Enterprise Resource Planning Blogs by SAP
Get insights and updates about cloud ERP and RISE with SAP, SAP S/4HANA and SAP S/4HANA Cloud, and more enterprise management capabilities with SAP blog posts.
Showing results for 
Search instead for 
Did you mean: 
Product and Topic Expert
Product and Topic Expert

This blog outlines the Two-Tier scenario, which involves integrating multiple specification inspections between a Headquarter and Subsidiary, using two distinct instances of SAP. This scenario is particularly beneficial for process industries operating in a two-tier structure, where the subsidiary interacts directly with customers by receiving demand and subsequently shares it with the Headquarters. The Headquarters is responsible for manufacturing and inspecting the products, ensuring compliance with country-specific quality standards.


Business Enterprises operating in a Two-Tier setup have implemented a system where the subsidiary utilizes SAP S/4HANA Cloud Public Edition as Tier 2, while the headquarter runs on either of the various deployments such as SAP S/4HANA, ECC systems acting as Tier 1. The objective is to manufacture products in accordance with country-specific standards.

In this setup, the subsidiary, operating on SAP S/4HANA Cloud Public Edition, sends assembly demands to the headquarter. The headquarter, functioning as a production and inspection unit, receives the demand, plans, produces, inspects, and delivers the requested products back to the subsidiary. In this process, the subsidiary acts as a customer, while the headquarter fulfils the role of the production and inspection entity. It is crucial for the business organization to manufacture the product and conduct inspections based on the specific standards of the target country in order to ensure suitability and compliance upon delivery.

Two-Tier Solution:

The Two-Tier Solution facilitates direct API-based integration between the SAP S/4HANA Cloud Public Edition system deployed at the subsidiary and the SAP S/4HANA Cloud Private Edition/SAP S/4HANA/SAP ECC system utilized at the Headquarters. This integration ensures that the manufacturing process meets the necessary standards required for specific countries, thereby enabling the production of products that comply with country-specific requirements.

Let's see the process flow,

Figure1: Integrated Multiple Specification Inspection in Two-Tier ERP

The process flow for the Two-Tier scenario Integrated Multiple Specification Inspection in Two-Tier ERP is as below,

  1. The process starts with the creation of purchase order at Tier 2 system and the demand flows to Tier 1 system via API to trigger automatic creation of sales order at Tier 1 and sends back the purchase order confirmation to Tier 2 system. Also, the sales order number will be updated in the purchase order document at Tier 2.

  2. Once the sales order created in Tier 1, production planner perform the MRP run to generate the planned order against the customer sales requirement. Followed by that planned order will be converted to Production order to proceed with the production activities to manufacture batch managed product.

  3. In Tier 1, Quality Inspector completes the Multiple specification Inspection by recording results for each characteristic which updates the batch classification characteristics automatically. After the completion of usage decision, stock will be received into unrestricted use.

  4. Once the manufacturing and Multiple specification inspection completes, Shipping specialist at Tier 1, creates Outbound delivery and complete the Post Goods Issue (PGI) against the sales requirement. Upon saving the outbound delivery, Quality Certificate will be generated. Download the Quality Certificate and the PDF document of certificate is shared from Tier 1 to Tier 2 via email.

  5. PGI at Tier 1 triggers the shipping notification and automatic creation of inbound delivery with Supplier batch at Tier 2. Copy the Supplier Batch to Material Batch via BAdI "LE_SHP_SAVE_DOCUMENT_PREPARE (Modify Standard and Custom Fields for Delivery Header and Items)".

  6. Receiving Specialist at Tier 2 completes Post Goods Receipt (PGR) against the Inbound delivery which generates the receiving inspection lot and certificate receipt document.

  7. Quality Inspector at Tier 2, attach the Quality Certificate document received from Tier 1 system (in step 4) and change the status of certificate receipt document to ‘Checked and Stored’ which confirm the certificate receipt in the receiving inspection lot by changing the status from CTCM to CORK.

  8. In Tier 2, Quality Inspector completes the result recording by referring the Quality Certificate received from Tier 1 and uploaded in Certificate receipt document of Tier 2. After the completion of usage decision in the receiving inspection lot, the batch classified product will be received into the unrestricted use.

  9. In Tier 1, Account Receivable Accountant generates the invoice and billing documents which in turn will be received into the Tier 2 system.

  10. Subsequently, in Tier 2, the product that meets the specific requirements of the country will be delivered to the external customer located in that respective country.

Therefore, the product is produced and inspected in adherence to country-specific standards within the two-tier mode. Further a Quality certificate for batch can be generated from Tier 2 system during sale to external customers.