overview of key business processes in erp (sap) -...

111212--JulJul--0808

Overview of key business Overview of key business processes in ERP (SAP)processes in ERP (SAP)

Part 1: Logistics Part 1: Logistics Atanu GhoshAtanu [email protected]@nevaehtech.com

1212--JulJul--0808 22

Course ContentCourse Content

1.1.Overview of SAP as a typical ERPOverview of SAP as a typical ERP2.2. Key business processes Key business processes –– LogisticsLogistics

–– Sales and DistributionSales and Distribution–– Materials ManagementMaterials Management–– Production PlanningProduction Planning–– Quality ManagementQuality Management–– Plant MaintenancePlant Maintenance

3.3.Demo and HandsDemo and Hands--onon

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Overview of SAP SystemOverview of SAP System

•• Full name of SAP translates into English from German as Full name of SAP translates into English from German as ““Systems, Applications and Products in Data ProcessingSystems, Applications and Products in Data Processing””–– The full name of SAP is rarely used nowThe full name of SAP is rarely used now

•• SAP is pronounced as SAP is pronounced as ““ESES--AYEAYE--PEEPEE”” and not and not ““SAPSAP””•• SAPSAP’’ss architecture is based on architecture is based on ““33--tiertier”” clientclient--server technology server technology

(GUI layer, application layer and database layer)(GUI layer, application layer and database layer)–– Hence the name Hence the name ““R/3R/3””–– ““R/3R/3”” does not stand for does not stand for ““Release 3Release 3””

•• ABAP/4 (Advanced Business Application Programming Language ABAP/4 (Advanced Business Application Programming Language Version 4) is the proprietary programming language in which the Version 4) is the proprietary programming language in which the SAP product is programmed and SAP product is programmed and customisationcustomisation donedone

•• SAP has SAP has categorisedcategorised basic business processes in an basic business processes in an organisationorganisation..–– These These ““building blocksbuilding blocks”” of processes are called of processes are called ““modulesmodules””–– SAPSAP’’ss ““honeycomb structurehoneycomb structure”” depicts the depicts the ““core R/3 modulescore R/3 modules””

•• SAP upgrades to new features through version managementSAP upgrades to new features through version management–– The latest version of SAP is The latest version of SAP is mySAPmySAP ECC (Enterprise Core Component) ECC (Enterprise Core Component)

6.06.0–– Previously SAP versions were named as 4.xa. The last version is Previously SAP versions were named as 4.xa. The last version is this this

series was SAP version 4.7. After this SAP discontinued this series was SAP version 4.7. After this SAP discontinued this nominclaturenominclature and moved to ECC nomenclatureand moved to ECC nomenclature

•• To cater to specific country needs, SAP has various To cater to specific country needs, SAP has various ““country country versionsversions”” to be boltto be bolt--on the base R/3on the base R/3–– Country Version for India is called CIN (Country India Version)Country Version for India is called CIN (Country India Version)

•• To cater to industry specific requirements, SAP has various To cater to industry specific requirements, SAP has various Industry Solutions (IS) e.g. ISIndustry Solutions (IS) e.g. IS--Oil for Oil and Gas, ISOil for Oil and Gas, IS--Mills for Mill Mills for Mill Products, ISProducts, IS--Retail for RetailRetail for Retail–– Many common industry solutions are built into AllMany common industry solutions are built into All--inin--One solution nowOne solution now

•• EE--commerce based modules like CRM, SRM are added commerce based modules like CRM, SRM are added components to R/3components to R/3–– Most features of these components are now built into AllMost features of these components are now built into All--inin--One One

solutionsolution

Sales &Sales &DistributionDistribution

SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS

MaterialsMaterialsMgmt.Mgmt.

ProductProductPlanningPlanning

QualityQualityMgmt.Mgmt.

Plant MaintePlant Mainte--nancenance

HumanHumanResourcesResources

FinancialFinancialAccountingAccounting

ControllingControlling

TreasuryTreasury

ProjectProjectSystemSystem

WorkflowWorkflow

IndustryIndustrySolutionsSolutions

R/3R/3R/3Client/Server

ABAP/4Client/ServerClient/Server

ABAP/4ABAP/4


SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS








TreasuryTreasury


WorkflowWorkflow




ABAP/4ABAP/4

SAP’s famous “honeycomb structure”depicting the core R/3 modules

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Overview of SAP SystemOverview of SAP SystemBasic R/3 modules for SAP areBasic R/3 modules for SAP are•• Sales and Distribution (SD)Sales and Distribution (SD)

–– Customer Master, Enquiry, Quotation, Sales Order Processing, PriCustomer Master, Enquiry, Quotation, Sales Order Processing, Pricing, Credit cing, Credit Management, Transportation, etcManagement, Transportation, etc

•• Materials Management (MM)Materials Management (MM)–– Vendor Master, Enquiry, Quotation, Purchase Orders, Pricing, InvVendor Master, Enquiry, Quotation, Purchase Orders, Pricing, Inventory Management, entory Management,

Inventory Valuation, Stock Transfer, etcInventory Valuation, Stock Transfer, etc•• Production Planning (PP)Production Planning (PP)

–– Planning Strategy, MRP, BOM, Routing, Work Center, Production OrPlanning Strategy, MRP, BOM, Routing, Work Center, Production Orders, etcders, etc•• Quality Management (QM)Quality Management (QM)

–– Inspection Plan, Incoming Quality, InInspection Plan, Incoming Quality, In--process Quality, Finished Goods Quality, Quality process Quality, Finished Goods Quality, Quality Certificates, etcCertificates, etc

•• Plant Maintenance (PM)Plant Maintenance (PM)–– Maintenance Orders, Breakdown Maintenance, Preventive MaintenancMaintenance Orders, Breakdown Maintenance, Preventive Maintenance, Maintenance e, Maintenance

Notifications, etcNotifications, etc•• Human Resources (HR)Human Resources (HR)

–– Payroll, Training, Recruitment, Performance Management, etcPayroll, Training, Recruitment, Performance Management, etc•• Financial Accounting (FI)Financial Accounting (FI)

–– Chart of Accounts, Accounts Payable, Accounts Receivables, InvoiChart of Accounts, Accounts Payable, Accounts Receivables, Invoice Verification, Asset ce Verification, Asset Accounting, etcAccounting, etc

•• Controlling (CO)Controlling (CO)–– Cost Center Accounting, Profit Center Accounting, Internal OrderCost Center Accounting, Profit Center Accounting, Internal Orders, Product Costing, etc s, Product Costing, etc

•• Treasury (TR)Treasury (TR)–– Funds Management, Cash Management, etcFunds Management, Cash Management, etc

•• Project Systems (PS)Project Systems (PS)–– Work Breakdown Structure (WBS), Internal Projects, External ProjWork Breakdown Structure (WBS), Internal Projects, External Projects, Project Costing, ects, Project Costing,

etcetc•• Workflow (WF)Workflow (WF)

–– Not a separate module actually but the feature is built into mosNot a separate module actually but the feature is built into most modulest modules•• Industry Solutions (IS)Industry Solutions (IS)

–– Various Industry specific solutions like ISVarious Industry specific solutions like IS--Oil, ISOil, IS--Mills, ISMills, IS--Auto, ISAuto, IS--Banking, ISBanking, IS--Retail, Retail, etcetc


SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS








TreasuryTreasury


WorkflowWorkflow




ABAP/4ABAP/4


SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS








TreasuryTreasury


WorkflowWorkflow




ABAP/4ABAP/4

SAP’s famous “honeycomb structure” depicting the core R/3 modules

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Overview of SAP SystemOverview of SAP System•• Non R/3 modules Non R/3 modules –– With the advent of eWith the advent of e--business and various business and various

other specific business requirements, SAP added new modules other specific business requirements, SAP added new modules around 1998around 1998--9999–– CRM CRM –– Customer Relationship Management intended to capture sales Customer Relationship Management intended to capture sales

transactions over the net and also other features like call centtransactions over the net and also other features like call center er activities. This product is a close competitor to Siebel.activities. This product is a close competitor to Siebel.

–– SRM SRM –– Supplier Relationship Management intended to capture Supplier Relationship Management intended to capture purchases over the netpurchases over the net

–– PLM PLM –– Product Lifecycle Management Product Lifecycle Management –– APO APO –– Advanced Planner and Advanced Planner and OptimiserOptimiser intended to provide features intended to provide features

of rule based shop floor scheduling and of rule based shop floor scheduling and optimisationoptimisation, global , global availability checks across multiple plants, transportation availability checks across multiple plants, transportation optimisationoptimisation, , etc. This product is a close competitor to i2.etc. This product is a close competitor to i2.

–– BW BW –– Business Warehouse intended to provide management Business Warehouse intended to provide management reporting and data miningreporting and data mining

–– SEM SEM –– Strategic Enterprise Management intended to provide financial Strategic Enterprise Management intended to provide financial consolidation for group companies, balance score card, etcconsolidation for group companies, balance score card, etc

–– DMS DMS –– Document Management SystemDocument Management System–– EHS EHS –– Environment, Health and SafetyEnvironment, Health and Safety

•• SAP has now SAP has now reorganisedreorganised its module based components into its module based components into process based components and included eprocess based components and included e--business components business components into it. But module based terminology is still popularly used ininto it. But module based terminology is still popularly used inmost cases.most cases.–– SCM SCM –– includes erstwhile MM, PP, PM, APO and SRM modulesincludes erstwhile MM, PP, PM, APO and SRM modules–– CRM CRM –– includes erstwhile SD and CRM modulesincludes erstwhile SD and CRM modules–– Financials Financials –– includes erstwhile FI, CO, SEM and BW modulesincludes erstwhile FI, CO, SEM and BW modules–– PLM PLM –– includes erstwhile QM and PLM modulesincludes erstwhile QM and PLM modules


SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS








TreasuryTreasury


WorkflowWorkflow




ABAP/4ABAP/4


SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS








TreasuryTreasury


WorkflowWorkflow




ABAP/4ABAP/4


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•• Technical areas of SAP consist ofTechnical areas of SAP consist of–– ABAPABAP–– BASISBASIS

•• ABAP involves programming in ABAP ABAP involves programming in ABAP language for language for customisationcustomisation popularly called popularly called ““RICERICE””–– Reports (Reports (customisedcustomised reports)reports)–– Interfaces (with other systems)Interfaces (with other systems)–– Conversions (for migrating data from legacy Conversions (for migrating data from legacy

system to SAP)system to SAP)–– Enhancements (to address unique business Enhancements (to address unique business

conditions by writing a piece of code through conditions by writing a piece of code through ““user exitsuser exits”” or or ““module poolmodule pool””))

•• Minimum Minimum customisationcustomisation is strongly is strongly recommended forrecommended for–– Faster testingFaster testing–– Easier maintenanceEasier maintenance–– Easier upgradeEasier upgrade

•• SAP has introduced SAP has introduced NetweaverNetweaver technology technology which is an SOA (Service Oriented which is an SOA (Service Oriented Architecture) in 2003Architecture) in 2003

SAP identified “user exit” at pre-defined points in source code

You can write your own code here and return to source code

SAP’s Source Code

You will require a special key from SAP to modify “source code”. It is strongly discouraged as SAP may consider to withdraw its warranty support if source code is modified

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•• Technical areas of SAP consist ofTechnical areas of SAP consist of–– ABAPABAP–– BASISBASIS

•• BASIS involvesBASIS involves–– Server sizingServer sizing–– SAP system installationSAP system installation–– Database administrationDatabase administration–– Performance tuningPerformance tuning–– Transports (i.e. transporting Transports (i.e. transporting

configuration and configuration and customisationcustomisation from from one system to another)one system to another)

–– User User authorisationsauthorisations–– ““PatchPatch”” and and ““Hot PackHot Pack”” applicationsapplications

•• Patches or hot packs are pieces of Patches or hot packs are pieces of ““correction codescorrection codes”” released by SAP from released by SAP from time to time or when there is a product time to time or when there is a product problemproblem

–– SAP version upgrade SAP version upgrade


SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS








TreasuryTreasury


WorkflowWorkflow




ABAP/4ABAP/4


SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS








TreasuryTreasury


WorkflowWorkflow




ABAP/4ABAP/4


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SD: Sales and DistributionSD: Sales and Distribution

SAPR/3

SDSDSDSDSD Sales & Distribution . . . . . . . .Sales & Distribution . . . . . . . .

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SD OverviewSD Overview SDSD

Inquiry

Quotation

Goods Issue

Sales Order

Delivery to Customer

Invoicing

Pricing

Materials Planning

Purchasing

Production

Goods Receipt

Customer Stock

Picking

Packing

Transportation

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Process Chain: Sales DistributionProcess Chain: Sales Distribution

- Create pick list- Create trans-

portationwork list

- Create loadingwork list

- Check credit- Check product availability- Determine pricing- Estimate delivery schedule- Determine conditions of

sale

Inbound LogisticsInbound Logisticsfrom Materialsfrom MaterialsManagementManagement

Outbound LogisticsOutbound Logisticsto Customerto CustomerSales Order & Distribution

Process

Support Customer SalesSupport Customer Sales(Customer Info Analysis)(Customer Info Analysis)

-- Optional Optional --

Process CustomerProcess CustomerInquiresInquires

-- Optional Optional --

Provide CustomerProvide CustomerQuotationsQuotations-- Optional Optional --

Support CustomerSupport CustomerAgreementsAgreements-- Optional Optional --

Receive PaymentReceive PaymentFI

Create InvoiceCreate InvoiceFI/CO/PA

Issue GoodsIssue Goods(Ship Product)(Ship Product)

FIFIMMMM

Create Delivery NoteCreate Delivery Note

Create Sales OrderCreate Sales OrderFI/CO/PAFI/CO/PA

MMMMPPPP

(Documents)

Sales/DistributionSales/DistributionChainChain

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Order EntryOrder Entry

PPMMFIFI FIFI

Credit ManagementCredit Management

Dynamic Availability Check

Cash ForecastCash Forecast

??? OK

1212--JulJul--0808 1212

Delivery/Shipment ProcessingDelivery/Shipment Processing

MMWM

MM

PickingPicking

PackingPacking

TransportationTransportation

Ship to party: C100Item Material Qty

.... DeliveryNote

10 6301 1020 6412 1030 1507 25

PickingList

Credit ManagementCredit Management

Static Availability Check

FIFI

1212--JulJul--0808 1313

Picking/PackingPicking/Packing

Picking RequestPicking Request

Picking Confirmation

Picking Confirmation

Confirm Picking Request

Confirm Picking Request

Goods IssueGoods Issue

DeliveryDelivery

Sales OrderSales Order

Print Picking ListPrint Picking List

Picking with Picking Confirmation

Picking without Picking Confirmation

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InvoicingInvoicing

FIFICOCO

PCAPCA

Single InvoicesSingle InvoicesCollective InvoicesCollective InvoicesInvoice ListsInvoice ListsCredit/Debit NotesCredit/Debit Notes

EDIEDI

Profit Center Accounting/Profitability AnalysisProfit Center Accounting/Profitability Analysis

Accounts Receivable/General LedgerAccounts Receivable/General Ledger

Cash ForecastCash Forecast

FIFI

COCOPAPA

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MM OverviewMM Overview

SAPR/3

MM ••Materials Management . . Materials Management . .

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MM OverviewMM Overview

Material requirement planning

External procurementPurchasing

Internal procurementProduction

Invoiceverification

Goodsreceipt

Inventory management

Goodsissue

Transferposting

Warehousemanagement

Internal and external accounting Sales and distribution

Master dataMaterialBatchVendorCustomerG/LStorage bins...

MMMM

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Material Material -- Central Master Central Master ““RecordRecord”” for Logisticfor Logistic

123Inventory

QualitySales Information

Production InformationDesc:---------------------

Product - 123

456Inventory

PurchasingDesc:---------------------

Raw Material - 456

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Data in the Vendor MasterData in the Vendor Master

General DataAddressPhone and Fax Number

Control Data

Purchasing DataTerms of PaymentContact Person Minimum Order Value

Account DataPayment TermsPayment MethodAccounting Clerk

Maintenance LevelClient Purchase Organization Company Code

• Mandatory maintenance at thePurchasing Organization Level

• Optional Maintenance at the Plant Level, the Vendor Sub-Range Level or acombination of the two

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External ProcurementExternal Procurement EnvironmentEnvironment

RequirementDetermination

Info Record

Price HistoryPurchasing Data

QuotaArrangement

SourceSourceDeterminationDeterminationVendor Vendor SelectionSelection

PurchaseOrder

Source ListSource List

InvoiceReceipt

RFQ

QuotationPurchaseRequisition

OutlineAgreement

Goods Receipt

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Goods MovementGoods Movement

Ad hoc.

Inventory Inventory

TransferPosting

GoodsIssue

GoodsIssue

Consumption Samples Sales Order

GoodsReceipt

Delivery Production

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Invoice VerificationInvoice Verification

VendorVendorinvoiceinvoiceVendor 3Vendor 3

FIFICOCO

Blocked InvoiceBlocked Invoice

Tolerance Check?Tolerance Check?

Release ofBlocked Invoice

Release ofBlocked Invoice

e.g...

Orders / Projects /Cost centersOrders / Projects /Cost centersG/L accounts / Accounts payableG/L accounts / Accounts payable

ndorndorinvoiceinvoice

Delivery InvoiceDelivery InvoicePreliminary PostingPreliminary Posting

Automatic Price UpdateAutomatic Price Update

PaymentPayment

OK !

InvoiceVerification

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PP OverviewPP Overview

SAPR/3

PP ••Production Planning . . Production Planning . .

1212--JulJul--0808 2323

Production Planning CycleProduction Planning Cycle

Sales and Operations PlanningSales and Operations Planning

Master Production SchedulingMaster Production Scheduling

Demand ManagementDemand Management

MRPMRP

MRP ListMRP List

Production Order Cycle orProduction Order Cycle orPurchase Order CyclePurchase Order Cycle

Master DataMaster Data

Material MasterMaterial MasterBill of MaterialsBill of MaterialsWork CentersWork CentersRoutingsRoutingsPRTPRT

Capacity PlanningCapacity Planning

Plant MaintenancePlant Maintenance

Sales & DistributionSales & Distribution

Materials ManagementMaterials Management

CostingCosting

PP

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Production : Process ChainProduction : Process Chain

Production ChainProduction ChainOutbound Logistics to MaterialsOutbound Logistics to Materials

Management or Sales ChainManagement or Sales ChainInbound Logistics from Inbound Logistics from

Procurement or Production ChainProcurement or Production Chain ManufacturingProcess

Determine Production Requirements Determine Production Requirements via MRP Output or Manually)via MRP Output or Manually)

Create production orderCreate production order(via conversion of planned order(via conversion of planned orderto production order or manually)to production order or manually)

Check material availabilityCheck material availability(Automatic)(Automatic)

Release Production OrderRelease Production Order

Print shop floor papersPrint shop floor papers(actual (actual workordersworkorders))

Withdraw materials from Withdraw materials from inventory (automatic/manual)inventory (automatic/manual)

Produce GoodsProduce Goods

Confirm production ofConfirm production ofgoods is completedgoods is completed

Transfer Produced Goods to InventoryTransfer Produced Goods to InventoryFI

Settle Production OrderSettle Production OrderFICOCO

Archive/Delete OrderArchive/Delete Order

MM

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Material Requirement PlanningMaterial Requirement Planning

3. Qrt 4. QrtDemands

Stochastic

Deterministic Planning

Demands

Bill ofMaterialExplosion

Quantity:12.000

Capacity PlanningLot Sizing Procedures

Net Change

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MRP MRP -- Planning ProceduresPlanning Procedures

PlanningProceduresPlanning

Procedures

DeterministicMRP

DeterministicMRP

Consumption-BasedPlanning

Consumption-BasedPlanning

Forecast-BasedPlanning

Forecast-BasedPlanning

Reorder PointPlanning

Reorder PointPlanning

AutomaticReorder PointAutomatic

Reorder PointManual

Reorder PointManual

Reorder Point

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Production ControlProduction Control

Planned OrdersPlanned Orders

ReleaseRelease Production OrderProduction Order

FI CO

OpenOpen Production OrderProduction Order

Goods IssueCosts

MM

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QM OverviewQM Overview

SAPR/3

QM ••Quality Management . . Quality Management . .

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QM in LogisticsQM in Logistics

•• HistoryHistory--dependent intensity of quality dependent intensity of quality inspectionsinspections

Goods receiptGoods receipt

Goods issueGoods issue

ProductionProduction• Inspection during production• Defects recording in QM• Control charts

• Quality management in SD (certifies quality)

QMQM

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PM OverviewPM Overview

SAPR/3

PM ••Plant Maintenance . . Plant Maintenance . .

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Plant Maintenance Plant Maintenance -- OverviewOverview

Create Work Orders

Create Work Orders

NotificationsNotifications

PlannedWork Orders

PlannedWork Orders

Schedule WO’sSchedule WO’s

Parts/SuppliesParts/Supplies

Labor Labor

Preventive/PredictiveMaint. WO’sPreventive/PredictiveMaint. WO’s

Master DataMaster Data

Close and Settle WOClose and Settle WO

ReportingReporting

Special ToolsSpecial Tools

Pre-defined work stepsPre-defined work steps

EmergenciesEmergencies

External ServicesExternal Services Material

RequisitionsMaterialRequisitions

ShopPapersShopPapers

PM

32321212--JulJul--0808

Next Session: Overview of key Next Session: Overview of key business processes in ERPbusiness processes in ERP

Part II: Financials and HRPart II: Financials and HR

Atanu GhoshAtanu [email protected]@nevaehtech.com