Two Methods to Procure Third-Party Services in SAP EAM

  • by Venu Cherupillil, Applications Consultant, PetSmart Inc.
  • March 29, 2013
Organizations sometimes seek services from external agencies for maintenance functions. Learn how materials management and plant maintenance functions integrate for handling those external services in Enterprise Asset Management.
Key Concept
You can generate a single purchase order per breakdown occurrence or preventative maintenance requirement with external services. For periodical services, you can settle each service visit by an external agency through service entry sheets generated by a maintenance plan. The acceptance of service entry sheets generates accounting entries for payments to vendors through normal logistics invoice verification.

Organizations may use external agencies for maintenance functions either because of a lack of necessary skills in-house, lack of capacity within the organization, or to reduce the cost of operations. SAP Enterprise Asset Management (EAM) has different scenarios for handling such requirements in both breakdown and preventative maintenance situations.

I describe two scenarios for integrating materials management (MM) and EAM (formerly called plant maintenance) to procure external services:

  • You can generate a single service purchase order (PO) per breakdown occurrence or preventative maintenance requirement.
  • A second method is to create a settlement work order with a service purchase order and then generate service entry sheets to acknowledge the acceptance of external service for payment. This can be accomplished periodically through preventative maintenance plans with service entry sheets as call objects.

In EAM, users create notifications when a breakdown of a technical asset occurs. Maintenance planners review the notification, record defect details, and convert the notifications to work orders for execution of repairs. In work orders, they enter the operations and assign spare parts for completing the work. The operations could be done by the company’s own technicians or by third-party contractors. Similarly, the spare parts may be from their own stock or from contractors.

The choice of an internal versus external operation for repairs or maintenance is based on the individual organization’s assessment of internal capacity, special skills requirements, contracting agreements with asset manufacturers and third parties, or other cost benefit analysis.

SAP EAM provides several functionalities to handle these requirements:

  • Purchase requisitions and POs can be generated to the third parties on the release of each work order.
  • A work order can have internal and external operations and internal and external materials.
  • You can create an Outline Agreement, Info Record, and Framework Order in MM as a reference document for the vendor and material group (also known as merchandise category in SAP Industry Solution – Retail). The labor can be treated as a material group or a service with service specifications.
  • These reference documents can be linked to task lists included in the maintenance plan to generate preventative maintenance work orders. These work orders, in turn, generate purchase requisitions for the work involved and can be converted to POs to be sent to vendors automatically.
  • The maintenance plan can be setup to generate service entry sheets as follow-on documents and can be accepted to post costs and pay the vendors periodically.

Out of the several possible scenarios, I describe two common ones representing breakdown and preventative maintenance situations.

Venu Cherupillil

Venu Cherupillil is a senior techno-functional consultant at PetSmart Inc. He has approximately 15 years of SAP experience in diverse areas of IS Retail, Materials Management, Enterprise Asset Management, Sales and Distribution, and various cross-application tools. He holds a bachelor’s degree in electrical engineering and a master’s degree in industrial management. He holds a number of certifications from SAP, including SAP Enterprise Architecture Framework. He is also an American SAP User Group presenter and is in the list of top contributors in the SAP Community Network.

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