Simplification List in SAP S/4 HANA in Materials Management

SAP S/4 HANA is SAP's next generation business suite, it is not a legal successor of any SAP Business Suite Product. It is a new product completely built on one of the most advance in-memory platform today - SAP S/4 HANA - and modern design principles with the SAP Fiori user experience (UX). SAP making, business processes and models) and innovations (Internet of things, Big Data, business networks and mobile-first) to help business Run Simple in the digital economy.

The Simplification List is the collection of single "Simplification Items" with the focus on what has to be considered through an Implementation/ System Conversion Project from SAP ERP to SAP S/4 HANA on-premise.

Per Simplification Item the following information will be provided:

• Description, Business Impact, and Recommendations
• SAP Notes (for related Pre-Checks or Custom Code Checks)

The Simplification List in SAP S/4 HANA in Material Management

Here, I am sharing some of the Simplication for SAP S/4 HANA related to Procurement and Inventory Management.

1. Master Data

    a. Business Partner Approach

    b. Material Number Field Length Extension

    c. Foreign Trade in Material Master

    d. Material Type - SERV

2. Logistic Batch Management

3. Output Management Adoption in Purchase Order

4. Classic MM-PUR GUI Transaction replacement

5. Foreign Trade within SAP S/4 HANA Procurement

6. Data Model in Inventory Management

7. Availability of Transactions in MM-IM

8. Material Ledger Obligatory for Material Valuation

9. Material Valuation - Statistical Moving Average Price

10. Legacy System Migration Workbench.

1. Business Partner Approach

Business Partner is now capable of centrally managing master data for business partners, customers and vendors. Business Partner is the single point of entry to create, change and display master data for Business Partner, Customers and Vendors

Transaction code for Business Partner - BP

There is no specific user interface for Customers/ Vendors from SAP Business Suite. Following transactions like XD01/ 02/ 03, VD01/ 02/ 03, XK01/ 02/ 03, FK01/ 02/ 03 are not available in SAP S/4 HANA on-premise.

We also have an option to align the ID (number) of Business Partner and Customers/ Vendors. The same number can be used or may not be used for Business Partner and Customer/ Vendor

Following are the roles for Business Partner :

FLCU00      FI Customer

FLCU01     Customer

FLVN00     FI Vendor

FLVN01     Vendor

2. Material Number Field Length Extension

SAP S/4 HANA on-premise can support a material number with 40 characters. The client has to decide if and when to switch on the extended material number functionality.

In the Customizing activity, you can activate the use of the following extended field in Extended material number. With this activation, the system uses only the extended version of the field. The extended material can have a maximum length of 40 characters.

a. Activate Extended Fields for Material Master:

    SPRO Path -> SAP Ref. IMG -> Cross Application Components -> General Application Functions -> Field Length Extension -> Activate Extended Fields

Check the box for "Extended Material Number" before this please read the SAP Note - 2232396

b. Define Length for Material Master

    SPRO Path -> SAP Ref. IMG -> Logistics General -> Material Master -> Basic Settings -> Define Output format of Material Numbers or T. Code - OMSL

Maintain the length "40" for the material master.

3. Foreign Trade in Material Master

Currently there are two software services for international trade transactions - Foreign Trade and Global Trade Service. Foreign Trade is a part of the normal SD. GTS is the external service that can be installed on an additional instance. With SAP S/4 HANA on-premise, the Foreign Trade functionality will not available because SAP Global Trade Services (GTS) is the successor for the business requirement. SAP GTS can be natively integrated with S/4 HANA. Additional functionalities for Import and Export Management are available with SAP GTS.

4. Material Type SERV

A new Material Type - SERV for services is introduced for Product Master in SAP S/4 HANA for simplification purposes.

Supported User Department - Basic Data, Sales, Purchasing and Accounting

5. Logistics Batch Management

The following transactions related to Logistic Batch Management are not available in SAP S/4 HANA on premise: MSC1/ MSC2/ MSC3/ MSC4

The following transactions are still available in SAP S/4 HANA:

MSC1N - Create Batch

MSC2N - Change Batch

MSC3N - Display Batch

MSC4N - Display Change Documents for Batch

6. Output Management Adoption in Purchase Order

A new Output Management has been introduced in the SAP S/4 HANA. The completed configuration differs from the configuration  that is used when Output Management is based in NACE and table NAST.

The configuration of Output Management is based on BRF+. In SAP S/4 HANA, the target architecture is totally based on Adobe document server and Adobe Forms only. For the form determination rules BRF+ functionality is used. 

Output Management based on NAST is no longer supported for new document in the Purchase Order.

The new Output Management supports only the Channels PRINT, EMAIL, XML (for Ariba Network Integration) and IDOC (for on-premise)

It is not mandatory to use the new Output Management, we can use the old NAST configuration.

SPRO Path -> SAP Ref. IMG -> Cross Application Components -> Output Control -> Manage Application Object Type Activation

Choose "Application Inactive" in Status, for which you wan to switch back to NAST.

Refer SAP Note - 2228611 for Output Management in SAP S/4 HANA.

7. Classic MM-PUR GUI Transaction Replacement

There are some transactions are not available in the SAP S/4 HANA on-premise:

ME21 ME22 ME23 ME24 ME25 ME26 ME27 ME28 ME51 ME52 ME53 ME54 ME59 MR01 MR1M

And also there are some BAPI's for purchasing not available for SAP S/4 HANA

BAPI_PO_CREATE/ BAPI_REQUISITION_CREATE/ BAPI_PO_GETDETAILS

8. Foreign Trade within SAP S/4 HANA Procurement

Currently there are two software services for international trade transactions: Foreign Trade and SAP Global Trade Service (GTS). Foreign Trade is the part of the standard Material Management (MM).

SAP GTS is the external service that can be installed on a separate instance. With the SAP S/4 HANA on-premise, the foreign trade will not be available because SAP Global Trade Service is the successor for the business requirement. Additional functions for import and export management are available with SAP GTS.

9. Data Model in Inventory Management

With SAP S/4 HANA this data model has been changed significantly. The new de-normalized table MATDOC has been introduced which contains the former header and item data of a  material document as well as lots of further attributes. Material Document data will be stored in MATDOC only and not anymore in MKPF and MSEG

10. Availability of Transactions in MM-IM

The following transactions for entering and displaying goods movement (material documents) - called "MB Transactions" (below) are not available with SAP S/4 HANA.

• MB01, MB02, MB03, MB04, MB05, MB0A, MB11, MB1A, MB1B, MB1C, MB31, MBRL, MBSF, MBSL, MBST and MBSU.

In SAP S/4 HANA the single screen generalized transaction MIGO is available (Transaction MIGO is available in SAP Business Suite since Release 4.6)

11. Material Ledger Obligatory for Material Valuation

This simplification makes it obligatory to use the Material Ledger in all SAP S/4HANA systems. When a system is converted to SAP S/4HANA the Material Ledger will be activated if not active already.

Latest trends in material management aim for improved and more flexible valuation methods in multiple currencies and parallel accounting standards while simultaneously reducing required system resources and improving scalability of the business processes. Since the data model of the Material Ledger (ML) module supports these business requirements, it was chosen as the basis for material inventory valuation in the new solution SAP S/4HANA.

It is very important to distinguish between Material Ledger, in its role as an inventory sub-ledger in Accounting, and business feature Actual Costing. Material Ledger, as the inventory sub-ledger, valuates material inventories in multiple currencies and GAAPs in parallel. In addition Material Ledger is a base prerequisite for the use of Actual Costing. With Actual Costing you can valuate your material inventories, work in process and cost of goods sold with weighted average unit costs that are being calculated after the fact by evaluating business transactions of one or several posting periods. 

Also other features, e.g. actual cost component split, are provided by Actual Costing. 

Even though Material Ledger is become obligatorily active, Actual Costing is not. Activation of Actual Costing is still optional.

12. Material Valuation – Statistical Moving Average Priced

The deactivation of the statistical moving average is not mandatory in SAP S/4HANA, but recommended to achieve a significant increase of transactional data throughput for goods movements. It is important to note that the deactivation is not reversible. The deactivation of the statistical moving average is the consequence of new lock behaviour for materials with price control "Standard". This new lock behaviour does not use exclusive locks anymore. The activation of the new lock behaviour leads to the deactivation of the statistical moving average. 

As a result, end users, creating material master data in SAP S/4HANA, have to select one of the following material valuation methods for a material:  

• Price control "Standard" that offers a fixed price inventory valuation, no parallel "statistical" moving average valuation. Only dedicated business transactions can change unit costs (e.g. MR21). But a significantly increased transactional data throughput for goods movements can be achieved. 

• Price control "Moving Average" with which unit costs of material inventory might be changed by any business transaction, but transactional data throughput is still limited by the exclusive locking.

13. Legacy System Migration Workbench

The Legacy System Migration Workbench (LSMW) can be considered as the target architecture. The available functional equivalent is Data Migration Server (DMIS) and SAP Migration Workbench (MWB). 

The Legacy System Migration Workbench is available in SAP S/4HANA in an unchanged manner. The LSMW function is still available / can be used in combination with SAP S/4HANA on-premise.

This blog is the reference to document “S4_OP1511-Simple logistics”

SAP Activate Methodology

SAP has announced the SAP Activate which is the combination of SAP Best Practices, guided configuration and methodology for SAP S/4 HANA allows you to build smart and run simple.

SAP Activate gives you the freedom to run fast (with a reference solution), beautifully (with a state-of-the-art Fiori UX), lean (with a lower TCO and continuous innovation), far (built-in extensibility to fit your needs), and flexibility (do it yourself or with a preferred partner or with SAP)

The SAP Activate Methodology replaces the ASAP as SAP's implementation methodology for SAP S/4 HANA and all other SAP solutions.

SAP Activate Methodology is a modular and agile framework for implementation and migration of SAP that provided content and guidance to project teams. It supports project teams through all stages of the project, from initial planning, through requirement implementation, to the on-going improvement in SAP solution.

There are two variant in Activate Methodology:
- SAP Activate Methodology for Cloud Solution
- SAP Activate Methodology for On-Premise Solution


SAP Activate Methodology for On-Premise Solution

This roadmap is intended to guide the implementation team through the On-Premise implementation utilizing Agile Methodologies (Agile implementation utilizes the SCRUM based approach to bulid solutions. This turn allows for an iterative implementation process with more flexibility for change).

This methodology is divided in six phases:

1. Discover
2. Prepare
3. Explore
4. Realize
5. Deploy
6. Run

1. Discover
The purpose of the Discover phase is to discover the solution capabilities, understand the business value and benefits of the solution to customer's business, determine the adoption strategy and roadmap in alignment with understanding the solution capabilities and product roadmap.

To conclude the Discover phase of SAP Activate, customers and sales team agree on: Implementation Scope, Project Timelines, Targeted Solution Model.

The next phase in the SAP Activate methodology is the Prepare Phase.

2. Prepare
The purpose of this phase is to provide the initial planning and preparation for the project. In this phase, the project is started, plans are finalized, project team is assigned, and work is under way to start the project optimally.

Activities in the Prepare phase:
- Define Project goals, a high-level scope, and a project plan
- Identify and quantify business value objectives
- Secure executive sponsorship
- Establish project standards, organization and governance
- Define and secure approval for the implementation/ upgrade strategy
- Define roles and responsibilities for the project team
- Validate the project objectives
- Develop roles and responsibilities for the project team
- Validate the project objectives
- Develop a project team training strategy, and start project team training.
- Establish project management, tracking, and reporting mechanisms for value delivery
- Document all initiation activities in the project charter
- Pre-assemble (or establish) the project environment,  infrastructure and IT systems including SAP Solution Manager
- And then prepare the Explore phase

3. Explore
The purpose of this phase is to perform a fit/gap analysis to validate the solution functionality included in the project scope and to confirm that the business requirements can be satisfied. Identified gaps and configuration values are added to the backlog for use in the next phase

Activities in the Explore phase:
- Prepare, setup and conduct solution validation workshops
- Refine business requirements
- Identify master data and organizational requirements
- Confirm to be business processes
- Define functional solution design, including  a gap analysis in solution design workshops
- Associate business requirements to the process hierarchy and the solution components
- Obtain business sign-off on delta requirements and design documents
- Collect end user information, analyzing learning needs, and developing a learning deployment strategy.
- Establish project management, tracking and reporting for value delivery.

In the Explore phase, industry and solution experts from SAP lead a series of structured show-and-tell and solution design workshops. The goal of these workshops is to review the best practice functionality of the SAP solution, identify delta requirements or gaps and document the conceptual design of the to-be delivered SAP enterprise solution. The team documents all functional and technical requirements, project issues and gaps in SAP Solution Manager.

4. Realize
The purpose of this phase is to use a series of iterations to incrementally build and test an integrated business and system environment that is based on the business scenarios and process requirements identified in the previous phase. During this phase, data is loaded, adoption activities occur, and operations are planned.

Activities in the Realize phase::
- Establish the solution landscape
- Implement the solution in the development environment using incremental build in time-boxed iternations
- Conduct overall end-to-end testing of the solution within the QA environment
- Set up production environment
- Prepare for data migration and data archiving
- Conduct performance testing
- Conduct project team and key user training
- Finalize end user training materials and documentation
- Track and report on value delivery

During Realize phase, the project team uses a series of iterations to incrementally configure, test, confirm, and document the entire end-to-end solution and to create legacy data conversion programs. The project team actively works with business representatives to ensure good fit of the built solution to the requirements from the backlog. Project Team releases results of multiple iterations to the business users to accelerate time to value and provide early access to finalized functionality. Each release it thoroughly tested in end-to-end integration test and user acceptance test.

The project team documents the configuration decisions and solution in the SAP Solution Manager tool. They also document all development - including interfaces, integration points, data conversion programs, reports, and any required enhancements - in SAP Solution Manager. Once these activities are complete for particular release and the team has obtained business approval, they make the release available in the production environment.

5. Deploy
The purpose of this phase is to setup the production system, confirm customer organization readiness, and to switch business operations to the new system.

Activities in the Deploy phase:
- Resolve all crucial open issues:
               - Conduct system tests
               - Check that system management is in place
               - Proceed with cut-over activities, including data migration
- Execute transition and cutover plans including organizational change management (OCM) plans
- Complete all scheduled end user training
- Identify and document all issues encountered in the transition to the new solution
- Monitor business process results and the production environment
- Establish OCC** or a "extra-care" center of excellence for support that provides:
               - Production support processes
               - Exceptional business monitoring processes
               - Extraordinary technical support
               - System enhancements
- Track and report on value delivery

6. Run
The purpose of this phase is to further optimize and automate the operability of the solution. Operability is the ability to maintain IT systems in a functioning and operation condition, guaranteeing systems availability and required performance levels to support the execution of the enterprise's business operations.