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Hello everyone.

One leading Pharma company of USA reached us to provide solution of a recent problem they are facing. We know Pharma Industries are governed by GxP compliances. The additional compliance introduced to it is that a specific country will allow drugs to be sold by the Pharma company if it is manufactured through an approved machine. I know the problem itself sounds complicated. Please refer the illustration for this.

Illustration : 1


Example: There 3 customer countries. Belgium, France & Germany. Belgium imposed a new rule that the Drug sold in their country should be manufactured through Reactor 4 only.


I used SAP segmentation (Reference 1) for this problem to solve. SAP has released SAP segmentation functionality applicable on SAP PP-PI in SAP S/4HANA 2021 (Reference 2) version. SAP Segmentation was initially introduced in SAP S/4HANA Fashion management Solution. This solution mainly meant for fashion products wholesaler, retailer & manufacturer. Segmentation plays a pivotal role in linking demand elements & supply elements. For an example, in Make-to-Order scenario, a sales order links all supply elements like planned orders, purchase requisitions, purchase orders, production orders & deliveries, so as in Segmentation. However, unlike MTO scenario, Segmentation is a free defined value and does not restrict to sales order line item only. It could be customer region, country, customer priority, customer quality index so on. Furthermore, Segmentation plays a role in demand optimization as it impacts Planned Independent Requirement and Sales Order both.

Main Solution:

The solution landscape includes SAP & non-SAP system. Before we deep dive into the solution, let us take a look on the process wise application usage.

Illustration 2


As we understand, SAP will govern the master data as well the end-to-end supply chain execution process, it is imperative that SAP controls the use of Resource (Reactor 4) for Belgium first. As per the illustration 1, there 4 processes to manufacture the drug. But the country restriction applied on main process “Bio-Reactor”. Now, this process has 4 resources; out of which Resource 4 is allowed for Belgium. So, Reactor 1 to 3 can not manufacture Batch meant for Belgium. But, Reactor 4 can manufacture batches for all 3 countries where Belgium has the highest priority to it. We addressed the order priority of Reactor 4 in Planning tool (which is non-SAP). The resource used in master recipe for the Drug must follow a rule of exclusion.

The Master recipe set up done with 2 alternatives. The first one contains country France & Germany (Belgium excluded) and the second one contains all countries.

                                                                Illustration: 3 (Master Recipe Alternative 1)

                                                                Illustration 4: (Master recipe alternate 2)

There are prerequisite set ups to activate Segmentation at a material level. These are Segmentation Characteristics, Segmentation Strategy & assignment segmentation strategy to materials. Please refer the link of reference 3 for this.

The transactional step for manufacturing is Planned Order from planning tool, convert to process order, release to create batch & confirmation with goods movement. As SAP creates process order before batch creation, that means the process order must be linked to a specific country that will allow the master recipe determination through production version. Also, this country value in segmentation must flow to the Batch created form this process order automatically till goods receipt. Thus, SAP will ensure country wise restriction on Drugs manufacturing process.

Before we start the illustration of core solution, let us look on SAP Segmentation adopted cycle.

                                                Illustration 5: The SAP Best Practices with Segmentation


Here in the illustration, we will observe a parallel cycle. The Country ‘Belgium’ is handled with country wise restriction compliance and ‘France’ has not implied that till now.

                                                                Illustration: 6 – Planned Order with Segmentation

Illustration 7: Automatic selection of Master Recipe based on Segment assigned to Planned Orders during conversion to Process Orders

Illustration 8: Country assignment in Segmentation filed

Illustration: 9 – Resource determination from Master Recipe based on Country exclusion rule in Segmentation


Illustration: 10 – Master batch created from process order that has same Segmentation assignment

Illustration: 11 – Stock with Segmentation


Illustration 12: Sales Order with Segmentation

Now, we set the system for batch determination in OBD Shelf-Life Expiration Date (SLED) methodology. The system derived Batch number in a country specific way. This provided the final system driven compliance to ‘Country wise restriction on Drug Manufacturing’.

Illustration 13: Country wise SLED based Batch determination in OBD



The SAP segmentation ensures country wise restriction on resource usage by manufacturing process. It enables user to do seamless transactions on SAP Fiori platform without worrying about compliance. I would vouch that SAP Blog Posts helped me figure out the solution outline. I referred the blog posts shared through link in reference 3. I would request all community members to read, follow and share feedback on this topic. I will write more blog posts on use of SAP Segmentation in other industries as well. Please follow my profile for more.

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  1. https://help.sap.com/docs/SAP_ERP_SPV/349992fb60854a62a264d716ad5c8f54/50d69e52c406215ce10000000a445...

  2. https://help.sap.com/doc/f2591a6901344c97a5e2029cc8f3703e/2021/en-US/SIMPL_OP2021.pdf

  3. https://blogs.sap.com/2021/11/16/s-4hana-2021-improvements-for-segmentation-in-process-orders/

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