Air canada blueprint guangfu(david) li

PublishedDate : 09.07.2019
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AIR CANADA
SAP ERP Project
Business Blueprint:
---Presented by Best Group
09.07.2019

Business Blueprint
Published: 09.07.2019
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DOCUMENT APPROVALS
Name & Responsibility Signature
ProjectManager Date
AirCanadaExternal Consultant Date
AirCanadaProjectManager Date
Lead Consultant Date
AirCanadaTeamLead Date

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TABLE OF CONTENTS
1. Air Canada integrated Structure
1.1. Air Canada company introduction
1.2. Air Canada company SAP integrated structure
2. Financial Accounting
2.1. Air Canada finance process analysis (AS-IS)
2.1.1Enterprise Structure
2.1.2 Financial Parameters
2.1.3 General Ledger/Financial Accounting
2.2. Enterprise Structure.
2.2.1Defining Company Code
2.2.2Defining Credit Control Area
2.3Financial Accounting Global Settings
2.3.1Fiscal Year Variant
2.3.2Posting Period Variant
2.3.3Document types
2.3.4Document Number Ranges
2.3.5Field Status Variants
2.3.6Posting Authorizations
2.3.7Posting Keys
2.4General Ledger Accounting Basic Settings
2.4.1Ledger Approach
2.4.2 Scenarios
2.4.3 Chart of accounts
2.4.4Retained Earnings
2.4.5Account Groups
2.4.6Document Splitting
2.4.7Payment Terms
2.4.8Automatic Tax Account Determination
2.4.9Open item management
2.4 Cash Journal
2.5 Bank Management

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2.6 Financial Closing & Reporting
2.7.1 Foreign Currency Valuation
2.7.2 Financial Statements
3. Cost Accounting and Control (CO) Module
3.1 Author and Managers of the Business Blueprint
3.2 Input
3.3 Organizational Structures
3.3.1 Controlling Area and Currency
3.1.2 Controlling Area Currency
3.1.3 Company Code and Currency
3.1.4 Company Code Currency
3.1.5 Fiscal Year Variant
3.1.6 Chart of accounts.
3.1.7 Operating Concern and Currency
3.1.8 Cost Center Standard Hierarchy
3.1.9 Cost center groups
3.1.10 Cost Center Type
3.1.11 Cost Period
3.2 Cost Accounting Master data
3.2.1 Cost Centers
3.2.2 Cost Center Groups
3.2.3 Cost elements
3.2.3.1 Primary Cost Elements

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3.2.3.2 Secondary Cost Element
3.2.4 Statistical Keys
3.3 General Expense Control Master data
3.3.1 Internal Orders
3.3.1.1 Real Internal Orders
3.3.1.2 Statistical Internal Orders
3.4 Profit Center Accounting Master data
3.4.1 Profit Center Groups
3.5 Profitability Analysis and Master data
3.5.1 Operating Concern
3.5.2 Characteristics
3.5.3 Profitability Report Format
3.6 Actual Transaction Records
3.6.1 Profitability Analysis Business Processes
3.6.2 SD Billing Documents Acquisition
3.6.3 Direct Cost Transfer from FI/MM Modules
3.6.4 Period End Closing Transactions
3.6.5 Creation of Distribution Keys
3.6.6 General Expense Distributions
3.6.7 Integrations
3.6.8 Expense Integration

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3.7 AS IS TO BE
4. Accounts Payables and MM
4.1 As is
4.2 Purchase Organization
4.3 Master Data
4.3.1 Materials master data
4.3.2.1 Vendor Account Group
4.3.2.2 Vendor Master Record
4.4 Transaction data
4.4.1 Invoicing
4.4.2 Invoice Clearing
4.4.3 Special GL transaction
5. FI-AA
5.1 General explanations (AS-IS)
5.1.1. Procuring an asset
5.1.2. Registering or Adding an asset
5.1.3. Adjusting the Assets
5.1.4. Transferring the Assets
5.1.5. Depreciating the Assets
5.1.6. Disposing the Assets
5.2 Functions and events (TO BE)
5.2.1 Overview
5.2.2 Asset Master Data
5.2.2.1 Data maintenance
5.2.2.2 General master data

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5.2.2.3 Data for calculating Asset Values
5.2.2.4 Asset classes & Account determination
5.2.3 create asset process
5.2.4 Asset acquisition
5.2.5 AUC
5.2.6 Periodic processing
5.2.7 Asset transfer
5.2.8 Asset scrapping/ retirement
5.3. GAP analysis
5.4. Integration consideration:
6. Sales and Distribution Module
6.1. Objectives
6.2. Methodology
6.3. Scope
6.4. Sales and Distribution Structure
6.5. As is VS To Be
6.6. Structure
6.6.1. Creating Sales Organization
6.6.2. Creating Distribution Channel
6.6.3. Creating Division
6.6.4. Plant Definitions and Assignment

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6.6.4.1. The Purpose of Assignment of sales Organization –Distribution channel Plant
6.6.5. Sales Office and sales Group Creation & Assignments
6.6.5.1. Maintain Sales Group
6.6.6. Assign Sales Organization to Company Code
6.6.7. Assign Distribution Channel to Sales Organization
6.6.8. Assign Division to sales Organization
6.6.9. Set Up Sales Area
6.6.10. Creating Assignment of Sales Area
6.6.12. Overview of Sales
6.6.13. Delivery
6.6.14. Billing
6.6.15 Pricing
6.6.16 Credit Management
6.6.17 Payment Terms

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Air Canada integrated Structure
1.1. Air Canada company introduction
Air Canada is Canada's largest airline and the largest provider of scheduled passenger services
in the Canadian market, the Canada-U.S. transborder market and in the international market to
and from Canada. In 2018, Air Canada, together with its Air Canada Express regional
partners, carried nearly 51 million passengers, offering direct passenger service to more than
220 destinations on six continents. Air Canada is a founding member of Star Alliance™,
providing the world's most comprehensive air transportation network.
Air Canada's predecessor, Trans-Canada Air Lines (TCA) inaugurated its first flight on
September 1, 1937. The 50-minute flight aboard a Lockheed L-10A carried two passengers
and mail between Vancouver and Seattle. By 1964, TCA had grown to become Canada's
national airline; it changed its name to Air Canada. The airline became fully privatized in
1989. Air Canada shares are traded on the Toronto Stock Exchange (TSX:AC), and effective
July 29, 2016, its Class A variable voting shares and Class B voting shares began trading on
OTCQX International Premier in the US under the single ticker symbol “ACDVF”.
Air Canada is among the 20 largest airlines in the world and employs 30,000 people. Its
corporate headquarters are located in Montreal.
In 2019, Air Canada has more than 400 aircrafts and lots of routes operating.

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1. Air Canada company SAP integrated structure
Client(Air Canada)
Credit
controlling
(1100)
Charts of
account
(1100)
Controlling
area
(1100)
Chart of
depreciation
(1100)
Cocd( 1100)
Purchasing Org.
(Air Canada)
Sales Org.
(0001)
Plant (Pearson)
Storge location 2(pearson
2)
Storage
location1(Pearson1)

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PASSENGER SEGMENT
1. FI
1.1. Air Canada finance process analysis (AS-IS)
2.1.1 Enterprise Structure
Air Canada is one legal entity and all books of accounts are maintained under this legal entity.
In this condition the final reports did not require any consolidation as there was one single
entity. All segments were grouped together and reported under this one single entity. We did
not have a credit control area in our legacy system.
2.1.2 Financial Parameters
The financial parameters are like calendar year consisted of twelve months and no special
periods. This Gap has been met up in our new ERP system. There was no security of postings
so far as the last system was concerned which will be taken up in the new system.
2.1.3 General Ledger/Financial Accounting
The legacy system maintained the “XYZ” accounting software which consisted of maintaining
manual ledgers and posting journal entries by analyzing debit and credit for every transaction.
Manual balancing and carry forward of ledger balances were needed.
Two separate books of accounts were maintained for IFRS and GAAP for all such manual
entries. Also there was no systematic maintenance of foreign currency transactions and
exchange rates were not uniform throughout the concern. The company maintained bank
accounts in its regular ledgers and both incoming and outgoing payments were matched in the
same account. The open items had to be reviewed from time to time to see what remained
outstanding.

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2.2 Enterprise Structure
Air Canada Inc is an independent legal entity and we maintain one single company code to
provide financial reporting for internal and external purposes.
Client- Air Canada (AIC)
Company Code - Air Canada(1100)
2.2.1 Defining company code
A company is an organizational unit in Accounting which represents a business organization
according to the requirements of commercial law in a particular country. In the SAP system,
consolidation functions in financial accounting are based on companies. A company can
comprise one or more company codes. The company code is an organizational unit used in
accounting. It is used to structure the business organization from a financial accounting
perspective. A company Code represents an independent accounting unit, for example, a
Company within a Corporate Group (Client). The Company Code is the smallest
Organizational unit for which a complete self-contained set of accounts can be drawn up for
purposes of external reporting. Balance sheets and Profit and Loss statements, required by law,
are created at company code level.

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A four character company code is created for Air Canada Inc, Regional Headquarter,
Toronto, Ontario, Canada.
Company code - 1100
Company name - Air Canada Inc
City - Toronto
Country - Canada
Currency - CAD
Language - English
Address - 100 University Avenue, Toronto.
2.2.2 Credit Control Area
The credit control area is an organizational unit that specifies and checks a credit limit for
customers. A credit limit is set per business partner record. Within a credit control area,
the credit limits must be specified in the same currency.
Our four character credit control area is - 1100
Credit Limit - 1000000
2.3 Financial Accounting Global Settings
Books of accounts are maintained by the company with financial year January to December.
Fiscal year is maintained for the Financial year. Air Canada maintains calendar year fiscal year
variant.
We will use standard FYV K4 for this purpose. In addition to this we will have 4 special
periods. After creating the fiscal year variant we will assign it to our co code.

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2.3.2 Posting period Variant
In Every financial year books are opened for on 1st of January and Closed on 31st December.
Books are closed in every month and balance are carried forward to next month. So, Posting
period variant is created.
We will define posting period variant 1100 to open posting periods for GL accounts AKDMS
and also create an authorization group to maintain it. After this we will assign it to our
company code .
2.3.3 Document Principle & Define Document Types –
Document types are defined at the client level and are used to differentiate between business
transactions. Air Canada will use the standard document types defined in the system. The SAP
system adheres to the document principle. This means that each posting is always stored in the
form of a document; each document has a document type, which is generally used to identify
the source and nature of the transaction (e.g. AP Invoice, AR Debit Memo etc.), and a unique
document number. Each document remains in the system until it is archived. Only complete
documents can be posted in the SAP system. "Complete" means that the balance from the debit
and credit items is zero. Further conditions for posting a document are that you must enter the
basic document data, such as document date, posting date, document type, posting key,
account number and amount. You must make entries in all the required fields (these are
defined as "required" during system configuration of Field Status Groups). When you enter
documents, the system checks whether these conditions have all been met. It also
checks/validates the entries themselves. For example, if you have entered a key that is not
defined in the system, the system issues an error message to this effect. If this is the case, you
can only continue
An incomplete document may be parked and then posted at a later date; this may be done by
the same or a different user. Generally the documents are parked when the user is waiting for
an approval from the superior. Subsequently the user can book the same as a G/L document.
One advantage of parking is that you can evaluate the data in documents online for reporting
purposes from the moment they are parked, rather than having to wait until they have been
completed and posted. A list of parked documents can be generated in the SAP for the benefit

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of the supervisor/manager. The document can then be checked and corrected by the user. This
document can then be posted in the General ledger. Parked documents can be modified or
deleted before posting.
For postings that recur on a regular basis, such as payments for rent or interest, legal fees, and
property taxes, the recurring entry program can be used to have the necessary documents
generated automatically. The recurring business transactions must be stored in the system as
recurring entry original documents. Each recurring entry original document contains the date
of the first and last posting, the frequency at which posting should be made, and the date of
the next planned posting. The recurring entry program must be started at regular intervals
within a specified period. The program selects all recurring entry original documents in which
the date of the next posting falls within the specified period, and then generates a batch input
session. When the session is processed, an FI document that corresponds to the original
document is posted, and the date of the next posting is changed accordingly in the recurring
entry original document.
Fig 1 Standard Document types
,

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2.3.4 Define document number ranges
Internal Number ranges will be defined for the document types for both leading and non -
leading ledgers of Air Canada. This will help Air Canada create unique documents for its
transactions.
Document Number Range in entry view is the document numbers which are posted in leading ledger.
we will define number ranges from 00 to 20,49,88,89,90 and 99 for our different document types.
2.3.5 Define Field status variant-
We will define our field status variants . What information is displayed when a document is
processed is controlled by the field status. Again for each group of GL accounts we have to
enter the field status groups and the field status groups are summarized in one field status
variant . We assign the field status variant to our company code.
Our Field Status Variant is 1100.
We will have the following Field Status Groups:
FIELD STATUS GROUP DESCRIPTION
FSCC Cost Center
ZEXP - Expense Accounts
ZGBS - General B/S accounts
ZMMA Material Management
ZRAA Reconciliation Accounts
ZREV Revenue Accounts
2.3.6 Posting Authorizations :We will define the upper limits for posting transactions within
tolerance groups for the following:
Upper Limit for posting procedures:

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1. USER TOLERANCE
TGAI
1. Total amount per document - 10,000,000.
2. Cash discount a user with this tolerance group is able to grant - 2%
3. Permitted payment difference -
Revenue - 100 10%
Expenses-100 10%
Tolerance Groups for employees/Users -
a) GBI-066- Jamshed- TGAI
b) GBI-060 - Baishali-TGAI
c) GBI-064 - Ibrahim-TGA
d) GBI-065 - Malati-TGAI
e) GBI-061- Guang - TGAI
2. G/L TOLERANCE
Tolerance groups for G/L accounts - TGGL-
DEBIT POSTING =100 0r 1%
CREDIT POSTING = 100 or 1 %
3. CUSTOMER & VENDOR TOLERANCE
Tolerance groups for customers & vendors- TGCV-
Permitted Payment differences - Gain - 100 10 % Adjust discount by 10
Loss - 100 10% Adjust discount by 10

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2.3.7 Posting Keys - Posting keys are also defined at the client level.The position key has
control functions within the line items.It controls :
1.To which type of account the line item can be posted to
2.If the item is posted as debit or credit and
3.the field status of additional details.
Fig 2 Standard Posting Keys
2.4 Basic Settings for General Ledger Accounting
2.4.1 Ledger Approach
We will follow the ledger approach in New General Ledger Accounting. We will have the
Leading Ledger for Canadian GAAP .
2.4.3 Chart of Accounts - The chart of accounts is a variant that contains the structure and
basic information about general ledger accounts.
Our chart of accounts will be named as 1100.
It is the operational chart of accounts of Air Canada.

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It will have two segments -General Ledger Master Records
● Chart of accounts segment which will contain the account number, name of the
account, control fields and consolidation fields.
● Company code segment will contain information exclusive to the company code
concerned and will contain control data, bank/interest and other information.
Here we define the information that is relevant to each company code:
Currency- You can select one of the following currencies as account currency- local or foreign
currency. If the account is local currency the other currency can be converted to local
currency for each line item.”Only balance is local currency “ is selected for clearing
accounts without necessitating exchange rate difference postings, in B/S accounts not
maintained in foreign currencies and not maintained on open item basis. Accounts with
foreign currency can be posted in this currency.
Taxes - Entries are possible in the tax fields of a document if the general ledger is relevant to
tax.
Reconciliation account-Reconciliation Account - All postings to the sub ledger accounts will
be automatically posted to the assigned reconciliation accounts.
We will have reconciliation account for account types:
1. K for Accounts Payable.
4. D for Accounts Receivable
Then we will assign this chart of accounts to our company code.
2.4.4 Retained Earnings Account - The system will automatically use this account while
closing the Profit & Loss accounts account.
Our Retained Earnings G/L is 40000
2.4.5 Accounts Groups - We will group the accounts of our chart of accounts into specific
account groups. This will be entered in the chart of accounts segment and will control the
appearance of the company code segment of the GL account through the field status group by

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choosing
a) Hide
b) Required entry
c) Display
d) Optional
We will create the following Account Groups for our Chart Of accounts with the following
number ranges:
FIXED ASSETS - 10000-19999
INVESTMENTS- 20000-24999
LOANS & ADVANCES- 25000-29999
CURRENT ASSETS- 30000-39999
EQUITY AND SHARE CAPITAL 40000-49999
LONG TERM LIABILITIES 50000-59999
CURRENT LIABILITIES & PROVISIONS 60000-69999
EXPENDITURE- 70000-99000
INCOMES- 100000-200000
CHART OF ACCOUNTS AIC.xlsx
2.4.6 Document Splitting –
Document splitting helps us create entry view and general ledger view. Entry view is how a
document appears to the document creator and how it is shown in the sub ledgers. And GL
view is how it appears in the GL. We will activate document splitting for our company code.
For this we will also create the zero balance clearing account. We will activate document
splitting for:

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1. Profit Centre Reporting.
2.4.7 Payment terms - Payment terms for
1. Vendors : If paid within 10 days then 2 % cash discount.
2. Customers : Payable immediately.Only for travel agents normal time would be 20 days
but if paid within 10 days they get 2 % cash discount.
2.4.8 Automatic tax account determination - Account determination will be based on tax
code or the account key. For this we will define the Tax Accounts.
The following G/L Accounts will be defined for this purpose.
GST/HST payable account - Current Liability —G/L A/C is 67000
2.4.9 Open Item Management - Open items are incomplete transactions such as invoices that
have not been paid. For a transaction to complete it must be cleared. Using the “Clear Account”
function we will be able to select those open items from an account that balance to zero and a
clearing document will be generated. It is relevant for accounts managed on an open item
basis.
2.5 Cash Journal
This will facilitate posting cash receipts and cash payments. By setting the cash balance at the
beginning of the day, the cash journal shows the cash balance at any time by adding the cash
receipts and deducting the cash payments. The cash journal also serves as a basis for entries
in general ledger and thereby represents the“Cash” GL Accounts. We will have one cash
journal for our company code. The documents that can be posted are:
G/L account postings
Outgoing payments to vendors
Incoming payments from vendors
Outgoing payments to customers
Incoming payments from customers
The G/L Account for Cash Journal will be 30000

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2.6 Bank Management
By configuring House bank management, we will maintain the following:
Maintain bank Master data
Define House Banks
Create account at our house bank
Maintain the links between our house banks and G/L accounts.
Our House Bank is CIBC Bank, Toronto. Time to time we will prepare reconciliation
statements to reconcile our balance at bank statement and books.
HOUSE BANK DETAILS
Bank Name- CIBC Bank, University Avenue, Toronto.
Bank Key - 11000
Bank ID - CIBC
Main Bank G/L - 31000
BANK ACCOUNT DETAILS
House Bank Account ID Bank A/C Number G/L Account
CIBC ABC1 123456 31010(incoming)
CIBC ABC2 789101 31011(outgoing)
2.7 Financial Closing
2.7.1 Foreign Currency Valuation
You carry out the foreign currency valuation before you create the financial statements. The
valuation includes the following accounts and items:
. Foreign currency balance sheet accounts, that is, G/L accounts that you manage in a foreign
currency (the balances of the G/L accounts in foreign currency are valued)
. Open items (customers, vendors, G/L accounts) posted in foreign currency

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(the line items are valued)
2.7.2 Financial Statements
We will define one standard Financial Statement versions as per Canadian GAAP for reporting
Profit & Loss and Balance Sheet. We will also define report forms for making budgeted
and actual comparisons.
Financial Statement Version Name - AICF
We will generate the following financial statement of Air Canada by referring to the previous
financial year 2018.

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3.Cost Accounting and Control (CO) Module
3.1Author and Managers of the Business Blueprint
First and Last
Name
Area of
Responsibility
Company Email
Jagtar Rana Singh ProjectManager Metro College jagtar.s@metroc.ca
Ibrahim Tekin
SAP CO Module
Consultant
BIJMConsultancy ibrahimtkn@gmail.com
3.1.1 Input
The Cost Accounting and Controlling module is the SAP module where the income and
expenses generated as a result of internal activities are monitored and analyzes and reports are
prepared in line with the requirements of management accounting and cost accounting.
In Air Canada ERP Project, Cost accounting module (CO) Cost Center Accounting (CCA),
General Cost Control (CO-OM) and Profitability Analysis (CO-PA) sub-modules are covered.
CO Module will work integrated with the following modules and systems within the scope of
the project:
3.1.2 Organizational Structures

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3.1.3 Controlling Area and Currency
The controlling area is the parent unit that configures an entity for Management and Cost
Accounting. It is a unit above the company code. Detailed monitoring of all income /
expenses in the enterprises connected to the Controlling Area can be made. Distribution and
transfers of income / expenses may be carried out within the objects defined in the controlling
area (eg cost centers, orders etc.).
Within the scope of the project, the controlling area that will constitute the CO module upper
unit has been determined as 1100.
3.1.3.1 Controlling Area Currency:
▪ Cost control is carried out through this currency.

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▪ Controlling Area currency is defined as CAD which is the group company currency.
3.1.4 Company Code and Currency
The company code is the organizational unit of the FI module. The company code is the
smallest organizational unit legally responsible for submitting the balance sheet. Company
codes are linked to the Controlling Area . Multiple company codes can be linked to a
Controlling Area . Thus, in terms of Management Accounting, the expense/income control of
all companies connected to the same Controlling Area can be monitored collectively. We will
only use one company code for this project.
Only one company code will be defined.
⮚ Air Canada Aviation Inc.
Air Canada company code will be connected to 1100 Controlling area.
3.1.4.1 Company Code Currency:
▪ CAD will be used as a company code currency.
The fiscal year variant and Chart of account to be defined in the 1100 Controlling Area has
also been taken over from the company code base versions and is created to be compatible
with FI. The fiscal year variant determines the relationship between the calendar year and the
fiscal year. The K4 variant for the fiscal year has been determined. With the K4 variant, CO
records can be executed in 4 special periods for closings in addition to 12 calendar periods in
FI

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3.1.6 Chart of accounts.
1100 (Air Canada) Chart of account has been prepared in accordance with the Air Canada GL
account list in order for financial applications to be carried out at SAP.
3.1.7 Operating Concern and Currency
The profitability analysis currency will be defined as CAD in the same way as the Controlling
Area currency. The profitability analysis module will also provide reporting in company code
(CAD) and Controlling Area (CAD) currencies.
3.1.8 Cost Center Standard Hierarchy = HIER_1100
Standard Hierarchy of Cost Center is a tree structure that groups all cost centers in the
Controlling Area . Each level / node in this structure is a group of cost centers. Each cost
center is linked to a node in the hierarchy, ie to the cost center group.
With the help of the standard hierarchy, information at cost centers can be consolidated and
reports can be issued on any level of the hierarchy.
3.1.09 Cost Center Type
The Cost Center type is an indicator that classifies Cost Centers in the Cost Center master
data. Management, logistics,sales distribution,etc.Cost Center types will be used for reporting
and control purposes. Air Canada the same characteristics will be assigned to similar Cost
Centers by using the categories of Cost Centers in the group.
Cost Center
Cost Center
Type
Operation G

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Marketing and Sales V
General Management L
3.1.10 Cost Period
The concept of "period" in Business Blueprint refers to each month that corresponds to
calendar periods. The periodic cost mechanism will work on the basis of calendar periods.
3.2 Cost Accounting Masterdata
Cost Center Accounting Master data
3.2.1 Cost Centers
The cost center is the organizational unit that represents the source of an incurred expense.
They are the units that provide the follow-up and control of the internal and external
expenses. While creating cost centers, various criteria such as distribution criteria, services
provided, products produced, geographical factors, areas of responsibility are taken into
consideration.
11011 Acc.And Fin.
11012 HR
11013 Administrative
11014 Passenger line

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11015 Tech & Ground Opr.
11016 Common
11021 Acc.And Fin.
11022 HR
11026 Common
11031 Acc.And Fin.
11032 HR
11036 Common
11041 Acc.And Fin.
11042 HR
11046 Common
3.2.2 Cost Center Groups
In the SAP system, each node constituting the levels of the cost center hierarchy also
represents a group of cost centers. According to the standard hierarchy, when creating a cost
center, it is mandatory to specify which node of the hierarchy is connected. A cost center
cannot be assigned or linked to the highest level in the standard hierarchy. A cost center group

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includes cost center groups or cost centers in a child node, and cannot contain both. Apart
from the grouping structure in the standard hierarchy, any number of hierarchical structures or
single level cost center groups can be formed for reporting and analysis purposes.
1101 General Management
11101 Acc.And Fin.
11102 HR
11106 Common
1102 Marketing
1103 Operation
11105 Tech& Ground Opr.
3.2.3 Cost elements
Cost elements are objects that are computationally tracked within the CO module. The Cost
element indicates the source on which the expense is incurred. Cost elements are defined in
the CO module under the Controlling Area and can be used by all companies connected to
the Controlling Area . Cost elements determine which type / type of expense or income arises.
In cost accounting, the Cost elements are divided into primary and secondary Cost elements.
3.2.3.1Primary Cost Elements
Costs incurred as a result of non-operating activities (eg electricity costs, rent expenses, etc.).
In the FI module, the expense / income accounts opened on the basis of the Cost elements in
the Chart of Accounts correspond to the primary Cost elements in the CO module. In order to
enable integration between FI and CO modules, the respective cost account must be created in
the FI module before the primary Cost element is created. For example, “770XXX Electrical
Expenses must be created as an“ 770XXX Electrical Expenses account in the FI module
before being created in CO. When an account with the same name and a cost element is
created, all records posted to that account in the FI module are recorded as expense in the

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corresponding Cost element in the CO module. When registering in the FI module, an account
assignment object must be used (eg cost center, internal order, etc.) to indicate the center to
which the charge relates.
Within the scope of the project, all income / expense accounts except reflection accounts will
be created as primary Cost element.
3.2.3.2 Secondary Cost Element
Secondary Cost elements are defined with a certain grouping logic to distribute the costs
collected at cost centers and primary Cost elements to cost centers with predetermined
distribution keys or for intra-CO offsetting records. Such cost elements are not equivalent in
the Chart of account , they can only be created in cost accounting management. They act as a
collector / distributor between CO objects that send and receive costs.
3.2.4 Statistical Keys
Statistical keys are used to create a basic factor rule in periodic offsetting (distribution, total
distribution); They are used to define values such as cost centers, internal orders, number of
employees for profit centers, number of phone units, and surface area.
Statistical keys are the Master data that can be used in distribution criteria and reporting.
Statistical keys are used in distribution cycles as distribution keys during cost center
distribution. They can be inherited from other modules or defined in CO.
Statistical keys for cost centers and internal orders, planned or actual value
saved as.
a) Fixed value: This value remains constant for all periods of the same fiscal year starting
from the month in which the value was entered. Manual changes can be
made in the desired period (eg number of people working in the
department).

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b) Total value: This value cannot be transferred to other periods, re-entered for each period
(e.g. number of credits).
The Statistical keys to be used within the scope of the project are determined as follows:
Statistical Key Figure Definition Unit Fix/Total
1101 Person Ratio Fix
1102 Air Miles Ratio Fix
3.3 General Expense Control Masterdata
3.3.1 Internal Orders
Internal orders are used for more detailed monitoring and reporting of costs that cannot be tracked on
the basis of chart of account or cost center. They are divided into two groups: statistical and
real internal orders.
In CO module a cost can be tracked both on the internal order and on the cost center. In this
case, the internal order is defined statistically. In statistical internal orders, actual registration
is made to a real CO object (cost center, etc.) while statistical internal order is recorded.
Records made to actual orders may be offset against another CO object (cost center, etc.) at
the end of the period.
Depending on whether the internal orders are opened real “or statistical“, it is determined
where the actual cost will be posted.
3.3.1.1Real Internal Orders
Real internal orders are CO objects where financial records are kept. If the internal order is
real, the charge is posted to that internal order. Therefore, they are subjected to transactions
such as settlement, distribution and offsetting at the end of the period. Real internal order
usage is not foreseen within the scope of the project.

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3.3.1.2Statistical Internal Orders
Statistical internal orders are CO objects where trace records of financial processes are kept. It
provides a third dimension after the Cost Center and Cost element in the analysis of expenses.
If the internal order is statistical,the actual charge record will be discarded instead of the cost
specified at the time of the posting or the cost specified in the statistical internal order's
Master data.
Here's an example of the types of internal orders that can be tracked in the system:
Order
type
Definition Sample number field
Z001 Vehicle V-XXXXXXXXXX externalno.
Z002 Phone P-XXXXXXXXXXexternal no
3.4Profit Center Accounting Masterdata
A profit center is a management-oriented organizational unit used for internal controlling
purposes. Dividing your company up into profit centers allows you to analyze areas of
responsibility and to delegate responsibility to decentralized units, thus treating them as
“companies within the company”.
3.4.1ProfitCenterGroups
1101 Domestic
11011 Toronto- Montreal
1102 US Border
11021 Toronto-New York
1103 Atlantic
11031 Montreal-Paris
1104 Pasific
11041 Vancouver- Beijing

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3.5 Profitability Analysis Masterdata
3.5.1 Operating Concern
The operating concern is the highest reporting level of the CO module. Multiple operating
concern can be defined within the organization. By assigning Controlling Area (s) to
Operating Concern, it is possible to provide profitability reporting of company code and other
related organizational units under a single organizational structure.
Within the scope of the project, a single 1100 Air Canada Operating Concern will be defined.
Account-Based Analysis ”will be applied in 1100 Operating Concerns.
The profitability currency will be defined in CAD in the same way as the Controlling Area
currency, taking into account the reporting. In the Profitability Analysis module, reporting can
be provided in company code currency (CAD) and Controlling Area currency (CAD).
The fiscal year variant will be used as K4.
3.5.2 Characteristics
The characteristics determine the breakdowns of profitability reports.
Profitability reporting will be based on one characteristic:
⮚ Profit Center Group (Domestic, US Border, Atlantic, Pasific,)
In the profitability reporting, the line structure is not descended on line basis at the moment,
but it is collected in the pool but line details are required to be taken along with SAP
transition. The profitability structure below on line basis will be established in the new
system, this data is present in the source system, integration will be provided from DOC and
Altea in this detail.
3.5.3Profitability Report Format

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Domesti
c
US
Border
Atlantic Pasific Total
TicketSales 1000 2000 3000 4000 10000
Cost of services sold 650 1350 2000 1750 5750
G profit 350 650 1000 2250 4250
Admin expense 50 100 150 200 500
Salary 50 100 150 200 500
Depreciation 200 400 600 800 2000
Net Profit 50 50 100 1050 1250
3.6 Actual Transaction Records
3.6.1 General Expense Records
In the SAP system, all expense / income related accounting records that will be subject to
cost, cost control and profitability follow-up will be recorded in CO module in real time as it
is automatically accounted as a result of quantity movements in logistics modules or manually
recorded in Financial Accounting module. Within the Cost Accounting and Control module,
the amount to be recorded should always be associated with a ”CO object within the relevant
CO sub-module, depending on the nature of the expense or revenue record and the manner in
which it is used in the calculations.

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At least one real expense / income object will be selected in all expense and income records to
be made in CO module. If desired, the secondary tertiary expense / income object can be
selected at the time of registration for reporting detailing. Records made to secondary tertiary
objects will be reported as statistical records as well as real records.
Overheads are followed in the following account and Cost Center breakdown.
-General Directorate: GM, accounting & finance, & administrative human resource
-Marketing: Passenger line
-Operational: Technical, ground operation
In the records related to phones, the relevant statistical internal order should be selected and
the record should be recorded.
3.6.2 Profitability Analysis Business Processes
Profitability Analysis (PA) - Acquisition of Profitability-Related Data
Within the scope of the project, Gross Profit / Loss “level profitability analysis will be
constructed in the income statement.
As soon as a PA related income / expense record is created in the SD / FI module, the FI
accounting document and the corresponding profitability document record will be generated
in real time.
Since the revenue records generated on sales invoices can be stored in PA databases on the
basis of profitability segments, FI income accounts will not need to be opened on each
characteristic basis. Related accounts will be created at the minimum summary level required.

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All aircraft have the same value, age and number of seats.
The number of aircraft used in each route is two.
There is no standard for ticket prices. It may vary according to route, time and aircraft
occupancy rate.
1000 miles takes 1 flight hour.
The same number of personnel is planned for each aircraft.
The number of flights and the line length are shown in the table below.
There are a total of 50 seats on each plane. Maximum 55 tickets can be sold for each flight.
September Flight Plan and Actual Data
Route Mile
s
Trip/m
nth
to from Septem
ber
Quanti
ty
Pric
e
Actual
Rev. for
mo. of
Septemb
er.
Total
Rev.
Toronto-
Montreal
1000 80 40 40 BC 50 1500 45 67500
EC 150 1000 145 145000
Toronto-
New York
2000 40 20 20 BC 50 2000 47 94000

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EC 150 1500 148 222000
Vancouver-
Beijing
4000 20 10 10 BC 50 2500 50 125000
EC 150 1750 150 262500
Montreal-
Paris
8000 10 5 5 BC 50 3000 50 150000
EC 150 2000 150 300000
1366000
3.6.3 SD Billing Documents Acquisition
All customer deliveries must be invoiced within the same period for FI-PA reconciliation. The
periodic shifts between goods issues and related invoices will make a difference in FI-PA
reconciliation.
3.6.4 Direct Cost Transfer from FI/MM Modules
The determination of FI accounts to be registered directly to PA will be made during the
detail design. These accounts can be added / subtracted at any time during live use.

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PA will be kept in gross profit and loss details.
3.6.5 Period End Closing Transactions
3.6.5.1 Creation of Distribution Keys
In the distribution of costs, the distribution keys will determine the rate at which the amount
at the point where the cost is collected will be sent to the receiving objects. Depending on the
type of expenditure to be distributed as distribution key and receiving objects:
▪ Percentage rates
Air Miles of the Rout Statistical key
will be used.
For cycle parts to be distributed on a percentage basis, the percentages can be used in the
same way each time until the percentages need to be entered once and updated again.
In the distributions that will use Statistical keys, it is necessary to enter the actual Statistical
keys into the system in order to operate the actual distribution cycle. The Statistical keys
defined as fixed values within the scope of the project do not need to be entered every month.
3.6.6 General Expense Distributions
Allocation structures will be designed during the realization phase.
After the distribution of all personnel and general expenses between the cost centers, the
profitability distribution will be realized.
3.6.7 Integrations

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Systems used
Netsuite: Accounting system, SAP will replace this system.
Altea: Web reservation and sales program. All revenue records for scheduled flights will
come from here to SD module.
DOC: Cost control uses the program, expense entries are made here. During the integration,
the expenses will come from the DOC to MM module. All DOC expenses will flow from
DOC, no other information will be received.
Integration for CO-PA will only be done from Altea and DOC systems.
Integration of Revenue with SD module
In the Altea system, all of the profitability dimensions are included. Sd module
The real income records system is the reservation system. Reservation system view and future
data are as follows.
⮚
If the Agency issues a ticket, Air Canada will charge it and then the Agency will issue
a commission bill to Air Canada. Commission invoices will record on MM module on
the basis of profitability dimensions, and there is no need for a distribution.
3.6.7.1 Expense Integration
Expenses are mainly monitored in 3 items: ACMI, DOC, and Overheads.

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ACMI+DOC= Cost of Service sold.
DOC stands for Direct Operational Cost. For DOC, we can access expenses on region route
basis. Within DOC, landing, handling, pax tax, catering, overflight, fuel, security, costs are
drawn.
ACMI stands for Aircraft Crew Maintenance Insurance. ACMI includes total rent, personnel
costs, maintenance and insurance. ACMI doesn't come from DOC. The cost of flying
personnel and insurance will come from SAP FI and maintenance costs will come from the
MM module dipriciation from AA with PA object.
3.7 AS IS- ToBe
1-Since the revenue records generated on sales invoices can be stored in PA databases on the
basis of profitability segments, FI income accounts will not need to be opened on each
characteristic basis. Related accounts will be created at the minimum summary level required.
2- Netsuite (former accounting software) was not eligible to use Statistical internal order and
cost center in the same record.
3- Since line, revenue and cost information is received through integration, detailed cost and
revenue reports can be obtained without entering data to the user.
4 Income and expense items can be matched on a customer-by-line basis and profitability
analysis will be conducted.
5-The data flowing to the SAP system by integration will be automatically saved in the format
requested by the accounting.
6 Thanks to the controls in the system, the costs will be prevented from being thrown to the
wrong cost places.
7- Because of the controls in the system, the costs will be prevented from being thrown to
the wrong cost places.

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4. Accounts Payables and MM
The Accounts Payable application components records and manages accounting data for all
Vendors. It is also an integral part of the purchasing system. Deliveries and invoices are
managed according to vendors.
4.1 As is
Paper-driven procurement has a cascading effect on an organization's bottom line. A routine
purchase generates bundles of paperwork, and needs too many back-and-forth emails to set
things straight.
Procurement inefficiencies cost organizations a huge chunk of cash in delayed purchases,
missed discounts, and transaction disputes. Attempting to speed up the procurement process
with outdated tools like spreadsheets and emails is like trying to start a microwave with steel
and flint.
To take advantage of early purchase and payment discounts, organizations need to toss stone-
age procurement practices out the window and embrace technological solutions. Modern
procurement tools can transform a painfully slow procurement strategy to world class
overnight.
If your procurement process still relies on ancient tools, it's time for a major technology
makeover.
4.2 Purchase Organization
SAP Business Process SAP MM is the short form for SAP Material Management system. We
use this model for Air Canada as follows:
∙ SAP MM is a part of logistics functions and it helps in managing
the procurement activities of Air Canada.
∙ It supports all aspects of material management (planning,
control, etc.).

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∙ It is the backbone of logistics that incorporates modules such as
Sales and Distribution, Production Planning, Plant Maintenance,
Project Systems, and Warehouse Management.
∙ Material Management as a process ensures no shortage of
materials (fuel, spare parts, catering and duty free products) or
any gaps in the supply chain process of the organization. SAP MM
speeds up the procurement and material management activities,
making the business run smoothly with complete time and cost
efficiency.
∙ It deals with managing the materials (products and/or services)
and resources of an organization with the aim of accelerating
productivity and reducing costs. At the same time, SAP MM is quite
versatile to accommodate changes that are frequent in any
business environment.
∙ It deals with the Procurement Process, Master Data (Material &
Vendor Master), Account Determination & Valuation of Material,
Inventory Management, Invoice Verification, Material Requirement
Planning, etc.
The following figure illustrates the flow of basic procurement activities:

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Every organization has some framework or structure according to which the whole business
runs. An enterprise structure is the structure that represents an enterprise in the SAP ERP
system. It is subdivided into various organizational units which, for legal reasons or business-
related reasons, are grouped together. An enterprise structure defines various levels in an
organization. These levels are placed according to some hierarchy. Each level has some
specific functionality associated with it, which in a combined way describes the working of an
organization. In addition, an enterprise structure defines various organizational units that are
present in an enterprise. The organizational structure in MM consists of the following
organizational levels:
∙ Client
∙ Company Code
∙ Plant
∙ Storage Location
∙ Purchasing Organization
∙ Purchasing Group

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The following diagram depicts one such organizational structure that describes the levels
incorporated in an organization. It puts the client at the topmost, followed by multiple
company code, followed by multiple plants, plants having multiple storage location with their
own or centralized purchasing organizations.
4.3 MasterData
Consideration was given to the creation of master material records. All purchases are
considered consumable material that is expensed upon receipt. After the Air Canada goes live
with ECC, we will have better knowledge of our procurement pattern purchases and a
material master could be created on an as-needed basis. We will have material master data
and vendor master data.
4.3.1 Materials master data

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In MM we will have the following types of materials in order to support operations of Air
Canada
Material Group Type SAP CODE
Tools Operating Supplies HIBE
Duty Free Trading HAWA
Services Operating Supplies HIBE
Catering Trading HAWA
Table 1. Material Types
Some sample materials can be seen in the following table:
Material Name Material Type Area Used
OfficeSupplies Operating Supplies Admin
Fuel Operating Supplies Ground Services
Maintenance Service Operating Supplies Ground Services
Insurance Operating Supplies Operations
Licences Operating Supplies Operations
Uniforms Operating Supplies Operations
Catering Trading In Flight
Perfumes Trading In Flight
Gifts Trading In Flight
Drinks Trading In Flight
Liquer Trading In Flight
4.3.2.1 Vendor Account Group

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In order to make full automation we will have following vendor groups in SAP for Air
Canada.
AccountGroup Description
ACDV Domestic Vendors
ACFV Foreign Vendors
ACEV Employees
ACOV One Time Vendors
ACSV Statutory Vendors
Each vendor will be assigned a unique number automatically from the systems and following
number ranges are arranged for each Vendors Account Group
AccountGroup Number Range Number Interval
From To
ACDV DV 500000 509999
ACFV FV 510000 519999
ACEV EV EC520000 EC529999
ACOV OV 530000 539999
ACSV SV 540000 549999
4.3.2.2 Vendor MasterRecord
A Vendor master record is maintained for each vendor. Each vendor’s master record is
recognized by number.
Vendor Master: Vendor Master Record is consists of three segments, General Data,
Company Code Data and purchasing Data.

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4.4 Transaction data
All financial transactions related to vendors will be recorded via FI module. Thus it is
not discussed here in detail.
4.4.1 Invoicing
Invoicing is done through following steps:
Purchase Order - PO will be made depending on requisition form.
Goods Receipt - As soon as the goods are received system will automatically issue this
document.
Invoice Verification - In this step goods are checked in terms of type, quantity, amount and
etc. against invoice sent by vendor.
Post Vendor Invoice - Posting of open invoice will be done through FI and discussed in detail
in the relevant section.
4.4.2 Invoice Clearing
Invoices are cleared through Cheques, Bills payables and Cash.
Payment Method – C (Cheque Payment)
Document Type – KZ
4.4.3 Special GL transaction
Advances paid to vendors are treated as special GL transactions.
Special GL Indicators.
A-Down Payment
5. FI-AA
A fixed asset is a long-term tangible piece of property or equipment that a firm owns and uses
in its operations to generate income. Fixed assets are not expected to be consumed or
converted into cash within a year. Fixed assets most commonly appear on the balance sheet
as property, plant, and equipment(PP&E). They are also referred to as capital assets.
FI-AA structure

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5.1 General explanations (AS-IS)
5.1.1. Procuring an asset
The asset procurement process starts with requisition. The requisitions are approved by the
concerned authorities. The purchasing group creates the purchasing orders and then release
the PO. After receiving the asset, the invoice for the asset is entered into the accounts payable.
Assets can also be directly entered in the Fixed Asset Management System
5.1.2. Registering or Adding an asset
Most of the information needed to set up the asset for depreciation is available at the time the
invoice is entered
Information entered at this stage include; acquisition date, placed-in-service date, description,
asset type, cost basis, depreciable basis etc.
Some information will flow automatically based on the asset type selected based on the
relationships that need to be defined in the system.
5.1.3. Adjusting the Assets

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Adjustments to existing asset information is often need to be made.
Events may occur that can change the depreciable basis of an asset.
There may be improvements or repairs made to asset that either adds value to the asset or
extend its economic life.
5.1.4. Transferring the Assets
Sometimes a fixed asset is transferred to another subsidiary, reporting entity, or department
within the company.
These intercompany and intra-company transfers may result in changes that impact the asset’s
depreciable basis, depreciation, or other asset data.
This needs to be reflected accurately in the fixed assets management system
5.1.5. Depreciating the Assets
The decline in an asset’s economic and physical value is called depreciation.
According to GAAP, depreciation is an expense, that must be periodically reflected on a
company’s books, and allocated to the accounting periods, to match income and expenses.
Sometimes, the revaluation of an asset, may also result in appreciation of its value.
Normally, we calculate the depreciation in excel.
5.1.6. Disposing the Assets
When a fixed asset is, no longer in use, becomes obsolete, is beyond repair, the asset is
typically disposed
When an asset is taken out of service, depreciation cannot be charged on it.
There are multiple types of disposals, such as abandonments, sales, and trade-ins

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Any difference between the book value, and realized value, is reported as a gain or loss.
5.2 Functions and events (TO BE)
5.2.1 Overview
SAP Asset Accounting in the SAP system is used for managing and monitoring fixed assets.
In Financial Accounting, it serves as a subsidiary ledger to the general ledger, providing
detailed information on transactions involving fixed asset.
The basic functions cover the entire life of the asset from the purchase order or initial
acquisition (which can be managed as an asset under construction) all the way to the asset
retirement. The system calculates, to a large extent automatically, the values for depreciation,
interest, insurance and other purposes between these two points in time, and places this
information at your disposal in varied forms using the Information System. The fixed assets
function provides you with both physical and financial control over the complete asset life
cycle, from acquisition through depreciation, revaluation, and disposal.
System configuration considerations
● Creation of asset classes
● Account determinations
● Screen layout & rules
● Asset depreciation
● Depreciation keys
5.2.2 Asset MasterData
5.2.2.1 Data maintenance
The "master data maintenance" component is used for recording the master data of your fixed
assets on an individual asset basis.

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The list below shows some of the functions provided for assisting with master data
maintenance:
● Control of the screen layout
● Mass changes to master record fields
5.2.2.2 General master data
This part of the master record contains concrete information about the fixed asset. There are
the following field groups:
● General information (description, quantity, and so on)
● Account assignment information
● Posting information (for example, activation date)
● Time-dependent assignments (such as, cost center)
● Information for plant maintenance
● Entries for net worth valuation
● Information on the origin of the asset
● Physical inventory data
● User fields/evaluation groups
In addition, you can create long texts for the individual field groups belonging to the general
data part of the asset master record. To assist you in entering long texts, you can use templates
you define yourself.
5.2.2.3 Data for calculating Asset Values
The individual calculation methods, with the exception of the base method, are dependent on
the chart of depreciation. This means you can represent your country-specific depreciation
requirements by means of calculation methods that are chart-of-depreciation-specific.
Usually, we use Straight-Line Depreciation over Total Useful Life-ACDS and Declining-
Balance Method of Depreciation-ACDD.
We maintain each calculation method separately, and then assign it to a depreciation key. We
can use a given calculation method in more than one depreciation key.

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We assign the deprecation key to different the chart of depreciation, like book value(01), Tax
balance CCA (The Capital Cost Allowance)(15)
We enter the use life and depreciation start date, then count the asset value by time.
In Air Canada, we will define 2 depreciation areas.
01 Bookdepreciation
15 Depreciation per income tax account
Air Canada will post the depreciation monthly, and use the ‘depreciation run’ to post the
planned depreciation periodic.
5.2.2.4 Asset classes & Account determination
Asset classes are the most important means of structuring fixed assets. The asset classes
structure your assets according to the requirements of your enterprise. Asset classes apply in
all company codes. The asset class catalog, therefore, is relevant in all company codes in a
client. In Air Canada, we will use the following asset class.

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The screen layout, tab layout and the field characteristics (required/optional/suppressed) of
the asset master record can be set for the asset class.
The assignment of asset numbers can be controlled by the asset class.The asset number
uniquely identifies a fixed asset. It always consists of the main asset number and the asset
sub-number. In Air Canada, we use the Internal number assignment.

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One of the most important functions of the asset class is to establish the connection between
the asset master records and the corresponding accounts in the general ledger in Financial
Accounting. This connection is created by the account determination key in the asset class.
In the account determination, an asset class consists of three main sections:
● A header with the control parameters for master data maintenance and account
determination
● A master data section with default values for the administrative data in the asset
master record
● A valuation section with control parameters for valuation and default depreciation
terms for each depreciation area
We will maintain the account determination to connect asset class 110-150 to the FI fixed
asset G/L account number range 10000-19999.
5.2.3 create asset process

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5.2.4 Asset acquisition
For purchasing New Assets, PO is raised in two ways:
a) Account assigned- the asset is directly capitalized;it will be posted by FI. In
Air Canada, we will capitalize 4 airplanes by this method.
b) No account assigned- the purchasing assets will be put in inventory. It will be
transferred to the asset A/C when it is used.It will be purchased by MM. We
will capitalize 3 airplanes by this method. (MM)
5.2.5 AUC
We can use the internal order to control this. Purchasing the materials and building it on site,
then settle the internal order total value or partial value to asset.
Process: Capital order� create AUC asset�collect costs in order�settlement
In Air Canada, We will build office equipment on site. (MM and CO)
5.2.6 Periodic processing
Depreciation run:

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Only when you execute a depreciation run does the system carry out all depreciations planned
up to the specified date. It also posts all planned depreciations in Financial Accounting that
have not been posted yet.
The depreciation run only covers automatic depreciation.
5.2.7 Asset transfer
using intra-company asset transfer, you transfer a fixed asset, or an asset component, to a
different asset master record. The target asset has to be in the same company code as the
sending asset. Intracompany transfer may be necessary for one of the following reasons:
● An asset was created in the wrong asset class. Since you cannot change the asset class
in the asset master data, you have to transfer the asset to a new master record.
● You split up an asset or move part of an asset (transfer from asset to asset).
5.2.8 Asset scrapping/ retirement
Asset retirement is the removal of an asset or part of an asset from the asset portfolio. This
removal of an asset (or part of an asset) is posted from a bookkeeping perspective as an asset
retirement. Depending on organizational considerations, or the business transaction which
leads to retirement, you can distinguish the following types of retirement:
∙ An asset is sold, resulting in revenue being earned. The sale
is posted with a customer.
∙ An asset is sold, resulting in revenue being earned. The sale
is posted against a clearing account.
∙ An asset has to be scrapped, with no revenue earned.
5.3. GAP analysis
N.A
5.4. Integration consideration:

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purchasing assets and AUC could integrate with MM and CO. CO creates the investment
order and MM manage the materials, after the order is finished, FI-AA settle it and capitalize
the assets.
Asset retirement could integrate the SD.
6.1.Objective :
A Business Process Workshop(BPW) was held with the keyusers of Sales and Distribution
and the entire Implementation team of SAP. The Implementation Team has developed a
high degree of process understanding .During the BPW,various business scenarios have
beendiscussed that needs to be addressed in SAP. The purpose of this report is to confirm
the understanding of these business scenarios and to effectively map these business
requirements, which will form the basis for development or configuration activity.
This document would provide the way forward during the Realization Phase , where these
processes will be configured in the SAP System.
6.2. METHODOLOGY:
Broadly , the Methodology that has been followed is ASAP Methodology, with a few
changes to suit this particular Project.
6.3. SCOPE:
SALES & DISTRIBUTION:
The Complete Sales Organization Structure and Master Data as well as the business
processes will be included in the scope of the project.
This project will include the following business processes of Sales and Distribution.
· Ticketing Revenues
· Catering Revenues

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6.4.Sales and Distribution Organizational
Structure:
6.5. AS IS VS TO BE :
Business Process Mapping Into SAP
Sales Order
During sales order processing ,the
system carries out monitoring the
sales transaction ,checking for
availability ,transferring requirement
to materials. Requirement planning.
In sap we can create Sales
Order (Sales Document
types)by using T.Code
VA01 and sales document
type”OR”

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Billing
Billing Invoices are created against
sales orders issued for products
shipped ,credit and debit memos
,Invoices and rebates .Deliveries
,which are carried out on the basis of
sales order ,are invoiced to the
Customer .If no complaints are made
about the delivery ,the business
transaction is considered complete
from the sales point of view.
In SAP Billing can be
created by using Billing
Document types by using
the T.Code VF01
Credit – Debit Memo
Credit memo : A Sales document
created on the basis of a customer
choice .This reduces receivables in
financial Accounting.
In Sap Credit -Debit
Memo’s can be created by
using T.Code VOV8 and
sales Document Types
DebitMemo :A SalesDocumentcreated
onthe basisofa CustomerPreferences
.ThisincreasesreceivablesinFinancial
Accounting.
Debit Memo –sales order
type
Credit Memos are created for various
reasons(for example the flight is
cancelled due technical or weather
issue ).Debit Memo, if for example no
show tkt or Cancellation of tkt. When
you create a credit or debitmemo , we
can refer to an Invoice or a credit
Memo Request.
Credit Memo-sales order
type
Pricing Condition

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The term pricing is used broadly to
describe the calculation of prices (for
external use bycustomersor vendors)
and costs (for internal purposes, such
as cost accounting). Conditions
represent a set of circumstances that
apply when a price is calculated. For
example,a particularcustomerorders
a certain quantity of a particular
product on a certain day. The variable
factors here - the customer, the
product, the order quantity, the date -
determinethe final pricethe customer
gets. The information about each of
these factors can be stored in the
system as master data. This master
data is stored in the form of condition
records
In Sap the total Pricing
condition can be created
by creating a pricing
procedureinwhichwewill
be creating condition
records .The condition
technique refers to the
method by which the
system determines prices
frominformationstoredin
conditionrecords.Thiscan
be done by using
Pricing Type : PR00
Condition Type :K007 –
Discount
Customer Master Data
The data on Business partners with
whom has a business relationship is
kept in master record .Master records
contain all data necessary for
processing business transaction
Customer master record is created
when we start a business relationship
with a new customer.
In Sap General Customer
Master Data will be
maintained by using
T.Code XD01(with
Integration of FI)
Service Material Master

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A Company to record sales of services
in the system, Services may be offered
alone, as an add-on to a product,or as
an after -sale service package.
The method for recording
the serviceisknownas the
SAPserviceorder process.
Create Service Material
Master – MM01
Create Service Price
Condition – VK11
ProcessSalesOrder – VA01
Attempt Delivery Creation
–VL01N
Execute Billing – VF01
Third Party Process
In thisprocesstheDirectSaleoftickets
issuedto thepassenger and theBilling
to the passenger will be raised by the
company
This process only sales
order and billing (after
verification ) will be done.
6.6. Organization Structure :
6.6..1 Creating Sales Organization
In sap, sales organization represents an organizational unit usedto controls to distribution andsales of goods & services
in the organization. The organization is used to negotiate the sales terms and conditions with the customers. So sales
organization is responsible forall business transactions relatedto sales, we needto assign sales organizationto at-least
one company code in SAP.

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T- Code : OVX5
Sales Organization
· Ticketing - 1100
· Catering - 1100
6.6.2.Creating Distribution Channel
In SapDistribution channels determines through which channel products and services of an organization to reach the
customers.
· The Distribution channel represents the channelthrough which salable material orservices reach customer.
The following three Distribution channel will be created for Air Canada Inc
T . Code OVXI
Distributi
on
Channel Description
A1 Direct Sale
A2
Online Sale
- Website
A3
Travel
Agent
6.6.3.Creating Division
· A division is defined as a product line orgrouping of services or material. we can assign a division to one or
more sales organization. A product is always assigned to one division. There are various organization units like
Sales Area etc. that can be mapped to one or more SAP modules.
· The following divisions will be created for Air Canada

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Division Description
20 Business Class
30 EconomyClass
10 Catering
6.6.4.Plant Definition and Assignment:
6.6.4.1.The Purpose of Assignment of Sales Organization – Distribution Channel – Plant
The purpose of this stepin the backendconfiguration (assignment of a plant to the combination(s) of sales organization
and distribution channel) is to allowthe combination of a sales organization anda distribution channel to proceedsales
with the assignedplant, so that the sales from the combination of a sales organization anda distribution channel with
the respective plant can be facilitated. Any numberof plants can be assignedto the combinations of sales organization(s)
and distribution channel(s). One plant can be assigned to more than one combinations of sales organization and
distribution channel.
PLANT
TORONTO PEARSON
AIRPORT(MM)
6.6.5 . Sales Office and Sales group Creation and Assignment
Maintain Sales Office - Toronto 065
6.6.5.1 Maintain Sales Group - 001 -AC0065
6.6.6. Assign Sales Organization to Company Code

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6.6.7. Assign Distribution Channels to Sales Organization
6.6.8. Assign Divisions to Sales Organization
6.6.9. Set Up Sales Area
6.6.10. Creating Assignment of Sales Area
Sales Area is simply a of combination of Sales Organization, Distribution Channel and
Division. It defines that a certain Sales Organization employed a certain strategy of
market reach, i.e. a Distribution Channel to sale a good or service belonging to a
particular division.
The following Sales Areas will be created for Air Canada Inc.
As it will be 7 Sales area for Air Air Canada
Sales Organization Distribution Channel Division Description
1100 Direct Sales -A1 Business Class-20 Sales Area
Economy Class-30 Sales Area
1100 Online Sales-A2 Business Class-20 Sales Area
Economy Class-30 sales Area
1100 Travel Agent-A3 Business Class-20 Sales Area
Economy Class-30 Sales Area
1100 Direct Sales -A1
CateringServices-10 Sales Area
6.6.11.Creation of Master Data:
Master Data is one of the key factors in Sales and Distribution module .There are two levels
of masters in SD
· Customer Master

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Ø General Data
Ø Company Data
Ø Sales Area Data
· Customer Account Group
· Create Customer Number Ranges for Sales and Assign to Customer Account
Groups
· Partner Determination
Ø Sold to Party
Ø Ship to party
Ø Bill to Party
Ø Payer
· Create Material Master for Sales
Customer Master PassengersofAirCanada
Customer Account
Group
A001-Domestic
Customer
A002 -International
Customer
Customer Number
Ranges
Domestic Customer-AC
0000600000-
0000699999
International Customer -
AI
0000700000-
0000799999

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Partner Function
a.Sold to Party ACP
b.Ship to Party ACP
c.Bill to Party ACP
d.Payer ACP003
Material Master for
Sales ACMS
6.6.12. Overview Of Sales
· Pre Sales Document
· Pre Sales Support
· Post Sales Activies
· Create Sales Oder
· Create Debit Memo
· Create Credit Memo
· Create Sales Document Type
6.6.13. Delivery
· Shipping Point
6.6.14. Billing
· Create Bill of Material
· How to correct the Invoice
· Define Item Category
· Create Blocking Reason
6.6.15. Pricing
· Determine Pricing by Item Category
· Tax Determination Procedure
· Item Category Determination
· Accounting Key

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6.6.16 Credit Management
· Credit Limit is 1000000
· T Code : OVA8
Ø Types of Credit Checks: Simple credit check and Automatic Credit Check
Ø Enter Credit Control
Ø Check credit check option
Ø Check Static option
Ø Check Open orders and Deliveries
6.6.17 Payment Terms:
Terms of payment / Payment terms are used in SAP to establish the conditions
between business partner and organization to settle the payment of invoices. The
conditions define the invoice payment due date as per baseline date and the cash discount
percentage offered for early invoice payment.
T Code : OBB8
Payment Term Description
AC1P
10% discount payment with in 10 days
Payment with in 45 days.

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