and SC also require procurement subentity settings. These settings are required to receive the purchased oxygen masks based on purchase orders.

Warehouses

The shop floor warehouses, normal warehouses, inspection warehouses, and finished goods warehouses of each production unit are defined as warehouses in LN, and linked to the site where the warehouse is located.

Except for the finished goods warehouses, the warehouses of each site are also linked to the enterprise unit defined for the production unit.

The finished goods warehouses of each site are linked to enterprise unit EUS for these reasons:

• The inventory is owned by the sales unit.
• The standard costs of EUS are based on the internal transfer between the production units and the sales unit.

Thus the finished goods warehouses are linked to the site of the production unit to which they belong, and to the enterprise unit of the sales unit. In this way, the logistic data of the site, such as lead times and the carrier, and the standard costs of the enterprise unit apply to the finished goods warehouses.

Offices

Office At	Model Name	Defined As	Type	Linked Site	Linked Enterprise Unit
Sales unit S	SO	Department	Sales office	SA	EUS
Production unit B	PB	Department	Purchase office	SB	EUB
Production unit C	PC	Department	Purchase office	SC	EUC

The sales office of sales unit S is defined as sales office SO, because commercial data such as the sales price and sales order data are defined in sales offices in LN. Sales office SO is linked to enterprise unit EUS, because management accounting is performed at unit level and sales office SO belongs to sales unit S. The sales office is linked to site SA to indicate that the sales office is located at site SA.

Purchase office PB is linked to site SB, because it is located at site SB and the purchase price of the oxygen masks is defined at site level in LN.

Purchase office PB is linked to enterprise unit EUB, because the aircraft manufacturer performs management accounting at unit level. Also, the financial transactions involved in the purchase of the oxygen masks at production unit B must be booked in the financial company, which is linked to enterprise unit EUB. Similarly, purchase office PC is linked to site SC and enterprise unit EUC.

Work centers

The work centers and production halls of each production unit are defined as departments of type work center in LN, and linked to the site defined for the production unit.

Planning clusters

Because each site performs its own production planning, a separate planning cluster is defined for each site. For site SA, planning cluster PLA is defined. For sites SB and SC, planning clusters PLB and PLC, respectively, are defined.

Intercompany trade relationships

To define the intercompany trade price between each production unit and sales unit S, these intercompany trade relationships must be set up:

From	To
EUA	EUS
EUB	EUS
EUC	EUS