| Status | Edited following Approval |
| Owner | |
| Stakeholders |
Issue
Syensqo has different types of plants i.e. Manufacturing, Distribution, Subcontracting, Consignment, Traded, Port plants, plants abroad etc. created in order to support different existing As-Is processes ex: Intercompany, Subcontracting etc. A lot of these plants are virtual plants i.e. do not have a physical location and are created to support a business process or legal/regulatory requirements. As part of ERP rebuild program the business processes are being standardised and therefore there is an opportunity to standardise and simplify the plant structure by getting rid of the virtual plants and those that are not needed for the future design. This simplification will improve supply chain transactions and increase opportunities for automation.
Recommendation
Based on the analysis, Option B: Simplify and standardise the Plant Structure is proposed. This option will simplify the and standardise the number of plants and the supply chain network of Syensqo. All the plants will have to evaluated based on the plant decision tree during the detailed design
Background & Context
Syensqo operates a diverse range of plant types to support various business processes. These include Manufacturing, Distribution, Subcontracting, Consignment, Traded, Port plants, and Plants Abroad. Each plant type was established to fulfill specific operational needs and to manage processes such as Intercompany transactions and Subcontracting. Notably, many of these plants are virtual i.e. they do not have a physical location. These virtual plants were created primarily to address particular business processes or to comply with legal and regulatory requirements, allowing Syensqo to navigate complex operational landscapes without maintaining a physical presence for each plant.
As-Is plant structure can be found here:
Following is the Overview of As-Is plants (Only the active plants as of writing this document are considered in the table below)
| Type of Plant | As-Is Counts | Purpose of the plants |
|---|---|---|
| Manufacturing Plants | 67 |
|
| Distribution Centers | 208 |
|
| Subcontracting Plants | 196 |
|
| Trading Plants | 18 |
|
| Consignment Plants | 8 |
|
| Maintenance Planning Plants | 64 |
|
| Maintenance Plants | 64 |
|
As a part of the To-Be design, plant represents a physical location where materials are produced, procured, stored, maintained or distributed. Following are some of the key functionalities at plant level
- Materials are valuated at plant level
- Inventory management functions including inventory reporting are carried out at plant level
- Materials Requirement Planning (MRP) is carried out at plant level
- Production and production planning activities are executed at plant level
- Quality management is carried out at plant level
- Maintenance and maintenance planning activities are executed at plant level
- A plant is the location where the technical objects of a company are installed i.e. Workcenter, functional location etc.
- Many master data objects are maintained at plant level ex: Material master MRP, Purchasing, QM etc.
- Plant is a key element for application system security
Assumptions
- Advanced Intercompany will be implemented in Syensqo which will get rid of the traded plants KDD017 - Intercompany Processing in the new ERP Solution - ERP Rebuild - Syensqo - Wiki knowledge base
- Sub-contracting plants are not required and will be managed via the standard sub-contracting process
Constraints
Any change in the current understanding of tax treatments / regulatory requirements will change the plant design
Impacts
Following are the impacts
Data Conversion and migration: Data from the As-Is systems need to be mapped based on the proposed Plant Structure
Cutover: Inventory migration approach should consider the plant design
Downstream System: There will be an impact on all the downstream systems that use Plant codes and there should be a one-time remediation or mapping exercise that should be undertaken
Business Rules
A location will be defined as a plant if atleast one the following conditions are met:
- Inventory is held and the ownership linked with this location
- Inventory is valued separately and material price varies
- Technical objects like functional locations etc., are reported and mapped to this location
- Location executes production and / or maintenance activities
- Has its own set of material master data values e.g. lead times, lot sizes etc.
- Location requires separate authorizations
Options considered
Following are the options proposed
Option A: Continue with the As-Is Plant Structure
No changes in the existing plant structure and we copy all the valid plants from the As-Is system. This option will enable the business to operate with the existing structure, however, will not enable Syensqo to reap complete benefits of the future design along with the automation opportunities.
Option B: Simplify and standardise the Plant Structure
As a part of this option, the plants are proposed to be simplified based on a decision tree. Each and every plant needs to be evaluated against the decision tree during detailed design to identify which of the As-Is plants are valid and needs to be created as plants in the To-Be structure
Following is the decision matrix used in the flow chart
| Decision Step | Rationale |
|---|---|
| Are all the assets and inventory owned by the vendor in this location? | If a location exclusively holds inventory or assets owned and managed by a vendor, it should be represented through the Business Partner – vendor. However, if a location contains inventory that is owned and managed by Syensqo, but also includes inventory provided by a vendor under a consignment arrangement, the existing plant can accommodate the vendor consignment process. In such cases, there is no need to create new plants. |
Are there any Sales/ Purchases/Maintenance/Storage/Production in this location? | If there are no sales or purchases of inventory occurring at a location or, if inventory is never stored in a location, there is no requirement to set up the location as a plant. |
| Is the location owned or leased by Syensqo? | If a location performs sales, purchases or holds inventory (as per question 2) and is owned, leased or managed by Syensqo, there is a requirement to represent this location as a plant in order to perform the relevant transactions. |
Is the location owned by a customer? | If a location is owned by a customer, and if the inventory is owned by Syensqo but not managed by Syensqo then a consignment sales process should be adopted in this location. If a location is owned by a customer, and if the inventory is not owned by Syensqo then a normal sales process should be adopted in this location. |
Requirement to capitalise the costs/Port? (Conversion / Consolidation etc.) | If a port is storing inventory for a period of time or if a port is changing the nature of the product (conversion, load consolidation/separation), then the port is playing the role of a distribution centre and should be treated as such. If a port is simply a location where goods transit to get to/from a destination, then a transportation location is sufficient to represent this location in the supply chain. Note that any transport specific costs such as duties, container charges, port charges, etc are all considered part of transport costs (as opposed to storage costs) and are handled through the normal transport management processes (and, therefore, do not require a plant or storage location). |
Inventory owned and managed by Syensqo and has a separate address to the existing plants | The location to be set-up as a separate plant |
Inventory owned and managed by Syensqo and doesn't have a separate address to the existing plants and needs to have separate valuation | There can be different material valuation requirement in case multiple GBU's exist in the same plant and can have different valuations due to having different supply chain network, Different external suppliers, different country of origin requirements, packing processes etc. If a material has to be valuated differently in two separate locations, there are 2 options, 1. to create a separate plant or 2. To enable split valuation. It is recommended at this point in time to create a separate plant. Further analysis will be conducted during the detailed design based on the analytical requirements if split valuation will be able to fulfil the requirements |
Inventory owned and managed by Syensqo and doesn't have a separate address to the existing plants and doesn't need to have separate valuation | The location will be set-up as storage location for an existing plant (If existing storage locations cannot be used) |
Is there a legal/regulatory / Security req to have a separate plant | There could be legal/regulatory/security requirements that will require the location to be set-up as a separate plant. The legal/regulatory requirement always takes precedence when we evaluate the location to be set-up as a plant. There will further evaluation done on case-by-case basis for the security requirements, if they can be fulfilled by any other attributes in the process / custom security objects that will take the precedence, however if the design becomes too complex creation of separate plant is advised |
Is the plant virtual and required for Intercompany Sales? | There is a technical requirement to have at least one plant assigned to the legal entity for Advanced Intercompany Sales process. In the case, where there are sales from the entities which doesn't have any plant, a virtual plant is created |
Evaluation
Option A: Continue with the As-Is Plant Structure | Option B: Simplify and standardise the Plant Structure | |
|---|---|---|
| Operational Complexity |
Stock take is cumbersome as some of the stock is not physically present but is represented as physical stock in the system |
Unified stock take process simplifies inventory management. Clear distinction between Physical Stock, Consignment stock, Subcontracting stock, SIT |
System Complexity |
Multiple virtual plants introduce complexity / performance issues in reporting |  Pro: Lesser plants in the system. Complex enhancements not required to keep the stock in sync |
| Automation |  Con: Limited automation potential due to fragmented plant types. | Pro: Any new automations can be built easily as there are not virtual plants and virtual postings and therefore lesser scenarios to model |
| Data Management | Con: Data will have to managed at different plants Fragmented data may lead to inconsistent reporting and analysis. | |
| Data Migration | Pro: Less complex as the data mappings required are minimum | Con: Complex as there will be data mappings and de-duplications required. |
See also
Change log
Workflow history
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