Global SCM

490610
Week 11 SAP & ERP
Seiwook Chung

Global SCM (490610-1) 1

 Weekly Plan
Lecture Topic Lecture Goals

• Demand Planning
1
2
Introduction
Basics of SCM
Class, norm and goal setup, walking through syllabus, evaluation
Macro supply chain, end to end process
3 Demand Planning Forecast and forecast accuracy, statistical forecast, bullwhip effect
4 Supply Planning MRP and replenishment, safety stock, reorder point, lead-time
5 Purchase Direct and indirect purchase, EOQ, Kanban, VMI
6 Inventory Planning Inventory planning and control, Inventory metrics,
7 Midterm
3PL Service provider selection, physical counting, Latest technology, H
8 Warehouse azmat
9 Int’l Transportation Ocean and air, industry norms, terms, and knowledge
10 International Trade Incoterms, country of origin, AEO, IATA, customs
11 SAP ERP and APO ERP basics, master data, integration with other tools,
Generic S&OP process and cross-functional communication, leadershi
12 S&OP p for SCM
13 Capacity 1 Discussion of "the goal", bottleneck
14 Capacity 2 Capacity planning
Global SCM (490610-1) 2
15 Final exam
 Supply Chain ②

2nd tier 1st tier

Factory W/H* Distribu Custom
Supplie Supplie Retailer
⑬⑭ ⑧ tor er
r⑤ r⑤

Information (Demand plan③ , Supply plan④)

Information (Orders⑤)

Material (Inventory⑥. Transportation⑨, trade⑩)

Reverse Supply Chain

$$$

SAP/ERP⑪
GlobalS&OP ⑫
SCM (490610-1) 3
* W/H: warehouse
 Important SCM IT Tools
- ERP, WMS, YMS, TMS, Integration

https://youtu.be/7XNj9TQ0758 Global SCM (490610-1) 4

 SAP SCM (SAP APO)

• https://youtu.be/XSqIRH2WjuI Global SCM (490610-1) 5

 Week 11
• Recap
• ERP
• SAP ERP
• Modules
• Master Data
• Other Business Solutions

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Customs Clearance (Declaration)
• The act of passing goods, through custo
ms, which is entering or leaving the coun
try, commercially
• Tax (mainly duty and value added tax)
• Import requirement
• Docs submitted and limited portions for
physical check

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 COO (Country of Origin)
• Define the origin of the country for impo
rted and exported products.
• If manufactured in multiple countries, tak
e the one where product’s value is added
most
• Definition is based on WTO rules but can
be different by the local laws
• Must be marked on the product

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 Import / Export Process
Local Transportation,
inland transpiration,
Exporter Importer
drayage
Shipper Consignee

Origin Country Bonded Int’l Bonded Destination Country

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 HS (Harmonized System) Code
• Harmonized commodity description & coding system
• The standard for international trade including export
and import declaration
• 8-10 digits for commodity types
• A factor for the duty rate determination with origin &
destination country
• Must be on the commercial invoice

https://www.kotra.or.kr/kh/common/getHSCodeList.do
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 Incoterms®
• Determines, between shipper and
consignee, the responsibilities for tasks,
risks, and costs in international
shipments
• Related to International commercial law
• Not synchronized with the definition of
the asset in accounting
• Trademark  ‘Incoterms® 2020’

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 Task
Incoterms® 2020 Risk
Cost

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Filing Docs for Import Declaration
(Commercial) Invoice & AWB

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 TP (Transfer Price)
• Buying price on the invoice when the seller a
nd the buyer are related (Intercompany trans
action)
• Shouldn’t be outside of the fair market value,
or subject to the audit by the authority for fa
ir duty declaration
• Example
– Astrazeneca Korea buys from AZ HQ
– GE Healthcare Korea sells to GE Healthcare US
– Celltrion sells to Celltrion Healthcare
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Definitions

Global SCM (490610-1) 15

 ERP (Enterprise Resource Planning)
Gartner.com
• Enterprise resource planning (ERP) is defi
ned as the ability to deliver an integrate
d suite of business applications. ERP tool
s share a common process and data mo
del, covering broad and deep operationa
l end-to-end processes, such as those fo
und in finance, HR, distribution, manufac
turing, service and the supply chain.

Global SCM (490610-1) 16

https://www.gartner.com/en/information-technology/glossary/enterprise-resource-planning-erp#:~:text=Enterprise%20resource%20planning%20(ERP)%20is,service%20and%20the%20supply%20chain.
ERP (Enterprise Resource Planning)
Definition at Oracle.com
• Enterprise resource planning (ERP) refers to
a type of software that organizations use to
manage day-to-day business activities such
as accounting, procurement, project
management, risk management and
compliance, and supply chain operations. A
complete ERP suite also includes enterprise
performance management, software that
helps plan, budget, predict, and report on
an organization’s financial results.

Global SCM (490610-1) 17

ERP (Enterprise Resource Planning)
Definition at SAP.com
• Helps run core processes in a single
system for departments such as finance,
manufacturing, HR, supply chain, services,
procurement, and others. ERP uses
intelligent technologies to help you
transform your mission-critical processes
and rapidly adapt to change – no matter
the size of your business.

Global SCM (490610-1)

https://www.sap.com/products/enterprise-management-erp.html 18
 ERP is
• A software system to execute all business
transactions and recognize them in financial
statement
• Reflective of the approved standard processes of
the organization for business and material
planning
• Consists of Modules (finance, costing,
manufacturing, HR, supply chain, services,
procurement, etc)  integrated seamlessly, real-
time
• Produce Financial Statements (Income statement,
balance sheet, cash flow statement, etc) & other
reports
Global SCM (490610-1) 19
 About ERP
• For entire organization and entire operation beyond
SCM
• Interface-able with other internal systems and
external systems (customer, supplier, government,
etc)
• Multinational companies: usually 1 client for all
organizations around the world
• System access map-able by module, by transaction
type, site (plant)
• Auditable: Logon time, by user, by transaction
• Electronic approval functions
• Strong report function

Global SCM (490610-1) 20

 Interfaces with ERP
• Internal: WMS, TMS, POS, Mobile, BW
(BI), Mobile, ATS, APO (SCM), etc 
More integrated, more complex in
upgrade
• External: e-Tax invoice, Banks,
Government, Credit card, Travel,
Carrier/Forwarder  Data security
should be assured

Global SCM (490610-1) 21

ERP, HCM, & ATS by Company
-HCM:
Human
Capital
Management

-ATS:
Applicant
Tracking
System

Global SCM (490610-1) 22

https://www.appsruntheworld.com/top-10-erp-software-vendors-and-market-forecast/
SAP & Oracle

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SAP ERP

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 SAP’s ERP Enhancement
• 1973 – R/1
• 1979 – R/2
• 1992 – R/3
• 1999 - SAP ECC
• 2015 – SAP HANA

If your company uses SAP ERP, it is called a

s “SAP”, “SAP ERP”, “R/3”, “SAP ECC”, or
“SAP Hana”
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 SAP HANA
• Newest ERP of SAP Company
• Vs. previous one, more advanced in
– Integration with other systems (SRM, CRM,
SAP SCM(APO), BI, etc)
– Mobile
– Cloud environment

https://en.wikipedia.org/wiki/SAP_S/4HANA
Global SCM (490610-1) 26
 Client
• In the SAP landscape, a client is an entity wi
th independent information and data.
• Multiple legal entities in 1 client  Multinat
ional companies  Massive planning (heuri
stic or MRP)
• Client type
– Production client
– Test client
– QC client
– Backup client
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 Configuration
• Basic framing work for an SAP ERP per the system blueprint
• Scope and out of scope
– Module
– Data fields
– Selectable data
• Each data field
– Mandatory or not
– Drop down box
– Allowed data type (numeric, characteristic)
– Digits, bites
• Reflective of the defined processes of the company
• Block unauthorized data selection
• Changes are very restricted only with high level approval
companies
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 Modules
• Partitioned per conventional business
functions (PP, MM, SD, FI, CO, etc)
• It is more for accesses & views so modules
are fully integrated
within 1 client of SAP
real time

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SAP ERP Modules

Global SCM (490610-1) 30

 FI (Financial Accounting)
• All accounting events in ERP is recognize
d as a general ledger in FI
• Financial statements are produced (Inco
me statement, balance sheet, cash flow s
tatement, etc)
• Mainly for financial accounting

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 CO (Controlling)
• Mainly for product costing and other int
ernal control.
• Cost accounting, managerial accounting

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 HR (Human Resource)
• Personnel
• Employee info
• Payroll
• Travel
• SAP User data

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 SD (Sales & Distribution)
• Covers from sales order taking to billing
• Process
– Sales order
– Deliver notes (MM)
– Shipping (GI in MM)
– Billing  Revenue recognition in FI
• Master data: material, price (condition), c
ustomer

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 MM (Material Management)
• Mainly for inventory management, and p
urchase
• Purchase from PR to PO
• Inventory: GR to GI
• Master data: Material, vendor, info record
, source list
• WM (Warehouse Management) belongs
to MM
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 PP (Production Planning)
• Production order to production completi
on
• Simple forecasting tool
• Master: Material, work center, BOM, routi
ng

Global SCM (490610-1) 36

 QM (Quality Management)
• Reflective of quality standards and requir
ements
• Transactions to be proceeded when
released in QM module after physical
quality check or test

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 WM (Warehouse Management)
• To define detailed areas and storage
locations all the way to bin level more so
than ERP. such as aisle, level, and bin and
to manage the inventory moves within
warehouse while in-and-out transactions
is managed at MM
• Sub module of MM
• Reflective of the warehouse process and
associated labels are generated

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Master data

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 Data
• Collection of information to be analyzed in in one for
mat (table)
• Accurately populated in terms of row and column
• Numbers: fairly weighted in same unit (180cm=1.8m=
5.9 foot=5’ 11’’)
• Differentiate blank and zero
• Numeric and characteristic (Midterm score vs School
ID #)
• Differentiate blank and zero
• Differenct value: cannot be same (George Bush)
• Same value: exactly same
– If containing USA, US, the US, America, United State of A
merica, it is not data
Global SCM (490610-1) 40
 Master Data in SAP is
• Data populated for continuous use in
multiple transactions and in difference
modules
• Reflective of standard (approved) process
• Not often changed (easier to change than
configuration
• Interfaced
• Transactional &
text (non transactional)

Global SCM (490610-1) 41

 Master Data in ERP
• A set of data not changed often and to be used
repeatedly in transactions
– Plant (location) master  Legal entity
– Material master  Inventory (SKU’s)
– Info record  Purchase price by SKU
– Source list  Supplier by SKU
– Vendor master  Information about suppliers
– BOM (Bill of Materials)  Raw material requirements in
production by SKU
– Routing  Production sequence by work center, lead time,
and indirect cost
– Work Center  Production stations in production process
– Customer master  information about customers
– Condition master  Sell prices for Sales order

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 Master data by Module

Material Master
Vendor Customer
BOM
Master Master

Info Price Work

Record Master Center

Routing

Source List

Purchase Production
http://i-bada.blogspot.com/ Global SCM (490610-1) Sales Order 43
Order order
Milestones in SAP Implementation
1. As-is
2. To-be (Gap Analysis & Project Scoping)
3. Master Data cleansing & test client upload
4. Conference room pilot
5. Integration test
6. User acceptance
7. Final data upload
8. Data (Master & Transaction) migration to
product client
9. Go-live
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Other Business Solutions by
SAP

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 SAP APO
(Advance Planner & Optimizer)
• Supply Chain Planning  Forecast future
transactions in ERP
• DP and SP
• Capacity Planning
• Alert (inventory shortage and surplus)

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 Key APO Functions
• DP (Demand Planning)
– Statistical forecast
– Consensus forecast
• SNP
– Heuristic: more intelligent MRP for multiple
sites in 1 client
• Capacity planning
• PPDS (Production planning Detailed
Scheduling)
• S&OP (Sales & Operation Planning)

Global SCM (490610-1) 47

SAP BW (Business Warehouse)
• Bata base for ERP (Configuration, master data,
transactions, etc)
– Interface from ERP to BW, not the other way around
• Standard queries is given
• New queries made by users like MS Access or Excel
pivot

Global SCM (490610-1) 48

SAP BI (Business Intelligence)
• More advanced out of BW
• Graphs
• Mobile friendly

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 SAP CRM
(Customer Relationship Management)
• Prospect customers  ERP customer master
• Quotation  ERP for sales order
• From customer’s call reception to service
follow-up including service part order

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 Mobile ERP
• Field Engineer, Sales reps, warehouse, etc

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 ERP transactions in OTC
(Order to Cash)
Event SD MM & WM PP FI & CO Master Data
Order taking Sales order Credit Material
check & Customer
approval Condition
Supply Plan ATP(Available MRP MRP Material
to promise)
Prod order / Purchase Productio Inv/AP Material
Purch order order n order BOM,Routing,
GR R/M Release Work Center,
info R, source L

Product GI R/M Productio GI R/M

order closed GR F/G n GR F/G
complete
Delivery Delivery GI F/G AR / Rev
note COGS/ INV
Money Customer’s Cash/AR
Credit update Global SCM (490610-1) 52
Collection R/M: Raw material, F/G: Finished Goods
Processes via ERP
- From previous classes

Global SCM (490610-1) 53

 Statistical Forecast
• Set alpha, beta, gamma weight factor via the
parameter (fcst profile, planning strategy)
selection in your fcst tool
– Alpha: Average
– Beta: Trend
– Gamma: Seasonality
• View multiple forecasts suggested by parameter
& pick one parameter (Do with fcst graphs)
• Parameter can be set up by product (SKU) or
product group
• Excel example
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Parameter Setups in SAP APO

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 MRP
• Material Requirements Planning is an
engine (algorithm) to calculate supply
plan of the finished goods and
associated raw materials which is
ultimately to fulfill the demand. The
input is consensus demand plan and the
output is planned orders with quantity
and timing
SP MRP DP

Global SCM (490610-1) 56

 MRP
• In supply planning for manufacturing sites, MRP
often means only for raw material supply plans
while MPS (Master Production Planning) is for the
finished goods. However, MRP often covers all
concepts above
• Heuristic: MRP run in SAP APO SNP module is
called by heuristic. It is designed not only for
MRP of individual location but also to reflect
interactions of multiple locations each other
within the system (client)

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 Auto PO
• Purchase order placed automatically as a
result of MRP without human review. It
can be applied when your demand plan,
master data setting, and MRP engine are
all reliable.
• Good fits are less expense BTS items
• Internal approval process for each order
can be exempted by the process
approval and audit.

Global SCM (490610-1) 58

 Kanban (看板)
• Started from Toyota as a part of lean
• PO is created when 1 of 2 `bins is
emptied by the warehouse worker
bringing attached Kanban card to
buyer
• Suitable for large quantity but less
expensive materials that systematic
management could be too costly
• Size of 1 bin determined by the
replenishment lead time
• Advanced handheld scanner and
auto PO is available in ERP’s

Global SCM (490610-1) 59

 Reorder Point

Reorder 5 or less

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 Next on Deck
Lecture Topic Lecture Goals

• Demand Planning
1
2
Introduction
Basics of SCM
Class, norm and goal setup, walking through syllabus, evaluation
Macro supply chain, end to end process
3 Demand Planning Forecast and forecast accuracy, statistical forecast, bullwhip effect
4 Supply Planning MRP and replenishment, safety stock, reorder point, lead-time
5 Purchase Direct and indirect purchase, EOQ, Kanban, VMI, CMI
6 Inventory Planning Inventory planning and control, Inventory metrics,
7 Midterm
3PL Service provider selection, physical counting, Latest technology, H
8 Warehouse azmat
9 Int’l Transportation Ocean and air, industry norms, terms, and knowledge
10 International Trade Incoterms, country of origin, AEO, IATA, customs
11 SAP R3 and APO ERP basics, master data, integration with other tools,
Generic S&OP process and cross-functional communication, leadershi
12 S&OP p for SCM
13 Capacity 1 Discussion of "the goal", bottleneck
14 Capacity 2 Capacity planning
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15 Final exam
End of Presentation

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