ERP and SAP Part 2 SAP University Alliances

ERP and SAP – Part 2 SAP University Alliances Version 2. 01 Sumantra Sarkar Georgia State University Robinson College of Business 8 rd November, 2011

SAP Components Finance Logistics SD FI MM AM SAP R/3 PM SAP PLM CO PP QM Financial Accounting (“Track”) Managerial Accounting Asset Management Treasury Client/Server ABAP Basis HR SAP SRM SAP ERP SAP CRM PS WF IS SAP SCM SAP Net. Weaver Sales & Distribution (“Sell”) Materials Management (“Buy”) Production Planning (“Make”) Plant Maintenance Quality Management - Personnel Management - Benefits - Payroll

SAP Main Menu

SAP Document Principle • Each business transaction impacting FI writes data to the SAP database creating a uniquely numbered electronic document. • The document number can be used to recall the transaction at a later date. • Audit Trail - contains critical and necessary information as: • Responsible person • Date and time of the transaction • Commercial content • Once written to the SAP database, a financial document (one impacting the financial position of the company) can not be deleted from the database. • The SAP document principle provides a solid and important framework for a strong internal control system – a requirement of law for companies that operate in the United States and in most other countries in the world.

GL Transactions Tracking S_ALR_87012291 Line item journal from Accounting General Ledger Information system Document Line item journal. 7

Presentation Overview • • Introduction to ERP Introduction to SAP Sales & Distribution Materials Management Production Planning Financial Accounting Controlling

MM Functionality • • Inventory Management Purchasing MRP Physical Inventory Valuation Service Master Invoice Verification Product Catalogs

Procure-To-Pay Process Purchase Requisition No financial impact (FI) Vendor Selection Purchase Order Notify Materials Payment Amount Management received owed isand (MM) Vendor Payment and assigned Accounts Financial and payable Accounting transferred reduced (FI) to to Vendor A/P XXXX vendor via automatic account payable Bank XXXX assignment Vendor Invoice Shipment Receipt PO Receipt XXXX Goods A/P XXXX Receipt Inventory-RM XXXX PO Receipt XXXX

GL Transactions Tracking Receipt of Goods Inventory-RM XXXX PO-Receipt XXXX Invoice Receipt PO-Receipt XXXXX A/P XXXXX 11

GL Transactions Tracking Payment to Vendor A/P XXXXX Bank XXXXX 12

Presentation Overview • • Introduction to ERP Introduction to SAP Sales & Distribution Materials Management Production Planning Financial Accounting Controlling

PP Functionality • SAP divides production into multiple processes • Production Planning • Manufacturing Execution • Discrete Manufacturing • Repetitive Manufacturing • KANBAN • Production – Process Industries • Integrated planning tool for batch-orientated process manufacturing • Design primarily for chemical, pharmaceutical, food and beverage industries along with batch-oriented electronics

Production Planning & Execution • Players in the Game • Strategic Planning • CEO, COO, CIO, CFO, Controller, Marketing Director • Detailed Planning • Line Managers, Production Scheduler, MRP Controller, Capacity Planners • Execution • Line Workers, Shop Floor Supervisors SIS Forecasting Sales & Operations Planning CO/PA Strategic Planning Demand Management MPS Detailed Planning MRP Manufacturing Execution Order Settlement Procurement Process Manufacturing Execution

Forecasting • Forecasting is the foundation of a reliable SOP • Accurate forecasts are essential in the manufacturing sector • Overstocked & understocked warehouses result in the same thing: a loss in profits. • Forecasts are ALWAYS WRONG

Forecasting • Forecasting Models • • Trend Seasonal Trend and Seasonal Constant • Selecting a Model • Automatically • Manually

Sales and Operations Planning (SOP) • Information Origination • • • Sales Marketing Manufacturing Accounting Human Resources Purchasing • Intra-firm Collaboration • Institutional Common Sense

Material Requirement Planning (MRP) • In MRP, the system calculates the net requirements while considering available warehouse stock and scheduled receipts from purchasing and production • During MRP, all levels of the bill of material are planned • The output of MRP is a detailed production and/or purchasing plan • Detailed planning level • Primary Functions • Monitor inventory stocks • Determine material needs • Quantity • Timing • Generate purchase or production orders

PP Master Data • • • Material Bill of Materials (BOM) Routing Work Center Product Group

Bill of Materials (BOM) Bicycle Example • List of components that make up a product or assembly § Seat Kit • Wheel Assembly • • • Tire Tube Wheel Hex nut Lock Washer Socket Head Bolt • Frame • Derailleur Gear Assembly § Handle Bar § Pedal Assembly § Chain § Brake Kit § Warranty Document § Packaging

Routing • Routings enable you to plan the production of materials (products). • Routings are used as a template for production orders and run schedules • Routing are also used as a basis for product costing. • Series of sequential steps (operations) that must be carried out to produce a given product • Routings contain: • What, Where, When, How

Work Center • A location within a plant where value-added work (operations or activities) are performed • Work Centers can represent • People or Groups of People • Machines or Groups of Machines • Assembly Lines • Work center used to define capacities • • Labor Machine Output Emissions • Capacities used in • Capacity requirements planning (CRP) • Detailed scheduling • Costing

Presentation Overview • • Introduction to ERP Introduction to SAP Sales & Distribution Materials Management Production Planning Financial Accounting Controlling

FI Integration • Fully integrated with other SAP modules • • Sales and Distribution (SD) Materials Management (MM) Production Planning and Execution (PP) Managerial Accounting (CO)

Goal of Financial Accounting (FI) • Financial Accounting is designed to collect the transactional data that provides a foundation for preparing the standard portfolio of reports. • In general, these reports are primarily, but not exclusively, directed at external parties. • Standard reports include: • Balance Sheet • Income Statement • Statement of Cash Flows

FI Reporting - sample • Balance Sheet • • Presentation of an organization’s Assets, Liabilities, and Equity at a point in time Assets: What the company owns Liabilities: What the company owes Equity: The difference between Assets and Liabilities • Income Statement • Presentation of an organization’s revenues and expenses for a given period of time (e. g. monthly, quarterly, or yearly) • Statement of Cash Flows • Considers the associated changes, both inflows and outflows, that have occurred in cash – arguably the most important of all assets – over a given period of time (e. g. monthly, quarterly, or annually)

Target Audience for reports • Internal • • Executives Senior Management Administrative Staff Employees • External - Legal Authorities Banks Auditors Shareholders Insurance Taxing Authorities Media Financial Analysts

Accountants and Audit Trails • Audit trails allow an auditor to begin with an account balance on a financial statement and trace through the accounting records to the transactions that support the account balance. • Or ……enables an auditor to trace individual transactions to the effected account balance(s) on a financial statement.

FI Master Data • General Ledger (G/L) Accounts • The unique combination of Company Code and Chart of Account creates a data storage area called a General Ledger. • The General Ledger contains a listing of the transactions effecting each account in the Chart of Accounts and the respective account balance. • It is utilized in the preparation of financial accounting statements. • Customer and Vendor Master Data • Customer and vendor account balances are maintained in FI through fully integrated accounts receivable and accounts payable sub-modules. • Financial postings for customers and vendors are made directly to their respective individual accounts and accompanied by a concurrent automatic posting to the General Ledger.

Presentation Overview • • Introduction to ERP Introduction to SAP Sales & Distribution Materials Management Production Planning Financial Accounting Controlling

Goal of Controlling (CO) • Managerial Accounting – also termed Controlling – is designed to collect transactional data that provides a foundation for preparing internal reports that support decision-making within the enterprise. • These reports are exclusively for use within the enterprise and include: • Cost center performance • Profit center performance • Budgets analyses

Target Audience • Executives • Senior Management • Department Managers • Controllers • Cost Accountants

CO Master Data • Statistical Key Figures • Provide the foundation for accurate and effective cost allocations between cost objects • Utilized to support internal cost allocations involving allocations, assessments, and distributions • Examples: • number of employees • square footage • minutes of computer usage Copy Center Activity (20 Hours) 6 Hours Executive Offices 10 Hours Maintenance Department 4 Hours IT Department

CO Processes § Posting Secondary Cost Element Executive Offices Rent Expense Debit Credit 1, 800 Prim ary Cos t Elem 2, 500 c. e S st Co lem E Maintenance Department 1, 500 Credit 2, 500 nt Eleme t s o C mary en Labor Expense r ima Pr st o y. C Sec. Cost Element 3, 000 2, 000 Pri Debit Credit 2, 000 en ent Supplies Expense Debit t Copy Center 1, 500 m Ele t Se c. Information Services Co st E lem en t 1, 200

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