03 procure to pay

7/28/2019 03 Procure to Pay

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Table of Contents

1 Introduction ......................................................................................................................... 3

1.1 Tenant ......................................................................................................................................3

1.2 Reference System .....................................................................................................................3

2 Introduction to Business Process Management .................................................................. 4

2.1 Overall Objectives ....................................................................................................................4

2.2 Roles and Segregation of Duties ..............................................................................................4

2.3 Specific Information .................................................................................................................5

2.4 Master and Organizational Data ..............................................................................................5

Master Data for the Business Scenario ...........................................................................................7

Approval Limits ................................................................................................................................7

3 Business Scenario: Procurement (Procure-to-Pay).............................................................. 7

3.1 Objectives .................................................................................................................................8

3.2 Overview of Business Tasks ......................................................................................................9

3.3 Login .........................................................................................................................................9

3.4 Create Sales Order..................................................................................................................10

3.5 Planning and Release Purchase Proposal...............................................................................11

3.6 Process Purchase Request and Order ....................................................................................13

3.7 Approve Purchase Order ........................................................................................................15

3.8 Post Goods Receipt ................................................................................................................16

3.9 Check the General Ledger Entries (optional) .........................................................................17

3.10 Post Supplier Invoice ..............................................................................................................18

3.11 Approve Supplier Invoice .......................................................................................................19

3.12 Select Items and Make Payment ............................................................................................20

3.13 Additional Optional Tasks ......................................................................................................22


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1 IntroductionThis assignment was originally developed by Nitin Kale` from University of Southern California and

has gone through multiple iterations and alterations. Thank you to Nitin for pioneering the effort. In

addition, the full assignment includes procure-to-pay and sales-to-cash along with some analytical

exercises. Due to time constraints here at the conference, we will complete only the procure-to-pay

assignment.

This assignment will introduce you to business transactions recorded in a fully-integrated system

called an ERP (enterprise resource planning) system.

1.1 TenantOn-demand customers want to focus on their business, not on running software. They expect no

upfront investment in hardware, predictable costs, and immediate access paired with rapid

deployment. The SAP Business ByDesign on-demand (SaaS) solution is initially setup by SAP shortly

after the customer requests it. The system is fully managed by SAP with high availability and highest

data security. For SAP Business ByDesign at least a 1 MBit/s internet connection is recommended.

SAP Business ByDesign is a web-based application and therefore only needs a standard web

browser.

The Tenant Provisioning service encompasses the following elements:

Tenant Set Up: SAP sets up the tenant ready for implementation and enables a smooth Go Live of

SAP Business ByDesign in full operative mode.

Tenant Operation: SAP manages the availability of the network-centered application and monitors

all the components of SAP Business ByDesign to see if they are up and running. It also checks the

traffic load on essential components in order to forecast delays and to invoke additional processes

to handle the overload.

Storage Operation: SAP takes care of the administration of all storage-related tasks with regard to

SAP Business ByDesign operations.

Application Management: For tenant operations, SAP takes care of monitoring and maintenance of

the SAP Business ByDesign application. This includes versioning, security, backups and system health

checks.

1.2 Reference SystemA reference system is a system that is preconfigured and loaded with realistic users and sample

data. The users and sample data are based on the model companyAlmika Inc. By following the step-by-step instructions in this hand-out, you will assume the identity of Almika users and use the built-

in sample data to carry out each of the business process tasks.


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2 Introduction to Business Process ManagementThe full set of exercises includes the procure-to-pay and the order-to-cash business transactions. In

section 2, we will focus on the procure-to-pay process.

2.1 Overall Objectives1. You will assume various roles and work within a medium-sized enterprise using an on-

demand information system (SAP Business ByDesign)

o To understand and execute various business processes and their variantso Perform different roles within the company and understand the responsibility and

authorization for each role

o To perform business tasks necessary to achieve the business process outcomeso Experience the end-to-end integration of SAP Business ByDesigno Learn to trouble shoot process issues within an ERP system

2. Describe the advantages of an on-demand solution for a small/medium sized enterprise2.2 Roles and Segregation of DutiesNormally, a company is run by people with different skill sets who perform different functions

within the organization. Often these individuals are grouped according to their functions or roles

within the company. For instance, there may be a sales department, an accounting department,

production, and so on. A persons function may be further refined within his functional area. For

example, the sales department might have sales managers, sales reps, telemarketers, and so on.

Typically an individual is allowed access to information, company assets, and given certain authority

based on his or her role and denied access to other information, assets, and authorizations which he

or she does not need to perform the tasks within the assigned role. This access limitation within the

company is called segregation of duties (SOD). SOD along with other internal controls can help the

company reduce the risk of fraud and errors.

Lets look at an example: Almika Company makes and sells solar heating systems. The sales reps are

allowed to negotiate prices with their customers. The sales rep enters the order for the heating

system into Almikas integrated ERP system, Business ByDesign. The warehouse delivers the heater

to the customer and the engineer installs the system. The billing clerk bills for the heating system

once it is installed at the customers site and the accounts receivable clerk collects the money from

the customer. If the sales rep did all of these tasks, he could enter a sales order for one amount, bill

the customer a higher amount and pocket the difference when payment came in. He could hide this

fraud by adjusting the customers invoice to reflect the original sales order; or, he could remove the

heater from the warehouse and deliver it anywhere, even his own home. By segregating theseduties or functions, Almika is reducing the likelihood that a single employee could commit such

frauds.

Just telling an employee that he is not allowed to do certain tasks or access information is usually

insufficient to prevent people from doing so. A well-designed integrated ERP system such as

Business ByDesign allows users to access the functions they need to fulfill their given tasks and

responsibilities within their roles, but prevents them from accessing areas within the system which


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are not needed to complete their job responsibilities. We will experience this system-enforced

segregation of duties in this exercise. You will be asked to assume various roles as you complete

each business transaction. Try to imagine yourself actually handing over a task to another employee

within the company as you change roles.

Business roles within SAP Business ByDesign give each employee access to various work centersbased upon their authorization. Therefore, as you progress through the exercises, you will have to

logout and log back in as a different role to access different work centers. This reflects the real life

situation where employees are given different roles, responsibilities and authorizations dictated by

legal and functional objectives.

2.3 Specific InformationThe roles in the procure-to-pay business cycle transactions for this assignment are listed below:

SAP Business

ByDesign User ID

Password Role Employee

Last

Name

Employee

First

Name

Student Name

SALES02P Welcome1 Sales

Representative

Jacob Kate

SALES01P Welcome1 Sales Manager Menson Bob

SUPPLYPLANNER01P Welcome1 Production

Manager

Stone Richard

WAREHOUSE02P Welcome1 Warehouse

Operator

Smith Mark

WAREHOUSE01P Welcome1 Warehouse

Manager

Loblanski Luther

FINANCIAL01 Welcome1 Chief Financial

Officer

Black Edward

FINANCIAL02 Welcome1 Financial

Accountant

Green Iris

PURCHASE02 Welcome1 Purchaser Warner Bill

2.4 Master and Organizational DataEach SAP Business ByDesign reference system contains essential master and organizational data,

which reflect the typical organizational structure of a mid-size company of a specific industry and

allow you to run the industry-specific processes using the appropriate master data; for example,

materials, vendors, or customers.

The following graphic gives you a high-level overview of the organizational structure of ALMIKA.


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Master Data for the Business ScenarioThe following table shows the specific master data you

will use for this section.

Master/Org. Data Type Name and Value Usage

Customer Silverstar Wholesale Corp.

(CP100110)

Sales

Product Cylinder customized Trade

(P100710)

Procurement (driven by Sales

Demand)

Supplier AMS Inc. (S100200) Procurement

Target Logistic Area Warehouse (P1100-20) Procurement (stock)

Freight-Forwarder ABC Cargo Worldwide

(S100800)

Sales - delivery

Ship-from-Location Almika Heating Cleveland

(P1100)

Sales - delivery

Logistics Area Warehouse (P1100-20) Internal warehouse

Approval Limits The following table shows some of the controls that have been put into the

reference company to simulate a real business environment.

Approval Type Limit Currency

Shopping Cart Approval $500 USD

Purchase Order Approval 3,500 USD

Supplier Invoice Approval 5,000 USD

Incoming Payment Approval none USD

Outgoing Payment Approval 10,000 USDPayment Deduction Approval

(Incoming)

50 USD

Expense and Reimbursement Approval 500 USD

3 Business Scenario: Procurement (Procure-to-Pay)You will execute the business scenario for Procure-to-Pay. The demand for procurement will be

generated from a sales order. You will start by creating a Sales Order for Material P100710,

Cylinder customized Trade. This material is purchased from a vendor and resold to customers

through two sales organizations P1110 Sales Heating and 2100 BR Columbus. The distributionchannel is Direct Sales. There is no in-house production for this material. The purpose of creating

the Sales Order is to generate demand that will trigger the procure-to-pay business process. At the

end of this procurement process you will end up with inventory of the material P100710, Cylinder

customized Trade.


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3.1 Objectives1. Perform different roles within the company and understand the responsibility and

authorization for each role within the business process.

2. Experience the end-to-end integration of SAP Business ByDesigno

Generate demand for a product that Almika sells to its customers by creating a salesorder

o Use supply planning to generate a purchase proposal for the shortfall of inventory tosatisfy the demand

o Explore and assign a source of supply for a purchase proposalo Understand why a purchase approval is important in the procurement processo Receive goods into inventoryo Learn how to process supplier invoices including appropriate approvals for payment


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3.2 Overview of Business TasksHere is an overview of business tasks and the roles that will perform those tasks.

3.3 LoginWe will be using the following tenant for this workshop.

https://my106203.sapbydesign.com

During this assignment, you will be logging in with different login IDs depending on your role within

the business process. The roles and passwords are given in section 2.3 of this document. If at any point during these exercises, your web browser warns you that the Cache limit has

been reached, clickyes to increase the limit and continue.

IMPORTANT NOTE: Since we are sharing login information, if you do make a mistakelogging in and lock a user for any reason, notify your instructor IMMEDIATELY so that the

login is not blocked for other students.

Sales Representative

Supply Planner

Supply Planner

Purchaser

CFO

Warehouse Manager

Financial Accountant

CFO

Financial Accountant Make payment

Approve Supplier Invoice

Create Supplier Invoice

Post Goods Receipt

Approve Purchase Order

Convert Purchase Request to Purchase

Order

Release Purchase Proposal to PurchaseRequest

Create a Purchase Proposal to satisfydemand

Create a Sales Order (generates demand)

Roles Business Tasks
https://my106203.sapbydesign.com/https://my106203.sapbydesign.com/


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Whenever the assignment asks you to enter your participant ID#, use the number given youin the front of these printed materials.Since all of us are logging in with the same login

information, your ID# will help us follow your work within the system.

3.4 Create Sales OrderLogon and Work Center Information

Logon ID / Role SALES02P Sales Representative / Kate Jacob

Work Center / View Sales Orders Common Tasks

Procedure

Field Name Data to Enter Activity / Button / Comment

Common Tasks list

Click New Sales Order.

(Account) Name CP100110 (Silverstar

Wholesale Corp.)

Press Enter or Tab

External Reference Your participant ID#

Requested Date < current date plus 7

days >

Items table

Product ID P100710 (Cylinder

customized Trade)

Quantity 100 ea You may use the calculator icon to enter this

number.

Click Submit, and choose Send Order

Confirmation to Account.


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Write down the Sales Order Number (at bottom of screen)

Log off, Click Yes on the message window. Restart Application (You will do this each time a new role

becomes responsible for a step in the process.)

3.5 Planning and Release Purchase ProposalLogon and Work Center Information

Logon ID / Role SUPPLYPLANNER01P Supply Planner / Richard Stone

Work Center / View Supply Planning Products

Procedure


Products view

Show list All Products by

Selection

and Find P100710 Click Go.

ProductID

P100710 (Cylinder

customized Trade)

Select the line item. (Select the line with anException) Click the left most column in a

row to select a row. (Clicking on the Product

ID or Description takes you to its master

data.)

Click Open.

Product Planning Details screen Supply and Demand List

Write down the Available Stock


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Select yourSales Order Number rowby

scrolling down and looking at the Document

ID column. Make sure that the Quantity is

100.

Write down the Projected Stock

Click New Planning Proposal. (You may need

to scroll to the top of the frame to view this

option.)A new row is created at the bottom

of the list.

A warning will occur enter a quantity greater

than zero. This prevents you from creating a

zero order.

In the new row, enter 100, the quantity of

your Sales Order. Click Enter.

Write down your purchase proposal

document ID number.

Supply and Demand List

Youll see that a purchase proposal was

generated with the quantity you have

proposed. (The row may be moved up.)

Change the Date on the proposal to one

week from today.

Enter

Product Planning Details screen

Click Save.


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Product

Description

Cylinder

customized TradeThis value is set by the system.

Open

Quantity

This should be the same quantity as your Purchase Request

and Sales Order

Gross Price $85

SupplierS100200 (AMS

Inc.)

Supplier IDs may appear in the Available Source of Supply table

list (scroll down). Select the Supplier and click Assign to

Selected Purchase Request.

Otherwise enter the supplier in the purchase request row.

Save and Close

Purchase Requests view

Show list

Assigned

Purchase

Requests

Click Go. Your Purchase Request now has AMS Inc. as the

Supplier.

Select the row of your purchase request and click Edit.

Purchase Request:### view

Notes Your participant

ID#

(you may have to click view all to see the notes tab), Add a row

and choose internal comment for the type of comment. Type

your participant ID in the details.

Click Save.

Click Close.

Purchase Requests view

Show list

Assigned

Purchase

Requests

The system will automatically take you to this view. Select the

row of your purchase request, for which the purchase order is

to be created, and click Quick Order.

Write down the Purchase Order ID that is created

automatically (see bottom of the screen).


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Click Close.

3.7 Approve Purchase OrderLogon and Work Center Information

Logon ID / Role FINANCIAL01 Chief Financial Officer / Edward Black

Work Center / View Managing My Area Approvals

Procedure


Approvals view

Show List Open tasks Select yourPurchase Order approval line

item.

Read the Business Task description.

Click Approve.

Click Refresh. The approval list does not show

that your Purchase Order is in need of

approval anymore. It has been approved.


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3.8 Post Goods ReceiptLogon and Work Center Information

Logon ID / Role WAREHOUSE01P Warehouse Manager / Luther Loblanski

Work Center / View Inbound Logistics Purchase Orders

Procedure


Purchase Orders view

Show list Open Purchase Orders

Purchase Order IDSelect your purchase order row, and click

Post Goods Receipt.

Create Inbound Delivery and Goods Receipt screen

Delivery Notification

ID

Your participant ID# This is the delivery notification ID of the

supplier / freight forwarder.

Actual Delivery

Date(Date / Time /

Time Zone)

For example, / 12:00 / ESTUse default by the system as the actual date.

Click Propose Quantities.

Actual Quantity This should be 100.

Click Propose Logistics Unit.

Target Logistic Area P1100-20(Warehouse)

This is set by the system.

Click Save and Close.

Write down your InboundDelivery number (at the bottom of the screen)


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Common Tasks, Stock Overview

Show List Identified Stock

Product ID Select P100710 (Customized Cylinder Trade)

Storage Location ID P1100 Click Go

On-Hand Stock You will see that the stock quantity increased

by the goods receipt amount

Create a print screen showing the stock

available

Close

3.9 Check the General Ledger Entries (optional)Note: This is only one of many ways to obtain this information.

Logon and Work Center Information

Logon ID / Role FINANCIAL02 Financial Accountant / Iris Green

Work Center / View Inventory Valuation Reports

Procedure


Reports List view

Show list By report category Financials Line Item Reports(3)

Click on Purchasing Documents Line Items

Selection ByDesign initial Click Go

Find your PO in the list


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Click on the right hand corner of the journal

entry field to expand your options.

Choose view journal entry

List the journal entry below. Show the general ledger accounts, the debits and credits, and amounts.

Click Close.

3.10Post Supplier InvoiceLogon ID / Role FINANCIAL02 Financial Accountant / Iris Green

Work Center / View Supplier Invoicing Invoice Entry

Procedure


Invoice Entry view

Show list All Orders to Be

Invoiced

Select your Purchase Order from the step

before. Be sure to use only your own PO.

Click New Invoice.

New Invoice screen

Supplier S100200 (AMS Inc.)

This is set by the system based on your

purchase order.

External Document

IDYour Participant ID# Suppliers invoice number

Invoice Date < current date >


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Receipt Date < current date > Default by the system based on the date

from the goods receipt

Total Gross ValueDefault by the system, data from the

purchase order

Total Tax amount Default by the system, data from the

purchase order

Invoice Description < no entry > Additional financial data, any entry possible.

Payment Terms 14 days 3%, 30 days

2%, 60 days due net

Default by the system, data from the

purchase order.

Payment Reason < no entry > Additional financial data, any entry possible.

Due dateDefault by the system calculated from the

credit terms.

Posting Date < current date >

Invoice Entry Net

Click Check. A message should appear at the

bottom of the screen indicating no errors.

Click Post.

Write down your SupplierInvoice number from the bottom of the screen.

3.11Approve Supplier InvoiceLogon and Work Center Information

Logon ID / Role FINANCIAL01 Chief Financial Officer / Edward Black

Work Center / View Managing My Area Approvals


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Procedure


Approvals view

Show List Open tasks Select the invoice from the previous step.

Read the Business Task description

Click Approve.

You should receive a message supplier

invoice: approved executed

3.12Select Items and Make PaymentLogon and Work Center Information

Logon ID / Role FINANCIAL02 Financial Accountant / Iris Green

Work Center / View Payables Suppliers

Procedure


Supplier Accounts View

Show List: Suppliers

with account

movement

Select the supplier row for AMS Inc.

(S100200)

Click View.

Supplier Account Monitor screen, Trade

Payables Tab, Invoice/Payments

Show List: Open

Items

Your document ID Select the row where the Document ID

matches your Supplier invoice number

Notice that the invoice amount is shown as a

negative amount. Thinking back on your

financial accounting class, why would it make

sense for the supplier invoice to be shown as


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a negative? Write your answer to question

3.13.6.

Click Pay Manually By > Outgoing Check.

Check NumberDefault by system chosen sequentially from

the check register

Payment Amount USD

Default by system based on the invoice

amount and credit terms

Bank Account ID 1100062588

Memo Your participant ID#

Click Complete Bank Data.

Click Post.

Write down the check number

Click Close.

Supplier Accounts View

Refresh the screen

Select the line with your check number.

Click on the journal entry on the line with

your check.

Write down the general ledger accounts and

the amounts below.

Click Close.


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Now, use the role of Chief Financial officer to approve this payment. Hint: Refer to step 3.11 for

information on how to do this.

Once the payment is approved, return to the Financial Accountant role.


Payables Work Center, Payment Clearing

Show ListCompleted Payment

ClearingsClick Go

Payment Clearing screen

Payee Name Sort the Payee Name column

Find AMS Inc. Confirm that your payment by

check is completed. (Match the check

number from the previous step with the

external reference field)

This concludes the Procure-to-pay exercises!

3.13Additional Optional Tasks1. Display the inventory of the product you have procured2. What is the status of your sales order?3. What is the Net Value of purchases from AMS Inc.?4. Display the Balance Sheet for Almika.5. Display the purchase history of the product you have bought.6. Thinking back on your financial accounting class, why would it make sense for the supplier

invoice to be shown as a negative?