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This blog post will provide the detailed process on Two-Tier ERP solution for the process of predictive maintenance with services integration in SAP S/4HANA Cloud from headquarters to subsidiary.

We will see how to leverage SAP Leonardo IoT with SAP Asset Intelligence Network in a secure cloud-based information exchange for equipment manufacturers, operators, and maintenance providers in a Two-Tier Set up. SAP Asset Intelligence Network provides a platform for effective collaboration between asset operators, asset manufacturers, service providers, and other stakeholders on asset definition, installation, usage, performance and service and maintenance. It is an asset business network that enables the scope of Industry 4.0 and the next generation of Intelligent Asset management


Business Context:

In an ever-evolving business model customers require product or equipment for their manufacturing activities for specific machine manufactures on rental basis to avoid capital expenditure.  Hence OEMs or headquarters provide equipment on rental basis for a particular lease duration. Since the machine is owned by the headquarter periodic maintenance must be ensured. In addition to the same predictive maintenance ensures the equipment at customer location is running without any interruption. This ensures zero downtime and increased customer satisfaction. Service providers or partners are alerted for equipment maintenances by the headquarters.

To understand better, customer places a contract with the Headquarters for an equipment. Equipment is delivered to the customer as a consignment and updated in master as equipment at customer location. The parameters or indicators are maintained in equipment master. IoT sensors in the equipment ensure key parameters are monitored and information relayed to OEM. Through predictive analytics from the indicator’s maintenance is triggered. The service providers are informed of the repair or service required with the customer and equipment details. Monthly rentals are charged against the contracts for the period equipment is at customer location. Between the headquarters and subsidiary, vendor invoicing is done for the service or repair carried out on the equipment.

Process Flow

Headquarters on SAP S/4HANA (on premise) integrated with SAP Asset Intelligence Network and Subsidiary is running on SAP S/4HANA Cloud. Through Two-Tier ERP solutions, seamless orchestration of process between Headquarters and Subsidiary along with below Integration points.

  1. Equipment Master is created when the good receipt is done postproduction into available stock with serial number generation.

  2. Equipment data with serial number is synced to the SAP Asset Intelligence Network.

  3. In the SAP Asset Intelligence Network, for the equipment key parameter or indicators are maintained that need to be monitored in the future.

  4. Customer places an order and rental contract is created with the material, contract duration and monthly rental to be paid as a periodic plan.

  5. Consignment Fill-up order is created against the rental contract. Delivery Document is created for shipping the material to the customer. During PGI serial number is added.

  6. Post PGI, equipment status for the serial number is updated to customer location with the customer details.

  7. The IoT sensors in the equipment periodically send details of the key parameters to PAI – Predictive Analytical Insights system in SAP Asset Intelligence Network.

  8. Data Analyzer check the data received against the standard details maintained. In case of any discrepancy and based on the alert mechanism set up in SAP Asset Intelligence Network, notifications are triggered to SAP S/4HANA OP system.

  9. Maintenance order is created with material that triggers purchase requisition which is converted to Purchase order with vendor as Subsidiary who carry out the services or repair at customer location.

  10. Service Order is created in SAP S/4HANA Cloud system in the subsidiary and synced to SAP Field Service Management. Service technician is assigned to the service order.

  11. Service confirmation is done, and invoice created with customer as headquarters in the subsidiary.

  12. Intercompany invoicing between subsidiary and headquarters is carried out.

  13. Customer monthly rental invoice is created from the rental contract.

  14. In case of any repair charges to be borne by customer, invoice is created against maintenance order.

Three Best Practices – 3D2, BH1 and 2EL are integrated for an end-to-end process flow.

The process starts with customer requesting for an equipment on a rental basis. In headquarters when post goods receipt is done for the material into available stock, serial number creation and equipment master creation is done. The equipment master details are synced to SAP Asset Intelligence Network integrated to SAP S/4HANA on-premise system. In SAP Asset Intelligence Network, for the equipment, key parameters or indicators are maintained.

Based on the customer order, rental contract is created for the specified period with periodic bill plan of the rental amount. With reference to the rental contract, consignment fill-up order is created. In the delivery document and subsequent post goods issue, serial number of the equipment is selected. The stock or equipment is transferred to the customer location however owned by the headquarters. Equipment master is updated with customer location details and synced to SAP Asset Intelligence Network.

IoT enabled data is sent from the equipment to the SAP Asset Intelligence Network. Data analyzer check the parameters received against the standard indicators set. Alert mechanism configured in SAP Asset Intelligence Network ensure notification is triggered for parameters that are deviating. Maintenance order is created in the SAP S/4HANA on-premise system. Based on the material in the maintenance order and purchase info record, purchase requisition and subsequent purchase order is created on the subsidiary running on SAP S/4HANA Cloud system. Service order is created for the purchase order. The service order is replicated to SAP Field Service Management wherein an agent is assigned. Service or repair of the equipment is done, and service confirmation sent back to the subsidiary for invoicing.

Billing document is created at subsidiary and billed to headquarter; corresponding supplier invoice will be created automatically at headquarter.

Rental invoice is created from the rental contract to the customer from the headquarters.

Business Benefits

  • Predictive maintenance through IoT enable data analytics ensure there is zero downtime of the equipment which in turn enhances customer satisfaction.

  • Building an Asset / Machine network - to bridge the gap between Manufacturers, Service Providers and Asset Owners / Operators.

  • Enable real-time condition monitoring and predictive, collaborative maintenance to improve services and support.

  • Experience greater automation for maintenance order in Two-Tier ERP. Seamless Integration of transactional steps like creation of service order at subsidiary.

  • Reduction in the data entry points from the business users.

  • Save costs for paper, postage, mailing, records management.

  • Enable higher degrees of scalability with process efficiency gains.


This blog post should help you to understand in detail about the predictive maintenance with service from subsidiary to customer against a purchase order in headquarter in Two-Tier Model.

Thanks for reading this blog post, hopefully the blog post was informative.

Two-Tier ERP Accelerators can be downloaded from best practice explorer and as shown in below screen

Best Practice Explorer

SAP Best Practice Explorer

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