Struggling to digitize your intercompany subcontracting flows?
Read more and discover how to boost your ERP solution to an integrated APS and MES enhancement.
During ERP implementation projects, production flows that include intercompany subcontracting are often considered as complex and difficult processes. In practice, these flows are often perceived as almost impossible to deploy without tons of administrative follow-up.
Why so? What we as consultants notice is that most designs fail to define an integrated business solution for internal subcontracted work.
This is however pretty important when internal subcontracting implies legal segregation of physical material consumption on the one hand versus labour force and work centre capacity on the other hand over multiple legal entities. Such segregation significantly complicates an integrated production plan.
Based on our insights and expertise, Mentor and Men was able to design a business solution that tackles these challenges. We succeeded to implement intercompany subcontracting production flows within a single APS production plan and a single MES shop floor entry, resulting in a synchronised work order status registration for multiple legal entities in ERP.
Key enablers for this achievement:
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The setup of Production Master data comprising a complete product dataset of multiple legal entities in ERP
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The deployment of Smart Integration Rules for ERP, APS and MES.
The Production Master data from multiple ERP-legal entities was setup and considered as one single product dataset to be gathered and integrated with the APS solution. Such a product dataset includes a package of:
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Production BOM setup in one legal entity, containing subcontracting services as a production requirement.
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Production Route setup from another legal entity, covering the resource requirements (labour and work centre capacity) for subcontracting services.
By doing so, the APS production plan for subcontracted work can be calculated and optimized, regardless of the legal boundaries in ERP.
“The Production Plan generates one single work order covering both material requirements and resource capacity from different legal entities.”
Thanks to the single product dataset, subcontracted work is not split and fragmented into two or more separate work orders. Consequently, APS users do not need to synchronise and sequence fragmented work orders to plan production in each legal entity. Instead, the production plan will generate a single work order covering both material requirements and resource capacity.
“Smart integration rules between APS and ERP assure the APS production plan is fed back to ERP, resulting in work order data split-up over multiple ERP-legal entities. Thereby assuring the legal segregation of physical materials and resources per legal entity”.
By making use of standard Microsoft Dynamics Intercompany logic, together with reservation and marking functionality, work order data for subcontracted work can be gathered over multiple ERP-legal entities. A single work order-data package is then integrated with MES.
“A huge reduction in shop floor registration activities.”
As a result, also MES considers only one work order, covering both material requirements as well as resource requirements. This involves a huge reduction in shop floor registration activities for production execution. MES data is sent back to ERP, triggering work order registration updates in multiple legal entities. At the same time, production costing and financial stock valuation is gathered and registered into the proper ERP legal entity. Through standard Intercompany sales and purchase operations, even the invoicing process for intercompany subcontracting services can easily be optimized or automated.
In this way Mentor and Men, on close partnership with our client, managed to deploy a single IT solution for a business process across different legal entities of one group of production companies.
Enthusiastic greetings
Timmy, Senior Business Solutions Architect bij Mentor and Men
