DMR Leads to More Efficient Procurement and Production Processes

  • by Jawad Akhtar, Head of SAP Delivery, AbacusConsulting
  • March 19, 2012
See how to reward a regular vendor who has been supplying a good quality product for a long time by providing reduced inspection requirements. That means not every delivery goes through a stringent quality control test. If a problem is identified in the supplied goods, you can change to normal or tightened inspection. You can achieve both with the Dynamic Modification Rule (DMR) in the quality management (QM) module. DMR can also help in the production process by reducing the data entry efforts needed to maintain results when several goods receipts are undertaken in different shifts. The benefit is improved business process efficiency.
Key Concept
The Dynamic Modification Rule (DMR) in the quality management (QM) module reduces data entry in results recording because all inspection lots with SKIP status no longer require data entry efforts. It can also help to improve organizational efficiencies if procurement or production yields a satisfactory output on a consistent basis. In procurement, DMR helps to quickly bring the raw material or packing material on the production line if the vendor adheres to the stringent quality control of the company. DMR provides for inspections at periodic intervals. As soon as any problem in quality is observed, it reverts back to regular or tightened inspection until the vendor again meets the quality standards.

Dynamic Modification Rule (DMR) functionality in quality management (QM) with its integration in procurement and production processes promises to bring about significant value addition and efficiency to business processes. It eliminates the need to routinely record all inspection results of every incoming raw material of a vendor or a continuous manufacturing finished good.

It skips a predefined number of inspection lots for results recording purposes and only requires a user to enter a usage decision of the inspection lots. However, any rejected inspection lot automatically triggers a normal or even tightened inspection. This ensures that necessary checks and balances are in place, despite moving toward automating some of the processes by means of implementing DMR for reduced inspection efforts.

The company benefits from reduced data entry effort as well as being able to reduce the lead time it take to clear (which is goods receipt processing time in the SAP system) these procured goods and make them available to the production process. It also helps to reduce inventory carrying costs. It enables vendors to negotiate better payment terms and a better selling price for their product, given that reliability with the company has been established. Eventually all these factors add up to a process called annual or periodic vendor evaluation in the SAP system (for which quality plays a very important role, in addition to price and timely deliveries).

My example of multiple goods receipts shows how DMR works. It starts with a reduced inspection. Then the inspection lot is rejected so you can see how the next inspection lots undergo regular or tightened inspection. Although the focus of this article is on DMR integration with the procurement process, the information is applicable to production processes.

To use DMR, you need to have QM master data set up correctly, including the sampling scheme, sampling procedure, Acceptable Quality Limit (AQL), and task list.

Jawad Akhtar

Jawad Akhtar earned his chemical engineering degree from Missouri University of Science and Technology. He has 17 years of professional experience, of which nine years are in SAP. He has completed eight end-to-end SAP project implementation lifecycles in the areas of PP, QM, MM, PM, and DMS in the steel, automobile, chemical, fertilizer, FMCG, and building products industries. He also has worked as an SAP integration manager and an SAP project manager. He has been proactively involved in a business development and solution architect role for seven years. He is the author of Production Planning and Control with SAP ERP, it's filled with in-depth infomation on discrete, process, and repetitive manufacturing types. His profile on LinkedIn is at http://pk.linkedin.com/in/jawadakhtar. You may follow Jawad on Twitter @jawadahl. Currently, he is associated with AbacusConsulting as Head of SAP Delivery.

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