System Specificationsfor Creating a Prototype Using

SAP Business Oneto Depict

the Business Processes atLight&Music Ltd.

Light&Music Ltd.

49 Business Street

London, UK

Tel: +20 7227 1234

Fax: +20 7227 1235

e-mail: info@lightandmusic.uk

Contents

1. Introduction2. Presentation of the Company3. Master Data

3.1 Items3.2 Vendors3.3 Customers3.4 Employees

4. Accounting5. Logistical Business Processes

5.1 Warehouse Management5.2 Purchasing5.3 Sales5.4 Production5.5 Rental5.6 Service5.7 Consulting

1. IntroductionLight&Music Ltd. needs an integrated Enterprise Resource Planning (ERP) system to support its business processes and advance its plans for expansion. A comparison of various products revealed that SAP Business One provides the best solution to meet the company's requirements and its plans for expansion. Light&Music Ltd. thus purchased a license for SAP Business One and now wishes to install the product on a server in the company. The managing director and company owner, Michael Smith, has decided to hire you to carry out the implementation. However, before commencing with the actual implementation, Mr. Smith wants to see how you intend to depict some of our more special business processes using SAP Business One. The system specifications document drawn up for this is now at your disposal. Your task is to implement the business processes defined in the system specifications in SAP Business One and to present your prototype to Mr. Smith tomorrow.Additionally you can use the System Initialization Guide from the SAP Service Marketplace.If you have any further questions about creating the prototype, please don’t hesitate to contact us.

2. Presentation of the CompanyLight&Music Ltd. is a legally independent company that is specialized in selling, renting, and installing professional media presentation systems for exhibitions and events. Furthermore, they consult architects and engineers in planning communication systems for complex building projects. The company was founded 1990 in London but they soon opened additional offices to make their services available nationwide. The head office, which also includes the whole administration is still in London but today Light&Music Ltd. also operates offices in Liverpool and Glasgow. Last year, they started to build their first office abroad in Dublin. It is supposed to be opened this year and should therefore be included in the prototype. Michael Smith sees the introduction of an ERP system as his own personal duty and wants to be in a position to control the efficiency of his business processes at any time. In addition, he also wants to have sole control over user access to the system.

3. Master Data

3.1 ItemsLight&Music Ltd. stocks a total of 500 items. They can be grouped in the following way:

ScreensThis group includes video screens, plasma or LCD displays, but also projector screens or LED walls.

Multi screensMulti screens are big presentation screens made up from several 40’’ LCD displays. Light&Music Ltd. produces these multi screens themselves and they are offered in the standard sizes 3x3, 4x4, and 5x5. They always keep a few multi screens on stock since these are very popular and Light&Music Ltd. is the only supplier in the UK. Each multi screen consists out of the required number of 40’’ LCD displays and a PC that splits the picture into the screen segments. Larger multi screens can be produced if ordered by a customer.

ProjectorsThis group includes video projectors, slide projectors, and overhead projectors.

LightsThis group includes flood lights, spot lights, and head lights.

ComputersThis group includes PCs, laptops, and presentation terminals.

MicrophonesThis group includes wireless and cable microphones.

PlayersThis group includes video, CD, and DVD players.

SpeakersThis group includes two way speakers or three way speakers with different power levels.

AmplifiersThis group includes pre-amplifiers and final amplifiers of different power.

StagesThis group included stages of different heights and sizes.

AccessoriesThis group includes all types of accessories, such as cables, microphone stands, traverses, interfaces, and so on.

Presentation SetsPresentation Sets consist of everything you need for a video or computer presentation, for example a laptop or video player, a projector, and a projector screen.

Sound SetsSound Sets consist of everything you need to be heard loud and clear even in large rooms or open spaces, for example a microphone, speakers, and amplifiers.

Stage Sets

Stage Sets consist of everything you need for a stage presentation. This includes a complete stage plus an adequate presentation and sound set.

The presentation sets, sound sets, and stage sets sell or rent cheaper than the single components. For some dedicated sets the possibility to change the components in the sales documents shall exist.

Only create those item groups and items in your prototype that are required in the business processes described above. However, you should be able to present a path for transferring data from the customer’s previous system.

3.2 VendorsLight&Music Ltd. has a total of 46 vendors. With some of them they have agreed that they offer special prices and payment terms. These vendors they call contractors and Light&Music Ltd. usually buys most of its material from them. All the other vendors are called independent vendors. For your prototype, it is sufficient if you create four vendors.

Contractors: Sound Systems Ltd.,Media Equipment Corp

Independent vendors: Global Electronics CorpSpotlights Ltd.

Sound Systems Ltd. supplies microphones, amplifiers, and speakers, while Media Equipment Corp supplies screens, computers, and players. Global Electronics Corp supplies Light&Music Ltd. mostly with accessories. Light&Music Ltd. tried to get a master agreement with Spotlights Ltd. who sells them stages and lights but they have not been successful yet. Can they somehow store the progress of their negotiations in the system?All vendors offer a 3% discount upon payment within the first week and 2% within the second week. Full payment is usually expected within 30 days.Can Light&Music Ltd. somehow store their vendor agreements (word documents) in the system?

3.3 CustomersLight&Music Ltd. has a total of 152 customers in four countries. For better analysis, they have split them into the following groups:

Hotels Fairs and Exhibitions Companies Architects

For your prototype, it is sufficient if you create the following customers: Hotels:

Meet&Sleep Hotels, London, UK Fairs and Exhibitions:

Dublin Trade Fair, Dublin, Ireland

Companies: SAP AG, Neurottstr. 16, 69190 Walldorf, GermanyEnglish Oil Corp, 23 Business Street, Bath

Architects:Christopher Wren Jr., Church Street, Glasgow

Purchases made by occasional customers will be processed using the account K999.Light&Music Ltd. offers fairs and exhibitions a 2% discount within the first 14 days and expects full payment within 30 days. Hotels have a payment period of only one week. Occasional customers are expected to pay immediately.English is the common language of all customers today but Light&Music Ltd. expects to have non-English-speaking customers in a few years when they expand throughout the continent. How can Light&Music Ltd. store the item descriptions and a free explanatory text in several foreign languages? Also, show a way to ensure that every customer receives correspondence automatically in the correct language.Light&Music Ltd. wants to send a punctual birthday present to the managing directors of their 18 major customers. Is there a way to automatically remind them a week before the birthday?

3.4 EmployeesThe company has 30 employees. For the prototype, it is sufficient if you create the following employees:

Michael Smith - CEOo Claire Thomas – Chief Accountanto Richard Long – Warehouse Managero Sarah Miller – Sales Manager (responsible for sales and rental revenues)

Maggie Martins – Sales Employee David Burns – Sales Employee

o Edward Petty – Purchasing Managero John Edison – Production Managero Clark Spencer – Service Manager

Mark Myers - Technician

4. AccountingLight&Music Ltd. uses the common British chart of accounts. They don’t need any account segmentation. Please contact their accounting department if you need additional accounts to depict the required business processes. Please demonstrate how to create and delete additional accounts.The company’s fiscal year corresponds to the calendar year and they create the annual financial statement once a year. They need twelve posting periods for their internal controlling. One goal of the implementation of SAP Business One is that Light&Music Ltd. can report on the revenues and expenses of its different business areas sales, rentals, installations, and consulting.

Light&Music Ltd. runs its accounts at Barclays Private Bank Limited in London. Please rename the relevant accounts in the standard chart of accounts accordingly. Light&Music Ltd. usually pays its liabilities via check and most of its customers do the same. For the prototype it is enough if you can show a fast and efficient way to create outgoing payments and how incoming payments are handled. The accounting department requests that you use the following accounts. Please create them if they are not available.Control Accounts

140000 Domestic Receivables140030 Foreign Receivables203000 Domestic Payables203030 Foreign Payables

Tax Accounts207000 VAT Payable (output tax)143030 VAT Receivable (input tax)

Banking Accounts161000 Girobank Account at Barclays161016 Checks received140100 Master Card Settlement140110 Visa Settlement140120 American Express Settlement161012 Bank transfer160000 Petty Cash700010 Cash Discount received450005 Cash Discount granted650010 Bank charges paid655040 Rounding Account for currency

differences700020 Realized Exchange Rate Differences

Gain650040 Realized Exchange Rate Differences

LossStock Postings

130000 Raw Materials131000 Work in Progress132000 Finished Products500500 Stock Difference Gains500510 Stock Difference Losses

Sales Postings400000 Domestic Revenues Account410000 Foreign Revenues Account500005 Raw Materials – COGS 500025 Finished Good – COGS 132008 Returned Goods

Purchasing Postings

500520 Expense Account for Consumables208040 Allocation Costs (GRNI)500200 Price Difference Account

Other accounts615100 Stock Insurances510000 Wages and salaries144080 Advance Payments340000 Retained Earning Account

Previously, all stock was posted only to the three stock accounts for raw materials, work in progress, and finished goods. In the future, each item group is supposed to have its own stock account. Sometimes, especially when Light&Music Ltd. supplies a big event such as a trade fair with products and services, they want to know how much they earned with this special event, even if they were working for different customers during that event. How can that be realized with SAP Business One?Light&Music Ltd. has insured its valuable stock against damage by fire and water and pays the insurance company an annual sum of 12,000 Pounds in January. Light&Music Ltd. posts the entire sum to an Advance Payment account directly after posting the invoice. This account is then gradually cleared during the year and insurance costs of 1,000 Pounds posted every month to the stock insurance account. Please demonstrate how this can be handled as easily as possible.Monitoring our liquidity is very important to Light&Music Ltd. Recurring postings are to be automatically included in the cash flow forecast. Future investments are also to be included, if they are already known. Mr. Smith, for example, is considering the purchase of a new company car next month worth 50,000 Pounds. This car is to be paid for in five monthly installments of 10,000 Pounds.

5. Logistical Business Processes

5.1 Warehouse ManagementEvery office (London, Liverpool, Glasgow, and Dublin) has its own warehouse where it stores rental items as well as sales items. Of course, both types of items need to be kept separated because Light&Music Ltd. usually only sells new goods. The warehouse in London comprises five rows of shelves with five shelves on three levels. Every item has a fixed storage location. As Light&Music Ltd. often employs temporary workers for picking, they would also like to be able to show and print the storage location of the item on the pick list.Up to now, Light&Music Ltd. has carried out the inventory valuation only once a year. When using SAP Business One, they expect to have a permanent overview of their current stock level. All purchased goods are supposed to be valuated with the moving average price per item and warehouse. The multi screens shall be valuated with a standard price of:

10000 for a 3x3 multi screen 18000 for a 4x4 multi screen

28000 for a 5x5 multi screenLight&Music Ltd. wants to have a minimum stock level of two multi screens of each standard type (3x3, 4x4, and 5x5) to be able to fulfill short-term demands.Light&Music Ltd. has an extensive sales and rental catalog covering their range of products. They would like to store the existing catalog pictures in the corresponding item master records so that they can use them in printed quotations.The presentation sets, sound sets, and stage sets sell or rent cheaper than the single components.

5.2 PurchasingLight&Music Ltd. purchases most of their items from their contractors. When entering an order, they would like the system to suggest only the items that are supplied by the contractor already entered.Light&Music Ltd. has all their vendor’s price lists at their disposal. In general prices are valid for one calendar year and the vendors send Light&Music Ltd. new price lists on a regular basis. The contractors send the price lists as Excel sheets. Is there a way to import these Excel sheets into the system? To compare the prices of their vendors, Light&Music Ltd. wants to have a display of all price lists in a table.Light&Music Ltd. has a special agreement with Media Equipment Corp regarding the 40’’ LCD displays for the multi screens. When they buy 50 pieces, they get a discount of 10%. When they buy 100 pieces, they get a discount of 15%.

Depict the entire purchasing process in an SAP Business One scenario while taking into account the specified basic conditions.

A customer may acquire a purchasing membership, which is valid for one year from the date of issue. The purchasing members are assigned to a membership category:

Gold card: Customers that make purchases of more than 5000 pounds in one year Silver Card: Customer that make purchases or more than 2500 pounds Standard Card: Default value for all other customers

At this point, the gold or silver card assignment is still done manually.At the end of the membership a member receives a bonus (credit memo) of 50 pounds for every 1000 pounds he or she purchased during the year. The member receives this sum only after reaching a round total. At 1500 pounds, for example, the member receives only 50 pounds, only when this member reaches 2000 pounds in purchases does the member receive a total of 100 pounds. The total bonus amount should be calculated by a report.For certain occasions, customers with gold and silver cards receive a special catalog and an invitation. The employees need a report in which they can view these membership categories in a list with street address , city, and postal (zip) code.

Four weeks before the membership expires, the customer is to be reminded to renew the membership. This requires a specific report.

5.3 SalesLight&Music Ltd. is selling items from all item groups.Light&Music Ltd. wants to optimize its sales. In order to ensure the punctual delivery of the items an automatic availability check shall be implemented. In case the item a customer desires is not on stock, they want to be able to offer him items that are similar. Please show how this can be accomplished. The credit limit for their customers is generally 20,000 Pounds. If this limit is exceeded by up to 1000 Pounds, a warning is to be given to the employee who is entering the order so that he or she can inform the customer about it. If the deviation from the credit limit is more than 1000 Pounds, the system shall block the order. Only Michael Smith can approve such a sales order.The sales-person usually receives a commission of 5%. Commissions are paid out once a year. How can the managing director receive a monthly listing of all sales commissions? The sales manager, Sarah Miller, does not want the sales employees to have access to each other’s sales documents. On the other hand, Sarah wants to have access to all sales documents. Make sure the sales employees can display the gross profit per item when processing the sales documents. Calculate the gross profit percentage as profit divided by the costs of the item. The Dublin Trade Fair may experience short-term demands for lights or speakers. Until the new office in Dublin is open, Light&Music Ltd. handles the sales to the Dublin Trade Fair by consignment processing. This means that Light&Music Ltd. delivers lights and speakers to a warehouse of the customer, and the customer informs Light&Music Ltd. whenever they remove any items from the warehouse to put them in use. Then the customer receives an invoice for these items. The items stored in the warehouse at the customer still belong to Light&Music Ltd. and therefore must appear with the correct amount in the stock list.Items of the item group Accessories are delivered directly from the vendor to the customers. Light&Music Ltd. only accepts the purchase order and forwards it to the vendor. The vendor invoices the delivery to Light&Music Ltd. and they invoice the items to their customers. This process should run automatically as much as possible.Depict the entire sales process in an SAP Business One scenario including the picking and packing functionality. For packing, Light&Music Ltd. works with two package types, for items up to 100 kg and for items of more than 100 kg. For every delivery Light&Music Ltd. charges a freight fee of 5 Pounds.

Furthermore, as already stated, Light&Music Ltd. consults, architects, and engineers in planning communication systems for complex building projects. Please show how these consulting services can be invoiced.

5.4 Production / MRPThe production of the multi screens is done completely in London from where they are shipped to the customers. Light&Music Ltd. wants to ensure that the stock does not fall below the minimum stock level of 10 of each of the multi screens. Demonstrate the production order recommendation through MRP and the production of some of the standard multi screens, as well as the production of a special extra large multi screen (7x7) ordered by a customer.

5.5 RentalLight&Music Ltd. is renting items from all item groups. The customer receives a printed rental agreement, which should contain the note that the items have to be brought back in proper state and that the customer has to pay for any damage. The estimated return date has to be saved in the system. When the item is returned, an invoice is created for the duration of the rental. At this point, all open transactions have to be closed and the item has to be available once again.If an item is already rented, Light&Music Ltd. wants to be able to determine its return date with the help of a report. To optimize their rental offer, Light&Music Ltd. would like to have an assessment of the rental time and rental frequency of the rental items.

5.6 ServiceLight&Music Ltd. offers to its customers a two year warranty for all the sold items. The items carry a serial number which is comprised out of the item code, the year, and a sequential number. This standard service is limited to working days from 8:00h to 17.00h and does not include holidays. If necessary, a technician travels within the next 5 days to the customer to fix the problem. The labor and travel expenses are free of charge, as well as any spare parts.Of course, Light&Music Ltd. also wants to submit a warranty claim to the vendor if a product is damaged. When Light&Music Ltd. receives a delivery of items equipped with serial numbers by the manufacturer, these serial numbers must be entered.

Furthermore Light&Music Ltd. offers comprehensive service packages to specific customers that own an in-house range of technical presentation equipment. This service covers telephone support from 8 am to 10 pm all week (including weekends and holidays) and an on- site- support by a technician within 1 day. The labor and travel expenses and the costs for the spare parts must be paid by the customer.

5.7 ConsultingAs already stated, Light&Music Ltd. consults architects and engineers in planning communication systems for complex building projects. Please show how these consulting services can be invoiced.