MRO Subcontracting Process in Aviation Industry

created by U Koya on Jul 21, 2015 11:46 AM, last modified by U Koya on Jul 22, 2015 8:05 AM
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Scope:
The Purpose of this document is to help SAP consultants to understand the MRO subcontracting process in Aviation Industry. This process
involves component dismantling from Aircraft, subcontracting work order creation and automatic purchase requisition generation, converting the
requisition to purchase order, shipping the component to subcontractor, goods receipt of the vendor processed (repaired) part, and reversal of
work order assigned goods receipt to Inventory (with and without Quality inspection) and the accounting posting associated at each step.
Following abbreviations are used in the document:
MM Materials Management
MRO - Maintenance, Repair and Overhaul
PR Purchase Requisition
PO Purchase Order
WO Work Order
QM Quality Management

Process:
In Aviation industry, reliable spare parts supply is essential for continuous aircraft operation. When an aircraft component is due for regular
maintenance checks or when the Maintenance department comes across a breakdown, it identifies the spare part that has been damaged and
dismantles it from the aircraft & replaces the faulty spare part with a new / usable spare part (in working condition), so that the system is restored.
The dismantled part is then sent for Repair to a subcontractor. The part is refurbished to working condition and is received into stock, which is then
available for use when required.
To be able to handle new / damaged parts separately, Split valuation of materials is used in SAP. Using split valuation, new or damaged parts can
be tracked separately both quantity and valuation wise. Also, serialization of materials is used to track each individual quantity of materials.

Prerequisites:
Software component: ECC-DIMP 605
Business functions:
Refurbishment and Subcontracting: LOG_EAM_ROTSUB
Refurbishment and Subcontracting 2: LOG_EAM_ROTSUB_2

 Software component: SAP-APPL 604

Business function:
Serial Numbers in Purchasing (LOG_MM_SERNO)
Configuration settings:
1.

Split valuation:
Activate split valuation

Define Global valuation category S-Condition

Define Global valuation types SERV (for parts in working condition) and UNSERV (for parts in non-working condition)

Link Valuation category and Valuation types

Activate Valuation category in plants

2.

Work Order type:

3.

Material Provision Indicator

Master data:
1.

Material is maintained with split valuation category

2.

Material Master is extended to SERV & UNSERV valuation types

Material is subjected to Batch Management

Material is subjected to Serialization

3.

Material is setup with sales data

4.

Vendor master

5.

Subcontracting Info Record

Process flow:

Note: Process flow applicable if material is not subjected to quality inspection

Business Scenario:
Dismantling the component from Aircraft and receiving to storage location:
Transaction: MIGO

Material document 4900097041 posted

Subcontracting Work Order Creation:

Transaction: IW31

Cost element, Purchase Org., Purch. group will be defaulted from configuration based on the ExternProfile assigned to work order type
and plant combination, and these can be overwritten during work order creation.

Release work order:

Transaction: IW32

Display work order and check the PR number:

Transaction: IW33

Display PR:
Transaction: ME53N

Release Purchase Requisition:

Transaction: ME54N

Convert Requisition to Purchase Order:

Transaction: ME21N

Clear the receiving parts batch number: A new batch number will be created during goods receipt of receiving part

Set the receiving parts valuation type to SERV

Release Purchase Order:

Transaction: ME29N

Output Purchase Order:

Transaction: ME9F

Outbound Delivery creation from Subcontracting Monitor:

Transaction: ADSUBCON
Components to be provided to subcontractor are issued through shipping.

Picking & PGI (Inventory Managed):

Transaction: VL02N

Enter picking quantity

Batch is defaulted from Purchase order
Valuation type is defaulted based on Batch master

Serial number is defaulted from purchase order

Accounting during PGI material document:

Display outbound delivery document flow using VL03N

Goods Receipt (Without QM):

Transaction: MIGO

Serial number of the receiving part during goods receipt will be same as the serial number of the component supplied to subcontractor
since the same part is getting repaired and sent back by the subcontractor.

Enter the receiving storage location

Verify the serial number of receiving part:

Verify the component details:

Components Batch: Defaulted from purchase order components

Components serial number: Defaulted from purchase order

Check for any messages

A new batch number is generated for the receiving part.

Post the document

Note: Above message with 2 material document numbers is an enhanced message to notify the users with the Goods receipt (101
movement type) and Goods Reversal document (262 movement type)
Since Goods receipt is posted with account assignment F-Order w.r.t to which repair is taking place, a reversal goods movement with
262 movement type needs to be posted to receive the stock into store, so that it is received into stock and available for future use.
System will post Automatic reversal document with 262 movement type using standard implementation of below BADI (active in IS A&D):

Display material document with 101 movement type:

Accounting during 101 movement:

The cost element of work order is debited with the repair charges (net price in repair purchase order) and GR/IR clearing
account is credited with the same amount.

Also, the consumption postings of components takes place:

Component inventory account is credited and Offsetting entry for inventory posting is debited.

Display material document with 262 movement type:

Material slip at header level is updated with the 101 material document number
(Part of standard BADI implementation)

Item text is updated with the PO and PO item information.

(Part of standard BADI implementation)

Accounting during 262 movement:

Since serviceable part (valuation type SERV) is posted to stock, inventory of serviceable part is debited and Offsetting entry for inventory
posting is credited.

Display stock overview:

Process flow for materials with QI:

The above process (without QI) works fine if the material is not subjected to quality inspection and the stock type during goods receipt
is unrestricted / blocked stock

If material is subjected to QI, an inspection lot will be created during 101 movement and reversal goods movement with 262
movement type can not be posted immediately since goods movement can not be carried out until inspection lot is completed with usage
decision and error message Change the inspection stock of Material XXXXXX in QM only will be displayed after 101 material document

SAP recommendation for materials with QI:

Create new movement type 901 similar to 101
Deactivate QI for 901 movement type
Create new movement type 962 similar to 262 and activate QI for 962 movement
Material master should be maintained with inspection type 05
Enhance standard implementation of BADI BADI_DIAD_GOODMVT_1 to post the automatic reversal with 962 movement type instead of
262 movement type
Post GR with 901 instead of 101, so no inspection lot is generated during GR when movement type is 901
Auto reversal is posted with 962 movement type and an inspection lot is created during reversal with 962 movement type
On clearing the usage decision, stock is posted to unrestricted use and available in store

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