ERP / SAP Overview

1
 What is an ERP solution...?
…. Integrated across the primary and support processes

Distribution

Manufacturing Marketing

Planning
Materials and Finance
Execution

Engineering Sales

Human Resources Slid

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 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

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 What results can be expected from
an “ERP culture”?
Reduced working capital requirements
Improved customer service
Improved direct labour productivity
Reduced purchase costs ERP
Reduced obsolescence
Reduced overtime
Having the figures to make decisions
Having accountability throughout the organization
Improved quality of life Slid
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 SAP R/3 Overview
Systems Applications & Products in Data Processing

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SAP R/3 : A comprehensive business
solution
SD FI
Sales & Financial
Distribution Accounting

MM CO

R/3
Materials Controlling
Mgmt.
PP TR
Product Treasury
Planning

QM
Quality
Client/Server PS
PM ABAP/4 WF
Project
Mgmt. System

Plant Mainte- Workflow

nance
HR IS
Human Industry
Resources Solutions

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 SAP R/3 : 3 Tier Architecture
The Presentation Layer
Those SAP R/3 software components that
specialize in interacting with end-users
form the Presentation Layer.

The Application Layer

Those SAP R/3 software components that
specialize in processing business
applications form the Application Layer.

The Database Layer

Those SAP R/3 software components that
specialize in the management , storage and
retrieval of data form the Database Layer
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 SAP R/3 : 3 Tier Architecture

Presentation Layer Application Layer Database Layer

components components components

reside in: reside in: reside in:

Presentation servers: Application servers: Database servers:

Systems capable of Specialized systems Specialized systems
providing a graphical multiple CPUs and with fast and large
interface. vast amounts of RAM. hard drives.
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 SAP R/3 : 3 Tier Architecture
Presentation Layer components are installed across many PCs.

The Application Layer

components are installed
across one or more high-
end servers.

The Database Layer

components are installed on
high-end database server.
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 SAP R/3 Overview
SD FI
Sales & Financial
Distribution Accounting

MM CO

R/3
Materials Controlling
Mgmt.
PP TR
Product Treasury
Planning

 QM
Quality
Client/Server PS
PM ABAP/4 WF
Project
Mgmt. System

Plant Mainte- Workflow

nance
HR IS
Human Industry
Resources Solutions

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 Integration

All business processes throughout the supply chain are executed in

one system sharing all information
SAP R/3

Workflow
S C
U U
P S
P Procurement Production Distribution T
L MM PP SD O
I M
E Finance and Accounting E
R FI CO R

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 SD: Sales and Distribution
SAP
R/3

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

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 SD
Inquiry
SD Overview
Quotation
Purchasing
Materials Planning
Sales Order Production

Pricing

Delivery to Customer Picking

Goods Receipt
Packing

Goods Issue Customer Stock

Invoicing Transportation
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 Process Chain: Sales Distribution
Sales/Distribution
Chain
Inbound Logistics
Outbound Logistics
from Materials Sales Order & Distribution
to Customer
Management Process
Receive Payment
FI
Support Customer Sales
(Customer Info Analysis)
Create Invoice - Optional -
FI/CO/PA
- Create pick list
- Create trans- Issue Goods Process Customer
portation
work list
(Ship Product) Inquires
- Create loading FI - Optional -
work list MM

Provide Customer
(Documents) Create Delivery Note Quotations
- Optional -
- Check credit
-Check product availability Create Sales Order
- Determine pricing FI/CO/PA Support Customer
- Estimate delivery schedule MM Agreements
- Determine conditions of - Optional -
sale PP Slid
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(Activities)
Order Entry PP
FI MM FI

Credit Management
Dynamic Availability Check
Cash Forecast

?
OK
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Delivery/Shipment Processing
FI MM
WM
MM
Ship to party: C100
Item Material Qty
10
20
30
6301
6412
1507
10
10
25
Credit Management
.
.
. Delivery
Static Availability Check
.
Note

Picking
List

Picking
Packing
Transportation Slid
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 Picking/Packing
Sales Order

Delivery

Picking without Picking Picking with Picking

Confirmation Confirmation
Picking
Print Picking List
Request

Confirm Picking Picking

Request Confirmation

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 Invoicing CO
PA
CO
Profit Center Accounting/Profitability Analysis
PCA FI
FI
Accounts Receivable/General Ledger

Cash Forecast

Single Invoices
EDI
Collective Invoices
Invoice Lists
Credit/Debit Notes

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 MM Overview

SAP
R/3

MM •Materials Management . .

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 MM
MM Overview
Material requirement
planning

External procurement Internal procurement

Purchasing Production

Invoice Goods Master data

verification Warehouse
receipt management Material
Batch
Inventory Vendor
management Customer
Goods Transfer G/L
issue posting Storage bins
...

Internal and external accounting Sales and distribution Slid

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 Material - Central Master “Record”
for Logistic 456
Inventory
Purchasing
Desc:---------------------
123
Inventory Raw Material - 456
Quality
Sales Information
Production Information
Desc:---------------------

Product - 123

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 Data in the Vendor Master
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

General Data Purchasing Data Account Data

Address Terms of Payment Payment Terms
Phone and Fax Contact Person Minimum Payment Method
Number Order Value Accounting Clerk
Control Data
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 External Procurement Environment
Requirement RFQ
Determination

Source List
Purchase Quotation
Quota Requisition
Arrangement

Source
Outline Determination Price History
Agreement Vendor Purchasing Data
Selection
Info Record

Purchase Invoice
Order Receipt
Goods Receipt

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 Goods Movement
Ad hoc.

Goods
Receipt
Delivery Production

Inventory Inventory

Transfer
Posting

Goods Goods
Issue Issue

Consumption Samples Sales Order Slid

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 Invoice Verification
CO FI
Orders / Projects /Cost centers
G/L accounts / Accounts payable Payment
Vendor
Vendor
Vendor
Vendor 3 invoiceinvoice Tolerance Check?
OK !

Blocked Invoice
e.g...
Invoice Release of
Verification Blocked Invoice

Delivery Invoice
Preliminary Posting
Automatic Price Update Slid
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 PP Overview

SAP
R/3

PP •Production Planning . .

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 PP
Production Planning Cycle
Sales and Operations Planning Master Data

Material Master
Master Production Scheduling Bill of Materials
Work Centers
Routings
PRT
Sales & Distribution Demand Management

Materials Management MRP Capacity Planning

MRP List Plant Maintenance

Production Order Cycle or

Costing Purchase Order Cycle
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 Production : Process Chain
Production Chain
Inbound Logistics from Outbound Logistics to Materials
Manufacturing
Procurement or Production Chain Management or Sales Chain
Process

Archive/Delete Order
Determine Production Requirements
via MRP Output or Manually)
Settle Production Order
FI
CO Create production order
(via conversion of planned order
to production order or manually)
Transfer Produced Goods to Inventory
FI Check material availability
(Automatic)
Confirm production of
goods is completed Release Production Order

Produce Goods Print shop floor papers

(actual workorders)

Withdraw materials from

inventory (automatic/manual)
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 Production Planning
1. Production Planning Functionality
2. Master Data
3. Sales and Operations Planning &
Demand Management
4. MRP
5. Production Order & Capacity Planning

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 Material Requirements Planning
Demands
Quantity:
12.000

Stochastic

Deterministic Planning

Bill of
Material
Demands Explosion
3. Qrt 4. Qrt

Capacity Planning
Lot Sizing Procedures
Net Change
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 MRP - Planning Procedures
Planning
Procedures

Deterministic Consumption-Based
MRP Planning

Forecast-Based Reorder Point

Planning Planning

Automatic Manual
Reorder Point Reorder Point
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 Production Control
MM
FI CO
Goods Issue
Costs

Open Production Order

Release Production Order

Planned Orders
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 QM Overview

SAP
R/3

QM •Quality Management . .

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 QM Overview QM

The QM application
FI
module is a
FI and information
SD quality control
Sales & Financial
Distribution Accounting
system supporting
CO
quality planning,
MM

R/3
Materials
Mgmt.
inspection, and control for
Controlling

PP manufacturing and AMprocurement

Product Fixed Assets
Planning Mgmt.

QM PS
Quality Project
Mgmt. System
PM WF
Plant Mainte- Workflow
nance
HR IS
Human Industry
Resources Solutions

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 QM in Logistics QM

Goods receipt
• History-dependent intensity of quality inspections

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

Goods issue
• Quality management in SD (certifies quality) Slid
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 PM Overview

SAP
R/3

PM •Plant Maintenance . .

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 Plant Maintenance - Overview
PM

Master Data

Pre-defined External
work steps Services Material
Parts/Supplies Requisitions Reporting
Notifications
Create
Work Planned Schedule Close and
Orders Work Orders WO’s Settle WO

Emergencies
Labor Shop
Special
Tools Papers
Preventive/Predictive
Maint. WO’s

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 FI Overview

SAP
R/3

Fi •Finance . .

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 Components of FI FI

General Ledger
FI-GL
Special Ledger
FI-SL
Accounts Receivable
FI-AR
Legal Consolidation
FI-LC
Accounts Payable
FI-AP Asset Accounting
FI-AA

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 Corporate Structure
Financial Financial Financial
Management Management Management
Area Area Area Corp. Group Level

Company Code (Company)

Legal Entity

Controlling Controlling Controlling Controlling

Area Area Area Area
Controlling Level

Plant Cost Centers

Management Units

Work Material
Place/Job Product Slid
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 The Elements of Financial
Accounting
Foreign Exchange
Management
Business
Analysis

Finance Information System

Executive Information System
G/L Information System Cash Management
and Forecast

Multiledger
Bank Accounts
Accounts Accounts
Payable Payables ivabless
Receivable Receivable
General Ledger
Extended General Ledger
Invoice Credit
Verification Management
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 The Components of FI
Configuration Functionality
• Organizational Structures Documents/Transactions Fiscal Year
– Company Codes Posting Adjustments
– Business Area Payment Terms Balance Sheets/Income Statements
• Organization of Accounting Foreign Currency Closings
– Ledger/Sub-ledger Taxes On-Line Display
Special G/L Transactions Interest Calculation
• Chart of Accounts Planning Correspondence
• Credit Control Payment Program Fixed Assets
– Setting Credit Limits Reporting Analysis
Legal Consolidations
• Master Records
– G/L Accounts
– Customers Modules
– Vendors
– Banks General Ledger Special Ledger
Accounts Payable Legal Consolidations
• Chart of Depreciation Accounts Receivable Credit Management
– Depreciation Areas Asset Accounting Cash Management and Forecast
– Assets Treasury
• Extended General Ledger
FI
• Group Company
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 CO Overview

SAP
R/3

CO •Controlling. .

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 CO
Components of CO
CO Configuration CO Modules
Organization Structures • Cost Center Accounting • Profit Center Acctg.

Master Data • Order and Project Acctg. • Product Costing

• Transaction-Based • Activity-Based Costing
Planning Setup Postings
• Product Costing
• Periodic Allocations
• Budgeting
Criteria and Values
• Profitability Analysis
Valuation • Business Planning
& Control

Functionality
• Settlement • Planning
• Internal Orders • Transaction-Based
Posting
• Open Item Management
• Profitability Analysis
• Periodic Allocations

CO • Overhead Management
• Monitoring Actual
Activities vs. Planned
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 The Elements of Managerial Accounting

Overhead Cost Overhead Cost Profitability Report

Controlling Controlling Analysis Structure:
Cost PA Market
Centers Segment
Region
Division
Cost of Sales

PCA

Cost of Period

Report
Structure:
Controlling Profit
Center
GL Slid
Accounts e 45
 Integration Within FI/CO

FI
Chart of Accounts CO

Financial Accounting Management Accounting

Asset Asset Overhead Cost Product & Sales &

Accounting Accounting Controlling Production Profitability
Controlling Controlling
Asset Gen. Ledger Cost Center
Accounting Accounting Controlling Mass Cost of Sales
Production Accounting
Investment Accounts Actual
Controlling Receivable Costing Continuous Period
Flow Prod. Accounting
Static
Plant Accounts
Standard
Maintenance Payable Batch
Costing
Production
Cash Flexible
Account Management Standard Make to
Revenue Costing Order Prod.
Central
Order Line Items
Controlling
Central Project Central
Documents Controlling Totals
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 Integration

Planned
Requirement PP SD
MM Customer
MRP Order

Requirement
on component Planned
Shipping
level Order

Purchase
Production
Order Invoicing
Order

Goods
Receipt Account
Receivable
Production
completed
Invoice
Verification FI
FI Order
Settlement CO
Accounts Slid
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Payable
Which modules are involved?
 SAP R/3 : Components

Master Data
Application
Transaction Data

ABAP
Programs

Organization Structure
Configuration Key Data Elements
Functionality Configurations
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 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

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 Organizational Structures in R/3
Organizational Units
Cost Accounting Client

External Logistics Controlling Areas

Accounting Company Codes

Sales Purchasing
Organizations Organizations
Internal Logistics Valuation Areas
(MRP/Production)

Plants

Inventory Management Storage Locations/Batches/Special Stocks

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 Organizational Structure in SAP R/3

Production Planning Financial Accounting

Company
Plant
Code

Controlling Human Resources

Client
Controlling Personnel
Area Area

Sales and Distribution Materials Management

Sales Purchasing
Area Organization Slid
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 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.

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 Why we need ABAP Developments?

SAP Solution

SAP R/3 scope

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 SAP Solution
Specific company
SAP R/3 scope
requirements

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 SAP Solution
SAP R/3 scope Specific company
requirements

New Functionality
Development

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 SAP Solution
SAP R/3 scope Specific company
requirements

New Functionality
Development

Non SAP
applications
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Types of ABAP Developments
• Reports

• Interfaces

• Conversions

• Enhancements

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