01 SAP Overview

© Copyright IBM Corporation 2003

ERP / SAP Overview

ERP / SAP Overview | September 2003 Slide 2

Enterprise Resource Planning

ERP Overview



... synchronization of Company functions...

Manufacturing

Purchase

Sales

Finance


Enterprise Resource Planning … and extended to the complete value chain...

Tier II Component Supplier

Vehicle OEM

Tier I Component Manufacturer



Administrative registration

Processes monitoring & feedback

Decision support and analysis

... delivering administrative and decision support with...


What is an ERP solution...?

…. Integrated across the primary and support processes

Marketing Manufacturing

Materials

Distribution

Finance

Engineering Sales

Human Resources

Planning and

Execution


The ERP application

An integrated suite of business applications, which..

- Closely links, monitors, and controls primary enterprise resources like manpower,

machine, material, methods, market and money

- Enables corporates to readily change their processes to adapt to the ever changing

business scenario

- Provides expertise in industry specific business processes

Entails

- Parameterization / Configuration

- Designing & Customization

- Testing and Implementation

- Training


Why clients buy ERP?

Corporate Initiatives

- Strategic initiatives

A requisite capability in a competitive global business

- Operational initiative

A foundation for performance and cost improvement

via integration

- Organizational initiative

To initiate a major organizational change within the company

Technology

- IT is making the transition from a supporting operational entity to becoming a strategic

competitive tool.

BECAUSE OTHERS ARE BUYING IT!!!


Recent business trends favoring ERP growth

Business Process Reengineering ( BPR )

Most large companies are attempting to cut in-house development costs, improve

customer service, and speed products to market by reorganizing their existing business

processes

Software Pricing

Licensing and pricing of mainframe based packaged applications are tied to the size of

mainframe system on which the applications run, but now customers are now

demanding user-based licensing options and major corporate applications like SAP

provide this instead of the conventional platform-based pricing technique


Recent business trends favoring ERP growth

Globalization

As businesses are becoming more global in scope, people are demanding packaged

corporate applications that are available in a variety of languages with support for

multiple currencies

Integration

As more and more companies are going for BPR, there is increase in demand for

integrated solution e.g.. different applications sharing a common database and thus

enabling data definitions and business rules to be applied across an entire organization

with the facility of doing modifications at one location only


Business process benefits clients expect from an ERP

project

Global process/ Product management

Integrated Supply Chain Management

Leverage purchasing and vendor management

Order cycle time/ customer service improvement

Inventory reductions

Reduced information systems costs on an ongoing basis

Improved business management through worldwide integration and information

Logistics and Distribution Sales & Customer Service

Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer Logistics


Major ERP vendors

SAP R/3

Peoplesoft

Oracle

Baan

JD Edwards


What results can be expected from an “ERP culture”?

Reduced working capital requirements

Improved customer service

Improved direct labour productivity

Reduced purchase costs

Reduced obsolescence

Reduced overtime

Having the figures to make decisions

Having accountability throughout the organization

Improved quality of life

ERP


SAP R/3 Overview

Systems Applications & Products in Data Processing


SAP AG – At a Glance

Founded in Germany in 1972

Market Leader in Industrial Enterprise Application (IEA)

About 56% market share in the ERP market

Worldwide presence in over 50 countries

18,000+ employees

Trained consultants doubled since 1996 (40,000)

About 20,000 companies in 120 countries

Around 64,500 installations of SAP

Strength lies in its high degree of integration, mainly for large,

global corporate enterprises

– Significant presence in Global Fortune 500 companies


SAP R/1 , R/2

• The R/1 system

– Developed for ICI Chemical

– Released 1972

– Focused on Sales & Distribution and Materials Management

– Discontinued after release of R/2

R/2

Basis System

• The R/2 system

– Reorganized as leading mainframe software for large multinational

corporations

– No sales effort planned – reactive only

– 4,300 copies worldwide in 1993

– Mainframe-based to replace user legacy software;

co-existence and migration strategy underway for R/2 and R/3


SAP R/3 : A comprehensive business solution

Sales & Distribution

SD

MM

PP

QM

PM

HR

FI

CO

TR

PS

WF

IS

Materials Mgmt.

Product Planning

Quality Mgmt.

Plant Mainte- nance

Human Resources

Financial Accounting

Controlling

Treasury

Project System

Workflow

Industry Solutions

R/3 Client/Server

ABAP/4


SAP R/3 : 3 Tier Architecture

Those SAP R/3 software components that

specialize in the management , storage and

retrieval of data form the Database Layer

The Database Layer


specialize in processing business

applications form the Application Layer.

The Application Layer


specialize in interacting with end-users

form the Presentation Layer.

The Presentation Layer



Database servers:

Specialized systems

with fast and large

hard drives.

Application servers:

Specialized systems

multiple CPUs and

vast amounts of RAM.

Presentation servers:

Systems capable of

providing a graphical

interface.

Presentation Layer

components

Application Layer

components Database Layer

components

reside in: reside in: reside in:



The Database Layer

components are installed on

high-end database server.

The Application Layer

components are installed

across one or more high-

end servers.

Presentation Layer components are installed across many PCs.


SAP R/3 Overview


SD

MM

PP

QM

PM

HR

FI

CO

TR

PS

WF

IS

Materials Mgmt.

Product Planning

Quality Mgmt.

Plant Mainte- nance

Human Resources


Controlling

Treasury

Project System

Workflow

Industry Solutions

R/3 Client/Server

ABAP/4


Integration

S

U

P

P

L

I

E

R

C

U

S

T

O

M

E

R

S A P R / 3

Procurement Production Distribution

Finance and Accounting

MM PP SD

FI CO

All business processes throughout the supply chain are

executed in one system sharing all information

Workflow


SD: Sales and Distribution

SAP

R/3

SD SD SD Sales & Distribution . . . . . . . .


SD Overview SD

Inquiry

Quotation

Goods Issue

Sales Order

Delivery to Customer

Invoicing

Pricing

Materials Planning

Purchasing

Production

Goods Receipt

Customer Stock

Picking

Packing

Transportation


Process Chain: Sales Distribution

- Create pick list

- Create trans-

portation

work list

- Create loading

work list

- Check credit

- Check product availability

- Determine pricing

- Estimate delivery schedule

- Determine conditions of

sale

Inbound Logistics

from Materials

Management

Outbound Logistics

to Customer Sales Order & Distribution

Process

Support Customer Sales

(Customer Info Analysis)

- Optional -

Process Customer

Inquires

- Optional -

Provide Customer

Quotations

- Optional -

Support Customer

Agreements

- Optional -

Receive Payment

FI

Create Invoice

FI/CO/PA

Issue Goods

(Ship Product)

FI

MM

Create Delivery Note

Create Sales Order

FI/CO/PA

MM

PP

(Activities)

(Documents)

Sales/Distribution

Chain


Order Entry

PP

MM FI FI

Credit Management

Dynamic Availability Check

Cash Forecast

? ? OK


Delivery/Shipment Processing

MM WM

MM

Picking

Packing

Transportation

Ship to party: C100

Item Material Qty

.

.

.

. Delivery Note

10 6301 10 20 6412 10 30 1507 25

Picking List

Credit Management

Static Availability Check

FI


Picking/Packing

Picking

Request

Picking

Confirmation

Confirm Picking

Request

Goods Issue

Delivery

Sales Order

Print Picking List

Picking with Picking

Confirmation

Picking without Picking

Confirmation


Invoicing

FI CO

PCA

Single Invoices

Collective Invoices

Invoice Lists

Credit/Debit Notes

EDI

Profit Center Accounting/Profitability Analysis

Accounts Receivable/General Ledger

Cash Forecast

FI

CO PA


MM Overview

SAP

R/3

MM Materials Management . .


MM Overview

Material requirement

planning

External procurement

Purchasing

Internal procurement

Production

Invoice

verification

Goods

receipt

Inventory

management

Goods

issue

Transfer

posting

Warehouse

management

Internal and external accounting Sales and distribution

Master data

Material

Batch

Vendor

Customer

G/L

Storage bins

...

MM


Material - Central Master “Record” for Logistic

123

Inventory Quality

Sales Information Production Information

Desc:---------------------

Product - 123

456

Inventory Purchasing

Desc:---------------------

Raw Material - 456


Data in the Vendor Master

General Data

Address

Phone and Fax

Number

Control Data

Purchasing Data

Terms of Payment

Contact Person

Minimum Order Value

Account Data

Payment Terms

Payment Method

Accounting Clerk

Maintenance Level

Client Purchase Organization Company Code

• Mandatory maintenance at the

Purchasing Organization Level

• Optional Maintenance at the

Plant Level, the Vendor

Sub-Range Level or a

combination of the two


External Procurement Environment

Requirement

Determination

Info Record

Price History

Purchasing Data

Quota

Arrangement

Source

Determination

Vendor

Selection

Purchase

Order

Source List

Invoice

Receipt

RFQ

Quotation

Purchase

Requisition

Outline

Agreement

Goods Receipt


Goods Movement

Ad hoc.

Inventory Inventory

Transfer

Posting

Goods

Issue

Goods

Issue

Consumption Samples Sales Order

Goods

Receipt Delivery Production


Invoice Verification

Vendor invoice Vendor 3

FI CO

Blocked Invoice

Tolerance Check?

Release of

Blocked Invoice

e.g...

Orders / Projects /Cost centers

G/L accounts / Accounts payable VendorVendor invoice invoice

Delivery Invoice

Preliminary Posting

Automatic Price Update

Payment

OK !

Invoice Verification


PP Overview

SAP

R/3

PP Production Planning . .


Production Planning Cycle

Sales and Operations Planning

Master Production Scheduling

Demand Management

MRP

MRP List

Production Order Cycle or

Purchase Order Cycle

Master Data

Material Master

Bill of Materials

Work Centers

Routings

PRT

Capacity Planning

Plant Maintenance


Materials Management

Costing

PP


Production : Process Chain

Production Chain

Outbound Logistics to Materials

Management or Sales Chain

Inbound Logistics from

Procurement or Production Chain Manufacturing

Process

Determine Production Requirements

via MRP Output or Manually)

Create production order

(via conversion of planned order

to production order or manually)

Check material availability

(Automatic)

Release Production Order

Print shop floor papers

(actual workorders)

Withdraw materials from

inventory (automatic/manual)

Produce Goods

Confirm production of

goods is completed

Transfer Produced Goods to Inventory

FI

Settle Production Order

FI

CO

Archive/Delete Order

MM


Production Planning

1. Production Planning Functionality

2. Master Data

3. Sales and Operations Planning &

Demand Management

4. MRP

5. Production Order & Capacity Planning


Material Requirements Planning

3. Qrt 4. Qrt

Demands

Stochastic

Deterministic Planning

Demands

Bill of

Material

Explosion

Quantity: 12.000

Capacity Planning

Lot Sizing Procedures

Net Change


MRP - Planning Procedures

Planning

Procedures

Deterministic

MRP Consumption-Based

Planning

Forecast-Based

Planning Reorder Point

Planning

Automatic

Reorder Point

Manual

Reorder Point


Production Control

Planned Orders

Release Production Order

FI CO

Open Production Order

Goods Issue

Costs

MM


QM Overview

SAP

R/3

QM Quality Management . .


QM Overview


SD

MM

PP

QM

PM

HR

FI

CO

AM

PS

WF

IS

Materials Mgmt.

Product Planning

Quality Mgmt.

Plant Mainte- nance

Human Resources


Controlling

Fixed Assets Mgmt.

Project System

Workflow

Industry Solutions

R/3

The QM application module is a

quality control and information

system supporting quality

planning, inspection, and control

for manufacturing and

procurement

QM


QM in Logistics

History-dependent intensity of quality inspections

Goods receipt

Goods issue

Production

• Inspection during production

• Defects recording in QM

• Control charts

• Quality management in SD (certifies quality)

QM


PM Overview

SAP

R/3

PM Plant Maintenance . .


Plant Maintenance - Overview

Create

Work

Orders

Notifications

Planned

Work Orders

Schedule

WO’s

Parts/Supplies

Labor

Preventive/Predictive

Maint. WO’s

Master Data

Close and

Settle WO

Reporting

Special

Tools

Pre-defined

work steps

Emergencies

External

Services Material

Requisitions

Shop

Papers

PM


FI Overview

SAP

R/3

Fi Finance . .


Components of FI FI

FI-GL

FI-AR

FI-AP

FI-SL

FI-LC

FI-AA

General Ledger

Accounts Receivable

Accounts Payable

Asset Accounting

Special Ledger

Legal Consolidation


Corporate Structure

Financial Management

Area


Area


Area

Controlling Area

Controlling Area

Controlling Area

Controlling Area

Work Place/Job

Material Product

Plant Cost Centers

Company Code (Company)

Corp. Group Level

Legal Entity

Controlling Level

Management Units


The Elements of Financial Accounting

Finance Information System

Executive Information System

G/L Information System

Foreign Exchange

Management

Business

Analysis

Cash Management

and Forecast

Multiledger

Bank Accounts

General Ledger

Payables

Extended General Ledger

Consolidation

Accounts

Payable

Invoice

Verification

Accounts

Receivable

Credit

Management


The Components of FI

Configuration • Organizational Structures

– Company Codes – Business Area

• Organization of Accounting

– Ledger/Sub-ledger

• Chart of Accounts

• Credit Control

– Setting Credit Limits

• Master Records

– G/L Accounts

– Customers

– Vendors

– Banks

• Chart of Depreciation

– Depreciation Areas

– Assets

• Extended General Ledger

• Group Company

• Number Ranges

Functionality

Documents/Transactions Fiscal Year

Posting Adjustments

Payment Terms Balance Sheets/Income Statements

Foreign Currency Closings

Taxes On-Line Display

Special G/L Transactions Interest Calculation

Planning Correspondence

Payment Program Fixed Assets

Reporting Analysis

Legal Consolidations

Modules

General Ledger Special Ledger

Accounts Payable Legal Consolidations

Accounts Receivable Credit Management

Asset Accounting Cash Management and Forecast

Treasury

FI


CO Overview

SAP

R/3

CO Controlling. .


Components of CO

CO Configuration

Organization Structures

Master Data

Planning Setup

Criteria and Values

Valuation

CO Modules • Cost Center Accounting

• Order and Project Acctg.

• Transaction-Based Postings

• Periodic Allocations

• Profit Center Acctg.

• Product Costing

• Activity-Based Costing

• Product Costing

• Budgeting

• Profitability Analysis

• Business Planning & Control

Functionality • Settlement

• Internal Orders

• Open Item Management

• Profitability Analysis

• Overhead Management

• Planning

• Transaction-Based Posting

• Periodic Allocations

• Monitoring Actual Activities vs. Planned

CO

CO


The Elements of Managerial Accounting

Overhead Cost Controlling

Profitability Analysis


Cost

Centers

Report

Structure:

Market Segment

Region Division

Cost of Sales

Cost of Period

PA

PCA

Report Structure:

Profit

Center

GL

Accounts

Controlling


Integration Within FI/CO


Asset Accounting

Asset Accounting

Asset Accounting

Investment Controlling

Plant Maintenance

Gen. Ledger Accounting

Accounts Receivable

Accounts Payable

Cash Management


Make to Order Prod.

Cost Center Controlling

Actual Costing

Static Standard Costing

Product & Production Controlling

Mass Production

Continuous Flow Prod.

Batch Production

Cost of Sales Accounting

Period Accounting

Flexible Standard Costing

Order Controlling

Project Controlling

Management Accounting

Sales & Profitability Controlling

Chart of Accounts FI CO

Central Documents

Central Line Items

Central Totals

Account

Revenue


Integration

PP MM

FI CO

SD

FI

Which modules are involved?

Planned

Requirement

MRP

Requirement

on component

level

Purchase

Order

Goods

Receipt

Invoice

Verification

Accounts

Payable

Planned

Order

Production

Order

Production

completed

Order

Settlement

Customer

Order

Shipping

Invoicing

Account

Receivable


SAP R/3 : Components

ABAP

Programs

Configuration

Organization Structure

Key Data Elements

Functionality Configurations

Application Master Data

Transaction Data


What is Customization ?

Customization

• the adaptation of application software to customer-

specific needs is accomplished in two ways :

Coding

Programming customer-specific code that replaces

or complements components of the application

Configuration

Rendering the application appropriate to a specific

customer by specifying data on which the

application operates


Organizational Structures in R/3

Cost Accounting

External Logistics

Accounting

Internal Logistics (MRP/Production)

Inventory Management

Organizational Units

Client

Controlling Areas

Company Codes

Plants

Sales Organizations

Purchasing Organizations

Valuation Areas

Storage Locations/Batches/Special Stocks


Organizational Structure in SAP R/3

Human Resources Controlling Client

Company Code

Purchasing Organization

Personnel Area

Production Planning

Sales and Distribution Materials Management


Sales Area

Controlling Area

Plant


ABAP Programming

SAP R/3 applications are written in the ABAP programming language, and run within the application layer of the R/3

System.

ABAP programs communicate with the database management system of the central relational database (RDBMS), and

with the graphical user interface (SAPgui) at presentation level.


Why we need ABAP Developments?

SAP Solution

SAP R/3 scope


SAP Solution

SAP R/3 scope Specific company

requirements


SAP Solution


requirements

New Functionality

Development


SAP Solution


requirements

Non SAP

applications

New Functionality

Development


Types of ABAP Developments

• Reports

• Interfaces

• Conversions

• Enhancements