I answered my own question - I was able to trigger automating Service order to Standard order using Requirement class settings.
My Standard Sales order has two lines - First line is for the actual Material. eg. M1. This is where I enter serial number for equipment, Do the delivery and goods issue with 631 movement type, so it stays as consignment stock.
Next line has service Material eg. M2 (DIEN type) which is what I use for creating Service order to capture the cost of all services on Equipment and to track all the actions on the equipment (via Status profile)
So on service order, Service Material is M2 - However I am trying to now figure out how to assign Equipment (from line 10) on Objects tab in service order
