The Dialogue
Note
Below, you can see the dialogue between James, Linda, Lisa, Manuel, and Thomas regarding the question of how to process Hybrid Machinery's logistics projects in SAP S/4HANA.
Thomas starts by stating his intentions regarding an investigation on how to process the projects at Hybrid Machinery.
James reacts to this and starts explaining what the responsibilities of a project planner are. He also explains which projects he processes during his daily work. After this, he wants to make clear which activities are typical for logistics projects. Linda supports him from an accounting point-of-view, and explains the processes in Controlling related to these types of projects. Lisa clarifies which steps are required in the Sales area, whereas Manual explains the main process steps in Project Procurement and Project Manufacturing.
See the following video for their actual conversation:
To summarize:
The steps required when carrying out logistics projects often start with a project plan, the project structure, and taking care of the project team. SAP S/4HANA Project System is an excellent tool to build, plan, and control these projects, that often integrate with, for example, Sales, Procurement, and even Manufacturing or Maintenance.
Other steps include the supervision of budgets, costs and revenues, as well as a results analysis and period-end closing activities.
Before the engineering, planning, and production of a forklift can start, a customer sales order (or a customer inquiry for a quotation) is required. After delivery, customers are also billed.
Whenever materials are involved, they need to be procured timely. At the beginning of an engineering project, usually only the material costs are estimated. In a later project phase, or for a sales project, the material requirements planning is triggered, when the project is released. Components might be procured externally from suppliers, or manufactured internally within the project itself, or using orders for the manufacturing department.
Note
In the next video, Thomas asks for more details regarding the various flavors of logistics projects at Hybrid Machinery:To summarize:
If all of the parts and activities that are required for a project are already known, a template can be used. The assembly processing feature of SAP S/4HANA can be used in this case. Using assembly processing, the project and network structure can be generated directly from the sales order.
For logistics projects, the costs can be derived rather easily by calculating the product structure. For a logistics project, there is also a need to keep track of the costs and revenues, and the contribution margin as well.
Before releasing a project, resource availability needs to be checked. Sometimes, external suppliers are used, if a company's own people lack special skills or have no availability. Capacity planning is carried out.
After checking the project, all activities and elements that need to be processed, are released, and people get to work. All materials need to be available, or procured externally or produced internally. After this, the building and assembly process can start. The responsible colleagues record their working times, and any component materials are consumed. After final assembly, the product is shipped to the customer, directly out of the project. Billing is then done by, based on the created sales order.
Note
In the next video, Thomas asks for more details regarding the process when a forklift is specifically designed for a customer:To summarize:
In case of a project where the product is specifically designed for the customer, an inquiry is created in the system, and the project structure is built. If it is not yet known which materials are required, the material costs are estimated. Based on the calculated costs in the project network, sales order pricing is then carried out, generating a quotation for the customer.
The quotation is based on the planned costs and might also include a surcharge. If the customer accepts the quotation, a sales order is generated, and the process is similar to the variant described before, that uses assembly processing.
If after project release, there is a period end, the existing project has to be taken into account. The value of the costs that can be capitalized for the project is calculated, and whether inventory values or reserves have to be created. This value is then transferred to Financial Accounting, during settlement of the project. When the project is finished, these values are then canceled based on the project status. This leads to the final actual costs and revenues.