SAP Refurbishment Proacaess

4/9/2019 External Refurbishment process for Repairable Spares with Serial number Integration | SAP Blogs
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Zafar Valsal
January 26, 2014 12 minute read
External Refurbishment process for Repairable Spares with

Serial number Integration
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16 Likes 17,155 Views 14 Comments
Summary
This document helps MM consultants to understand the way in which the external refurbishment process can be mapped
with the Integration of Subcontracting Purchase Order, Split Valuation and Serial Number to handle the complete cycle of
refurbishment and track the material in system with entire history of material movements for the particular serialized
material
Refurbishment for Repairable Spares
The refurbishment of repairable spares is important for industries like process industries, mass production, etc. where the
resources availability is of utmost importance & any downtime due to the equipment or system failure may run into huge
https://blogs.sap.com/2014/01/26/external-refurbishment-process-for-repairable-spares-with-serial-number-integration/ 1/40
losses. In such kind of industries, the key components of equipment / production system are maintained at high availability
(often referred to spare parts) whereby upon failure of the equipment, the faulty spare part from this equipment can be
replaced by a new / working spare part already in stock, so that the equipment can be started again.
Later, this faulty spare part can be refurbished again (by internal maintenance team or through an external refurbishment
vendor) & can be re-used.
External Refurbishment for Repairable Spares
In the below scenario taken up ahead, we will go through the case, when the refurbishment has to be performed
completely by an external vendor and the Inventory will be managed in the Spares Warehouse
Process Flow
The following graphic provides an overview of External Refurbishment for repairable spares taken for this
illustration:
Referring the above ow process, whenever the Maintenance department comes across a breakdown, it
identi es the spare part that has been damaged & it immediately replaces this faulty spare part with a new /
usable spare part (in working condition), so that the system is restored.
This movement of Spare part between the internal maintenance / user department, External Supplier &
External refurbishing contractor is highlighted by the terms – NEW, DEFECTIVE and REFURBISHED to indicate
the condition under which the spare part moves from one area to another.
External Supplier supplies the spare part in the NEW state. When the spare parts renders useless & cannot
function anymore, it is returned back to the Warehouse as a DEFECTIVE component. Later this DEFECTIVE
spare part is send to external refurbishing contractor for repair & once completed, it is sent to the Warehouse
as a REFURBISHED spare part. Meanwhile the Maintenance department is satis ed by the supply of another
functional spare part from the Warehouse, so that there is no stoppage due to non-availability of spare item.
Later for repairable spare item that cannot be further refurbished, it can be posted for scrapping.
In all these cycles, that happen on a particular spare part item, it is of vital importance to know at any time the
number of refurbishments performed on a given individual spare part item, so as to enable to do proper
planning of maintaining the adequate inventory in Warehouse for avoiding any resultant down times due to
unavailability of a functional spare part at any given time.
The above cycle will be explained in the Demonstration section below, for the scenario considered in this illustration.
Business Scenario
In the scenario taken up for illustration here, the Repairable spare items are managed by the Spare Parts
Warehouse.
Spare Parts Warehouse receives material at the time of initial procurement & then issues the material against
the reservation to the Maintenance / user department. The Issued repairable spare part material is used in the
Plant and when its usability ends, it is sent back to Warehouse for refurbishment by external vendor. The
warehouse does a receipt of this part (return to warehouse) & then creates a requisition for its external
refurbishment and replaces this part with another part of the same material from stock, if any, which can be
used by Maintenance for the time being. After the refurbishment is completed, the refurbished material is
received back in stock by Warehouse.
The usability of the Repairable spare part item needs to be bifurcated in system based on one of the 3 states of
the material as shown below:
NEW (when the material is purchased from the vendor initially and is in unused state)
DEFECTIVE (when the material is returned to Warehouse by Maintenance/user dept., after its usability ends)
REFURBISHED (when the material is received from the external refurbishing vendor, after refurbishment)
Also, the value of material in a NEW state will be more as compared to one in REFURBISHED state or in
DEFECTIVE state, which will have bare minimum value, which can be priced based on the business requirement
This bifurcation needs be re ected in the Stock of Spare Parts Warehouse along with the unique tracking /
identi cation for the individual Repairable Spare part item of the same material
Approach
The given business scenario can be managed by using Subcontracting for external Refurbishment, combined
with Split Valuation for the repairable spare parts & serialization for each part’s individual tracking
3 valuation types created under a new valuation category based on the Condition of the material, they are:
NEW (when the material is purchased from the vendor initially and is in unused state)
DEFECTIVE (when the material is returned to Warehouse by Maintenance/user dept., after its usability ends)
REFURBISHD (when the material is received from the external refurbishing vendor, after refurbishment)
For ease of accounting, it was decided that the DEFECTIVE material should always have a zero value (price
control given as standard price), whereas REFURBISHD material will take the price of the Refurbishment and
the components consumed in the refurbishment process, hence moving average price control assigned to other
2 valuation types
Further pre-requisites are explained below
Pre-requisites
A material master record must be created in the system for the repairable spare part
Split Valuation is activated bifurcation of repairable spare part based on its state / condition
Unique identi cation is only possible if the individual pieces of material have been serialized
You have installed DIMP 6.0, activated the business function Refurbishment and Subcontracting
(LOG_EAM_ROTSUB), Refurbishment and Subcontracting 2 (LOG_EAM_ROTSUB_2) and Serial Numbers in
Purchasing (LOG_MM_SERNO)
System Con guration Overview:
Con guration for Split Valuation
Below are some con guration settings required for using the Split Valuation for the Material based on its State
/ Condition viz. NEW, DEFECTIVE or REFURBISHED. The snap shots are self-explanatory.
Con guration:
Activation of Split Valuation:
De ning Valuation types:
De ning Valuation Category:
Assigning Types to Category:
Assigning Category to Organization unit:
Con guration for Serialization
We will use the existing standard Serial number pro le without any changes
Con guration for Subcontracting
No Speci c con guration required for Subcontracting, as we will be using the standard subcontracting process
without delivery
Con guration for Material Provision Indicators
Material Provision Indicators for Rework “S” will be used in the components for the scenario illustrated, based
on the Subcontracting Type selected in the purchase requisition
Demonstration for the Approach:
Material Master Extension for Valuation Types
The material master of the Repairable spare part needs to be extended to the new valuation types created viz.
NEW, DEFECTIVE and REFURBISHED.
Serial number assignment needs to be done in the Material (Test material created for Demo)
Valuation Category “M” entered in the Test Material
Extending the Test Material to all the 3 valuation types, one by one
Material extended to NEW valuation type
Similarly extend the Test Material to other valuation types, one by one
Material extended to DEFECTIVE valuation type
Material extended to REFURBISHED valuation type
Now the further illustration below will show the scenario with all the business transactions:
Upon return of DEFECTIVE material in Spare Parts Warehouse from User department, PR will be created by
Warehouse for External Refurbishment in this scenario taken up for Demo
{Alternatively there is also possibility in system to get the Subcontracting PR – for external refurbishment –
created from the order directly. As the subcontracting purchase order item has an account assignment to the
refurbishment order (account assignment F in the standard system) an additional posting might be necessary
to update the stock, depending on the special stock assignment of the purchase order. The additional posting
can be performed using business add-in (BAdI) BADI_DIAD_GOODMVT_1, for which a default implementation is
provided by SAP}
Step 1: Receipt of Defective Material through MIGO
Stock overview – visibility of the material with its state – DEFECTIVE (better visibility)
Serial number can be displayed for this material
Serial number history gets updated for this material
Step 2: Create Purchase Requisition for Subcontracting for the requirement of the REFURBISHED material &
selecting the Item Category as “L”
Select the Subcontracting Type as “1” – Reburbishment with unchanged material number, as in this case, we
are requistioning to get the same DEFECTIVE material returned back after refurbishment in REFURBISHED
state from the Vendor with the same Serial number
Due to the Subcontracting Type “1” – The component list automatically gets updated with the same material
number for this rework scenario & the Material Provision indicator “S” is updated. We need to specify the
Valuation type of this issuing component as DEFECTIVE & save the purchase requisition
Step 3: Next Purchase order is created referencing the purchase requisition
All the key subcontracting values like subcontracting type & the components would be adopted in the
Purchase order from the purchase requisition. Purchase order can be then saved & released subsequent to
addition of other Purchasing terms and conditions based on the contractual agreement with Vendor
Step 4: Once the PO is released to the Vendor, Warehouse can issue the components through MIGO –
Transfer Posting with reference to the Purchase Order; Alternatively the Transaction – ADSUBCON can also
be used instead
The Serial number of the DEFECTIVE component needs to be entered in this transfer, Warehouse can also
use the search facility, if required & then post the document
The Stock Overview can be checked to see the impact of this issue
The Serial number can be checked
The Serial number history can be viewed to see the updates
Step 5: Once the refurbishment is completed by the Subcontracting Vendor, the REFURBISHED material will
be received by Warehouse, for which they can perform Goods Receipt with reference to the Purchase Order
At Goods Receipt for this Subcontracting Purchase Order, the REFURBISHED material will be received using
movement type 101 & DEFECTIVE material will be consumed through movement type 543 from the Vendor
stock
Since the Subcontracting type selected was having Material Provision Indicator “S”, the same Serial number
will be proposed by system for the receiving & issuing line item. Check the item data of Receiving
REFURBISHED material & its Serial number
Check the item data of Issued DEFECTIVE material & its Serial number, which cannot be changed
Check the Accounting document after posting the Goods Receipt, whereby the DEFECTIVE components
price & external Refurbishment value is loaded on to the REFURBISHED component cost, as per the material
master’s accounting data maintained
After the Goods Receipt is posted, check the Stock Overview, whereby the DEFECTIVE component is now
converted into REFURBISHED material, which is under quality inspection stock type, based on the material
master quality data maintained
Complete history of all the movements happended for this material has been updated
Step 6: After the quality Inspection lot has been cleared, the material can be Issued against reservation to
Maintenance / User department
Step 7: Return to Warehouse from Maintenance / User department – after the issued material’s usability
ends – so that it can again be checked & send for External Refurbishment (This needs to be done in 2 steps)
Firstly, after the Material arrives in SPARE PARTS WAREHOUSE, it is checked & the same needs to be
transferred to the Valuation Type DEFECTIVE, before the Material is taken back in Warehouse. This can be
done via the Transaction IQ02 (Optionally, the Maintenance / User department can also perform this
transfer before sending the Material to Warehouse, depending on the business requirement)
Step 7a: Currently we can see that the Serial number is having the Master batch as REFURBISHED, based on
the last movement done at the time of Goods Issue (The Stock Batch is empty, as this Serial number is
issued & is not in Warehouse)
This Master batch needs to be modi ed to DEFECTIVE, before it can be taken back in Warehouse
Step 7b: Now the stock can be taken and posted as a Return to Warehouse item using MIGO via Movement
Type 262 & can be posted after entering the Serial number details
After the Goods Issue is posted, check the Stock Overview, whereby the DEFECTIVE component is now in
Warehouse Stock
Complete history of all the movements happended for this material has been updated
After Stock is returned back, now the above Refurbishment cycle can be repeated, again until the Repairable
Spare can be refurbished. All the material movements along with complete history will be updated for this
Repairable Spare item until its life span ends. At the end of its life Span, this component can be sent to Scrap
yard for Scrapping
Hope the above illustrated process will be helpful for mapping the External Refurbishment process for
Repairable Spares with Serial number Integration
Related Content
References have been taken from below sources
Reference 1
Reference 2
Reference 3
Reference 4
Reference 5
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Assigned tags
MM (Materials Management) | refurbishment | repairable | spares | split valuation |
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14 Comments
You must be Logged on to comment or reply to a post.
Dibyendu Patra
January 26, 2014 at 5:18 pm

Hi Zafar Valsal,
Very good document….
Just one information:
No need to give the split valuation con guration in details…
The con guration of split valuation is well covered in the document.
Split Valuation Activation & its Material Master creation
Otherwise you have done a very hard work in this document…
Keep it up..
Like (0)
Zafar Valsal | Post author
January 26, 2014 at 6:01 pm
Hi Dëv Päträ,
Thanks for your nice comments
In this document, I just went by the ow as per the prerequisites given by me, so that I cover all the steps
required by a person in need to reproduce this scenario for their use
I will de nitely keep your suggestion in mind from next time onward
Like (0)
Former Member
January 27, 2014 at 4:06 am
Hi,
Good document and great e ort. I think we can go for a refurbishment order, through which system can
generate a PR. Thus, there will be complete integration between PM and MM. But instead of inventorizing, the
cost will be booked against order, which you can settle subsequently.
Also, you could have mentioned the accounting entries during receipt of refurbished material. Anyway good
job. Keep sharing.
Regards,
Sudeep.
Like (0)
January 27, 2014 at 6:06 am

Hi Sudeep A,
Thanks for your nice feedback

You are absolutely correct, as through the another route, the subcontracting PR for refurbishment can also be
directly created from the Maintenance Order, whereby the REFURBISHED material will directly be consumed
on performing the Goods Receipt. Then if required, the business add-in (BAdI) BADI_DIAD_GOODMVT_1 can
be used to post it back to stock.
I will try to check out this scenario also & will update the goods receipt accounting document created in this
case of direct consumption
The existing accounting entries shown above are only for this particular scenario, whereby the receipt is
directly posted to stock
Thanks a lot again
Like (0)
Mehmet Ozgur Unal
March 13, 2014 at 6:38 pm

Hi Zafar;
Good e ort , thanks for sharing
Like (0)

March 17, 2014 at 10:34 am
Hi Mehmet Ozgur Unal
You’re welcome
Thanks for your nice comments,
Like (0)
Mohsin Abbasi
March 13, 2014 at 8:28 pm

Dear Zafar,
Awesome work man, i got my solution after reading this, as i have same scenario on new project, it will help me
a lot.
Best Regards
Mohsin Abbasi
Like (0)
March 17, 2014 at 10:32 am

Hi Mohsin Abbasi
I am glad to know this
thank you
Like (0)
Former Member
March 14, 2014 at 4:04 am

Hi Zafar Valsal
Quality document with detailed info. Good E ort.
Like (0)
March 17, 2014 at 10:30 am

Hi Bhâgyârâj Ġǿwdâ
Thanks for your nice comments
Like (0)
Former Member
August 1, 2014 at 11:16 am

Nice Document Zafar.
useful document to know about refurbishment process.
Thanks,
Sunil Boya
Like (0)
Former Member
November 23, 2015 at 11:45 am

Dear Zafar,
Nice document made by one.
I just want to ask one thing that I am trying to activate 2 Business functions.
1)LOG_EAM_ROTSUB_2
2)LOG_EAM_ROTSUB
but I am unable to nd both of these in sfw5.
DIMP 6.0 is also installed (EHP 7.0 with current patch level).
I would appreciate if you could guide us how to activate both of these Business function.
Thanks,
Sarang Shinde.
Like (0)
Gulshan Baral
June 27, 2016 at 4:15 pm

Great work Zafar. It’s a very nice document which describes an end to end external refurbishment process.
Earlier I was facing di culty in understanding external refurbishment, but after going through this document I
am very much clear & I am able to do it on my own.
Excellent document. Once again great work.
Thanks,
Gulshan
Like (0)
Former Member
July 5, 2016 at 6:00 pm

Hi Zafar,
Awesome document. I have one question though. I am trying to implement this solution at my organization but
we are not using serialized materials as of yet. When I do the GR, the MAP is the refurbished material is getting
updated with the current Refurbishment MAP + PO Price. It’s not updating as you have shown which is
Defective material price + PO price.
Can you kindly advise on why this is so? I do have split valuation set up and we have di erent prices set up for
the Defective and Refurbished materials.
Thanks.
Regards,
Sanjivi
Like (0)
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4/9/2019 External Refurbishment process for Repairable Spares with Serial number Integration | SAP Blogs

External Refurbishment process for Repairable Spares with

16 Likes 17,155 Views 14 Comments

Refurbishment for Repairable Spares

External Refurbishment for Repairable Spares

Further pre-requisites are explained below

System Con guration Overview:

Con guration for Split Valuation

Activation of Split Valuation:

De ning Valuation types:

De ning Valuation Category:

Assigning Types to Category:

Assigning Category to Organization unit:

Con guration for Serialization

Con guration for Subcontracting

Con guration for Material Provision Indicators

Demonstration for the Approach:

Material Master Extension for Valuation Types

Valuation Category “M” entered in the Test Material

Material extended to NEW valuation type

Material extended to DEFECTIVE valuation type

Material extended to REFURBISHED valuation type

Step 1: Receipt of Defective Material through MIGO

Serial number can be displayed for this material

Serial number history gets updated for this material

Step 3: Next Purchase order is created referencing the purchase requisition

The Serial number can be checked

The Serial number history can be viewed to see the updates

The Serial number can be checked

The Serial number history can be viewed to see the updates

The Serial number can be checked

The Serial number history can be viewed to see the updates

MM (Materials Management) | refurbishment | repairable | spares | split valuation |

Related Blog Posts

Outsourced Manufacturing – Classic Subcontracting

Maintaining the Warranty Data of material

Achieving Copy to clipboard functionality in MIGO Serial Numbers tab

Subcontracting problem with di erent Valuation Type recursive serial number

Serial number pro le tracking/relationship

Subcontracting from PM order with serial number

You must be Logged on to comment or reply to a post.

January 26, 2014 at 5:18 pm

Very good document….

Just one information:

No need to give the split valuation con guration in details…

The con guration of split valuation is well covered in the document.

Split Valuation Activation & its Material Master creation

Otherwise you have done a very hard work in this document…

Zafar Valsal | Post author

January 26, 2014 at 6:01 pm

Thanks for your nice comments

January 27, 2014 at 4:06 am

Zafar Valsal | Post author

January 27, 2014 at 6:06 am

Thanks for your nice feedback

Thanks a lot again

Mehmet Ozgur Unal

March 13, 2014 at 6:38 pm

Good e ort , thanks for sharing

Zafar Valsal | Post author

Thanks for your nice comments,

March 13, 2014 at 8:28 pm

Zafar Valsal | Post author

March 17, 2014 at 10:32 am