Internal Product Development

1. Internal Product Development SAP Best Practices

2. Purpose, Benefits, and Key Process Steps • Purpose • The business process encompasses all steps necessary to setup and process a project to develop a new product. • Furthermore, the scenario is supported by the main cost object controlling functions required, such as preliminary costing and period-end closing. • Benefits • Project structuring • Simplified preliminary costing for complex projects • Revision levels ensure data consistency • Key process flows covered • Document Management (Easy Document Management) • Assign a document (KPR) to the material masters of the finished product • Project Management • Create a project based on a template • Product Data Management with Engineering CM • Create a change number for the design project • Display the BOM of the new product • Redisplay the BOM (effects of change number) • BOM status management • Assign revision level to the material master of the new product • Product Cost Controlling • Material cost estimate for the new product before and after BOM changes (effects of change on price is shown) • Material calculation • Project Closing • Record development (engineering) activities • Closing and Settlement of project

3. Required SAP Applications and Company Roles • Required • Enhancement package 5 for SAP ERP 6.0 • Company roles involved in process flows • Project Manager • Product Cost Controller • Engineering Specialist • Employee (Professional User) • Enterprise Controller • Asset Accountant

4. Detailed Process Description • Internal Product Development • This scenario supports companies in designing new products. • SAP Product Lifecycle Management provides the project management functions to collect all costs and documents for product development. The project provides a central structure for cost collection and documentation management. Transparent BOM handling and product data management functions help to turn the product specification into an engineering BOM that can be copied to create the production BOM. All project activities are recorded. • The internal design department sets up a design proposal for the new product, which serves as the basis for the product specification. • The new material master and material BOM are created in the backend system. Later, the production scheduler creates routing as a basis for production and calculation of the product. • To check the price level specified from the marketing department for the new product, the product cost controller calculates material costs using the BOM and routing. Since the estimated price exceeds the specified price limit, a component of the new product BOM is exchanged for a less expensive component using change management. The design department issues an engineering change master to collect and document all changes according the specification document. • Following a second costing run (cost estimate), the price meets the budget. Now the development status of the new product can be fixed by assigning a revision level. • At the end of the scenario, the internal design department records the activities it executed during the project, and finally closes the project. • The manufacturer creates a production BOM (by copying the engineering BOM (usage type 2) to the production BOM (usage type 1). QM in production, credit management and plant- and company closing.

5. Process Flow Diagram Internal Product Development Marketing Dept. Design Request for a New Product Project Manager Receive Specification from Internal Marketing Dep. and Create Doc. Info. Record Receive Design Request from Your Internal Marketing Department Approve Working Hours Generate Settlement Rule Transfer Recorded Data to Controlling Complete Project technically Project settlement to CO-PA Close completed project Create a Design Project Release Project Engineering Specialist Assign Revision Level to Header Material of New Product Lock Engineering Change Master Create Engineering Change Master (ECM) for CAD drawing Create New Engineering Change Master Record Working Hours Update Doc.Using CAD Document & assign to Header Material of New Product Product Design Process CAD Interface Create Material BOM (155.37) Activate Change Number Create Routing (155.39) Assign Revision Level Create Material Master for Header Material Create Document Info Record Create Production BOM from Engineering BOM Lock Engineering Change Master Change BOM and Display BOM Link Document Info Record to Header Material and Release Document Make BOM Costing Relevant Activate Change Number Product Cost Estimate too High Product Cost Controller Reference and Simulation Costing (187) Proceed Standard Cost Calculation (154) Create Cost Estimate with Quantity Structure Cost Estimate Enterprise Controller Period-End Closing “General” (181) BOM = Bill of Material, DM = Document Management

6. Process Flow Diagram Project Management Employee (Professional User) Record Working Hours (Optional) Direct Activity Allocation Project Manager Approve Working Hours Complete Project Technically (Optional) Generate Settlement Rule Actual Settlement of Project to Asset Management Period-End Closing for Plant (181) Actual Settlement of Project to Profitability Analysis (CO-PA) Maintain a Settlement Rule Close Completed Project Enterprise Controller Transfer Recorded Data to Controlling Assets Accountant (Optional) Create Asset

7. Diagram Connection Legend <Function> Hardcopy / Document External to SAP Financial Actuals Business Activity / Event Budget Planning Unit Process Manual Process Process Reference Existing Version / Data Sub-Process Reference Process Decision System Pass/Fail Decision