Aircraft Spare Parts Valuation Process in Airline Industry - by Ravishankar Telluri
Aircraft Spare Parts Valuation Process in Airline Industry - by Ravishankar Telluri
Aircraft Spare Parts Valuation Process in Airline Industry - by Ravishankar Telluri
in Airline Industry
Contents
Background..................................................................................................................................................2
Types of Aircraft Spare Parts.......................................................................................................................2
As Is Inventory Valuation.............................................................................................................................3
To Be Business Need...................................................................................................................................3
Business Benefits.........................................................................................................................................3
How the TO BE process works in SAP..........................................................................................................3
Conclusion.................................................................................................................................................10
Background
This document describes about how the Aircraft Parts valuation process is optimized in SAP for
Delta Airlines.
Delta Air Lines is a major United States airline headquartered in Atlanta, Georgia, in the United
States. The airline operates an extensive domestic and international network serving all
continents except Antarctica. Delta Air Lines and its subsidiaries operate over 5,000 flights every
day and have approximately 80,000 employees. The airline's hub at Hartsfield-Jackson Atlanta
International Airport is the world's busiest airport by passenger traffic and number of landings
and takeoffs.
The Maintenance, Repair and Operations (MRO) supply chain planning process, controlling and
accounting the flow of repairable parts, is more complex and challenging; but effectively
managing rotable parts reduces the cost for your aftermarket operation and increases
profitability. It is crucial that the MRO supply chain is well integrated to provide visibility of
serviceable and unserviceable parts between the repair shop, supplier, warehouse and customer.
As Is Inventory Valuation
In AS IS, Spare Parts procurement and valuation is processed in Legacy system (SCEPTRE).
To Be Business Need
Implement the Procurement of Spare Part process (PO, GR, IR) into SAP
Track the Spare parts units management in MM and value management in Asset
Accounting
Create the process for automatic creation/retirement/scraping of Spare Part assets
based on the goods movements (receipts booking, Scrapping).
Business Benefits
Integrated Asset accounting process with MM Goods movements
Saves lot of manual efforts in managing the asset accounting process in SAP.
Improving the accuracy and operational efficiency
Material master record number is external and created using the concatenation of MPN: CAGE CODE.
FFFC (Form Fit function class) serial number value is also maintained in the Material Master record.
Multiple materials (different MPNs and Cage Codes) can have the same FFFC value. The key function of
the FFFC is to recognize the parts with common functionality. These parts are interchangeable parts in
the Aircraft maintenance process. For example COKE and PEPSI will have the same FFFC serial
Number.
All of the above 3 values are key references for the reconciliations between Asset master quantity verses
Material Master quantity.
All Purchase Order receipts for these types of materials will be processed in logistics thru the standard
MM process. Since the standard price is always maintained as Zero in the Material Master the entire PO
price amount is posted on Price difference clearing account (Technically Asset clearing GL account is
mapped in the Account determination of Price difference). So as per the account determination setting
the receipt process will post the below entry.
From MM side only Material master quantity is updated. No Inventory valuation in MM.
The designed Custom enhancement will auto post the asset accounting postings (additions, retirements
and transfers). Custom enhancement reads the Logistics material movement documents data and
prepares and creates the IDOC for Asset accounting process. For example if custom enhancement reads
the 101 movement document then it creates the IDOC data that is needed for Asset creation BAPI/ Asset
addition BAPI.
Custom enhancement will create multiple asset master records for the same material. An asset master
record per month per material is maintained. For example Material ‘XYZ123’ with Qty 15 is received on
5th Feb 2011 (first purchase in 2011) then Custom process will create an asset record with Qty of 10 and
Capital date of 5th Feb 2011. If the next receipt is received on 20 th Feb 2011 then it is processed as
addition to the exiting asset. All other subsequent receipts in the same month will be processed as
additions to the exiting asset master. The receipts in the next month will be processed with another new
Asset Master record with Next month date as Capital date. All subsequent months receipts will follow
the same process (an Asset record per month per material). Purchase price is posted as the APC value of
the asset.
If the custom process reads the Scrap or retirement type of movement then it creates the IDOC data for
Asset accounting process. For example the Custom process reads 551 movement type documents then it
processes the Asset retirement posting. The earliest purchased Asset master records are retired first.
The IDOC data is processed by standard IDOC processing mechanism (Message Type/BAPI).
Here are the some of the examples of IDOC message types handled by the custom enhancement.
Material Movements and corresponding Custom IDOC message type for Asset Accounting updates.
411,412 ZFB01
262 zfb08_ab08
311, 631, 312, 632, 309, 310, Z39 and z41 ZABUMN
IDOC Type and Custom Function Module attached to the IDOC message type to process:
1)
Collect the data and create the asset accounting postings (Create asset/Additions)
2)
ZASSET_PROCESS_ABAVN
Collect the data and determine the Asset Master and quantity to be retired. Then the below BAPI is called to post Asset
Retirement.
3)
ZASSET_PROCESS_ABUMN
This collects the data and process the Asset Transfers (Inter Company and Intra Company)
Conclusion
This process improves the operational efficiency by reducing the cycle times in Supply Chain,
Inventory and asset accounting departments.