The importance of building quality checks and material inspections into every stage of the supply chain can’t be overemphasized.
Besides saving time and money in the short term, integrating quality management (QM) into critical processes can deliver greater business benefits well into the future.
The represents a generalized logistic value chain: the diamonds represent quality gates that you can implement and through which the product must pass in the logistics and supply chain processes before it moves on to the next step.
In the following sections, we’ll briefly review some of the business processes in which QM integrates with logistics areas.
Materials Management
The QM integration with materials management (MM) attends to quality inspections of all procured materials. Inspections can be triggered even before goods are delivered, which allows a company’s representatives to visit suppliers to check the quality of the goods they produce.
The scope and complexities of MM are very large, so we restrict ourselves to covering either the integration points of QM with MM or where business processes in MM directly impact QM. The following subfunctions are heavily integrated with QM:
- Procurement
- Inventory management
For business processes in the procurement area, you’ll need MM’s organizational structure, such as the purchasing organization and purchasing group. For inventory management business processes, you’ll need the plant and storage location, which we covered previously.
The following are the organizational units that you need to ensure are available in the system so that your procurement processes run in the system and with which you can integrate QM:
- Purchasing organization: A purchasing organization can be a logical or actual division of a company’s purchasing functions and is responsible for managing and reporting procurement functions. For example, a purchasing organization can be a local or imports business.
- Purchasing group: A purchasing group is a person or group of persons responsible for the procurement of group of materials or services. Examples of purchase groups are raw materials, chemicals, maintenance spares, or consumables. When you create a purchasing group, it’s important to ensure that it isn’t created with a person’s name because that person’s role or area of responsibility may change.
Production Planning
When integrated with production planning (PP), QM adds two additional types of quality inspections: in-process and finished goods. During the production process, an in-process inspection ascertains the quality of goods in production. In this situation, the user performs the QM results recording, defects recording, and usage decision steps before releasing the material to the next stage of production. It’s also possible to embed quality controls in the production process so that the next step of a production process only begins after the quality results and usage decision from the previous step are recorded in the system.
Further, it’s also possible to incorporate quality inspection processes as soon as components or materials required in the production processes are issued out. For finished goods, the user performs the three quality steps before the stock is released for sale or consumption. In summary, three types of quality inspections are possible in a production process—goods issue, in-process, and goods receipt inspection—and in all three manufacturing types: discrete, process, and repetitive.
The quality management processes work well even when a company has implemented the embedded production planning and detailed scheduling (PP-DS) functionality of PP in SAP S/4HANA.
Sales
If the customer requires additional quality checks before goods can be dispatched, QM can handle them once it’s integrated with SAP S/4HANA Sales. When goods are issued against a sales order, the SAP S/4HANA system creates an automatic inspection lot that must first be checked for compliance with the customer’s quality specifications. QM can also trigger an inspection when a customer returns defective goods.
The business processes in SAP S/4HANA Sales are generally the starting point in the entire chain of business events. These are the organizational units of SAP S/4HANA Sales:
- Sales organization: A sales organization can be a logical or actual division of a company’s sales functions and is responsible for managing and reporting sales functions. For example, a sales organization can be a local or exports business.
- Distribution channel: A distribution channel is the logical or actual way or channel through which the company distributes or sells its products. Examples of distribution channels include retail, wholesale, institutional, government, or large corporate clients.
- Division: A division is the actual or logical group of a company’s products for which it wants to see its sales results or profits. Divisions can be cars, spare parts, or services for the automobile industry, or medicines, cosmetics, or consumer products for an herbal pharmaceutical company.
Plant Maintenance
If plant maintenance (PM) is used for routine, preventive, or predictive plant maintenance, companies should perform additional quality checks on equipment to ensure that it adheres to minimal maintenance criteria. They can do so by integrating QM with PM.
It’s also possible to use QM to map inspection scenarios into other business processes, including the following:
- Plant-to-plant inspections, in which goods transferred among various plants or distribution centers within the company go through quality checks to ensure that there are no damages during transportation
- Physical sample inspections, in which a company’s or competitor’s sample is evaluated to help in important decisions, such as whether to buy the material from a new supplier or change product specifications to match those of competitors
- Manual inspections in such situations as creating inspection lots for stored raw materials or finished goods or after natural or manmade disasters
- Inspections for stability studies performed on products under development to ensure that they meet certain physical or chemical specifications
- Custom inspections when the standard inspections in QM fail to meet particular business needs, such as integration with third-party quality management tools or inspection results from laboratory equipment
Embedded Extended Warehouse Management
Embedded extended warehouse management (EWM) in SAP S/4HANA has introduced significant improvements in the entire logistics and supply chain in general and QM in particular. The need to create and replicate embedded EWM master data, such as product master or location, is eliminated in SAP S/4HANA, making it faster and smoother to run embedded EWM integrated business processes.
There is, however, still a need to set up queued remote function calls (qRFCs) in SAP S/4HANA for embedded EWM so that the transactional data communicates between SAP S/4HANA and embedded EWM. Almost all embedded EWM integrated business processes are available in embedded EWM in SAP S/4HANA, and the ones that aren’t available yet are slated to be available in future releases.
Editor’s note: This post has been adapted from a section of the book Quality Management with SAP S/4HANA by Jawad Akhtar. Jawad is an SAP logistics and supply chain management expert with a focus on business sales and delivery. He earned his chemical engineering degree from the Missouri University of Science and Technology in the United States. He has more than 20 years of professional experience, 16 of which have been spent working with SAP systems. He has experience working on several large-scale, end-to-end SAP implementation project lifecycles, including rollouts. He works with SAP clients to help them identify the root causes of business issues and address those issues with the appropriate SAP products and change management strategies. He now focuses on next-generation SAP products such as SAP S/4HANA, SAP Integrated Business Planning, SAP Ariba, and SAP Customer Experience.
This blog post was originally published 3/2025.
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