Refurbishment process in PM/EAM

[Silambarasan]

 Introduction

Refurbishment process

Refurbishment is a strategic process aimed at revitalizing and restoring older or damaged assets to their optimal condition, ensuring prolonged usability and performance. Beginning with thorough assessment and planning, refurbishment involves disassembling, inspecting, and repairing components as necessary.

Refurbishment saves costs over Purchasing new components.

Refurbishment process can do in two methods:

1. Internal refurbishment order
2. External refurbishment order – subcontracting
3. External refurbishment order – service

This blog discusses the concepts of internal and external subcontracting without serial number

1.   Refurbishment order – External Subcontracting  process flowchart

   2.Refurbishment – internal process flow

Pre Requisite

1.Valuation Type

The process of refurbishment is applicable to refurbish-able materials only. A refurbish-able material is one for which valuation type (e.g. New, Damaged and Refurbish) is defined in material master. Stock is maintained for these materials in storage locations for each valuation type/batch separately. The price of material is different for each valuation type.

When such a material/component gets damage in the operative plant, it is removed from its equipment and immediately replaced with its spare, drawn from the stores. The damage material is returned to the stores in valuation type DAMAGED, which increases the stock of damaged materials.

Later, whenever the refurbishment of faulty materials will be planned based on the availability of manpower to do refurbishment or requirement of working condition spare materials in near future like for shutdown or overhauling event, material refurbishment will be done using Refurbishment orders.

**A material which has no standby stock and which is not split valuated in the batches of New, Damage & Refurbish based on its condition; is not in the scope of SAP refurbishment process. It must be repaired immediately and installed back on to its equipment using the corrective/ Breakdown order maintenance cycle.

2.Faulty Spare/Material stock in warehouse:

When equipment breaks down, it is removed from its operational site and replaced with a spare part or new equipment to ensure production continues uninterrupted. The faulty equipment and its spare parts are marked as damaged – Valuation type and returned to the warehouse, where the inventory is adjusted automatically with the corresponding costs. This entire procedure, from dismantling to storing the faulty equipment, is managed by generating a maintenance order using transaction code IW31.

Replacing the faulty Parts with New/ Refurbished using breakdown/corrective maintenance and sending the faulty parts to warehouse:

1.Refurbishment order creation – External (Subcontracting)

Pre requisite

• Faulty material stock should be availabe as Damaged- valuation type in warehouse

Step 1

T.code: IW81

Choose PM04 (STD) as the order type for the refurbishment order, and specify the priority, material, and planning plant.

Step 2

Input the description, planner group, main work center, cost, PM activity type, and target material quantity.

Specify the source and destination plants, storage locations, and valuation types. Include the basic start and finish dates, priority, and first operation details, such as the control key (PM02) for external work and others.

Activate the subcontracting button for subcontract refurbishment orders, verify the component batch, and save the order.

3.Purchasing Dept will create Subcontracting Purchase order against the PR

4.Inventory store/ warehouse, Issuing the  goods to subcontracting vendor in ME2O/MIGO t.code

5.Goods receipt from sub.vendor in MIGO t.code

6:The stock is updated at the order level upon goods movement, reflecting the system status and delivery quantity in the header.

7.Confirmation of the operation, TECO and Settlement

2.Refurbishment order creation – Internal

Pre requisite

• Faulty material stock should be available as Damaged- valuation type in warehouse

1. T.code: IW81

Choose PM04 (STD) as the order type for the refurbishment order, and specify the priority, material, and planning plant

2. Input the description, planner group, main work center, cost, PM activity type, and target material quantity.

Specify the source and destination plants, storage locations, and valuation types. Include the basic start and finish dates, priority, and first operation details, such as the control key (PM01) for internal work and others

 verify the component batch, and save the order.

3.Inventory /warehouse, issue the goods against the reservation for internal refurbishment work.

4.After the refurbishment done, goods get received from ref work to warehouse in T.code IW8W

5.The stock is updated at the order level upon goods movement, reflecting the system status and delivery quantity in the header

6.Confirmation of the operation, TECO and Settlement

[taekele_bijlsma]

Hi Silambarasan

Thanks for the clear explainer of the refurbishment process. We have also prepared ourselves for this process but faced two challenges. Would love to hear your and others opinion and experience. 

First challenge: When capital spares are involved, how do you handle the revaluation of any fixed asset tied to it? using split valuation your process works but the revaluation of your fixed asset should not be influenced by this.

Second challenge: subcontracting and EWM do not like each other. now a workaround with an IM managed warehouse is implemented. This, off course leads to additional steps in the warehousing process that are only needed to make this process work. They do not add business value and preferably be avoided. Did you already faced this and what was solution was chosen?

Best Taekele

[sveerabathiran]

Hi Silambarasan,

Is the explained process available in S/4HANA Cloud edition?

Suresh