Use of Segmentation in S/4 HANA for Product Revisions

With S/4 HANA, SAP introduced a concept called Segmentation that was available in an Industry Solution prior to S/4 HANA. This blog provides an overview of how Segmentation can be used to track product revision levels with segregation of inventory for each of those revision levels.

In a B2B world, usually a product is assigned a new identification (new part#/material#) if there is a change to the form/fit/function. But if the change is minor (no change in form/fit/function), the customer assigns a revision level and may specify that product revisions are not interchangeable. One solution to solve this business requirement is Segmentation within S4/HANA that works throughout the supply chain. Segmentation can be used to assign revision levels and track these revisions (Inventory, Demand, Supply at these revision levels) throughout the logistics processes from Sales/ Procurement/ Manufacturing and Inventory.

ECN function provides the revision levels but cannot segregate inventory whereas Segmentation function can fill that gap of inventory tracking.

The screenshots are from 1809 release of S/4 HANA. Now let’s go into details of the set-up of Segmentation and its processing.

Easy Access Set-up

Characteristics

CT04 – Create a characteristic in the Segmentation grouping. This is similar to any other characteristic creation in S/4 HANA but it must be created in the special group for Segmentation (1 in screenshot) so that it is available for the creation of Segmentation structure.

The important part is the relevance for the characteristics on the Addnl. Data tab.

This relevancy provides the ability to have BOM and Routing (or other areas) to recognize the Segmentation. Make sure that the relevant ones are checked for your business process. For our task, we need the BOM and ROU to be relevant. As you can see there are other areas where this Segmentation can be made relevant. Ex – Weights & Volumes, Sales Statuses etc.

Segmentation

SGTS – Create a new Segmentation Structure with the Characteristic(s) created above. This allows the system to link the characteristic(s) to the Segmentation function. Segmentation is flexible based on the characteristics that can be created/customized depending on the unique business requirements. You can add multiple characteristics if necessary. For each of the characteristic, the blank value can be made as an acceptable input.

Master Data

Material Master

Assign the Segmentation Structure in the Material Master. Once the Segmentation is assigned, the batch functionality will be turned on automatically.

Important Note – Once the Segmentation is assigned to a Material Master, it can be changed only if there are no postings against that material.

BOM

The BOM maintenance is the same except the identification of the revision level (Segmentation characteristic). The option to “include” or “exclude” the component by revision level (Segmentation characteristic) is provided.

Routing

The Routing is like normal routing other than specifying that this routing is applicable to the revision level (Segmentation characteristic). Depending on the revision level the routing can be different to accommodate the change in the manufacturing process of the revision level.

Transaction Data

Stock Overview – The stock overview shows the stocks in different product revisions (Segmentation Characteristic). This is one of the key requirements – to track the inventory at the revision level without creating a new material#. As indicated, a batch is created for each revision (Segmentation characteristic). The MMBE selection screen is also enhanced to have the Segmentation as one of the filters.

Sales Orders – In the sales orders, the product revision (Segmentation characteristic) can be identified as the Requirement Segment. The Sales Pricing conditions can be specific to the revision level (Segmentation characteristic) with the creation of new condition table/access sequence that includes the Segmentation. Pricing can be specific to Requirement Segment from the Segmentation.

Purchase Order – While creating the Purchase Order, the product revision level can be specified to the vendor as stock segment so that the right revision level can be shipped. Note – I have moved the field Stock Segment on the PO screen to be before the Material for easier visibility. By default, in S/4 HANA you may have to scroll to the right to view this stock segment. The Purchasing Pricing conditions can be specific to the revision level (Segmentation characteristic) with the creation of new condition table/access sequence that includes the Segmentation.

Production Order – When a production order is created, the Stock Segment can be specified, and it is carried onto the Production Order Header/ Goods Receipt Tab.

MRP Requirements – The standard MD04 of stock requirements screen is enhanced to provide the visibility of the Stock segment as well as Requirement segments. The MRP requirements are visible for each of the product revisions.