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Integrate SAP Quality Management for a more efficient supply chain

Applying SAP Quality Management to supply chain management saves time and money by cutting down on wasted stock. Consultant Jawad Akhtar explains how.

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The importance of building in quality checks and material inspections at every stage of the supply chain cannot be overemphasized. Besides saving time and money in the near term, integrating quality management into critical processes can deliver greater business benefits well into the future. The SAP Quality Management (QM) module completely integrates with several key supply chain processes, including procurement, production, and sales -- even plant maintenance. It can check the quality compliance of raw materials when they're first delivered by vendors and later during production and post-production. SAP QM can also check for compliance with customers' quality specifications before the finished goods are shipped.

With SAP QM, an inspection for lots of materials requiring examination can be created automatically or manually, and users can perform the following functions:

  1. Record the results of the inspection.
  2. Record defects, if any.
  3. Decide whether to use the material, return it to the vendor, scrap it or rework the material.

SAP QM integration with SAP MM procurement

The SAP QM module completely integrates with the SAP Materials Management (MM) module and all procurement-related activities. Inspections can be triggered even before goods are delivered, which allows a company's representatives to visit vendors to check the quality of the goods they produce. The process is called source inspection in the SAP QM module.

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However, the most common type of inspection entails checking goods against purchase orders upon delivery. As soon as the vendor delivers the goods, an inspection lot is automatically created; the user then tells SAP QM to record to the results, then makes the "usage decision" on whether to release the material for consumption. The payment amount is directly linked to how much of the delivered good was of acceptable quality and how much was rejected or returned to the vendor. Finally, the vendor's quality scores get updated according to whether the good arrived on time, in complete quantity and at a competitive price. These quality scores help the user decide whether to continue the relationship or seek other sources of supply.

For batch-managed materials with a shelf life expiration date (SLED), SAP QM offers a recurring inspection that is based on a predefined inspection interval or when the material approaches expiration. The system prevents the expired or nearly expired material from moving from issuance to production until a decision (usage decision in SAP) is made to either extend the SLED or scrap the goods altogether. Recurring inspection can greatly reduce time and cost by raising red flags so companies can quickly consume or sell materials before they expire.

However, integrating QM with MM -- or any of the three other modules identified below -- is not automatic. Companies will want to consider using an SAP QM consultant if it doesn't have the necessary skills already in house.

SAP QM integration with SAP PP production

When integrated with the SAP Production Planning (SAP PP) module, SAP QM adds two additional kinds of quality inspections: in-process and finished goods. During the production process, an in-process inspection ascertains the quality of goods under production. 

In an in-process inspection, the user performs the SAP QM results recording, defects recording and usage decision steps before releasing the material to the next stage of production.

For finished goods, the user performs the three steps before the stock is released for sale.

SAP QM integration with SAP SD sales processes

If the customer requires additional quality checks before goods can be dispatched, SAP QM can handle them once integrated with SAP Sales and Distribution (SAP SD). When goods are issued against a sales order, the SAP system creates an automatic inspection lot that must first be checked for compliance with the customer's quality specifications.

The SAP QM module can also trigger an inspection when a customer returns defective goods.

SAP QM integration with SAP PM maintenance

If they use SAP Plant Maintenance (SAP PM) for routine, preventive or predictive plant maintenance, companies should perform additional quality checks on equipment to ensure it adheres to minimal maintenance criteria. They can do so by integrating the SAP QM equipment data into the SAP PM module. Then, whenever SAP PM creates work orders, the integrated system creates an automatic and corresponding inspection lot. The user performs the routine SAP QM steps, executing a usage decision before the maintenance department is allowed to put the equipment back in service.

Managing additional inspections in SAP QM

Apart from these supply chain management processes, it's also possible to use SAP QM to map inspection scenarios onto other business processes, including:

  • Plant-to-plant inspections, in which goods transferred within the company go through quality checks to ensure there are no damages during transportation.
  • Physical sample inspections, in which a company's or competitor's sample is evaluated to help in important decisions, such as whether to buy the material from a new vendor or to change product specifications to match those of competitors.
  • Manual inspections in such situations as creating lots for stored raw materials or finished goods or following natural or manmade disasters.
  • Inspections for stability studies, performed on products under development to ensure they meet certain physical or chemical specifications.
  • Custom inspections when the standard inspections in SAP QM fail to meet particular needs, such as integration with third-party quality management tools or inspection results from laboratory equipment.

ABOUT THE AUTHOR
Jawad Akhtar is an assistant vice president and SAP project manager who focuses on SAP SCM for AbacusConsulting, which is based in Pakistan.

This was first published in August 2012

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