L15 Sapr3 Process1


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L15 Sapr3 Process1

  1. 1. Business Processes (SD, MM, PP) and Organizational Structure
  2. 2. Agenda <ul><li>Value chain and business process integration </li></ul><ul><li>Organizational elements </li></ul><ul><li>Business processes and R/3 functionality </li></ul><ul><li>Motor Sports International </li></ul><ul><li>R/3 System walkthrough of major transaction events </li></ul>
  3. 3. <ul><li>Integration and Sharing of Information: </li></ul><ul><li>-Order Information–> Shipping, Billing & Cash Processing </li></ul><ul><li>-Customer Master -> Order & Billing & Delivery </li></ul><ul><li>-Shipping –> Inventory & General ledger Adjustment </li></ul><ul><li>-Billing & Cash Processing –> General ledger Adjustment </li></ul>
  4. 4. The four business processes of the value chain are implemented in R/3 through the application modules.
  5. 5. MSI: The Company specialized in Motor Cycle Mfg
  6. 6. Organizational Elements <ul><li>A mechanism for hierarchically representing company’s organizational structure in the SAP R/3 system. These definitions are critical to an implementation. Organizational elements can belong to one or more applications: For example, a company code belongs to the FI, MM, HR, SD, and other applications. </li></ul><ul><li>The financial examples for Motor Sports International, Inc. - US include: </li></ul><ul><ul><li>A client which represents a legally and organizationally independent unit at the highest level of the SAP R/3 System (e.g., SS group). (Note: This is a different client than the SAPGUI client of the three tier architecture) </li></ul></ul><ul><ul><li>Business areas can be used to produce internal balance sheets and profit/loss statement. Cross-company business area reporting is supported. MSI is divided into the motorcycles (02) and accessories (90) business areas </li></ul></ul><ul><ul><li>A company which is an independent legal entity within a client. Motor Sports International has two legal entities, Motor Sports International, Inc. US (3000) and Canada (4000). </li></ul></ul>
  7. 8. Organizational Elements - MM <ul><li>A purchasing organization is a unit that negotiates general conditions of purchase for one or more plants. </li></ul><ul><li>MSI’s purchasing organization in the US is 3000. </li></ul><ul><li>A plant is an organizational unit within a company corresponding to a location, facility, or branch. Plants are used by all Logistics applications. </li></ul><ul><li>MSI has two manufacturing locations, plant 3000 located in New York, and plant 3400 located in Seattle. </li></ul><ul><li>Both plants have been assigned to purchasing organization 3000. </li></ul><ul><li>Plants use storage locations to distinguish areas within the plant for inventory use. </li></ul>
  8. 10. Organizational Elements - SD <ul><li>A sales organization is responsible for negotiating sales conditions and distributing materials and services. </li></ul><ul><li>MSI has one sales organization for the U.S. </li></ul><ul><li>A distribution channel is an organizational unit that determines how materials reach a customer. </li></ul><ul><li>Retail sales is distribution channel 03. </li></ul><ul><li>A division is an organizational unit that serves two purposes: </li></ul><ul><ul><li>Logistically, a division manages customer-specific arrangements such as partial deliveries and pricing. </li></ul></ul><ul><ul><li>Financially, once products are sold, a division monitors product line profitability by mapping the division/plant combination to a business area. </li></ul></ul><ul><ul><li>MSI’s divisions are motorcycles (02) and accessories (90). </li></ul></ul>
  9. 12. The SAP R/3 System Organization Diagram generically represents organizational units and their connections. The arrows indicate one-to-one, one-to-many, and many-to-many relationships. This example shows the sales view. This diagram is part of the Business Navigator (component view). Refer to Business Navigator for all system models.
  10. 13. <ul><li>Customer/Vendor/Material/Account Master , </li></ul><ul><li>One customer master record for a sales order, delivery, invoice, payment, etc. </li></ul><ul><li>Master data has an organizational aspect. A customer master record has client, company, and sales area data. </li></ul><ul><li>A typical task in R/3 is to add a record to master data such as the Material Master. </li></ul>
  11. 14. Adding a Material Master : Select Logistics >>> Materials management >>> Material master. Select Material >>> Create special >>> Finished product.
  12. 15. <ul><li>Four main business processes: </li></ul><ul><ul><li>Customer Order Management (Selling) </li></ul></ul><ul><ul><li>Manufacturing Planning and Execution (Making) </li></ul></ul><ul><ul><li>Procurement (Buying) </li></ul></ul><ul><ul><li>Financial/Management Accounting and Reporting (Accounting) </li></ul></ul>
  13. 18. <ul><li>Customer order management refers to the process of taking orders, checking availability, delivering goods, invoicing customers, and receiving payment. </li></ul><ul><li>Application Modules that support this process are: </li></ul><ul><li>Sales and Distribution (SD) </li></ul><ul><li>Financial Accounting (FI) </li></ul><ul><li>Materials Management (MM) </li></ul><ul><li>Production Planning (PP) </li></ul><ul><li>Controlling (CO) </li></ul><ul><li>Functions included are: </li></ul><ul><ul><ul><li>Pre-sales activity </li></ul></ul></ul><ul><ul><ul><li>Sales order processing </li></ul></ul></ul><ul><ul><ul><li>Inventory sourcing </li></ul></ul></ul><ul><ul><ul><li>Delivery </li></ul></ul></ul><ul><ul><ul><li>Billing </li></ul></ul></ul><ul><ul><ul><li>Customer payment </li></ul></ul></ul><ul><ul><ul><li>Customer support (question resolution) </li></ul></ul></ul><ul><ul><ul><li>Sales Information System (SIS) </li></ul></ul></ul>
  14. 21. <ul><li>Manufacturing Planning and Execution refers to the process of recognizing demand, netting requirements, planning for the production or procurement of materials, and identifying the capacity to satisfy demand. </li></ul><ul><li>The SAP R/3 application modules that support this process are: </li></ul><ul><li>Materials Management (MM) </li></ul><ul><li>Financial Accounting (FI) </li></ul><ul><li>Sales and Distribution (SD) </li></ul><ul><li>Production Planning (PP) </li></ul><ul><li>Controlling (CO) </li></ul><ul><li>Human resources (HR) </li></ul>
  15. 22. <ul><li>The SAP R/3 Functions included are: </li></ul><ul><ul><ul><li>Sales and operations planning (SOP) </li></ul></ul></ul><ul><ul><ul><li>Demand management </li></ul></ul></ul><ul><ul><ul><li>Master production scheduling (MPS) </li></ul></ul></ul><ul><ul><ul><li>Material requirements planning (MRP) </li></ul></ul></ul><ul><ul><ul><li>Shop floor control </li></ul></ul></ul><ul><ul><ul><li>Production order (Execution, Management, Processing) </li></ul></ul></ul><ul><ul><ul><li>Logistics information system (LIS) </li></ul></ul></ul><ul><ul><ul><li>Product costing </li></ul></ul></ul><ul><ul><ul><li>Capacity requirements planning (CRP) </li></ul></ul></ul><ul><ul><ul><li>Bills of material (BOM) </li></ul></ul></ul><ul><ul><ul><li>Routing </li></ul></ul></ul><ul><ul><ul><li>Work centers </li></ul></ul></ul>
  16. 23. demand forecast activity, closed-loop planning phase, control of production activities through inventory valuation, order settlement, product costing
  17. 25. <ul><li>Procurement refers to the process of requisitioning, vendor sourcing, purchasing, receiving, and paying for materials and services . </li></ul><ul><li>The SAP R/3 application modules that support this process are: (MM)(FI)(PP)(CO)(PM) </li></ul><ul><li>Functions are: </li></ul><ul><ul><ul><li>Reorder point planning </li></ul></ul></ul><ul><ul><ul><li>Requisitions </li></ul></ul></ul><ul><ul><ul><li>Source determination </li></ul></ul></ul><ul><ul><ul><li>Request for quotation processing </li></ul></ul></ul><ul><ul><ul><li>Contracts/scheduling agreements (Blanket PO) </li></ul></ul></ul><ul><ul><ul><li>Purchasing </li></ul></ul></ul><ul><ul><ul><li>Receiving </li></ul></ul></ul><ul><ul><ul><li>Inventory update </li></ul></ul></ul><ul><ul><ul><li>Invoice verification </li></ul></ul></ul><ul><ul><ul><li>Payment </li></ul></ul></ul><ul><ul><ul><li>Purchasing Information System (PurchIS) </li></ul></ul></ul>
  18. 26. <ul><li>Encompasses the purchasing of goods and services from recognition of the requirement through final vendor payment for the goods or services received. </li></ul><ul><li>The five major functions related to this process are : </li></ul><ul><li>Purchasing requisition, Purchase order processing, </li></ul><ul><li>Goods receipt, Invoice receipt/verification, Payment </li></ul>
  19. 28. <ul><li>Each of the 3 previous business processes have links to the Financial/Management Accounting and Reporting process. </li></ul><ul><li>Financial Accounting (FI): </li></ul><ul><li>General Ledger, Accounts Receivable/Payable </li></ul><ul><li>Fixed Assets, Consolidation, Special Ledger, Treasury </li></ul><ul><li>Controlling (CO) </li></ul><ul><li>Cost Center Accounting, Internal Order Acctg </li></ul><ul><li>Product Cost Accounting, Profit Center Accounting </li></ul><ul><li>Project Cost Controlling, Activity-Based Costing </li></ul><ul><li>Profitability Analysis </li></ul>
  20. 29. <ul><li>Each of the three previous business processes have links to the Financial/Management Accounting and Reporting process. </li></ul><ul><li>The major functions related to this process for our scenario are: General ledger accounting </li></ul><ul><li>Legal and management reporting </li></ul>
  21. 30. Processes, Functions, Transactions all related.
  22. 33. <ul><li>business scenario : </li></ul><ul><li>Receive an order for our 1200cc motorcycles from our wholesale customer, Cycle Concepts Inc in Philadelphia, with a request for delivery in one month. </li></ul><ul><li>MPS had been reviewed and approved for our motorcycle plant located in NY. We plan to produce approximately 30 MSI 1200cc motorcycles per month. </li></ul><ul><li>By running MRP, we determine how many and which components we needed for this production plan. The motorcycle is composed of sub-assemblies and purchased parts. </li></ul><ul><li>In order to produce the motorcycles, we procure the mirrors from the Eastern Supply Corporation . They bill us and we send a payment. Per their instructions, we send an invoice to their head office. </li></ul><ul><li>According to the terms on the invoice, we receive payment for the delivered motorcycles within the discount period. </li></ul><ul><li>The production manager responsible for the production cost center analyzes the labor costs for production. </li></ul>
  23. 35. <ul><li>Main business processes and their functions are: </li></ul><ul><li>Customer Order Management:Customer Order, Delivery, Billing,Cash Receipt Processing </li></ul><ul><li>Manufacturing Planning and Execution: </li></ul><ul><li>Sales and Operation Planning (SOP), MPS, MRP </li></ul><ul><li>Planned Order Processing, Production Order, </li></ul><ul><li>Production Order Receipt, Purchasing Requisition </li></ul><ul><li>Procurement: </li></ul><ul><li>Purchase Order, Payment, Order Confirmation, </li></ul><ul><li>Goods Issue, Goods Receipt, Invoice Receipt and Verification </li></ul><ul><li>Financial/Management: </li></ul><ul><li> Accounting and Reporting </li></ul>
  24. 37. <ul><li>The sales order contains: Material data, Pricing information, Order quantity,Customer data, Delivery data </li></ul><ul><li>In our business scenario: the sales order is created after Cycle Concepts, Inc . of Philadelphia makes a request to purchase 1200cc MSI Motorcycles with delivery in a month. </li></ul>
  25. 39. <ul><li>MPS contains: </li></ul><ul><li>Demand management parameters </li></ul><ul><li>Time planning parameters </li></ul><ul><li>Quantity planning parameters </li></ul><ul><li>Planning Time Fence (PTF) </li></ul><ul><li>Available To Promise (ATP) </li></ul><ul><li>In our business scenario: Motor Sports International creates a plan for a four-month build schedule. The shop calendar and stock on hand are taken into consideration when demand on production is calculated. </li></ul><ul><li>Motor Sports International runs MPS. </li></ul><ul><li>The customer order is an independent requirement within manufacturing. </li></ul>
  26. 41. <ul><li>Material Requirements Planning (MRP) is a planning system of gross to net calculation of the material plan. </li></ul><ul><li>Generates dependent requirements through bill of material (BOM) explosion. </li></ul><ul><li>MRP contains: </li></ul><ul><li>Net change or regenerative planning </li></ul><ul><li>Time planning parameters </li></ul><ul><li>Quantity planning parameters </li></ul><ul><li>Demand management parameters </li></ul><ul><li>In our business scenario: MRP plans matched sets of parts for all components required to build the planned number of motorcycles per month as determined from MPS. </li></ul>
  27. 42. <ul><li>The sales order contains: Material data, Pricing information, Order quantity, Customer data, Delivery data. </li></ul><ul><li>In our business scenario: The sales order is created after Cycle Concepts, Inc. of Philadelphia makes a request to purchase 1200cc MSI Motorcycles with delivery in a month. </li></ul>
  28. 43. <ul><li>The basic purchase order contains: Vendor, Material or service to be purchased, Order quantity, Delivery and payment data, Pricing information </li></ul><ul><li>In our business scenario: The requisition for mirrors is converted into a purchase order to be sent to our vendor, Eastern Supply. </li></ul>
  29. 44. <ul><li>The goods receipt contains: Quantity and materials received against a purchase order or production order. </li></ul><ul><li>In our business scenario: MSI receives the mirrors from Eastern Supply . </li></ul><ul><li>The New York Warehouse perpetual inventory is updated. </li></ul><ul><li>A financial document, which updates the inventory account and an accrued liability account, is created. </li></ul>
  30. 45. <ul><li>The invoice receipt and verification contains: Price of the goods received, Quantity of the goods to be paid for. </li></ul><ul><li>In our business scenario: The invoice receipt and verification process verifies the agreed upon mirror part number, price, and quantity, and creates the corresponding financial transaction. </li></ul>
  31. 46. <ul><li>Payment contains: Vendor master data, Payment terms, Bank master data, Amount due. </li></ul><ul><li>In our business scenario: After the vendor invoice is posted, MSI issues a check for payment of the mirrors received based on payment terms. </li></ul>
  32. 47. <ul><li>Planned order processing contains: Quantities, Dates, Components, </li></ul><ul><li>In our business scenario: The planned order addresses the requirement for the manufactured final assembly - the MSI 1200cc motorcycle. </li></ul>
  33. 48. The production order contains: Operations, Material components, Costing data, Dates In our business scenario: MSI releases the production order to the shop floor.
  34. 49. <ul><li>A goods issue contains: A reference to a production order, The release of inventory, The creation of a financial document </li></ul><ul><li>In our business scenario: Motor Sports International issues to the production order all components that are necessary to make the motorcycles. </li></ul>
  35. 50. <ul><li>Records actual production results: actual amount of product completed at a specific operation, actual amount of time spent per operation. </li></ul><ul><li>Determines who carried out the operation, amount of yield and scrap produced. </li></ul>
  36. 51. <ul><li>The production order receipt contains: Date, Quantity received </li></ul><ul><li>In our business scenario: The motorcycles from the production order are received into inventory. </li></ul><ul><li>The quantity of motorcycles is updated. This process affects the value of inventory on the balance sheet. </li></ul>
  37. 53. <ul><li>The billing process contains: Invoice to the customer., Pricing information from the order, Shipped quantity from the deliveries, Creation of the financial document. </li></ul><ul><li>In our business scenario: After the goods are delivered, the billing document is created and the invoice is sent to the Cycle Concepts, Inc. head office in Seattle based on the requested billing schedule. </li></ul>
  38. 54. <ul><li>Cash receipts processing contains: Payment amount, Payment terms, Discount amount, Invoice number </li></ul><ul><li>In our business scenario: Based on the payment terms, MSI receives payment from Cycle Concepts, Inc. for the MSI 1200cc motorcycles. </li></ul>
  39. 55. <ul><li>Financial accounting, Cost accounting, Legal reporting, Management reporting. Financial/Management Accounting and Reporting occurs when a journal entry is posted, and departmental expenses are reviewed and analyzed. </li></ul>