Defining Settings for Component Exchange with Supplier in Core Management Process

This document explains the settings you must define when creating terms and conditions for a purchase order in the component exchange with a supplier.

Outcome

You have defined the settings to be able to buy remanufactured components and return a core.

Follow these steps

  1. Define an attribute model

    Specify the ID of the attribute model and a description in 'Attribute Model. Open' (ATS050/B). Select related option 11='Model lines' to start 'Attribute Model. Connect Attributes' (ATS051).

    On the B panel in (ATS051), create one attribute for the sales process which will indicate different attributes for retrieving the sales price and discounts for the sold component.

    Create an attribute for the condition in the same way. This will determine the costing of the sold or returned core.

    On the E panel in (ATS051), specify these values:

    • Attribute type = Alphanumeric
    • Controlling object = Lot master
    • Main attribute = Attribute 1, for example.

    Select the processes in which the attribute should be included, for example customer order, manufacturing order, and purchase order.

    Create an attribute for the condition in the same way. This will determine the costing of the sold or returned core. You select the value 1='Cst attribute 1' in the 'Cost attribute' field on the E panel in (ATS051).

    In (ATS051), select related option 22='Attribute values' to start 'Attribute Matrix. Open' (ATS020) and specify the attribute values in 'Attribute Matrix. Enter Values' (ATS021).

    Example of attribute values for sales:

    • Remanufactured
    • New
    • Used equipment.

    Examples of attribute values for conditions:

    • As new
    • Before failure
    • After failure
    • 50% of full core
    • No refund.

  2. Define a costing model for purchase

    A costing model must be defined for the purchase order process to trigger the core charge amount on the purchase order.

    You define a costing model in these steps:

    • Create costing elements

      Start by defining a costing element in 'Costing Element. Open' (PPS280/B). This element must be the same as parameter 46='Costing element' for return of core price in 'Settings - Purchasing' (CRS780/G).

      Create a connection to the attributes that check the pricing using the check boxes 'Invoice charge quantity' and 'Markup' in (PPS280/E).

      Select related option 12='Costing values' to start 'Costing Element. Enter Values' (PPS282). On the B panel, define the attribute values that should give a price. On the E panel, define the price setting rules.

    • Define a costing model

      After you create costing elements, you must define a costing model to be used for the purchase order line. You define a costing model in 'Purchase Costing Model. Open' (PPS285). To connect elements, select related option 11='Costing element/Model' to continue to 'Costing Model. Connect Elements' (PPS286).

    • Connect the costing model to items and purchase settings

      At purchase order line entry, charges are created by using the costing model from the 'Costing model' field on the F panel in 'Item. Connect Facility' (MMS003).

      Alternatively, you can specify the costing model to be used at purchase order line entry on the G panel in 'Settings Purchasing' (CRS780).

      At purchase order line entry in 'Purchase Order. Open Lines' (PPS201), the attribute values that were defined in 'Attribute Value. Connect to' (ATS101) are added to the order line. If the attribute values correspond to the settings of the costing element, then a charge will be connected to the purchase order line. The attribute settings of the purchase order line also check if the order line will be core processed or treated as an ordinary purchase order line.

  3. Define charges for purchase

    Charges for a purchase must also be defined. You define the charges in these steps:

    • Create a line charge

      You define the line charge in 'Order Line Charge. Open' (CRS275). Select the control object that determines the charge percentage or the amount (if an amount charge).

    • Define a calculation factor

      You define the calculation factor or the amount for the charge (for example 0.1=10%) in 'Order Line Charge. Enter Amount' (CRS277).

  4. Define settings for purchase order workflow

    You define workflow settings for purchase order in these steps:

    • Specify the requisition order type

      You must define order types for the requisition that will be used for the core return and claim. The order types are defined in 'Req/Distr Order Type. Open' (CRS200).

      The order type ID is user defined, so you can give it a name that is easy to remember.

      You must use transaction type 41 for the returns.

    • Return order type

      The return order type must be defined in 'Return Order Type. Open' (PPS399). The return order type checks the supplier return process by using the defined return-to-supplier order category. In (PPS339), you also connect the return order type to the requisition order type, which you use to manage the return process from the warehouse to the supplier.

      • The order type ID is user defined, so you can give it a name that is easy to remember. You can use the same ID as on the requisition order type, for example.
      • Select the return order category according to the intended use. The category defines which headings to display in the panels and which fields are mandatory. The valid alternatives are:
        • 1 – Claim
        • 2 – Return of core

      A return order type with order category 2-'Core return' must exist for the core process.

    • Settings for purchase order

      The general settings for a purchase order must be defined in 'Settings - Purchasing' (CRS780).

      For the core management process, these settings must be defined:

      • On panel E: Setting 09 – Default return-to-supplier order type, core return. The default order types for return of core and for claim must be defined in 'Return Order Type. Open' (PPS399)
      • On panel G: Setting 46 – Costing element for return of core price. This setting indicates the costing element you should use when you return a core as a part of the return-to-supplier process in 'Return To Supplier. Open' (PPS390). The costing element is used to calculate the price of the order lines containing cores that should be sent back to the supplier for a refund.
    • Purchase costing model

      The purchase costing model must be defined in 'Purchase Costing Model. Open' (PPS285). The purchase costing model must have a costing element that is specified in the same way as setting 46 (Costing element for return of core price) in 'Settings Purchase Order' (CRS780). The costing details are defined in 'Costing Model. Connect Elements' (PPS286).

  5. Define settings for Core

    You define core terms in 'Core Terms. Open' (CRS168). In order to perform the core process, you must populate these fields on the E panel:

    • Attr ID purch
    • Attr value purch

    The values you specify in these two fields must be used in the attribute model of the item that has current core terms.

    1. General terms for customer orders, purchase orders and work orders:

      • 'Core terms' – The core term ID is user defined, and indicates the ID of the terms for the core return. The terms include information such as description, aging and return date.
      • 'Language' – You can define the terms for each division and language.
      • 'Name' – Standard field for giving the terms a name.
      • 'Terms text' – A description of the terms. This text is printed on the customer order invoice.
      • 'Start date code' – The start date used to calculate the return date of the core. The date can be calculated from the delivery date or from the invoice date.
      • 'Refund limit days' – The number of days when no refund is given. The date for no refund is calculated based on the start date code.

    2. Customer terms:

      • 'Return customer' – The number of days from the start date after which the core must be returned by the customer. After the calculated return date, the aging reduction is activated.
      • 'Aging reduction' – The percentage by which the refund is reduced based on how late the core is returned. The percentage uses two decimal places. The reduction is calculated based on the aging reduction method.
      • 'Aging reduction method' – Defines how the reduction of refund is calculated: per late day or after late return.
        • Per late day: For each day after the requested return date the amount is reduced by the percentage defined in the 'Aging reduction' field. For example, if the core is returned two days late and the aging reduction is 2%, the amount is reduced by 4%.
        • After late return: If the core is returned after the requested return date then the entire amount is reduced by the percentage defined in the 'Aging reduction' field. For example, if core is returned two days late and the aging reduction is 50%, then the amount is reduced by 50%.
      • Aging text – A description of the aging terms. This text is printed on the customer order invoice.

    3. Supplier terms:

      • Return supplier – The number of days from the start date after which the core must be returned by the supplier. No aging reduction is activated in the supplier flow, but after the refund limit no refund of the core can be expected.

  6. Settings in the Item Master (MMS001)

    • Core item

      The core item is the item which is purchased, sold, and returned by the customer to the supplier.

      1. Specify 'Lot ctrl method' on the E panel in (MMS001). This cannot be set to 0-'Lot control not used'.

      2. Specify an attribute model for the remanufactured item in the 'Attribute model' field on the G panel in (MMS001).

      3. In the 'Core terms' field on the K panel in (MMS001), specify the ID of the core terms you defined in 'Core Terms. Open' (CRS168). This field is also essential for all items that are part of the core management process.

      4. In the 'Core ch item no' field on the K panel in (MMS001), specify the ID of the core charge item you defined in (MMS001). The core charge item is used on the core charge line when entering customer orders. It is also used on the invoice specification when entering maintenance customer orders.

      5. In the 'Core reman item' field on the K panel in (MMS001), specify the ID of the core reman item you defined in (MMS001). The field indicates the item used by default for a core return in 'Customer Return. Open' (OIS390/A). This is used in the internal remanufacturing process when the core return is used as a raw material in the finished product. The item number used should have a prefix indicating its similarity to the other items in the same acceptance group.

      6. Select 1='Supplier reman' in the 'Exchangeable' field on the K panel in (MMS001). The field indicates whether or not the item is available as a part of a supplier exchange program. The item is usually a larger component or a subassembly such as an engine, gear box or fuel pump, which can be rebuilt or remanufactured. This field is essential for all items that are part of the core management process.

      7. In the 'Accept group' field on the K panel in (MMS001), specify the ID of the acceptance group you defined in 'Acceptance Group. Open' (CRS169). The acceptance group is used to group items which have interchangeable entitlements. A core return can be created against an entitlement for any item number within the same acceptance group. The core refund will be calculated for the returned part number. Hence the core refund may be lower if the returned core is replaced from the assortment.

      8. In the 'Cstng mod core' field on the K panel in (MMS001), specify the ID of the costing model defined in 'Sales Costing Model. Open' (OIS022). The core charge costing model is used to calculate the core charge and the core refund.

    • Core charge

      The core charge is a non-material item and is required in the core management process. A core charge item must be defined and connected to the discount model with the discount item. This item must have a separate item type with item category 13='Non-material item' specified on the G panel in 'Item. Open' (MMS001).

      1. You must first define the item type in 'Item Type. Open' (CRS040). Select the item category 13='Non-material item'. This item category indicates that this is a core charge item.

      2. In (CRS040) select option 11='Field control' to start 'Item Type. Select Fields' (MWS041). Configure the item type fields so that the 'Non-material type' field is displayed on the G panel in (MMS001) and the 'Exchangeable' field and 'Core terms' field are displayed on the K panel in (MMS001).

      3. Field 'Inv accounting' needs must be 0-'No inv account' on E panel in (MMS001).

      4. In the ‘Item category’ field on the G panel in (MMS001), specify 13='Non-material' since this item is a charge, not a physical item and will not be stored.

      5. 'Non-mtrl type' field should be set to 01-'Core crg item' on the K panel in (MMS001).

  7. Settings for item warehouse (MMS002)

    • Remanufactured component

      1. In field 'Supplier' on the E panel in 'Item. Connect Warehouse' (MMS002), a supplier must be defined.

      2. 'Container mgt' field on the G panel in (MMS002) must be set to 7-'Container for Packages'.

    • Core charge

      1. The core charge item must exist in (MMS002), however no specific settings are required.

  8. Settings for item and facility (MMS003)

    • Remanufactured Component

      1. The costing model must be set in 'Item. Connect Facility' (MMS003). On the E panel, select 2-'Average cost' in the 'Inv acc method' field.

      2. 'Attribute cost' must be activated on (MMS002/E).

      3. Optional: On the F panel, specify the ID of the costing model in the 'Costing model' field. This field is used to set the core price. Costing models are defined in 'Costing Model. Open' (PPS285).

    • Core charge

      1. The costing model must be set in 'Item. Connect Facility' (MMS003). On the E panel, select 0-'Zero' in the 'Inv acc method' field.

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