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Salient Features of IS-CWM

- The meat transformation industry is different with respect to other industries since ituses the concept of "Catch Weight Management" popularly known as CWM. SAP hascome up with a specific solution for this industry with the name called SAP IS-CWM.

- The catch weight management property is different in the aspect that there is no fixedratio between the logistics unit of measure and valuation unit of measure.

-Due to this the process of inventory, procurement, production, billing and accounting aredifferent. The uniqueness of this industry is that the cost estimate changes very frequentlydue to the industry process. The cost estimation almost changes daily so the businessprocess system must be in a position to cater this need.

- The WIP clearing process and target cost calculation are different when compared to thestandard process.

- As per IS-CWM process there shall be only one accounting view in the material master,some special transactions are added for stock , price calculation etc to take care of bothlogistics as well as valuation unit of measures.

- The goods issue, goods receipt process are different since it involves the capturing of both units of measures.

A typical Business Scenario on IS-CWM

The business scenario involving the meat industry calls for a unique industry specificsolution offered by SAP known as IS-CWM.

The food industry is specific with the concept of catch weight functionality. The catchweight functionality allows the handling of two independent units of measure formaterials within the supply chain. For example pieces and kilograms can be used toinventory an item without a fixed ratio between both the units.

SAP Catch weight management(2.0) enables the catch weight management functionalitythrough out inventory management, product costing and financial accounting processes.

In the typical value chain within the food industry is a combination of two distinctstrategies

a)"Push"- Inbound deliveries of live stock or raw materials (e.g. hogs and Milk)b)"Pull"- Outbound deliveries of products (e.g. ham, cheese)

These two approaches are represented within the business scenario by 2 separateproduction

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stages. The “push” approach is triggered by the Procurement business process. And the“pull”approach is triggered by Demand Planning and completed the Sales & Delivery businessprocess. These business processes are connected by inventory scenarios.

Procurement in Catch Weight Management

I shall take the example of Hog as the live stock procured to demonstrate the catch weightfunctionality

The item hog is represented in the system as a catch weight material, i.e., it is controlledin two units of measure which ratio varies per animal; in other words, each hog has to beaccounted for with a different weight. In this business scenario, hogs are controlled in thebase unit of measure EA (each) and in the parallel unit of measure KG (kilograms).

Furthermore, each hog is identified individually in the system by a batch number,assigned fortraceability purposes, that carry the following characteristics:• Delivery Id: delivery identification of the hog to the slaughterhouse• Hog Id: vendor (farmer) hog identification• Hog Fat: hog classification based on weight and fat• Hog Origin: country where the hog was born and raised

Later on the normal purchasing process begins and during the goods receipt, a weight isentered in the system for each individual hog, along with the characteristics listed aboveassociated to a batch number. Thus each animal retains its own set of data.

Conversion Rate 110 KG <=> 1 EA

The production process is similar process as is done with other consumer goods andindustries products. Depending on which process the customer is comfortable we can goahead and propose either a production order (discrete manufacturing) or a process orderwith process management.

The uniqueness happens during the goods issue and goods receipt for those productswhich needs to be catch weight managed. During these inventory processes we need toprovide not only the base unit of measure (ea) but also the parallel or valuation unit of measure (KG) based on which a current cost estimate on the basis of current valuationquantities are carried out.

The cost estimation, the invoice verification, the billing functionality are different in casewe go with the catch weight management functionality.

The point is these above mentioned parameters are unique in the meat industry whencompared to other consumer products industry.