Industries use EWS for a variety of reasons. For example, a manufacturer of air conditioning units might have a system that alerts the manufacturing department when it identifies an increase in orders for the same repair parts from service centers in a certain region. This trend could indicate that the units had a defective part when they left the plant or that the part does not perform to vendor specifications.

I’ll explain how EWS works and describe the best way to set it up, using the example of an exception that informs supply chain management if production lead times exceed normal operational limits. This is a problem that can affect the ability to ship finished goods to customers on time.

Exceptions

EWS is based on the theory of exceptions and can alert you to issues such as these:

• Exceeded thresholds: Each day at a plant, the logistics functions operate within normal boundaries, such as the number of purchase orders created, Plant Maintenance (PM) notifications, and sales orders. If you know the parameters within which the plant operates, you can perform an analysis to inform you when exceptions occur outside of the normal operating boundaries. For example, the exception could occur when sales of a certain material exceed a predefined level for the day.
  
  
• Trends: If the delivery time for vendors is on average 4.5 days and in a certain month the delivery time has increased to six days, this indicates a trend and triggers the exception.
  
  
• Planned versus actual comparison: If a production facility plans on scrapping 200 kilos of material but scraps more than that, this would trigger the exception and raise the need for an investigation.

For all of these examples, without EWS in place, the exceptions would not be noted — and this could cost the company both financially and in customer goodwill.

Key Terms

EWS exists within Logistics Information System (LIS) and uses three objects found in LIS to create the exceptions: information structures, characteristics, and key figures.

Information structures. These are objects in which you can deposit information in a format that allows you to extract the data for future analysis. LIS has two types of information structures: standard structures that are predefined in SAP and self-defined structures that users create. The standard structures are delivered with the SAP system, but not all structures are applicable to the processes of all companies. Therefore, self-defined structures are available to enable the supply chain team to define its own structures based on values from other structures or individual tables.

Characteristic. The characteristic is a component of the information structure. It is an object for which you can collect information. For example, a characteristic may be a purchasing group, sales office, or a functional location. The characteristic value is the number of the purchasing group (e.g., 001) or the sales office number.

Key figures. The key figure is a value or set of values for the characteristics. For example, a key figure may be an invoice amount, rework percentage, or average lead time.

How to Create an Exception

To explain the exception, I’ll use an example from a past client. The logistics management team was concerned that the production lead times were increasing, so the team introduced new procedures. However, it did not know if the procedures would address the issues. To ensure that they would be aware of any erroneous lead times as soon as they occur, members of the team devised an exception in EWS to inform them immediately.

You can create an exception using transaction code MCY1 or by following menu path SAP Menu>Logistics>Logistics Controlling>Logistics Information System>Early Warning System>Exception>Create. Figure 1 shows the initial screen that you use to create the exception. The important factor here is to choose the correct information structure. Each functional area has a number of structures. You should examine these to determine the structure that contains the characteristics needed for the exception. In the example here, the exception for lead times uses S023, the information structure for materials. In this example, I created an exception with a meaningful name, ZEWS_PP_0001. I chose this name because it is a user-created EWS exception in the Production Planning (PP) area.

Figure 1

Initial screen in which you create an exception

After you select the information structure, you identify the relevant characteristics. Figure 2 shows the characteristics chosen from the S023 information structure. You can select any number of characteristics, but these depend on the exception you are creating. The exception built for monitoring lead times uses the characteristics Material, Month, MRP controller (material requirements planning), and Plant.

Figure 2

Select the characteristics for the exception

Figure 3 shows the key figures chosen for the characteristics. In this exception, the logistics team identified the actual lead times and the target lead times as the key figures that should define the exception.

Figure 3

Select the key figures for the exception

After selecting the characteristics and key figures, you need to determine what type of analysis you need to perform for the exception. Figure 4 shows the three analysis conditions from which you can choose: Threshold val. anal. (threshold), Trend analysis, or Plan/act. comparison (planned versus actual).

Figure 4

Select the Type of Condition

In this example, the logistics management team initially wanted to know when a production actual lead time had exceeded the threshold value in the new procedure. However, it indicated that a planned versus actual comparison was a possible option in the future, so it added the target lead time as a key figure as well.

After choosing the threshold value analysis, enter the values for it. In Figure 5, I selected a threshold for the lead time that is greater than six days (>6).

Figure 5

Assign the threshold value for the key figure

Figure 6 shows the alert information for the exception. When an actual lead time exceeding six days triggers an exception, the details in the exception direct the alert to the relevant parties. In Figure 6, the exception sends a fax and email, but does not trigger a workflow event. In this example, the follow-up processing requests that the system send an alert by email to a mailbox for alerts. As a backup it sends a fax to the production manager’s office. Many companies trigger a workflow event that informs a number of users and requires them to take actions.

Figure 6

Enter the alert information for the exception

Execute the Exception

You can execute the exception in different ways. The common method is to run a periodic analysis using transaction code MCYB or by following menu path SAP Menu>Logistics>Logistics Controlling>Logistics Information System>Early Warning System>Periodic Analysis>Schedule.

Figure 7 shows the options you can choose for running the exception — Hourly, Daily, Weekly, Monthly, or Other period. In this example I chose the Weekly option. You run ongoing EWS exceptions as background jobs and, depending on the severity of the potential issue, you would run the job at the appropriate interval. For example, a consumer products company making hundreds of thousands of items a day may need exceptions every hour, while a manufacturer of luxury vehicles may require a similar exception each month.

Figure 7

Define the frequency to run the exception

You can run the periodic analysis as a system-driven or event-driven analysis. The system-driven analysis executes the exception against all system data. An event-driven analysis uses data changed or added since the last exception run.

In addition to executing the exception periodically, you can run it in an ad-hoc method, as shown in Figure 8. Use transaction code MCYN or follow menu path SAP Menu>Logistics>Logistics Controlling>Logistics Information System>Early Warning System>Exception Analysis. When you run the exception manually, the user can enter various selection criteria, such as plant or MRP controller, and a given date range. The results of the manual selection show any exceptions for the data based on the criteria within the exception.

Figure 8

Execute the exception via transaction MCYN

Figure 9 shows the data for the exception. This information is for the materials that have an actual lead time over the exception, in this example six days. You can find further details by drilling down on a particular material. Select the material and choose the drilldown option from the menu. The next level of the drilldown shows the values for the other characteristics selected for that material, such as plant, MRP controller, and time period selected.

Figure 9

Results of the executed exception

By looking at the exception results, the logistics management team became aware that issues were still occurring with lead times even after the new production procedures were in place. EWS gave it the ability to address those issues in a timely manner before customers were affected by excessive lead times.