IS 466 ADVANCED TOPICS IN INFORMATION SYSTEMS

LECTURER : NOUF ALMUJALLY

5 – 10 – 2011

College Of Computer Science and Information, Information Systems Department

Lessons Learnt from Lecture4

• Instance? • each install of the SAP R/3 software on an

individual application server

How To web‑enable the SAP Applications?

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Objectives

Business Process Integration Organisational Data Master Data Rules Transaction Data

Organizational Elements of FI Organizational Elements of CO Organizational Elements of SD Organizational Elements of MM Material Management Module

Business Process Integration

FI

MM

SD

Org

Data

Ru

les

FI

MM

SD

M

aste

r Data

FI

MM

SD

FI SDMM

Business Process Integration

• “The Stool” : a metaphor for the SAP structure

• There are four basic components needed to run execute SAP:1. Organizational Data2. Master Data3. Rules

4. Transactions

• The Legs which ‘hold up’ the transactions• Transactions cannot be run unless these are setup.• The legs are typically configured during the implementation process.

Organizational Data

• A hierarchy in which the organizational units in an enterprise are arranged according to tasks and functions.

• Are static data and are rarely changed

• The definition of organization units is a fundamental step, it is a critical factor in how the company will be structured

• Data that is defined when the system is installed

• An example is the table with country codes.

Master Data

• Master data is relatively fixed• Before making the master data configurations, you

must have completely defined the organizational structures

• Master data is created centrally and shared among applications and business processes.

• Ex.• Material master data

contains all information about the materials a company procures, manufactures, stores and ships

• Purchasing information recordcontains information on a specific material and a vendor supplying this material

Master Data (Con.)

• Vendor master data

contains information about the vendors that supply an enterprise. It contains data such as:• the vendor’s name and address• The currency used for ordering from the vendor• Names of important contact persons (sales staff)

• General Ledger master data It serves as a complete record of all business transactions of a company.

Rules

• Defines the parameters for Master Data and Transactions

• Determines functionality for Master Data and Transactions

• Relatively fixed• Changes as policy changes

Transaction Data

• Data resulting from executing business process steps.

• Unlike master data, transactional data is dynamic – each transaction is unique

•  An example of transaction data is: • The goods in a warehouse which change after each

purchase order • The company is selling some materials to one of the

customer. So they will prepare a sales order for the customer. When they will generate a sales order means they are doing some sales transactions. Those transactional data will be stored in Transactional table.

Con.

SAP Organizational Elements

Definition

• Definition of Organizational Elements:• In the SAP R/3 System, organizational elements

form structures that represent the legal and organizational views of a company. These views include: accounting, manufacturing planning and execution, materials management, and sales and distribution.

• In summary, the organizational elements and

their structures form the framework in which all business transactions are processed.

Client

CompanyCode

Plant

StorageLocations

SalesOrganization

Division

SAP

EnterpriseEnterprise

WarehousesWarehouses

DivisionDivision

CompanyCompany SubsidiarySubsidiary

SalesOrganization

SalesOrganization

FactoryFactory

Mapping our organization to SAP Organizational data

Material Management Organizational Structure

StorageLocation

Plant

PurchasingOrganization

Company

Client 401

USA Germany

N. America Europe

New York California

Receiving Warehouse

Hamburg

Receiving Warehouse

Key Organizational Elements

Client: • self-contained unit in SAP system with separate

master records and complete set of database tables.

• Root of the organizational hierarchy. Highest organizational element.

• The Client represents the enterprise/headquarters group.

• All related companies contained in the same client.

• Generally one client per SAP production instance. • Master data is created at the client level.

Financial Accounting View (FI)

Key Organizational Elements - FI

Company Code:• a distinct legal entity contained within an ERP

system. • “Distinct legal entity” - reports its operations

independently.• Accounts are managed by company code. • Business transactions are carried out at the

company code level. • Client may contain 1 or more company codes. • A company code can be in only 1 client.

Business Area: • Internal organizational unit used to create balance

sheets and profit and loss statements below the company code level  (optional)

Controlling View (CO)

FI

Company Code

CO

Controlling Area

FI

Business Area

CO

Cost Center Profit Center

CO

Key Organizational Elements - CO

Controlling Area: • Independent organizational structure for which

costs and revenues are collected• can have many company codes assigned to it

Profit Center:• a unit that collects revenue usually product lines

(cost centers are assigned to profit centers)

Cost Center:• a unit that collects commonly related costs

Sales and Distribution View (SD)

Key Organizational Elements - SD

• Sales Organization: central organizational element controlling terms of sale to customer.

• Distribution Channel: mechanism through which goods and/or services reach the customer. Ex. wholesale, retail and direct sales.

• Division: logical groupings of related products. • Sales Area: a unique combination of a sales

organization, distribution channel, and division.

Materials Management View (MM)

Key Organizational Elements - MM

• Plant: location where goods or services are produced, maintained, or distributed. • Each plant belongs to only 1 company code. • A company code may have multiple plants.

• Storage location: place within a plant where goods are stored. • Each plant must have at least one storage location. • Each storage location belongs to only 1 plant.

• Purchasing Organization: part of organization responsible for procuring materials and services. • Negotiates purchases, sets pricing conditions, engages

in strategic purchase planning, sets contracts.

Material Management Conditions

• Purchase Organization • PO linked to one, many or no CC• PO has to be linked to one or many plants

• Plant• PL has to be assigned to a CC• PL can have one to many Storage locations

• Storage Location• Many SL to one PL

Material Management Module

Materials Management Module

• The Materials Management (MM) module is fully integrated with the other modules of the SAP System.

• It supports all the phases of materials management: materials planning and control Purchasing goods receiving inventory management and invoice verification.

Components of Materials Management

MaterialsManagement

(MM)

LogisticsInvoice

Verification

MaterialMaster

PhysicalInventory

Valuation

MRP

ServiceEntrySheet

ServiceMaster

ProductCatalog

Purchasing

InventoryMgmt.

ForeignTrade/

Customs

Procurement Process (Procure-to-Pay)

Purchase Requisition

Paymentto Vendor

Notify Vendor

VendorShipment

InvoiceReceipt

GoodsReceipt

Purchase

Order

Procurement Process

• This is a standard view of the procure to pay process and the most common.

Procurement Process

1. Starts with a requisition that needs to be filled. 2. The purchase order is the document to fill the need:

usually includes the vendor, cost/price, quantity, terms and other pertinent information. [ part one of the 3-way match]

3. Notifying the vendor4. The goods are shipped and brought to the organization5. The goods are received and then put away [ part two

of the three way match]6. An invoice is received from the vendor [third part of

the 3-way match]7. After the tolerances/verification of the 3-way match

are met a payment is made according to the terms agreed to on the purchase order.

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3-Way Match for Payment

PurchaseOrder

GoodsReceipt

InvoiceReceipt

Debit Credit

PaymentProgram

Verification

Outcomes of the Procurement Process33

1. Purchase Requisition2. Purchase Order3. Goods receipt4. Invoice Receipt5. Pay the Vendor

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1- Purchase Requisitions

• Internal document• Requesting a certain quantity of material

or service on a certain date• Can be created:

• Manually• Automatically (Materials Requirements

Planning (MRP), sales orders, etc.)

Purchase Requisition (con.)

What are types of information required?

• Materials• Quantities• Delivery dates• Plants• Purchasing groups, etc.

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2 -Purchase Orders

• Purchase Orders are:• A formal request to a vendor to provide materials or

services• An internal planning and tracking tool.

The process:1. Request for Quotations

• The business sends out RFQ to the vendors and the vendors respond back with Quotations with prices. 

2. quotation evaluation3. Purchase Order

• Printed, fax, sent, etc. to a vendor

Purchase Order (con.)

What are types of information required?

•Vendor•Material and/or service•Quantity and price•Delivery dates•Terms of payment

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3- Goods Receipt

• Goods receipt with reference to a purchase order• Copy data from purchase order• Delivery notification• Invoice verification• Updates purchase order history• Inventory update• Automatic update of General Ledger (G/L)

accounts

Goods Receipt (con.)

4 -Invoice Receipt40

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Invoice Verification

• Matches the vendor’s invoice to the purchase order and the goods receipt (3-way match)

• Matches price and quantity• Updates the purchase order and its history• Updates accounting information

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5- Pay the Vendor

• Selects invoices for payment based on the payment terms in the vendor master or purchase order

• Generates payment for released invoices

• Updates accounting information

Pay the Vendor (con.)

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Questions ??

What should you do this week ?• Review the lectures.• Do the Tutorial and submit it online:

is_466@hotmail.com

Due date: Friday.• Read The assignment to discuss it during

the tutorial.• Consult Lecturer if any questions related to

the subject.

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