Scenario Overview:

ETO - Project Manuf. - Sales

Order Processing with ProMan
 Engineer-to-Order (ETO): Environment

Engineer-to-order (ETO) activities involve customer-specific manufacturing of

a product, such as the construction of a plant. Both complexity and uniqueness characterize
the product. The products require large order-specific project and engineering services that
carry considerable risk for technical solutions, costs,
and deadlines. A project therefore processes a customer order.

The following features characterize engineer-to-order activities:

Extensive quotation phase (over several month)

Order-Specific Engineering Services
Complex and Dynamic Product Structures
Internal and External Procurement
Complex Information and Communication Structure
Long Lead-Times
Calculation and Cost Control
Milestone Billing
Assembly, Start-up and Warranty

 SAP AG 2005
 Engineer-to-Order (ETO): Environment

- Order probability is not very high

- Very extensive order processing phase (over several years)
- Very expensive unique products  Joint Ventures are necessary
Milestone billing
Billing, results analysis and costing
Complex and dynamic product structures
Risk analysis – technical and commercial evaluation is necessary
Order-specific engineering services
Engineering Change Management/ Claim Management
Make or Buy decisions have to be made
Long lead-times procurement
Contractual negotiations have to be documented
Installation and Assembly on site

 SAP AG 2005
 ETO - Project Manuf. - Sales Order Processing with
ProMan

Industrial Machinery
Machinery & Components
and Equipment Value Chain 4

E84 O v eSummary
r v i e w Content
Content

 ETO - Project Manuf. –

Order Proc. with ProMan

 ETO - Project Manuf. - Sales Order Processing with

ProMan
- Sales order creation
- Linkage set between project and SD order
- Material procurement through PRO-MAN
- Milestone transferring from project to SD order
- Progressive billing with milestones
- Component planning and production in PRO-MAN
- Re-work processing with claim and debit memo
- Delivery through project
- Assembly and acceptance test at customer controlled by

netwok activities
- Cost/revenue analysis through project infomation system
 SAP AG 2005
 ETO - Project Manuf. - Sales Order Processing with
ProMan: Component View
Customer Manufacturer
SAP R/3
The step before is the acceptence of a customer quotation.
This is subject of E83 – ETO Quotation Processing with BOM-PS and Record Management
Create customer order copying the 2nd quotation created in ETO quotation processing,
and adopt the variant configuration result.
Project tuning bases on the detail business situation, and confirm the project start with the 1 st milestone.

Execute long-lead time procurement by Pro-MAN, create the purchase order.Release the purchase order.

Milestone transferring from the project to the SD order.

Invoice the down payment billing since the first milestone reached.
Down payment.
Process R&D work of the project by release the related WBS element, then confirm the related activities.

2nd advance payment. Release 2nd milestone then settle the 2nd invoice.

Start Production work of the project by release the related WBS element.

GR for long-lead time procurement component to the project stock.

Initial stock for the raw materials, and some of them need to be posted to project stock.

Production processing using Pro-MAN, for all the semi-finish goods.

Customer specification change to change the component of BOM.

Scrap one component from the project stock.

Re-work of the component using Pro-MAN.

Create debit request to customer to charge the special cost for the re-work.
Create claim document to record the cost of re-work, and link the claim to production WBS element.
Finish the production part of project by confirm the related activities.

2nd advance payment. Release 3rd milestone then settle the 3rd invoice.

Start delivery work of project and delivery creation from the project.
Delivery process and GI.

final payment. Finish the Delivery work and release the last milestone.

Cost and revenue analysis by PS reports.

Link related business documents to record management model.

 SAP AG 2005
 Business Benefits

Project structuring/execution via project system

 Clear definition of deliverables and responsibilities
 Clear definition and milestones to break down the work by project phases
 Centralized control for project costing and revenue
Milestone billing
 Determines the percentage of completion (milestone technique for
earned value analysis)
 Determines dates in the billing plan for sales orders (cost control)
PRO-MAN
 Centralized control of components consumed during the project
 Control and monitor MRP, procurement, production through a single interface
Change Management in Project
 Control the material scraping and re-work through PRO-MAN
 Control the cost of re-work by claim
 Charge the cost of re-work to customer by debit request
Delivery through Project/Final Assembly on Customer Site
 Deliver the main items to customer through project
 Control the assembly work and customer acceptance test by network
activities

 SAP AG 2005
 BoM Structure

E84
E84  Engineer-to-Order
Order Processing

SD BOM
E83-1000 (Variant Configurable)
Robot Route

E83-1100
Switchgear Cabinet

E83-1200
Robot

PP BOM PP BOM
E83-1210 E83-1220-XXX E83-1230
Basis System Control Cabinet Enhancements

E83-1211 E83-1212 E83-1231 E83-1233

Base Frame Rotating Column Picker Arm Tox Pliers

E83-1212-HALB E83-1232
Rotating Column Spot Welding Gun
- Raw Material

 SAP AG 2005
 Material Master Data

E83-1000 Robot Route

E83-1100 Switchgear cabinet
E83-1200 Robot
E83-1210 Basis system
E83-1211 Base frame
E83-1212 Routing column
E83-1212-HALB Routing column - Raw
E83-1220-110 Power supply 110V
E83-1220-230 Power supply 230V
E83-1220-380 Power supply 380V
E83-1230 Enhancements
E83-1231 Picker arm
E83-1232 Spot welding gun
E83-1233 Tox pliers

 SAP AG 2005
 Project Structure

SD Order
Item

Billing WBS linked to

the SD Order item
to handle the revenue
of the project

Activities in central WBS

element linked to
different WBS elements
to control the project
phases centrally

 SAP AG 2005
 Milestone with Progressive Billing

Milestones linked to
SD order item to
control the progressive
billing

 SAP AG 2005
 PRO-MAN

Centralized control of
components consumed
during the project

Control and monitor MRP,

procurement, production
through a single interface

 SAP AG 2005
 Change Management in Project

PRO-MAN to
Project Handle the change
In logistic side

Cost Charge
of the change of the change

Claim is built, and the Debit Memo Request is

assignment goes to built, and assignment also
related WBS in goes to related WBS in
the project the project

 SAP AG 2005
 Delivery through Project/Final Assembly on Customer Site

Item Category DLP

stands for the delivery
items generated from
a project
Deliver the main items
to customer through
project

 SAP AG 2005