Equipment Service and Repair businesses that are implementing SAP face a challenge to ensure that the system doesn’t impair their ability to service customers promptly.
This article is an opinion on the business requirements, current solutions and the challenges faced.
***A note: This is not an effort to criticise SAP in any way.
Common traits and requirements for Service and Repair Businesses
It is very typical for Service and repair companies to share the following traits
- Turn around time is essential. Critical equipment out of service can cost customers millions of dollars.
- It is common to repair product that is not OEM. Non-OEM means the business did not originally manufacture the equipment.
- Service and repair people are technically capable. Their data entry/system skills may not be as outstanding.
- Even in large organisations, small regional facilities with less than ten staff are common.
- Traceability is often important. Traceability means you can track what the business added during the repair process.
The SAP approach for Service and Repair Businesses
There isn’t a stand-alone module that covers service and repair in SAP. Wait you’ll say, there is the PM – Plant Maintenance module. That’s true; the plant maintenance module designed for businesses managing the maintenance of their internal equipment. For Service and Repair; the Plant Maintenance module works with the SD- Sales and Distribution module. This combination is where the complexity begins.
Here are the methods I know. If you’ve got another, or just think I’m out to lunch (I do enjoy food greatly!), please share in the comments.
1. PM – Plant Maintenance First
In this solution, the first activity is to raise a service order. The service order becomes the driving document. A sales order is created only once the work is complete.
- It’s a simpler method. There are fewer transactions for the user.
- Training is simpler for users.
- No order backlog. In this method, consultants need to devise a way to build the order value into the order backlog totals. If you run a list of sales orders, the order will not show up.
- The order backlog list becomes the list of service orders.
- The sales order is the last operational step after all work is complete. This process has a tendency to drive hockey-still like revenue for each financial period. With that said, I should state that repair facilities are famous for this pattern regardless of the process.
2. SD – Sales & Distribution First
In this solution, the first transaction is a Sales Order. The sales order is followed immediately after by the creation of a service order.
- The order is immediately visible in the list of sales orders/sales order backlog.
- The process is much more complicated and in my experience requires extensive staff training and retraining.
The biggest issue facing SAP Service and Repair organisations: Material Masters
The main reason this is such an issue is simple: many service and repair companies repair equipment that they didn’t build. If you have a two-day turnaround on a repair that has 15 or 100 materials that do not currently exist in your system, something is going to fail.
Here come the workarounds
You’ve got two days to get the job done. 30 materials that are available in town but are not in SAP. Your customer is screaming for his remarkable life-saving piece of equipment. What part of the process are you going to short circuit?
Nearly every single time it will be the system process. The situation may drive a catch-up effort a week or two later, but more often it looks like this:
- Service notification is created
- Sales Order is created
- Service Order is created
- Go back to sales order
- Go back to service order
- Repair technician establishes list of required parts
- Engineer verifies list
- Planning reviews the list of materials and determines none of it exists within SAP
- Operations manager pulls out credit card OR Planner creates fake external service operations to buy the parts. (Yes really)
How other systems handle material issues
I can’t speak for all systems but here is how the mid-level Epicor system handles the same Service and Repair situation.
- Planner creates a sales order
- Planner creates a service order and links the two documents using a simple field.
- Repair technician establishes list of parts
- Engineer verifies
- 3rd party materials become “Parts-on-the-fly”. The planner loads “Parts-on-the-fly” into the list of materials. The purchaser buys the materials as one-off items.
Does it work? Yes. It can solve both the traceability and speed issues. Are you going to pull out SAP and install Epicor? Highly unlikely :), but it does call into question why the process cannot be simplified further.
Why do we care about order backlog? Let’s just let the consultants code it in the back end and walk away.
The main reason is consistency. Service and Repair businesses often have a parts business as well. They may even have a new product business. Creating a back door customization means that the Operational and Finance teams need to review multiple document lists. In some cases, those items relate to the same job.
SAP contains an outstanding equipment master. Part of the preventative maintenance system, the equipment master allows facilities to track all of their Assets within even the largest of plants, refineries, mines, etc. The equipment is tied a functional location which tells you where in the plant this equipment belongs.
It makes sense that service and repair businesses would use this to track customers equipment as well. I have yet to see this implemented effectively in a service and repair business.
SAP in Small Repair Facilities
SAP implementations in small facility require plans to ensure role coverage. In my experience, this often requires some transactional work occur at a larger facility. Again, this is an area where in a quick turn-around it is common to see the physical work get done and a week later the staff play catch up.
Some suggestions for new implementations with Service & Repair businesses
Decide early on whether the sales order comes first or last. Companies should ask the consulting team ASAP and understand the outcomes of both approaches.
Determine whether it is possible to combine transactions.
Ask the question, what will we do when we need materials that aren’t in the system?
Look hard at small facilities. Can they handle the SAP processes and how?
About to go through an SAP implementation. Read our 5 common issues during an SAP implementation article.
Mike, are you suggesting SAP doesn’t work for Service and Repair?
Hardly. I’ve worked with and in many service and repair facilities that have utilised SAP as their ERP solution. I am however saying that the required processes can put undo stress on the facilities and that there must be a better way.
I just haven’t found it yet. Have you?