Business Process Integration I

Business Process Integration I
Version 4.1 July 2007 Business Process Integration I Presented by The Rushmore Group, LLC © SAP AG and The Rushmore Group, LLC 2007

Welcome Introductions Course schedule Classroom materials
Version 4.1 July 2007 Welcome Introductions Student Instructor Course schedule Classroom materials Housekeeping issues July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Introductions Tom Wilder, MBA, SAPM, SAP Certified Associate
Version 4.1 July 2007 Introductions Tom Wilder, MBA, SAPM, SAP Certified Associate Faculty of the Department of Accounting and MIS at CSU, Chico since 1996 Courses taught using SAP: Introduction to MIS Introduction to SCMS/POM Quality Management Information Systems Project Management Business Process Integration SAP Team member, Program Director for Curriculum Currently, CSU, Chico has over 20 courses that include an SAP component. These courses include Accounting, Supply Chain, MIS, and Business Administration SAP components include SAP® ERP, SAP® Solution Manager, SAP® Extended Warehouse Management and SAP® APO. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Course Materials Business Process Integration Slides
Version 4.1 July 2007 Course Materials Business Process Integration Slides Business Process Integration Exercises July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Schedule of Exercises Day One – 1 to 20 (1-36)
Version 4.1 July 2007 Schedule of Exercises Day One – 1 to 20 (1-36) Day Two – 21 to 68 (37-88) Day Three – 69 to 106 (89-137) Day Four – 107 to 151 ( ) Day Five – 152 to 195 3 more days for BPI-2 We will try to get this all done in 4 days! July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

What is BPI- Three BPI-1 covers SD, FI, MM and configuration
BPI-2 covers CO, PP Combined, BPI-3 covers all of the above Either BPI-1, BPI-2 or BPI-3 can be run as separate courses Discovered that faculty that wanted BPI-2 content already had enough core experience, just needed the modules BPI-3 takes out some of the redundancy July 2007 © SAP AG and The Rushmore Group, LLC 2007

More on that … BPI-3 allows for a full semester course
Combining the two, set-up configurations done in BPI-1 allows for the use of the same client to continue BPI-2 In a stand along situation, BPI-2 runs on a different client There is also BPI-O, for Overview, that adds HR and QM, no configuration. July 2007 © SAP AG and The Rushmore Group, LLC 2007

Death by PowerPoint Almost 600 slides to review, +355 in BPI-2
Version 4.1 July 2007 Death by PowerPoint Almost 600 slides to review, +355 in BPI-2 Many redundant Mind numbing Indicates slides that are not in the standard slide deck July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 An Introduction to the Basics of SAP’s ERP Client / Server Integrated Business Solution © SAP AG and The Rushmore Group, LLC 2007

SAP Systems, Applications, and Products in Data Processing (SAP)
Version 4.1 July 2007 SAP Systems, Applications, and Products in Data Processing (SAP) Name of the company SAP AG SAP America Name of the software SAP R/2 – Mainframe version SAP R/3 – Client/Server version Now SAP-ERP Stands for Systems , applications and products in data processing SAP AG located in Germany SAP America is wholly owned sub of AG R/2 is the initial version R/3 newer July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP AG Founded in Germany (1972)
Version 4.1 July 2007 SAP AG Founded in Germany (1972) World’s third largest software provider World’s largest provider of Integrated Business Solutions software Company stock trades on the Frankfurt and New York exchanges 4th behind Microsoft, Oracle (they do 1/5 the business SAP does in Application Software, most of the revenue is from their databases), and Computer Associates Significant Because it is initially German, some the of the translation is not exact July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP World-wide usage
Version 4.1 July 2007 SAP ERP World-wide usage Designed to satisfy the information needs for business sizes (small local to large all international) Multi-lingual Multi-currency Designed to satisfy the information needs for all industries (industry solutions) They have a new product: SAP Business One: Small business First one is for retail So many large companies have small subsidiaries that are not big enough to run SAP ERP Driven as a market decision to prevent erosion of market share. SAP has a complete set of industry solutions: Automotive Pharmaceuticals Hospital Manufacturing Chemical Government 20+ Minimal configuration: a lot of what we do in the class is already done. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Enables a company to link it’s business processes
Version 4.1 July 2007 SAP ERP Enables a company to link it’s business processes Ties together disparate business functions (integrated business solution) Helps the organization run smoothly Real-time environment Scalable and flexible The real benefit of ERP is a single point of data entry. Linked everything that we were trying to teach students. Students finally understood why they had to take the classes they had to take. It put it all together. Nay sayers were saying only large enterprises only use SAP. If the students got hired in a large company they would be in a silo. The students who really benefited are the ones who worked in small companies because they understood the whole business process and their jobs have a broader range of duties. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Integrated Business Solutions Software Vendors
Version 4.1 July 2007 Integrated Business Solutions Software Vendors SAP Oracle (Peoplesoft and J.D. Edwards) Microsoft – Great Plains, Axapta, Solomon IBM BAAN There are many ERP vendors. SAP is the largest and the most robust. Peoplesoft is considered the H/R Leader JD Edwards – Mid market Oracle – Technology leader Microsoft – Mediocre product, but has inertia IBM – OK product July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Architecture Central relational database (e.g., Oracle, Informix, Microsoft SQL and many others) Client/Server – three-tiered ERP Component – Oriented towards common identifiable business modules (FI, MM, SD, CO, PP, HR) Add-ons: Customer Relationship Mgmt (CRM) Supply Chain Mgmt (SCM) Product Lifecycle Mgmt (PLM) Multiple database options ERP components are standard business functions: FI (finance), MM (Materials Management), SD (Sales & Distribution), CO (Controlling), PP (Production Planning), HR (Human Resources) Many add-ons Add on focus on specific market niches or business functions. Two of the most popular are CRM and SCM July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Relational Database Tables: Defines and links thousands of tables of information (25,000+) (40,600+ now) Advantages Consistent and accurate data Common definitions for terms Shared, but restricted usage (e.g., profiles) Eliminates data redundancy 3.0d had 7,000 tables ,000 tables ,000 tables If you know everything about SAP, your lying. It is just too big. Your profiles dictates what you can see. This is the only time you will have access to the complete system. You can do anything, including take the system down. Audit trail – You can tell which student took it down, and they will take care of it themselves. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Client/Server Environment
Version 4.1 July 2007 Client/Server Environment Client Software/hardware combination that can make a request for services from a central repository of resources Server Software/hardware combination that can provide services to a group of clients in a controlled environment What is Client-server Computing? The short answer: Client/server is a computational architecture that involves client processes requesting service from server processes. The long answer: Client/server computing is the logical extension of modular programming. Modular programming has as its fundamental assumption that separation of a large piece of software into its constituent parts ("modules") creates the possibility for easier development and better maintainability. Client/server computing takes this a step farther by recognizing that those modules need not all be executed within the same memory space. With this architecture, the calling module becomes the "client" (that which requests a service), and the called module becomes the "server" (that which provides the service). The logical extension of this is to have clients and servers running on the appropriate hardware and software platforms for their functions. For example, database management system servers running on platforms specially designed and configured to perform queries, or file servers running on platforms with special elements for managing files. It is this latter perspective that has created the widely-believed myth that client/server has something to do with PCs or Unix machines. What is a Client process? The client is a process (program) that sends a message to a server process (program), requesting that the server perform a task (service). Client programs usually manage the user-interface portion of the application, validate data entered by the user, dispatch requests to server programs, and sometimes execute business logic. The client-based process is the front- end of the application that the user sees and interacts with. The client process contains solution-specific logic and provides the interface between the user and the rest of the application system. The client process also manages the local resources that the user interacts with such as the monitor, keyboard, workstation CPU and peripherals. One of the key elements of a client workstation is the graphical user interface (GUI). Normally a part of operating system i.e. the window manager detects user actions, manages the windows on the display and displays the data in the windows. What is a Server process? A server process (program) fulfills the client request by performing the task requested. Server programs generally receive requests from client programs, execute database retrieval and updates, manage data integrity and dispatch responses to client requests. Sometimes server programs execute common or complex business logic. The server-based process "may" run on another machine on the network. This server could be the host operating system or network file server; the server is then provided both file system services and application services. Or in some cases, another desktop machine provides the application services. The server process acts as a software engine that manages shared resources such as databases, printers, communication links, or high powered-processors. The server process performs the back-end tasks that are common to similar applications. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Three-Tier SAP Structure
Version 4.1 Three-Tier SAP Structure July 2007 GUI – Graphical User Interface or Web Interface Application server (one or many) Database server (one single location) World wide companies have redundant servers that back up real time. What is a Two-Tier Architecture? A two-tier architecture is where a client talks directly to a server, with no intervening server. It is typically used in small environments (less than 50 users). A common error in client/server development is to prototype an application in a small, two-tier environment, and then scale up by simply adding more users to the server. This approach will usually result in an ineffective system, as the server becomes overwhelmed. To properly scale to hundreds or thousands of users, it is usually necessary to move to a three-tier architecture. What is a Three-Tier Architecture? A three-tier architecture introduces a server (or an "agent") between the client and the server. The role of the agent is manyfold. It can provide translation services (as in adapting a legacy application on a mainframe to a client/server environment), metering services (as in acting as a transaction monitor to limit the number of simultaneous requests to a given server), or intelligent agent services (as in mapping a request to a number of different servers, collating the results, and returning a single response to the client. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Internet Transaction Server
Version 4.1 SAP Enterprise System July 2007 Database Application Presentation Browser Client PCs, Laptops, etc. Network Application Servers Internet Transaction Server Web Server 3-tier client server system Web server Internet transaction server Brings it to a single database across the world. What is Client-server Computing? The short answer: Client/server is a computational architecture that involves client processes requesting service from server processes. The long answer: Client/server computing is the logical extension of modular programming. Modular programming has as its fundamental assumption that separation of a large piece of software into its constituent parts ("modules") creates the possibility for easier development and better maintainability. Client/server computing takes this a step farther by recognizing that those modules need not all be executed within the same memory space. With this architecture, the calling module becomes the "client" (that which requests a service), and the called module becomes the "server" (that which provides the service). The logical extension of this is to have clients and servers running on the appropriate hardware and software platforms for their functions. For example, database management system servers running on platforms specially designed and configured to perform queries, or file servers running on platforms with special elements for managing files. It is this latter perspective that has created the widely-believed myth that client/server has something to do with PCs or Unix machines. What is a Client process? The client is a process (program) that sends a message to a server process (program), requesting that the server perform a task (service). Client programs usually manage the user-interface portion of the application, validate data entered by the user, dispatch requests to server programs, and sometimes execute business logic. The client-based process is the front- end of the application that the user sees and interacts with. The client process contains solution-specific logic and provides the interface between the user and the rest of the application system. The client process also manages the local resources that the user interacts with such as the monitor, keyboard, workstation CPU and peripherals. One of the key elements of a client workstation is the graphical user interface (GUI). Normally a part of operating system i.e. the window manager detects user actions, manages the windows on the display and displays the data in the windows. What is a Server process? A server process (program) fulfills the client request by performing the task requested. Server programs generally receive requests from client programs, execute database retrieval and updates, manage data integrity and dispatch responses to client requests. Sometimes server programs execute common or complex business logic. The server-based process "may" run on another machine on the network. This server could be the host operating system or network file server; the server is then provided both file system services and application services. Or in some cases, another desktop machine provides the application services. The server process acts as a software engine that manages shared resources such as databases, printers, communication links, or high powered-processors. The server process performs the back-end tasks that are common to similar applications. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

mySAP Business Suite mySAP ERP SAP NetWeaver mySAP SCM mySAP PLM mySAP
Version 4.1 mySAP Business Suite July 2007 SAP NetWeaver mySAP SCM mySAP PLM mySAP SRM mySAP CRM mySAP ERP These are the basics, or fundamentals of how a company runs. We make, buy, sell, track, and manage the employees We teach this to graduate, undergraduate, and the high school level The concept of commerce is very easy for the students to understand. Start with the basics and then you can make it more and more complex as you go along July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

ERP mySAP ERP Modules Client / Server Integrated Business Solution SD
Version 4.1 mySAP ERP Modules July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Green ones (and blue): Logistics Blue: Separated for this course even though it is in logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Business Modules July 2007 Collections of logically related transactions within identifiable business functions MM (“Buy”) PP (“Make”) SD (“Sell”) FI and CO (“Track”) HR These are the basics, or fundamentals of how a company runs. We make, buy, sell, track, and manage the employees We teach this to graduate, undergraduate, and the high school level The concept of commerce is very easy for the students to understand. Start with the basics and then you can make it more and more complex as you go along July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 SAP ERP Basics July 2007 Instance – each install of the SAP ERP software on an individual application server Configurable – each instance can be distinctively configured to fit the needs and desires of the customer (within limits) Most of the infrastructure decisions, including configuration decisions, occur during project implementation Configurable – Not a single line of code to set this up. Change options in configuration July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Configuration July 2007 The process of tailoring SAP software by selecting specific functionality from a list of those supported by the software, very much like setting defaults (e.g., Word, Access) DOES NOT involve changes to the underlying software code Very much like changing switches or setting defaults Configuring is what you do to have the system be able to execute your business processes the way you want them to. (e.g. If you deliver steel, you don’t want a Ferrari, you want a semi-truck. SAP can be either depending upon how you configure it.) Be careful with configuration. Once it is done, it is very difficult to undo. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Programming Code Modifications
Version 4.1 Programming Code Modifications July 2007 Changes to the delivered code ABAP/4 – Advanced Business Application Programming (ABAP) This should be done sparingly and carefully as it can make migration to new versions of the software much more difficult If you change the code, SAP will no longer support you. You should FULLY research before you make the decision to modify. Gateway Computer: not able to up-grade with JDE because they made so many changes. They were stuck with a version of software over a decade old without the functionality they needed with the newest releases. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Document Principle
Version 4.1 SAP ERP Document Principle July 2007 Each business transaction that writes data to the database creates a uniquely numbered electronic document Each document contains information such as Responsible person Date and time of the transaction Commercial content Once created, a document can not be deleted from the database Every transaction is an electronic document. It keeps track of everything you do. Allows users to track every action taken in a company. Simply put, it allows users to answer the question “Where’s my order.” What Where it is and where it came from, and where is it going next When Who July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Review SAP and SAP ERP Integrated Business Solution Architecture
Version 4.1 Review July 2007 SAP and SAP ERP Integrated Business Solution Architecture Client/Server Software Relational Database SAP ERP Modules Configurable Software Programming Code Modifications – Be Careful!! SAP ERP Document Principle July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 1 Unit 1 Business Processes, Integration, and Configuration in the SAP ERP Environment © SAP AG and The Rushmore Group, LLC 2007

Two Differing Learning Approaches
Version 4.1 July 2007 Two Differing Learning Approaches Standard SAP training Level 1: Introductory Level 2: Business processes Level 3: Configuration Our Approach Cross functional Understand business processes and their relationships to SAP's organizational structure Highlight integration/configuration!! Levels are SAP Training: Level one: Introductory Level Two : Focus on transactions Level three: how we set up the system to work the way we want it to ww.sap.com/usa/education/cirriculum/cirriculum.asp?rid SAP teaches it from a very functional perspective. Consultant or a silo perspective. This works well in everyday business, but we want to teach students/executives how it all works together. We are going across the functional areas. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Understanding Cross Functional
Version 4.1 July 2007 Understanding Cross Functional Students may not be familiar with a cross functional environment SAP is a chore No distinction from one “actor” to another in exercises Typically unfamiliar with the roles of business July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Role playing First week or two of term role play a business
Version 4.1 July 2007 Role playing First week or two of term role play a business Have students identify the roles needed in a business Identify students as actors Ask what is needed in a transaction Have them create a paper based system Go through the sales/procure process with their paper based system July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Roles Have students identify the roles for each exercise
Version 4.1 July 2007 Roles Have students identify the roles for each exercise Purchasing agent, Sales, A/R, A/P, IS, Shipping, etc. Students will wear many hats as they go through the exercises. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Learning by Creating a Model Business
Version 4.1 July 2007 Learning by Creating a Model Business Understanding business processes and their integrative nature Understanding SAP organizational structures Combining business processes and SAP organizational structure (i.e., configuration) Test the newly configured system View system outputs - statistics, reports, and graphics You are actually going to start from scratch. Financial Organizational Structures Material Master Org. Structures Sales and Distribution structures Rules then run transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Pen Incorporated Start-up company in the promotional pen business
Version 4.1 July 2007 Pen Incorporated Start-up company in the promotional pen business Initially buys and re-sells different lines of promotion pens Sells to both wholesale and retail – procure and distribute Later acquires a production facility to manufacture its own product – produce and distribute (BPI-2, Also costing) We will setup and execute the 3 major processes an organization We created a pen because it was very easy to setup and understand. The IDES has a motorcycle, but that is more complex than we need to teach the system. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Exercises and Reports In this session, we will run through all of the exercises Additionally, we will trouble shoot each student as they hit a roadblock We will also run reports to see the progress that you make The reports are used in grading students throughout the term July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP and Business Processes
Version 4.1 July 2007 SAP ERP and Business Processes - Overview - © SAP AG and The Rushmore Group, LLC 2007

Pen Incorporated Procure for Sales Order
Version 4.1 July 2007 Pen Incorporated Procure for Sales Order Pre-Sales Activity Sales Order Delivery Billing General Ledger Accounts Purchase Requisition Purchase Order Goods Receipt In Inventory Plant or Warehouse Invoice Receipt Availability Check NO YES Goods to Delivery Goods from Purchase Order Inventory Postings Accounts Receivable Payable Can start out with a pre-sales activity Then to Order processing Became an order Check inventory – If not… Buy Receive Goods Assign to sales order Send to customer Bill customer Pay Vendor Account for all activities General ledger either the balance sheet or income statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Pen Incorporated Produce for Sales Order
Version 4.1 July 2007 Pen Incorporated Produce for Sales Order Pre-Sales Activity Sales Order Delivery Billing Planned Order Production Order Completion Confirmation In Inventory Plant or Warehouse Availability Check NO YES Goods Issued to Delivery Goods from Production Order General Ledger Accounts Inventory Postings Accounts Receivable Payable Issue Goods to Production Order Can start out with a pre-sales activity Ended up in Order processing Became an order Make Plan execute production order Issue goods Complete to inventory Cost Assign to sales order Send to customer Bill customer Account for all activities July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

This diagram is used throughout the slide deck
Version 4.1 SAP Enterprise System July 2007 This diagram is used throughout the slide deck ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets We try to break it down into 50 or 75 minute increments (a class period) Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logistics Materials Management (MM) Sales and Distribution (SD)
Version 4.1 Logistics July 2007 Materials Management (MM) Sales and Distribution (SD) Production Planning (PP) Quality Management (QM) Plant Maintenance (PM) Service Management (SM) Logistics Material Management: Purchasing, receipts, Inventory management, MRP Sales & Distribution: Selling, templates, Shipping, billing, quotes Production Planning: Making a product, planning, Forecasting, MPS/MRP, Capacity Control, Different mfg techniques (KANBAN, repetitive), completions, manufacturing accounting Quality Management: Subjective and empirical, Planning, inspection, Certificates, notification, Test Equipment (calibration) Plant Maintenance: Preventative Maintenance, maintenance orders, for all tools and equipment Service Management: Structure and manage technical objects for which services should be performed (for example, technical systems, machines) Manage data for warranties and business partners Create service requests Plan and execute requested services Bill the costs that arise as a result of the services being executed Monitor call processing in order to keep to deadlines and agreed response times July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounting and Finance
Version 4.1 July 2007 Accounting and Finance Financial Accounting (FI) Controlling (CO) Enterprise Controlling (EC) Fixed Asset Management (AM) Project Systems (PS) The Financial Accounting (FI) application component fulfills all the international requirements that must be met by the financial accounting department of an organization. It provides the following features: Management and representation of all accounting data All business transactions are recorded according to the document principle, which provides an unbroken audit trail from the financial statements to the individual documents. Open and integrated data flow Data flow between Financial Accounting and the other components of the SAP System is ensured by automatic updates. Data is available in real time within Financial Accounting. Postings made in the subledgers always generate a corresponding posting in the general ledger. Preparation of operational information to assist strategic decision-making within the organization Treasury (TR) Cash Management Cash Budget Management Controlling (CO) Purpose Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the services provided by an organization. As well as documenting actual events, the main task of controlling is planning. You can determine variances by comparing actual data with plan data. These variance calculations enable you to control business flows. Income statements such as, contribution margin accounting, are used to control the cost efficiency of individual areas of an organization, as well as the entire organization. Enterprise Controlling (EC) Profit Center Accounting Consolidations Executive Information Systems (EIS) and Business Planning Investment Management (IM) The Investment Management (IM) component provides functions to support the planning, investment, and financing processes for: Capital investments, such as the acquisition of fixed assets as the result of-house production or purchase Investments in research and development Projects that fall primarily under overhead, such as continuing education of employees or establishing new markets Maintenance programs Project System (PS) Both large scale projects, such as building a factory, and small-scale projects, such as organizing a trade fair, require precise planning of the many detailed activities involved. The project manager has the job of ensuring that the project is executed efficiently, on time, and within budget - which he or she achieves by ensuring that the required resources and funds are available as and when needed. Projects are generally part of the internal processes of a company. To be able to control all tasks in project execution, you need an organizational form that is specific to the project and which is shared by all departments involved. Before you can carry out a project in its entirety, the project goals must be precisely described and the project activities to be carried out must be structured. A clear, unambiguous project structure is the basis for successful project planning, monitoring, and control. You structure your project per the following points of view: By structures, using a work breakdown structure (WBS) By process, using individual activities (work packages) Project managers usually distinguish between two types of project: Externally financed projects Customer projects Internally financed projects Overhead cost projects Capital investment projects July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Human Resources Human Resources (HR) Version 4.1 July 2007 July 2007
Personnel Management (PA) Personnel Time Management (PT) Payroll (PY) Training and Event Management (PE) HR Tools (PY-XX-TL) Reporting in Human Resources Management HR Infotypes HR Archiving European Monetary Union: Euro (CA-EUR) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Materials Management (MM)
Version 4.1 Materials Management (MM) July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Materials Management Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Components of Materials Management
Version 4.1 Components of Materials Management July 2007 Materials Management (MM) Logistics Invoice Verification Material Master Physical Inventory Valuation MRP Service Entry Sheet Product Catalog Purchasing Mgmt. Foreign Trade/ Customs Purchasing (MM-PUR) Purpose The ERP System consists of a number of components that are completely integrated with one another. This integration allows the various departments and units of an enterprise to share and maintain the same information. Purchasing is a component of Materials Management (MM). The Materials Management (MM) module is fully integrated with the other modules of the SAP System. It supports all the phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification. The tasks of the MM Purchasing component are as follows: External procurement of materials and services Determination of possible sources of supply for a requirement identified by the materials planning and control system or arising directly within a user department Monitoring of deliveries from and payments to vendors Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly. Valuation MM - Material Price Change (MM-IV-MP) Balance Sheet Valuation (MM-IM-VP) Actual Costing/Material Ledger (CO-PC-ACT) Inventory Management and Physical Inventory (MM-IM) This component deals with the following tasks: Management of material stocks on a quantity and value basis Planning, Entry, and Documentation of all Goods Movements Carrying out the Physical Inventory Features Material Master (LO-MD-MM) The material master contains information on all the materials that a company procures or produces, stores, and sells. It is the company's central source for retrieving material-specific data. This information is stored in individual material master records. MRP Procedures in Consumption-Based Planning Use In consumption-based planning, the following MRP procedures are available: Reorder point procedure Forecast-based planning Time-phased materials planning Logistics Invoice Verification (MM-IV-LIV) Logistics Invoice Verification is a part of Materials Management (MM). It is situated at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting. Product Catalog A number of media can be used as vehicles for presentations, including: Print media CD-ROM Online services (such as internet, T-Online, CompuServe, AOL) Information kiosks at the point of purchase The Product Catalog functionality comprises a programming interface (Business API) for accessing the data and integrated maintenance of product catalog-related data. This data comprises: The layout of the product catalog The materials and prices in the product catalog Texts Multi-media objects (graphics, sound documents, video clips etc.). Service Master MM External Services Management provides a basic process for the procurement of externally performed services. This basic process comprises the following functionality: Foreign Trade Official customs brokers are licensed by the customs service to assist you with import and export transactions. They have the responsibility to ensure that all foreign trade customs procedures are followed completely and comply to legal regulations. They also ensure that the duties collected from your company are turned over to the government when they become due. Although the services of a customs broker replace the need for your company to handle the necessary tasks associated with foreign trade, they can be very costly. SAP's FT system incorporates all of the necessary checks and balances necessary to ensure that your import and export transactions are handled lawfully and that the duties owed to the customs authorities are calculated instantly and accurately. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Procurement Process (Procure-to-Pay)
Version 4.1 Procurement Process (Procure-to-Pay) July 2007 Integration Purchase Requisition Purchase Order Notify Vendor Payment to Vendor Vendor Shipment This is a standard view of the procure to pay process and the most common. It may vary significantly based upon the company procedures, the products/services purchases and other factors. SAP allow businesses to tailor it to their needs. Starts with a requisition or need that needs to be filled. This can come from Planning (MRP), manually or other The purchase order is the document to fill the need: usually includes the vendor, cost/price, quantity, terms and other pertinent information. [ part one of the 3-way match] Notifying the vendor The goods are shipped and brought to the organization The goods are received (typically at the dock) and then put away [ part two of the three way match] An invoice is received from the vendor [third part of the 3-way match] After the tolerances/verification of the 3-way match are met a payment is made according to the terms agreed to on the purchase order. Invoice Receipt Goods Receipt July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

This slide represents the complete course
Version 4.1 July 2007 Process Integration Purchase Order Procurement Process Auto Gen or Manual Purchasing agent Purchase Requisition Convert Production Proposal Receiving Clerk Goods Receipt Production Process Schedule and Release Production Planner Plant Manager Run MPS w/MRP Accounts Payable Invoice Receipt Goods Issue Sales Assistant Check Availability Sales Person Shop Foreman Quality Inspector Payment to Vendor Sales Order Entry Completion Confirmation Quality Inspection Pick Materials Goods Receipt This slide represents the complete course Warehouse worker Order Settlement Receipt of Payment Post Goods Issue Accounts Receivable Shipping Supervisor Invoice Customer © SAP 2009 / Page 46 © SAP AG and The Rushmore Group, LLC 2007

Sales and Distribution (SD)
Version 4.1 Sales and Distribution (SD) July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Components of Sales and Distribution
Version 4.1 Components of Sales and Distribution July 2007 Sales and Distribution (SD) Sales Support Credit Mgmt. Shipping Transport Billing Foreign Trade Information System Master Data Sales Support: Computer-Aided Selling Purpose The Sales Support component provides a wide range of functions for opportunity management. It helps your sales and marketing department to support your existing customers and, at the same time, to develop new business. Within the Sales Support environment, all sales personnel in the field and in the office can share valuable information about customers, sales prospects, competitors and their products, and contact people. The Sales Support component is: a source of information for all areas of Sales and Distribution a tool for lead generation, lead qualification, and lead tracking Sales Sales allows you to execute different business transactions based on sales documents defined in the system. Four groups of sales documents are differentiated: Customer inquiries and quotations Sales orders Outline agreements, such as contracts and scheduling agreements Complaints, such as free of charge deliveries, credit and debit memo requests and returns Shipping Transportation Transportation is an essential element in the logistics chain. It affects both incoming and outgoing goods. Effective transportation planning and processing ensure that shipments are dispatched without delay and arrive on schedule. Transportation costs play an essential role in the calculation of the price of a product. It is important to keep these transportation costs to a minimum so that the price of a product remains competitive. Efficient transportation planning and processing helps to keep these costs down. Billing Billing represents the final processing stage for a business transaction in Sales and Distribution. Information on billing is available at every stage of order processing and delivery processing. This component includes the following functions: Creation of: Invoices based on deliveries or services Issue credit and debit memos Pro forma invoices Cancel billing transactions Comprehensive pricing functions Issue rebates Transfer billing data to Financial Accounting (FI) Credit and Risk Management Credit management Outstanding or uncollectible receivables can spoil the success of the company greatly. Credit Management enables you to minimize the credit risk yourself by specifying a specific credit limit for your customers. Thus you can take the financial pulse of a customer or group of customers, identify early warning signs, and enhance your credit-related decision-making. This is particularly useful if your customers are in financially unstable industries or companies, or if you conduct business with countries that are politically unstable or that employ a restrictive exchange rate policy. Customer Service Processing Customer Service enables you to plan and manage a wide range of service scenarios. It includes functions for processing: Service notifications Warranties Service orders Service contracts Service quotations Repair orders Customer Service (CS) draws on functionality from different SAP application components, in particular Plant Maintenance (PM) and Sales and Distribution (SD). For example, CS involves the planning and processing of external services, such as contracts for the maintenance and repair of equipment that a customer has either bought or rented. Maintenance planning and servicing is managed in PM; in SD you can create and maintain the relevant service contracts. Contract-related charges that are incurred in PM are passed on in the form of requests for billing in SD Sales Information Systems - Reports and Analyses The SAP ERP System offers you a wide range of information and analysis tools for sales and distribution. These provide you with a quick overview of your current business situation. You want to determine how many orders customer XY issued in the last quarter. To see this information, you can execute the report "List orders". This gives you a list of orders and also contains information on the items, order value etc. You can set the scope of this list yourself. Foreign Trade / Customs As markets become increasingly more global and business structures more complex, the need for accuracy in handling the foreign trade needs of a business is gaining rapidly in importance. SAP’s ERP Foreign Trade / Customs application (FT) provides the tools you need to compete effectively in today’s fast-paced market. It is designed to help you meet the rapidly changing foreign trade requirements of your business. SAP’s ERP Foreign Trade application enables you to: Manage import and export processes, integrating them efficiently into the supply chain Automatically identify licensing requirements for importing and exporting goods based on current regulations Simplify reporting with automatic procedures for creating, printing and submitting declarations Determine which of your products qualify for preference handling Provide an active interface for sending or retrieving data via internationally available EDI systems and other electronic media Update or change data in all relevant foreign trade documents at any time prior to the final goods issue. Even after you have posted the goods issue, you can still change data in the invoice. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Order Process (Order-to-Cash)
Version 4.1 Sales Order Process (Order-to-Cash) July 2007 Integration Check Availability Sales Order Entry Pick Materials Receipt of Customer Payment Pack Materials Not unlike the procure to pay process, this is completely configurable. You decide how you want the order to cash process to work and configure the system appropriately May start with Sales Order Check inventory If you do not have inventory –procurement process or production process Pick materials: from inventory Pack material: (optional) pack in box appropriate box or other Post Goods Issue (Title transfer) Invoice Customer –Create Accounts Receivable Collect Money Invoice Customer Post Goods Issue July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Financial Accounting (FI)
Version 4.1 Financial Accounting (FI) July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Components of Financial Accounting
Version 4.1 Components of Financial Accounting July 2007 Financial Accounting (FI) Accounts Receivable Payable Special Purpose Ledger Fixed Assets Banks General The Financial Accounting (FI) application component fulfills all the international requirements that must be met by the financial accounting department of an organization. It provides the following features: Management and representation of all accounting data All business transactions are recorded according to the document principle, which provides an unbroken audit trail from the financial statements to the individual documents. Open and integrated data flow Data flow between Financial Accounting and the other components of the SAP System is ensured by automatic updates. Data is available in real time within Financial Accounting. Postings made in the subledgers always generate a corresponding posting in the general ledger. Preparation of operational information to assist strategic decision-making within the organization General Ledger Accounting Purpose The central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. Recording all business transactions (primary postings as well as settlements from internal accounting) in a software system that is fully integrated with all the other operational areas of a company ensures that the accounting data is always complete and accurate. Accounts Receivable Account Receivables application component records and administers accounting data of all customers. It is also an integral part of sales management. All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange). The system contains a range of tools that you can use to monitor open items, such as account analyses, alarm reports, due date lists, and a flexible dunning program. The correspondence linked to these tools can be individually formulated to suit your requirements. This is also the case for payment notices, balance confirmations, account statements, and interest calculations. Incoming payments can be assigned to due receivables using user-friendly screen functions or by electronic means such as EDI and data telecommunication Accounts Payable The Accounts Payable application component records and administers accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. The system automatically makes postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning. Payables are paid with the payment program. The payment program supports all standard payment methods (such as checks and transfers) in printed form as well as in electronic form (data medium exchange on disk and electronic data interchange). This program also covers country-specific payment methods. Bank Accounting This component is used to handle accounting transactions that you process with your bank. Features It includes the management of bank master data, cash balance management (check and bill of exchange management), and the creation and processing of incoming and outgoing payments. It is possible to freely define all country-specific characteristics, such as the specifications for manual and electronic payment procedures, payment forms, or data media. Asset Accounting The Asset Accounting component consists of the following parts: Traditional asset accounting Processing leased assets Preparation for consolidation Information System Traditional asset accounting encompasses the entire lifetime of the asset from purchase order or the initial acquisition (possibly managed as an asset under construction) through its 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 form using the Information System. There is a report for depreciation forecasting and simulation of the development of asset values. Special Purpose Ledgers In the application Special Purpose Ledger, you can define ledgers for reporting purposes. You can keep these user-defined ledgers as general ledgers or subsidiary ledgers with various account assignment objects. Account assignment objects can either be SAP dimensions from various applications (such as account, cost center, business area, profit center) or customer-defined dimensions (such as region). The special purpose ledgers enable you to report at various levels using the values from the various application components. The functions available in the special purpose ledgers enable you to collect and combine information, create and modify totals, and distribute actual and plan values. The values are transferred to the special purpose ledgers from other SAP applications and external systems. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Procurement Process (Procure-to-Pay) July 2007 Integration Purchase Requisition Purchase Order Notify Vendor Payment to Vendor Vendor Shipment This is a standard view of the procure to pay process and the most common. It may vary significantly based upon the company procedures, the products/services purchases and other factors. SAP allow businesses to tailor it to their needs. Starts with a requisition or need that needs to be filled. This can come from Planning (MRP), manually or other The purchase order is the document to fill the need: usually includes the vendor, cost/price, quantity, terms and other pertinent information. [ part one of the 3-way match] Notifying the vendor The goods are shipped and brought to the organization The goods are received (typically at the dock) and then put away [ part two of the three way match] An invoice is received from the vendor [third part of the 3-way match] After the tolerances/verification of the 3-way match are met a payment is made according to the terms agreed to on the purchase order. Invoice Receipt Goods Receipt July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Sales Order Process (Order-to-Cash) July 2007 Integration Check Availability Sales Order Entry Pick Materials Receipt of Customer Payment Pack Materials Not unlike the procure to pay process, this is completely configurable. You decide how you want the order to cash process to work and configure the system appropriately May start with Sales Order Check inventory If you do not have inventory –procurement process or production process Pick materials: from inventory Pack material: (optional) pack in box appropriate box or other Post Goods Issue (Title transfer) Invoice Customer –Create Accounts Receivable Collect Money Invoice Customer Post Goods Issue July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Configuration - Overview - Version 4.1 July 2007
Draw picture of stool Seat – Transactions Supported by Leg 1 – Organizations data Leg 2 – Master data Vendor, customer, material Leg 3 – Rules Govern how a transaction is used in the system SAP is an erector set You can create anything you want with it, the problem is converting it to something else is not easy. You can’t readily dismantle it too easily. Did you define what you wanted it to do before you started. One is the biggest problem is people do not define what you want before they start. © SAP AG and The Rushmore Group, LLC 2007

ERP Client / Server Integrated Business Solution SAP Enterprise System
Version 4.1 SAP Enterprise System July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Business Process Integration
Version 4.1 July 2007 Business Process Integration “The Stool” Components Organizational Data Master Data Rules Transactions (This model is used throughout the slides) In the Business Process Integration class we use the stool as a metaphor for the SAP structure. There are four basic components needed to run execute SAP. Three of these are the legs of the stool: org data, master data, and rules. These ‘hold up’ the transactions. Transactions cannot be run unless these are setup. The legs are typically configured during the implementation process. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration FI SD MM Transactions Org Data Master Data FI MM SD Rules FI MM SD FI In the Business Process Integration class we use the stool as a metaphor for the SAP structure. There are four basic components needed to run execute SAP. Three of these are the legs of the stool: org data, master data, and rules. These ‘hold up’ the transactions. Transactions cannot be run unless these are setup. The legs are typically configured during the implementation process. During BPI 1 we will setup the stool for Finance, Materials management and Sales and Distribution. MM SD July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Organizational Data A hierarchy in which the organizational units in an enterprise are arranged according to tasks and functions Are static data and are rarely changed The definition of organization units is a fundamental step, it is a critical factor in how the company will be structured Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction If you setup organizational data and wish to change it, it very well may be more work than the initial setup. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Master Data Master data is relatively fixed
Version 4.1 July 2007 Master Data Master data is relatively fixed Material master data Vendor master data Purchasing information record General Ledger master data Before making the master data configurations, you must have completely defined the organizational structures Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction Master Data includes things like material, customer records, vendor records, and general ledger accounts. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Rules Defines the parameters for Master Data and Transactions
Version 4.1 July 2007 Rules Defines the parameters for Master Data and Transactions Determines functionality for Master Data and Transactions Relatively fixed Changes as policy changes Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction Rules are relatively fixed. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Transaction Data Includes internal and external exchanges that describe business activities Unlike master data, aggregate transactional data is dynamic – each transaction is unique Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction Transaction data uses/comprised of the master data, rules, and org data. Every transaction has an audit trail. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Functional Areas – Where and When
Version 4.1 July 2007 Functional Areas – Where and When Business Process Integration I Financial Accounting (FI) Materials Management (MM) Sales and Distribution (SD) BPI 1is designed as a class for showing how a strictly distribution company operates BPI 2 is designed to add the complexity of manufacturing to the distribution. At the end of BPI 2 students will have configured and successfully tested all aspects of a simple manufacturing company. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Functional Areas – Where and When
Version 4.1 July 2007 Functional Areas – Where and When Business Process Integration II Financial Accounting (FI) Controlling (CO) Materials Management (MM) Production Planning (PP) Quality Management (QM) Sales and Distribution (SD) BPI 1is designed as a class for showing how a strictly distribution company operates BPI 2 is designed to add the complexity of manufacturing to the distribution. At the end of BPI 2 students will have configured and successfully tested all aspects of a simple manufacturing company. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 2 The Basics - Navigation - Version 4.1 July 2007
Draw picture of stool Seat – Transactions Supported by Leg 1 – Organizations data Leg 2 – Master data Vendor, customer, material Leg 3 – Rules Govern how a transaction is used in the system SAP is an erector set You can create anything you want with it, the problem is converting it to something else is not easy. You can’t readily dismantle it too easily. Did you define what you wanted it to do before you started. One is the biggest problem is people do not define what you want before they start. © SAP AG and The Rushmore Group, LLC 2007

Overview Logging on SAP ERP screens Basics of data entry
Version 4.1 Overview July 2007 Logging on SAP ERP screens Basics of data entry Working with multiple sessions Reporting On-line help and system messages Setting user defaults Logging off During this unit we will go through everything you need to know to navigate successfully throughout the SAP ERP system. These systems are pervasive throughout ERP, so anywhere you are working it will be the same. Often called the UI (User Interface). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP System Standard Features
Version 4.1 SAP ERP System Standard Features July 2007 Logging on SAP ERP screens Basics of data entry Working with multiple sessions Reporting On-line help and system messages Setting user defaults Logging off July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

For Chico June 21-24 2010 workshop only
Version 4.1 July 2007 Chico Session user ID UAP-001 to UAP-040 123456 Good to For Chico June workshop only July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging On - SAP ERP Initial Screens
Version 4.1 Logging On - SAP ERP Initial Screens July 2007 Get to log-on screen Select new Click on Server name Pick Client User ID Password Language : July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging On - The Client This is a numeric field
Version 4.1 Logging On - The Client July 2007 This is a numeric field This number defines a whole business entity For the 2010 Chico workshop, we will use client 310 We can use client 320 for BPI-2, if needed Client is a whole set of rules You may have many different clients within the SAP system with different functions. For instance, a production class may have a much different setup and execution than a service class next door. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging On - User Enter the name of the SAP user
Version 4.1 Logging On - User July 2007 Enter the name of the SAP user Users of SAP system are client-specific User identification on one client will only allow access to that client on that server Users are client dependent. A user has to be setup individually per client with its own password. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging On - Password Rules
Version 4.1 Logging On - Password Rules July 2007 Letters Numbers Easy to remember 3-8 Characters long No 3 Characters can be the same Do not start with a ? or an ! Do not use previous 5 passwords Having a password is important. Every movement or transaction within SAP is tracked via the audit trail. So, if someone steals your password they can do much damage to the system and it will be tracked back to your name. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Logging On - Language July 2007 SAP supports multi-national character sets and languages on the same system, at the same time Default languages are English and German Currently support 26 languages including double-bit Kanji languages (oriental) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging On - Data Record
Version 4.1 Logging On - Data Record July 2007 The user/password has validity dates per client. For instance, if a temporary employee is doing some data entry work for a couple of weeks, the administrator can, not only limit the access, but limit the time the employee will have access, so they cannot access the system once they leave. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP System - Standard Features
Version 4.1 July 2007 SAP ERP System - Standard Features Logging On SAP ERP Screens Basics of Data Entry Working with Multiple Sessions Reporting On-line Help and System Messages Setting User Defaults Logging Off July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - The Topics
Version 4.1 July 2007 SAP ERP Screens - The Topics Easy Access desktop System menus System navigation Transaction name Transaction icons Transaction work area Status messages We will discuss the screen and what components of the layout are on the screens. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - Easy Access Desktop
Version 4.1 SAP ERP Screens - Easy Access Desktop July 2007 System Menus Transaction Name Icons Work Area Status Messages System Navigation Transaction icons will change depending upon what transactions you are on. System and help are the only two that are always on every screen. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - Easy Access Desktop
Version 4.1 SAP ERP Screens - Easy Access Desktop July 2007 Favorites Folder and Sub-Folder Transactions Favorites Add your own Folder and subfolder Triangles down or to the right (open vs. closed) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - System Menus
Version 4.1 SAP ERP Screens - System Menus July 2007 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - System Navigation
Version 4.1 SAP ERP Screens - System Navigation July 2007 Enter Save Back Exit Print Scroll icons Help icon Options Command Field Cancel Find/Expand icons Create a new session Create a desktop shortcut White open area is command field – transaction codes Green check mark is enter (same function as enter on your key board) Disk – Save Back – one screen Yellow – One level Cancel – back up one screen at a time Binoculars – Expand and find Pages Asterisk – Create a new sessions Toggle between sessions Short cut – Desktop (can do it from menu) Question mark : Help July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - Transaction Name
Version 4.1 SAP ERP Screens - Transaction Name July 2007 If you display technical information, it will show the transaction name. Extras ->Settings July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - Transaction Name
Version 4.1 SAP ERP Screens - Transaction Name July 2007 SAP initially created as a main frame system. To get anywhere you had to know the transaction code. If you type the transaction code, it will bring you to the transaction. When you go back, it will take you the main menu where you came from *NOTE: YOU CANNOT RUN TRANSACTION CODES IN IMG* July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens - Transaction Icons
Version 4.1 SAP ERP Screens - Transaction Icons July 2007 Screen or view dependant (e.g. materials master will differ from sales order entry will differ from the main menu) Transaction dependant July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens – Transaction Work Area
Version 4.1 SAP ERP Screens – Transaction Work Area July 2007 Easy access menu. All the transactions we will use. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Screens – Status Messages
Version 4.1 SAP ERP Screens – Status Messages July 2007 System Message System Information Select transaction so you always know where you are July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Transaction Screen
Version 4.1 July 2007 SAP ERP Transaction Screen Header Tabs Line Item Detail Transaction screens are broken down into header and detail areas. Tabs made getting information much easier. It use to be one very large page that scrolled on and on and on. Line Item July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

SAP ERP Master Data Screen
Version 4.1 July 2007 SAP ERP Master Data Screen Tabs Detailed information specific to one data item. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 SAP ERP System - Standard Features Logging on SAP ERP screens Basics of data entry Working with multiple sessions Reporting On-line help and system messages Setting user defaults Logging off July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Basics of Data Entry Using menus Using transaction codes
Version 4.1 July 2007 Basics of Data Entry Using menus Using transaction codes System > status Using /n Multiple sessions Using /o Use transaction codes to VA01 – take directly to that transaction If you do the from another transaction you need /nva01 to start a new transaction (closes old session and opens new one) /o new session with the transaction. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Basics of Data Entry Types of entry fields Moving between fields
Version 4.1 Basics of Data Entry July 2007 Types of entry fields Moving between fields Radio buttons and check boxes Possible entry fields Match-codes Saving data Canceling data July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Basics of Data Entry Cancel Check Box Pull Down Entry (Input) Field
Version 4.1 Basics of Data Entry July 2007 Cancel Check Box Pull Down Entry (Input) Field Tab Save Tabs eliminated scrolling and buttons White if you can enter something into field Gray if you cannot enter into the field Radio buttons (old radios that if you pushed on button it turns all the others off) Required fields will not allow you to leave without entering July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Basics of Data Entry There are three types of entry fields: Required
Version 4.1 July 2007 Basics of Data Entry There are three types of entry fields: Required Default entry Optional entry field For instance sales order Organization is required so you have the information in the system. Who makes it required (you do through the configuration) Every field has Suppressed Display only Required Optional Problem with suppressed it suppresses the field and the functionality End user cannot do this. Only admin Default entries to ease entry. Not to do extra typing Problem with defaults – Sometimes when is optional it may need to be put it. You may need it later. E.g. weight in material master. Without it you can take an order, but can not ship it. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Working with Multiple Sessions
Version 4.1 July 2007 Working with Multiple Sessions Opens another session This opens another SAP ERP window Alt-tab to move between sessions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Working with Multiple Sessions
Version 4.1 July 2007 Working with Multiple Sessions An SAP session is a window in which the user may perform a particular task Users may have up to six sessions open at one time Alt-tab to switch back and forth between the sessions. Bloomberg has up to four monitors on their desks at a type with 4 sessions open. When you move your mouse it transfers between screens and it would move from session to session July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Reporting Three basic steps to running a report Access the report
Version 4.1 July 2007 Reporting Three basic steps to running a report Access the report Enter selection criteria Execute the report Access Selection Get the data you want Use it like a funnel Execute Green checkmark with a clock – execution button July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Reporting Access Selection Execution Version 4.1 July 2007 July 2007
Get the data you want Use it like a funnel Execute Green checkmark with a clock – execution button ENTER DOES NOT WORK TO GENERATE July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 SAP ERP System - Standard Features Logging on SAP ERP screens Basics of data entry Working with multiple sessions Reporting On-line help and system messages Setting user defaults Logging off SAP on-line help is fabulous 3od - not as good It has become wonderful July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

On-line Help Version 4.1 July 2007 July 2007
Application help Specific to the application you are working on SAP Library (all) All the help with finds. Release notes (updates and upgrade information) There are many version and updates that are continually going out. This let’s you know what one you are working on. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

On-line Help Help on screen fields - F1
Version 4.1 July 2007 On-line Help Help on screen fields - F1 Extended help Reference information Technical information Displaying possible entries - F4 Using the Help menu ERP library Getting started F1 is field level help Context sensitive help Once open Can select technical information Create defaults for what the field is for association F-4 possible entry List of potential entries Help Menu Application help Specific to the application you are working on SAP Library (all) All the help with finds. Release notes (updates and upgrade information) There are many version and updates that are continually going out. This let’s you know what one you are working on. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

F1 - Key F4 - Key On-line Help Version 4.1 July 2007 July 2007
F1 is field level help Context sensitive help Once open Can select technical information Create defaults for what the field is for association F-4 possible entry (called match codes) List of potential entries Match codes Arrow pointing right – more tabs Pull down July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

System Messages E = Error W = Warning I = Information
Version 4.1 System Messages July 2007 E = Error An invalid entry has been made The cursor moves to the field where the error has occurred W = Warning A possible error has been made The user can continue without changing I = Information Feedback from the system Different ways to set up Pop up: so it pops up in its own screen when you get the message On bottom menu Red Error:: Kiss of death – you cannot do anything Generally the cursor moves to where the infraction occurs Yellow – Warning: most of the time it will let you continue – Something is not quite perfect, but good enough to let the transaction occur. Green – All documents that you create will give you information messages. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging on SAP ERP screens Basics of data entry Working with multiple sessions Reporting On-line help and system messages Setting user defaults Logging off July 2007 © SAP AG and The Rushmore Group, LLC 2007

Setting User Defaults Version 4.1 July 2007 July 2007
Reduces the data entry you have to do The system is not case sensitive, BUT if you put it in the wrong case it will not convert. Remember – all caps German acronyms (They really do mean something/are easy to remember if you spoke German) Drill into system (from a pull down on the navigation menu) System User profiles Own data July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging on SAP ERP screens Basics of data entry Working with multiple sessions Reporting On-line help and system messages Setting user defaults Logging off July 2007 © SAP AG and The Rushmore Group, LLC 2007

Logging Off Exit button System > logoff
Version 4.1 Logging Off July 2007 System > logoff Exit button System log off Exit button Corner x-box Normal Windows close Time out options: If you are not active within x-period of time then the system will automatically log you out. All transactions are tracked via the audit trail. Any thing you do has your name written all over it. So, if you try to mess up the system we will know who did it. Remember, if you do not log out someone else can mess up the system and the blame will be place on you. For security purposes it is important to log off SAP whenever you leave your PC. Your user name is linked with all transactions you perform providing an audit trail. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

BPI – I - Exercise Roadmap
Purchase Requisition Purchase Order Procurement Process Check Availability Run MRP Goods Receipt Sales Order Process Sales Order Entry Invoice Receipt Pick Materials Payment to Vendor Receipt of Payment Post Goods Issue Invoice Customer July 2007 © SAP AG and The Rushmore Group, LLC 2007

Structure of SAP Hierarchal structure of SAP Where everything fits
Version 4.1 July 2007 Structure of SAP Hierarchal structure of SAP Where everything fits Better understanding, yet difficult to convey to students that have not been in the environment Lunchtime? July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Process Exercise Part 1
Version 4.1 July 2007 Sales Process Exercise Part 1 Order-to-Cash © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Sales Order Process (Order-to-Cash) July 2007 Check Availability Sales Order Entry Pick Materials Receipt of Customer Payment Pack Materials Not unlike the procure to pay process, this is completely configurable. You decide how you want the order to cash process to work and configure the system appropriately May start with Sales Order Check inventory If you do not have inventory –procurement process or production process Pick materials: from inventory Pack material: (optional) pack in box appropriate box or other Post Goods Issue (Title transfer) Invoice Customer –Create Accounts Receivable Collect Money Invoice Customer Post Goods Issue July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 2, Group 1 Exercises Logging on the SAP System
Version 4.1 Unit 2, Group 1 Exercises July 2007 Logging on the SAP System Create Vendor Master Create Material Master Create Customer Master Create Customer Quotation Create Sales Order with Reference to Customer Quotation Check Stock Status July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Procurement Process Exercise
Version 4.1 July 2007 Procurement Process Exercise Procure-To-Pay © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Materials Management (MM) July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Procurement Process (Procure-to-Pay) July 2007 Purchase Requisition Purchase Order 3-Way Match Notify Vendor Payment to Vendor Vendor Shipment This is a standard view of the procure to pay process and the most common. It may vary significantly based upon the company procedures, the products/services purchases and other factors. SAP allow businesses to tailor it to their needs. Starts with a requisition or need that needs to be filled. This can come from Planning (MRP), manually or other The purchase order is the document to fill the need: usually includes the vendor, cost/price, quantity, terms and other pertinent information. [ part one of the 3-way match] Notifying the vendor The goods are shipped and brought to the organization The goods are received (typically at the dock) and then put away [ part two of the three way match] An invoice is received from the vendor [third part of the 3-way match] After the tolerances/verification of the 3-way match are met a payment is made according to the terms agreed to on the purchase order. Invoice Receipt Goods Receipt July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 2, Group 2 Exercises July 2007 Run Materials Requirement Planning –Single Item, Single Level Convert Purchase Requisition to Purchase Order Create Goods Receipt Create Invoice Receipt from Vendor Post Payment to Vendor Sales order created independent demand on the system. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Process Exercise Part 2
Version 4.1 July 2007 Sales Process Exercise Part 2 Order-to-Cash © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Sales Order Process (Order-to-Cash) July 2007 Check Availability Sales Order Entry Pick Materials Receipt of Customer Payment Pack Materials Not unlike the procure to pay process, this is completely configurable. You decide how you want the order to cash process to work and configure the system appropriately May start with Sales Order Check inventory If you do not have inventory –procurement process or production process Pick materials: from inventory Pack material: (optional) pack in box appropriate box or other Post Goods Issue (Title transfer) Invoice Customer –Create Accounts Receivable Collect Money Invoice Customer Post Goods Issue July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 2, Group 3 Exercises Create Delivery Note for Sales Order
Version 4.1 Unit 2, Group 3 Exercises July 2007 Create Delivery Note for Sales Order Check Stock Status Pick Materials on Delivery Note Post Goods Issue Bill Customer Post Receipt of Customer Payment Review Document Flow July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

1-20 start-up exercises 1-20 are done on Company code 999
Version 4.1 July 2007 1-20 start-up exercises 1-20 are done on Company code 999 All other exercises are done on the student created CC and Plants Grade after exercise 20 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 3 Financial Accounting (FI) - Overview - © SAP AG and The Rushmore Group, LLC 2007

ERP Client / Server Integrated Business Solution SAP Enterprise System
Version 4.1 SAP Enterprise System July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 3, Part 1 – Overview Financial Accounting (FI)
Version 4.1 Unit 3, Part 1 – Overview July 2007 Financial Accounting (FI) Goals and Objectives Target Audience Components Managerial Accounting (CO) Comparisons and Relationships July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Goals and Objectives Financial accounting is designed to collect all of the data needed to support the preparation of financial statements for external users Reporting – SEC etc These reports give a consistent view of the company’s financial health. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Target Audience External Internal Legal Authorities Executives Banks
Version 4.1 Target Audience July 2007 External Legal Authorities Banks Auditors Shareholders Insurance Taxing Authorities Media Financial Analysts Internal Executives Senior Management Accounts Administration Staff Employees There are two types of audiences: Internal and External. Internally: The employees who run the company. This gives them the information needed to make decisions. Externally: Anyone who has a financial stake in the company. This could be shareholders, creditors, government (taxes, fraud, etc.) insurance companies, or anyone who would like to purchase shares of the companies stock. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Components of Financial Accounting July 2007 Financial Accounting (FI) Accounts Receivable Payable Special Purpose Ledger Fixed Assets Banks General The Financial Accounting (FI) application component fulfills all the international requirements that must be met by the financial accounting department of an organization. It provides the following features: Management and representation of all accounting data All business transactions are recorded according to the document principle, which provides an unbroken audit trail from the financial statements to the individual documents. Open and integrated data flow Data flow between Financial Accounting and the other components of the SAP System is ensured by automatic updates. Data is available in real time within Financial Accounting. Postings made in the subledgers always generate a corresponding posting in the general ledger. Preparation of operational information to assist strategic decision-making within the organization General Ledger Accounting Purpose The central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. Recording all business transactions (primary postings as well as settlements from internal accounting) in a software system that is fully integrated with all the other operational areas of a company ensures that the accounting data is always complete and accurate. Accounts Receivable Account Receivables application component records and administers accounting data of all customers. It is also an integral part of sales management. All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange). The system contains a range of tools that you can use to monitor open items, such as account analyses, alarm reports, due date lists, and a flexible dunning program. The correspondence linked to these tools can be individually formulated to suit your requirements. This is also the case for payment notices, balance confirmations, account statements, and interest calculations. Incoming payments can be assigned to due receivables using user-friendly screen functions or by electronic means such as EDI and data telecommunication Accounts Payable The Accounts Payable application component records and administers accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. The system automatically makes postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning. Payables are paid with the payment program. The payment program supports all standard payment methods (such as checks and transfers) in printed form as well as in electronic form (data medium exchange on disk and electronic data interchange). This program also covers country-specific payment methods. Bank Accounting This component is used to handle accounting transactions that you process with your bank. Features It includes the management of bank master data, cash balance management (check and bill of exchange management), and the creation and processing of incoming and outgoing payments. It is possible to freely define all country-specific characteristics, such as the specifications for manual and electronic payment procedures, payment forms, or data media. Asset Accounting The Asset Accounting component consists of the following parts: Traditional asset accounting Processing leased assets Preparation for consolidation Information System Traditional asset accounting encompasses the entire lifetime of the asset from purchase order or the initial acquisition (possibly managed as an asset under construction) through its 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 form using the Information System. There is a report for depreciation forecasting and simulation of the development of asset values. Special Purpose Ledgers In the application Special Purpose Ledger, you can define ledgers for reporting purposes. You can keep these user-defined ledgers as general ledgers or subsidiary ledgers with various account assignment objects. Account assignment objects can either be SAP dimensions from various applications (such as account, cost center, business area, profit center) or customer-defined dimensions (such as region). The special purpose ledgers enable you to report at various levels using the values from the various application components. The functions available in the special purpose ledgers enable you to collect and combine information, create and modify totals, and distribute actual and plan values. The values are transferred to the special purpose ledgers from other SAP applications and external systems. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

ERP Client / Server Integrated Business Solution Controlling (CO) SD
Version 4.1 Controlling (CO) July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Goals and Objectives Managerial accounting is designed to collect data for the preparation and analysis of reports for use by internal users Controlling reports on who’s using and generating the money per segment (cost center, product, etc.) in the company. Controlling information is not reported externally and is typically confidential internally to a company. Cost center accounting Internal Projects: Do we make money or not: per project? July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Target Audience Executives Senior Management Department Managers
Version 4.1 July 2007 Target Audience Executives Senior Management Department Managers Controllers Cost Accountants The people responsible for the profit, budget, or health of the organizational segment (cost center, department, product, etc.) in the company. Many times bonuses are based upon the profitability of a manager’s or VP department. In these companies there is often internal competition to keep costs down between departments and can be very efficient. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Components of Managerial Accounting
Version 4.1 Components of Managerial Accounting July 2007 Controlling (CO) Cost Element Acct Center Product Internal Orders Activity Based Costing Profit Profitability Analysis Controlling (CO) Purpose Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the services provided by an organization. As well as documenting actual events, the main task of controlling is planning. You can determine variances by comparing actual data with plan data. These variance calculations enable you to control business flows. Income statements such as, contribution margin accounting, are used to control the cost efficiency of individual areas of an organization, as well as the entire organization. Cost Element Accounting Cost Element Accounting is the part of accounting where you enter and organize costs incurred during a settlement period. It is thus not an accounting system as such, but rather a detailed recording of data that forms the basis for cost accounting. Cost Center Accounting You use Cost Center Accounting for controlling purposes within your organization. The costs incurred by your organization should be transparent. This enables you to check the profitability of individual functional areas and provide decision-making data for management. This requires that all costs be assigned according to their source. However, source-related assignment is especially difficult for overhead costs. Cost Center Accounting lets you analyze the overhead costs according to where they were incurred within the organization. Internal Orders Internal orders are normally used to plan, collect, and settle the costs of internal jobs and tasks. The SAP system enables you to monitor your internal orders throughout their entire life-cycle; from initial creation, through the planning and posting of all the actual costs, to the final settlement and archiving: Activity-Based Costing Activity-Based Costing provides a process-oriented, cross-functional view of overhead, in contrast to the traditional location-oriented view provided by Cost Center Accounting. Activity-Based Costing thus complements and enhances Cost Center Accounting. Activity-Based Costing allocates process quantities based on resource and process drivers, allowing you to define cost allocation along the value-added chain more exactly than is possible with overhead rates. Activity-Based Costing also complements and enhances product costing by assigning costs to the business processes where they originated. Cost center resources can allocate to business processes based on their true utilization of activities. Product Cost Controlling Product Cost Planning Cost Object Controlling Actual Costing/Material Ledger Product Cost Controlling Information System Profit Center Accounting Profit Center Accounting determines the profit of the defined cost center Profitability Analysis Profitability Analysis enables you to evaluate market segments, which can be classified according to products, customers, orders or any combination of these, or strategic business units, such as sales organizations or business areas, with respect to your company's profit or contribution margin. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Comparison Financial Accounting Managerial Accounting
Version 4.1 Comparison July 2007 Financial Accounting External Accounting Balance Sheet Profit & Loss Statement Legal Requirements Standards Managerial Accounting Cost Center Accounting Profit Center Accounting Product Costing Profitability Analysis Different Valuations Flexibility You can capture these cost any way you want. Manager’s bonuses are often based upon their profit center’s profitability July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Comparative Reporting
Version 4.1 Comparative Reporting July 2007 Liquidity Calculation Retained Earnings Report Financial Accounting (FI) Balance Sheet Income Statement External Reporting Cost Center Reports Financial accounting is external and feeds the external reporting requirements Managerial Accounting is internal only Product Costs Reports Managerial Accounting (CO) Profit Margin Profit Center Reports Internal Reporting July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Interrelated and Closely Connected
Version 4.1 Interrelated and Closely Connected July 2007 (FI) Transaction Document Amount G/L Account # Cost Center (CO) Transaction Cost Element Income Statement Bal. Sheet Financial Accounting Supplies Exp. Bank 100 100 Controlling Cost Center Transactions can have an effect on both FI and CO. The transaction will create a debit and a credit for FI (FI transaction) If CO is turned on a cost center or cost element bucket will be updated. (CO transactions) 100 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Financial Accounting (FI) - The Basics - © SAP AG and The Rushmore Group, LLC 2007

Unit 3, Part 2 – Overview General Ledger Chart of Accounts
Version 4.1 Unit 3, Part 2 – Overview July 2007 General Ledger Chart of Accounts Balance Sheet Assets Liabilities Equity Income Statement Revenues Expenses July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger The General Ledger provides a complete record of all "acceptable" business transactions from the viewpoint of an accountant An acceptable business transaction has the following traits Affects the financial position of the entity Measurable in a currency Affects at least two accounts Assets = Liabilities + Equity Debits = Credits Cannot have a single sided entry: Debits have to equal credits The system will not allow a posting that is out of balance: If it is you must first correct the error, or park it until a later time when you can fix it. You can have multiple debits or credits per side (splits) , but the total has to balance per transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Chart of Accounts The foundation for the General Ledger is the Chart of Accounts A Chart of Accounts contains a complete list of all of the accounts utilized in the General Ledger for a given company Financial accounting reports are prepared from the balances contained in the General Ledger’s Chart of Accounts Chart of Accounts This is a list of all G/L accounts used by one or several company codes. For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a company code. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Chart of Accounts (continued)
Version 4.1 July 2007 Chart of Accounts (continued) There are five types of accounts contained in a Chart of Accounts Assets Liabilities Equity Revenues Expenses There are two primary accounting reports prepared from the General Ledger Chart of Accounts Balance Sheet Income Statement Chart of Accounts This is a list of all G/L accounts used by one or several company codes. For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a company code. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Balance Sheet – Assets Things of value that a company owns or controls that accountants have agreed to measure in monetary terms. Examples of these accounts include: Cash Accounts receivables Plant and equipment Inventory Balance sheets Assets liability Owner’s equity Assets (good guys) generally good Inventory is often an exception (too much is bad) This is what the company owns or has Balance Sheet Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Balance Sheet – Liabilities
Version 4.1 July 2007 Balance Sheet – Liabilities Things that a company owes or must provide services in order to settle that accountants have agreed to measure in monetary terms. Examples of these accounts include: Accounts payable Notes payable Bonds payable Unearned revenue Liabilities Bad guys – What a company owes to settle the accounts Typically debt Balance Sheet Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Balance Sheet – Equity Equity is simply the mathematical difference between assets and liabilities. Includes the monetary amounts collected with respect to all preferred and common stock transactions, the aggregate net income reported since organization of the company, and a reduction for dividends that have been paid to stockholders. Balance Sheet Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Balance Sheet Version 4.1 July 2007 July 2007
Assets top Liabilities middle Owner’s equity bottom Compares one year the next July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Income Statement – Revenues
Version 4.1 July 2007 Income Statement – Revenues The monetary amounts collected from customers in settlement for goods purchased from our company or services rendered by our firm to them during the current fiscal year. Income Statement (Profit and Loss Statement) Comparison of revenue and expenditure of a period to determine the results for the company and the sources of these results. Often called the “P&L” July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Income Statement – Expenses
Version 4.1 July 2007 Income Statement – Expenses The monetary amounts paid to vendors in settlement for goods purchased by our company or services rendered to our firm by other companies during the current fiscal year. March 1st 1913 – Many companies have this as their fiscal year. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Income Statement Version 4.1 July 2007 July 2007
Revenues Expenses Profit on bottom Microsoft’s income statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Financial Accounting (FI) - Organizational Structures - Draw picture of stool Seat – Transactions Supported by Leg 1 – Organizations data Leg 2 – Master data Vendor, customer, material Leg 3 – Rules Govern how a transaction is used in the system SAP is an erector set You can create anything you want with it, the problem is converting it to something else is not easy. You can’t readily dismantle it too easily. Did you define what you wanted it to do before you started. One is the biggest problem is people do not define what you want before they start. © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration FI Org Data The first leg in our stool. We will be creating Organizational data for Finance. This is the first step of our implementation of SAP software for our company. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 3, Part 3 – Org Structures
Version 4.1 Unit 3, Part 3 – Org Structures July 2007 Organizational Structures Client Company Chart of accounts Company code Credit control area You are not going to create a client or company: The client and company is going to be setup for us already. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Client Highest hierarchical level in an SAP environment
Version 4.1 July 2007 Client Highest hierarchical level in an SAP environment A complete database containing all the tables necessary for creating a fully integrated information system Master records are created at the client level The client may be the enterprise and you may want to share customers at the company level Client Definition A commercially, organizationally, and technically self-contained unit within an SAP System. Clients have their own master records and set of tables. The definition of the client organizational unit is obligatory. Use The client is the highest level in the SAP System hierarchy. Specifications that you make, or data that you enter at this level are valid for all company codes and for all other organizational structures. You therefore only need to make these specifications, or enter this data once. This ensures that the data is consistent. Users must enter a client key when they log on to the SAP System. This defines the client in which they wish to work. All the entries you make are saved per client. Data processing and analysis is also carried out per client. This means that you cannot include customer accounts from different clients in one dunning run. Access authorization is assigned per client. You must create a user master record for each user in the client where he or she wishes to work. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Client Version 4.1 July 2007 July 2007
The client may be the enterprise and you may want to share customers at the company level Client Definition A commercially, organizationally, and technically self-contained unit within an SAP System. Clients have their own master records and set of tables. The definition of the client organizational unit is obligatory. Use The client is the highest level in the SAP System hierarchy. Specifications that you make, or data that you enter at this level are valid for all company codes and for all other organizational structures. You therefore only need to make these specifications, or enter this data once. This ensures that the data is consistent. Users must enter a client key when they log on to the SAP System. This defines the client in which they wish to work. All the entries you make are saved per client. Data processing and analysis is also carried out per client. This means that you cannot include customer accounts from different clients in one dunning run. Access authorization is assigned per client. You must create a user master record for each user in the client where he or she wishes to work. The SAP System is delivered with the clients 000 and these clients already contain default settings. For more information, see Setting Up Clients in Customizing. These sections are automatically selected when you create your implementation projects (company IMG, project IMG). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Company Consolidated financial statements are created at the company level A company can include one or more company codes All company codes must use the same chart of accounts and fiscal year Company is not required in the definition of an enterprise (optional) A company is the smallest organizational unit for which individual financial statements can be drawn up according to the relevant commercial law. A company can contain one or more company codes. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Organizational Structure
Version 4.1 July 2007 Organizational Structure Client Company Client is the enterprise Typically the same A company is the smallest organizational unit for which individual financial statements can be drawn up according to the relevant commercial law. A company can contain one or more company codes. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Company Code A legally independent entity
Version 4.1 July 2007 Company Code A legally independent entity The smallest organizational unit for which accounting can be carried out Business transactions are processed at this level Accounts are managed at this level Legal financial statements, such as the balance sheet and the income statement, are generated at this level using the General Ledger balances The smallest organizational unit for which a complete self-contained set of accounts can be drawn up for external reporting. This involves recording all relevant transactions and generating all supporting documents for financial statements, such as balance sheets and profit and loss statements. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Organizational Structure Client Company Company Code You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a company You do have to create a company code The only reason to create a company is when you have to create a consolidated financial statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Chart of Accounts A listing of the accounts (assets, liabilities, equity, revenues, and expenses) that are contained in the General Ledger A chart of accounts must be assigned to every company code in order to create the General Ledger for that company Several company codes can use the same chart of accounts We generally we want the same chart of accounts for consolidations All the decision you are going to make of how you want to conduct business Chart of Accounts This is a list of all G/L accounts used by one or several company codes. For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a company code. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Chart of Accounts United States Chart of Accounts Canadian Chart of
Version 4.1 July 2007 Chart of Accounts United States Chart of Accounts Canadian Chart of Accounts Each company may have the same chart of accounts in a given country: That way sales in Canada will go to the Sales account and sales in the US will go to the Sales Account For consolidation: these will match up Company Code 010 Company Code 038 Company Code 110 Company Code 117 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Organizational Structure Client Chart of Accounts Company Company Code You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a company You do have to create a company code The only reason to create a company is when you have to create a consolidated financial statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Fiscal Year Variant Specifies the accounting fiscal year for reporting purposes Special periods are created to aid in the quarterly or year-end adjusting process completed prior to preparing financial statements A single fiscal year variant is assigned to each company code You use fiscal year variants to define: How many posting periods there are in a fiscal year How many special periods you require How the system is to determine the period for postings you enter. K1, for example has 13 periods, 12 plus 1 special July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Organizational Structure Client Chart of Accounts Company Fiscal Year Variant Company Code You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a company You do have to create a company code The only reason to create a company is when you have to create a consolidated financial statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Credit Control Area An organizational unit or area of responsibility created to control customer credit limits A company code is assigned to one and only one credit control area Multiple company codes can be assigned to one credit control area An organizational unit that represents the area where customer credit is awarded and monitored. This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer. Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. If GM control credit at company code level dealership Sells Chevrolet - $10 million credit Things go well Applies for Buick - $10 million credit Add Pontiac, etc. Soon $50 million with GM TOO much If GM managed at company level instead of company code level. It would have stopped at $10 million July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Organizational Structure Client Chart of Accounts Company Fiscal Year Variant Credit Control Area You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a company You do have to create a company code The only reason to create a company is when you have to create a consolidated financial statement Company Code July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Organizational Structure Client Company Chart of Accounts Code Fiscal Year Variant Credit Control Area You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a company You do have to create a company code The only reason to create a company is when you have to create a consolidated financial statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Consolidation and Business Areas
Version 4.1 July 2007 Consolidation and Business Areas Company A company is an organizational unit in Financial Accounting which represents a business organization according to the requirements of commercial law in a particular country. Business Areas A unit in an enterprise that groups product and market combinations as homogeneously as possible for the purpose of developing unified business policy. An organizational unit that represents the area where customer credit is awarded and monitored. This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer. Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. If GM control credit at company code level dealership Sells Chevrolet - $10 million credit Things go well Applies for Buick - $10 million credit Add Pontiac, etc. Soon $50 million with GM TOO much If GM managed at company level instead of company code level. It would have stopped at $10 million July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Consolidation of Company Codes
Version 4.1 July 2007 Optional Organizational Structures GM Corp. Chart of Accts Client GM–Corporate Credit CA General Motors Corporate Fiscal Year Var. Consolidation of Company Codes GMC Cadillac Chevrolet Business Areas You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a company You do have to create a company code The only reason to create a company is when you have to create a consolidated financial statement Cars Trucks July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Client 100 Credit Control Area Fiscal Year Variant Pen Inc. Chart of
Version 4.1 July 2007 Client 100 Credit Control Area Fiscal Year Variant Pen Inc. Chart of Accounts Company Code You have to assign a chart of accounts to each company code. This chart of accounts is the operating chart of accounts and is used for the daily postings in this company code. You do not have to create a company You do have to create a company code The only reason to create a company is when you have to create a consolidated financial statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 3 – Exercises Create Company Code Create Chart of Accounts
Version 4.1 Unit 3 – Exercises July 2007 Create Company Code Create Chart of Accounts Assign Company Code to Chart of Accounts Assign Company Code to Fiscal Year Variant Create Credit Control Area Assign Company Code to Credit Control Area Assign Permitted Credit Control Area to Company Code July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Management (MM)
Version 4.1 July 2007 Unit 4 Material Management (MM) - Organizational Structures - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration MM Org Data We will now create organization data for the material master. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 4 – Overview Unit Concept Purchasing and SAP ERP
Version 4.1 Unit 4 – Overview July 2007 Unit Concept Purchasing and SAP ERP Procurement Process Organizational Structures Organizational Relationships Warehouse Management July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit Concept The purchasing process involves the acquisition of goods and services to support the creation of goods and services in the organization In this unit the structure required for the purchasing process is presented July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Purchasing and SAP ERP The purchasing process exists in the Materials Management (MM) module of SAP ERP and Finance (FI) module The structure includes elements of the Materials Management (MM) and Finance (FI) modules Master data for the purchasing process exists in the (MM) and (FI) modules The purchasing process can and does interface with the Production Planning (PP), Warehouse Management (WM), and Quality Management (QM) modules The execution of purchase order is primarily done in Materials Management, but parts of the procurement process are cross-module. A/P resides in finance, and receipt quality check in Quality Management. Putaway’s from receipt can interface with the Warehouse Management module. Org structure in MM and FI Master Data in MM and FI Rule and transaction Data interface with MM, FI, PP, WW, and QM July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Components of Materials Management
Version 4.1 Components of Materials Management July 2007 Materials Management (MM) Logistics Invoice Verification Material Master Physical Inventory Valuation MRP Service Entry Sheet Product Catalog Purchasing Mgmt. Foreign Trade/ Customs Purchasing (MM-PUR) Purpose The ERP System consists of a number of components that are completely integrated with one another. This integration allows the various departments and units of an enterprise to share and maintain the same information. Purchasing is a component of Materials Management (MM). The Materials Management (MM) module is fully integrated with the other modules of the SAP System. It supports all the phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification. The tasks of the MM Purchasing component are as follows: External procurement of materials and services Determination of possible sources of supply for a requirement identified by the materials planning and control system or arising directly within a user department Monitoring of deliveries from and payments to vendors Good communication between all participants in the procurement process is necessary for Purchasing to function smoothly. Valuation MM - Material Price Change (MM-IV-MP) Balance Sheet Valuation (MM-IM-VP) Actual Costing/Material Ledger (CO-PC-ACT) Inventory Management and Physical Inventory (MM-IM) This component deals with the following tasks: Management of material stocks on a quantity and value basis Planning, Entry, and Documentation of all Goods Movements Carrying out the Physical Inventory Features Material Master (LO-MD-MM) The material master contains information on all the materials that a company procures or produces, stores, and sells. It is the company's central source for retrieving material-specific data. This information is stored in individual material master records. MRP Procedures in Consumption-Based Planning Use In consumption-based planning, the following MRP procedures are available: Reorder point procedure Forecast-based planning Time-phased materials planning Logistics Invoice Verification (MM-IV-LIV) Logistics Invoice Verification is a part of Materials Management (MM). It is situated at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting. Product Catalog A number of media can be used as vehicles for presentations, including: Print media CD-ROM Online services (such as internet, T-Online, CompuServe, AOL) Information kiosks at the point of purchase The Product Catalog functionality comprises a programming interface (Business API) for accessing the data and integrated maintenance of product catalog-related data. This data comprises: The layout of the product catalog The materials and prices in the product catalog Texts Multi-media objects (graphics, sound documents, video clips etc.). Service Master MM External Services Management provides a basic process for the procurement of externally performed services. This basic process comprises the following functionality: Foreign Trade Official customs brokers are licensed by the customs service to assist you with import and export transactions. They have the responsibility to ensure that all foreign trade customs procedures are followed completely and comply to legal regulations. They also ensure that the duties collected from your company are turned over to the government when they become due. Although the services of a customs broker replace the need for your company to handle the necessary tasks associated with foreign trade, they can be very costly. SAP's FT system incorporates all of the necessary checks and balances necessary to ensure that your import and export transactions are handled lawfully and that the duties owed to the customs authorities are calculated instantly and accurately. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Organizational Structures
Version 4.1 July 2007 Organizational Structures Plant Valuation Area Storage Locations Purchasing Organizations Purchasing Groups There are five organizational structures that we will define for our material management Plant Valuation area Storage locations Purchasing organizations Purchasing groups July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Organizational Structure July 2007 Credit Control Area Client Fiscal Year Variant Chart of Accounts Company Code Controlling Area Purchasing Organization Sales Organization Distribution Channel Division Plant Purchasing Group SL10 SL20 Shipping Point Sales Area July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP 2009 / Page 180 © SAP AG and The Rushmore Group, LLC 2007

Plant Lowest valuation area
Version 4.1 July 2007 Plant Lowest valuation area Organizational level where Material Requirements (MRP) runs Generally used to describe a production site, a distribution center or centralized warehouse May be a physical or logical unit Plant is a physical or logical location It may be a warehouse: PHYSICAL Vendor are in warehouse (Vendor managed inventory) Customer site (consigned inventory): LOGICAL Can do multiple plants within the same physical structure We value material at the plant level. Planning done at the plant not organizational level The plant is an operating area or branch within a company. The plant is embedded in the organizational structure as follows: The plant is assigned to a single company code. A company code can have several plants. Several storage locations in which material stocks are managed can belong to a plant. A single business area is assigned to a plant and to a division. A plant can be assigned to several combinations of sales organization and distribution channel. A plant can have several shipping points. A shipping point can be assigned to several plants. A plant can be defined as a maintenance planning plant. A plant has the following attributes: A plant has an address. A plant has a language. A plant belongs to a country. A plant has its own material master data. You can maintain data at plant level for the following views on a material master record in particular: MRP, Purchasing, Storage, Work scheduling, Production resources/tools, Forecasting, Quality management, Sales, Costing. The plant plays an important role in the following areas: material valuation If the valuation level is the plant, the material stocks are valuated at plant level. If the valuation level is the plant, you can define the material prices for each plant. Each plant can have its own account determination. inventory management The material stocks are managed within a plant. MRP Material requirements are planned for each plant. Each plant has its own MRP data. Analyses for materials planning can be made across plants. production costing In costing, valuation prices are defined only within a plant. plant maintenance If a plant performs plant maintenance planning tasks, it is defined as a maintenance planning plant. A maintenance planning plant can also carry out planning tasks for other plants (maintenance plants). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Valuation Area The valuation area determines at which level a material is valuated (inventory value is established) SAP ERP allows valuation at the company code or plant level, but recommends valuation area be set at the plant level We are going to create at the plant level. System defaults to plant level. Define valuation level You define the valuation level by specifying the level at which material stocks are valuated. You can valuate material stocks at the following levels: Plant level Valuation must be at this level in the following cases: If you want to use the application component Production Planning (PP) or Costing Company code level The decision you make is valid for the whole client. You are recommended setting material valuation at plant level. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Storage Location Subdivision of a plant
Version 4.1 July 2007 Storage Location Subdivision of a plant Where materials are managed (inventory management) Raw Materials Maintenance, Repair, and Other (MRO) Finished Product May be a physical or logical unit Maintain storage location A storage location is the place where stock is physically kept within a plant. A storage location has the following attributes: There may be one or more storage locations within a plant. A storage location has a description and at least one address. It is possible to store material data specific to a storage location. Stocks are managed only on a quantity basis and not on a value basis at storage location level. Physical inventories are carried out at storage location level. A storage location can be assigned to a warehouse number in the Warehouse Management System . You can assign more than one storage location to the same warehouse number within a plant. Storage locations are always created for a plant. Could be inventory management Production floor Quality Engineering bin July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Organizational Relationships
Version 4.1 Organizational Relationships July 2007 Plant/Storage Location Storage Location 20 - Quality 10 - Inventory Plant P001 Storage locations are assigned to a plant Do not confuse inventory locations with storage locations Storage locations equates to a warehouse Inventory location is a bin or place where individual inventory is kept We would want to create these things because we want to have them in quality until we inspect them. Could have a return: Check the return before we place it back into inventory. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchasing Organization
Version 4.1 July 2007 Purchasing Organization Organizational unit responsible for the procurement of materials and services. SAP requires that purchasing organizations be assigned at the plant level A purchasing organization can be assigned to more than one plant A purchasing organization can be assigned to a company code Required to a plant – PO org purchases for the plant Multiple purchasing orgs – Centralized – Does it for all plants Maintain purchasing organization From the Materials Management and Purchasing view, the purchasing organization is responsible for all purchasing activities (including the processing of requests for quotations and purchase orders, for example). The purchasing organization is integrated within the organizational structure as follows: A purchasing organization can be assigned to several company codes. (= Corporate-group-wide purchasing). A purchasing organization can be assigned to one company code. (= Company-specific purchasing). A purchasing organization can also exist without being assigned to a company code. Since each plant must be assigned to a company code, the latter can be determined via the plant at the time of each procurement transaction even if the procuring purchasing organization has not been assigned to a company code. A purchasing organization must be assigned to one or more plants. (= Plant-specific purchasing). A purchasing organization can be linked to one or more other purchasing organizations. (= reference purchasing organization) For more on this topic, refer to Assign Purchasing Organization to Reference Purchasing Organization. A purchasing organization can be divided into several purchasing groups that are responsible for different operational areas. Each purchasing organization has its own info records and conditions for pricing. Each purchasing organization has its own vendor master data. Each purchasing organization evaluates its own vendors using MM Vendor Evaluation. Authorizations for processing purchasing transactions can be assigned to each purchasing organization. All items of an external purchasing document, that is, request for quotation, purchase order, contract, or scheduling agreement, belong to a purchasing organization. The purchasing organization is the highest level of aggregation (after the organizational unit "client") for purchasing statistics. The purchasing organization serves as the selection criterion for lists of all purchasing documents. Possible organizational forms You can organize your purchasing function in the following ways: Corporate-group-wide purchasing Company-specific purchasing Plant-specific purchasing All of these forms can co-exist within a single client. Corporate-group-wide purchasing: A purchasing organization is responsible for the purchasing activities of different company codes. In this case, you do not assign a company code to the purchasing organization, but specify the company code concerned for each individual purchasing transaction. You assign plants from different company codes to the purchasing organization. Company-specific purchasing: A purchasing organization is responsible for the purchasing activities of just one company code. In this case, you assign a company code to the purchasing organization. The purchasing organization may procure only for this company code. You assign only plants of the company code concerned to the purchasing organization. Plant-specific purchasing: A purchasing organization is responsible for the purchasing activities of one plant. In this case, you assign the plant and the company code of the plant to the purchasing organization. The purchasing organization may procure for this plant only. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Organizational Relationships Plant/Purchasing Organization (1) Purchasing Organization – P002 Organization – P001 Plant P001 Decentralized purchasing One plant – multiple purchasing organizations July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Organizational Relationships (Continued)
Version 4.1 Organizational Relationships (Continued) July 2007 Plant/Purchasing Organization (2) Purchasing Organization – P001 Plant P001 Purchasing Organization – P002 Plant P002 Each plant has its own purchasing organization July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Organizational Relationships (Continued)
Version 4.1 Organizational Relationships (Continued) July 2007 Plant/Purchasing Organization (3) Plant – P002 Plant – P001 Purchasing Organization – P001 Centralized purchasing One purchasing organization for multiple plants July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Organizational Relationships (continued)
Version 4.1 Organizational Relationships (continued) July 2007 Plant/Purchasing Organization (4) Company Code C002 C001 Purchasing Organization – P001 Plant – P002 Plant – P001 Centralized We can set up the purchasing for multiple companies and the plants within them. One purchasing organization for multiple company codes July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchasing Group Responsible for specified purchasing activities
Version 4.1 July 2007 Purchasing Group Responsible for specified purchasing activities Often used to identify individual buyers Used for reporting Purchasing Group Definition A purchasing group corresponds to a buyer or group of buyers who perform the following purchasing activities: Procuring certain articles or merchandise categories Acting as the contact for vendors The purchasing group is also responsible for the day-to-day planning of requirements and ordering of merchandise.This includes creating purchase orders, allocation tables and promotions. It can also send vendors requests for quotation or create purchase requisitions. Or we could have individual buyers under the purchasing group Metals Government July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Organizational Relationships July 2007 Purchasing Organization/Purchasing Group Purchasing Organization – P001 Purchasing Group 001 Purchasing Group 002 A purchasing organization can have multiple purchasing groups. For instance, one group could specialize a one type of material procurement while another could special in another. This often take place in industrial fabrication shops that use a lot of steel. One person/group is in charge of procuring and getting delivered the steel rolls, etc. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Organizational Structure July 2007 Purchasing Organization – P001 Company Code C001 Storage Location 20 - Quality 10 - Inventory Plant P001 Group 001 We have been asked over and over to provide how it all fits together. You can’t It really DEPENDS on the organization. IT IS COMPLETELY CONFIGURABLE! In this example the purchasing organization buys for more than one plant Storage locations can be the same for every plant. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Warehouse Management Not required for the purchasing functionality of SAP ERP A separate module in the SAP ERP environment Many functions and elements can be performed outside of the module Warehouse Management System (WMS) Purpose The SAP Warehouse Management system (WMS) provides flexible, automated support in processing all goods movements and in managing stocks in your warehouse complex. The system supports scheduled and efficient processing of all logistics processes within your warehouse. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Warehouse Management Elements
Version 4.1 July 2007 Warehouse Management Elements Receiving, identifying and sorting goods Placing goods into storage bins Taking inventory Monitoring and inspecting goods in storage Preplanning distribution of materials Picking and accumulating orders Packaging, loading and shipping goods Storage Bin Management You map your entire storage facilities in the Warehouse Management system. In doing so, you can set up various storage facilities such as automatic warehouse, high rack storage areas, bulk storage or fixed storage bins in various storage types, according to your needs. You manage material stocks at storage bin level. You can define these storage bins according to your own requirements. Every storage bin in your warehouse is mapped in the system. This lets you monitor all warehouse movements at all times. You can follow where a certain material is in your warehouse. SAP Inventory Management and the SAP Warehouse Management system are fully integrated. With its inventory procedure and recording of stock differences, the system ensures that the inventory balance in Inventory Management always corresponds to the warehouse stock in the WMS. Goods Movements You process all goods movements that affect your warehouse via the WMS. This includes goods receipts, goods issues, stock transfers, material staging for production, automatic replenishment, managing hazardous materials, and processing stock differences in your warehouse. The WMS optimizes warehouse capacities and material flows using putaway and stock removal strategies, which you can adjust to suit your individual needs, or by using storage units. Planning and Monitoring The WMS offers you an overview of all goods issues and warehouse stocks. The system supports you in planning, monitoring, and optimizing work processes. For example, it gives you a foresighted view of the workload in the coming days or allows you to intervene in good time during critical warehouse processes, so that you can execute warehouse movements on time. Via the RF monitor, you get an up-to-date picture of all of the activities in the warehouse, which means that you can control the actual work in the warehouse using the RF monitor. Radio Frequency Connection In order to structure the work in the warehouse efficiently and cost-effectively, you control the warehouse workers’ work steps clearly and simply via mobile radio-frequency terminals. Radio frequency connection (RF connection) to mobile date entry achieves quick and flawless data transfer. The RF machines receive data directly from the SAP system and transfer data back to the system. Using barcodes, you can record information to be recorded and verify it. This means that you ensure a high standard of quality in your warehouse. Decentralized WMS You can run the WMS as a standalone decentralized warehouse management system, independent of a central enterprise resource planning system (ERP system). For more information, see Decentralized Warehouse Management. Warehouse Control WMS also has an interface to external systems (warehouse control units), so that you can integrate automatic putaway, stock removal systems or fork lift control July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Warehouse Management Relationships
Version 4.1 Warehouse Management Relationships July 2007 Inventory Management (MM) Company Code Plant Storage Loc. Warehouse User definable warehouse levels Mimics the physical layout in the actual warehouse. We will be setting up the upper level (Material Management system) We will NOT be setting up the warehouse management system. Aisle Storage Rack Warehouse Management (WM) Quantity July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 4 – Exercises Verify Valuation Area Define Plant (P_ _ _)
Version 4.1 Unit 4 – Exercises July 2007 Verify Valuation Area Define Plant (P_ _ _) Define Storage Locations for Inventory and Quality Define Purchasing Organization Create Purchasing Groups Assign Plant to Company Code Assign Purchasing Organization to Company Code Assign Purchasing Organization to Plant Setup Parameter ID July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 5 Financial Accounting (FI) - Rules (Internal Controls) - © SAP AG and The Rushmore Group, LLC 2007

Unit 5 – Rules Rules Account groups Field status variant
Version 4.1 Unit 5 – Rules July 2007 Rules Account groups BS – Balance Sheet Account Group PL – Income Statement Account Group RA – Reconciliation Account Group Field status variant Field status groups Fiscal year variant You are not going to create a client or company: The client and company is going to be setup for us already. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Account Groups Chrt/accts Acct group Description From To
Version 4.1 Account Groups July 2007 Chrt/accts Acct group Description From To CHRT BS Balance Sheet CHRT PL Income Sheet CHRT RA Reconciliation Reconciliation fit inside the balance sheet accounts Sub-sets Have to create account groups before they create the master records You must assign each account to an account group. The account group ensures that only the relevant screens and fields are displayed and ready for input for each of the customer’s different partner functions. For example, the address, communication, and bank data fields are omitted for the account group for one-time accounts. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Account Groups Identifier that controls which fields must be entered when an account is created Determine a valid number interval for each of the groups (types) of General Ledger accounts that have common attributes Must be created before General Ledger Chart of Accounts master records can be created You must assign each account to an appropriate account group How do they control the credit control area, etc. Account groups BS accounts PL accounts Determines which fields needs to be filled in Have to create account groups before they create the master records You must assign each account to an account group. The account group ensures that only the relevant screens and fields are displayed and ready for input for each of the customer’s different partner functions. For example, the address, communication, and bank data fields are omitted for the account group for one-time accounts. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Account Groups Account Group BS Account control Account management
Version 4.1 July 2007 Account Groups Account Group BS Account control Account management Document entry Bank/financial details Interest calculation Joint venture Account control Suppress Req. entry Opt. entry Display Currency Tax category Reconciliation account … Here is an example of the definition of an account group for Account control Suppress: Does not display and also suppresses functionality Required Entry: Cannot continue until you enter the field – functionality is enabled. Optional entry: Optional – functionality is enabled Display: You cannot enter or change the field - Functionality is enabled July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Field Status Field status controls how the data will be entered for a field when an accounting master record is being used in a transaction Determining whether a field is required, optional, suppressed, or display only Field status controls are also relevant to a specific activity — create, change, or display Under account group Tells what info Under that – Field status What information we have to have to use that account. Suppress: Does not display and also suppresses functionality Required Entry: Cannot continue until you enter the field – functionality is enabled. Optional entry: Optional – functionality is enabled Display: You cannot enter or change the field - Functionality is enabled July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Field Status Variant Fld status group Text ZALL All Accounts
Version 4.1 Field Status Variant July 2007 Fld status group Text ZALL All Accounts ZBSA Balance Sheet Accounts ZEXP Expense Accounts ZGRI Material Management (GR/IR) Accounts ZRCN Reconciliation Accounts ZREV Revenue Accounts A field status variant groups together several field status groups. You assign a field status variant to each company code. The field status group specifies which fields are ready for input, which fields must be filled or which fields are suppressed when entering documents. Specifying which fields are required, suppressed, optional, or display only when using the various general ledger accounts. A field status group is assigned to a general ledger account when it is created. Field status variant ZEXP When we create new things in SAP we have to use naming conventions to prevent things from being overwritten. If you name these things with an x,y,z it will migrate it with upgrade A way to group things together July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Field Status Variant July 2007 Field status variant (V000) - Group ZBSA - Balance Sheet Acct. General data Additional account assignments Materials management Payment transactions Asset accounting Taxes ... General Data Suppress Req. entry Opt. entry Display Assignment number Text Invoice reference … A field status variant groups together several field status groups. You assign a field status variant to each company code. The field status group specifies which fields are ready for input, which fields must be filled or which fields are suppressed when entering documents. Specifying which fields are required, suppressed, optional, or display only when using the various general ledger accounts. A field status group is assigned to a general ledger account when it is created. We have a whole series of field data with it. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

So What is a Reconciliation Account?
Version 4.1 So What is a Reconciliation Account? July 2007 Postings to sub-ledgers (such as accounts receivable or accounts payable) are automatically concurrently posted to the corresponding reconciliation account in the General Ledger In this way, the General Ledger is automatically updated and remains in balance with the customer and vendor individual account totals Sales to an individual customer You use this to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account. The "Receivables from goods and services" account is an example of a reconciliation account for customers. Enter Customer in the Reconciliation account for account type field. Enter a Vendor in this field for a vendor reconciliation account. Using the reconciliation account procedure, it is possible to create a balance sheet and a profit and loss statement at any time, since the amounts posted to subledger accounts are also posted automatically in the general ledger. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Receivable Reconciliation Account
Version 4.1 Accounts Receivable Reconciliation Account July 2007 preview Accounts Receivable Reconciliation 950 300 Customer 142 150 Customer 123 400 Customer 135 100 Customer 189 All customers (group of customers) are rolled into the Accounts Receivable Reconciliation accounts July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 5 – Exercises Create Account Groups
Version 4.1 Unit 5 – Exercises July 2007 Create Account Groups Define Retained Earnings Account Review Field Status Variant Assign Company Code to Field Status Variant July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 6 Financial Accounting (FI) - Master Data - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration Master Data FI Now, we will build two additional chunks of the base of the stool for finance: Rules and master Data July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Master Data Master data is relatively fixed Material master data Vendor master data Purchasing information record General Ledger master data Before making the master data configurations, you must have completely defined the organizational structures Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 6 – Overview General Ledger Master Data
Version 4.1 Unit 6 – Overview July 2007 General Ledger Master Data Chart of Accounts Data Company Code Data Reconciliation Accounts Accounts Receivable Accounts Payable Goods Receipt/Invoice Receipt General Ledger Account Balances You are not going to create a client or company July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

General Ledger – Master Data
Version 4.1 July 2007 General Ledger – Master Data A unique master record is created for each General Ledger account General Ledger accounts are created at the client level Business transactions are posted to the portfolio of General Ledger accounts made available to a company through the assignment of a specific Chart of Accounts System can generate numbers or you can generate the numbers. With the exception of materials, we will let the system create the numbers. Company code has to be on every transactions – So ledger accounts can be the same. Company codes are unique General Ledger Accounting The central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. Recording all business transactions (primary postings as well as settlements from internal accounting) in a software system that is fully integrated with all the other operational areas of a company ensures that the accounting data is always complete and accurate. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

General Ledger – Master Data (continued)
Version 4.1 July 2007 General Ledger – Master Data (continued) Contains control information for: Data entry Data processing Specifies the account type: Balance sheet Income statement Account group controls what is in the balance sheet and the income statement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

General Ledger Organization of the Data
Version 4.1 July 2007 General Ledger Organization of the Data Contains one or more Chart of Accounts specific information areas Contains one or more Company Code specific information areas In this way, a General Ledger master account can be shared by several combinations of Charts of Accounts and Company Codes General ledger master data can reside in multiple charts of accounts in multiple company codes. It is truly master data that can be used in many places. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

General Ledger Chart of Accounts Data
Version 4.1 July 2007 General Ledger Chart of Accounts Data Account number Name of the Chart of Accounts Account group provides information that controls the creation of the master record for a company code 100101 X BS Account number Chart of accounts C100 Account group P&L statement acct type Balance sheet account Account groups controls the field used to create the master data Structure The following information is contained in the chart of accounts area of a G/L account master record. The chart of accounts The account number and account name (short and long text) The indicator that specifies whether the account is a balance sheet account or an P&L statement account. At the start of a new fiscal year, the balance of a balance sheet account is carried forward to itself. With P&L statement accounts, you must specify the account to which the profit or loss is carried forward at the end of a fiscal year. The account group With the account group, you group similar accounts together and control the creating and changing of master records. They control The account number interval in which the account number must lie. The screen layout for creating G/L accounts in the company code-specific area. This means that you can define whether fields require an entry, may have an entry, or are hidden when creating or changing a master record in the company code-specific area. You defined the account groups prior to creating G/L accounts. For more information, read Account Group Entries which are necessary for consolidation are trading partner and group account number. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

General Ledger Company Code Data
Version 4.1 July 2007 General Ledger Company Code Data Local currency Foreign currency Tax category Open item management Line item display Sort key When creating a G/L account in a company code, you have to make several specifications. These specifications are saved in the G/L account master record and will affect future transactions, such as postings to this G/L account. When setting the account currency, you have two options available: Enter the local currency of your company code. The system automatically uses the local currency that you defined when creating the company code as the default value. This allows posting to the G/L account in any currency. When you make a posting in a foreign currency, the amount is translated into the local currency. For more information, see Posting a Document in a Foreign Currency. The transaction figures are kept as follows: In the local currency, that is, the total of all the amounts posted in the local currency In the individual currencies, that is, the total of all the amounts posted in various currencies. Enter a foreign currency. This is a foreign currency balance sheet account. The G/L account can only be posted to in this currency. The transaction figures and the account balance are kept in the foreign currency entered and in the local currency. In tax accounts, you can specify the type of tax on sales/purchases (input or output tax) that can be posted to the account. If you set the "Open item management" indicator in the master record for an account, the line items in this account is marked as open or cleared. The balance of an account with open item management is equal to the balance of the open items. General ledger accounts are kept with open item management if you need to check whether there is an offsetting posting for a given business transaction. If you set the "Line item display" indicator in the master record for an account, all line items that have been posted to this account are displayed if they have not been archived. You use line item display to display the document line items from the account. For line item display, the system lists all the line items for an account. Sort Sequence When you display or change line items, they are displayed in a standard sort sequence. The standard sort sequence is determined internally by the system. The system uses selected fields within the document to do this. Reconciliation Account You use this field to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

General Ledger Company Code Data (continued)
Version 4.1 July 2007 General Ledger Company Code Data (continued) Local currency Specify the currency in which the account is to be posted Transaction figures are always updated and displayed in local currency Account currency The account currency indicates the currency in which this account is held. If a currency other than the company code currency is specified, users can only post items in that currency to this account. (An exception to this is exchange rate differences resulting from valuating G/L account balances.) If the company code currency is specified, users can post items in any currency to this account. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) Foreign currency Specify the alternative currency in which the account is to be posted It is possible to select up to two alternative currencies Transaction figures will be updated in both the local and alternative currencies You have the following options for the foreign currency valuation: You can carry out the valuation in local currency, (company code currency), or a parallel currency (for example, group currency). You can also use different valuation methods (for example, lowest value principle). In addition to the foreign currency valuation, you can also carry out a currency translation in accordance with FASB 52 (US GAAP). You can thereby translate your account balances from local currency into group currency, for example. Your foreign currency balance sheet accounts are valuated as part of the foreign currency valuation: The balance of the foreign currency balance sheet account, that is, the balance of the G/L account managed in a foreign currency, forms the basis of the valuation. The result of the valuation is posted to the valuated account. The exchange rate profit or loss from the valuation is posted to a separate expense or revenue account for exchange rate differences as an offsetting posting. All open items in foreign currency are valuated as part of the foreign currency valuation: The individual open items of an account in foreign currency form the basis of the valuation, that is, every open item of an account in foreign currency is valuated individually. The total difference from all the open items in an account is posted to a financial statement adjustment account. The account therefore retains its original balance. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) Tax category Specify the type of tax on purchase and sales (input or output taxes) that can be posted to the account If the account is not tax relevant, do not make a specification in this field If you make the tax relevant, it will not allow you to post until you account for the taxes. Tax Category in Account Master Record Determines whether the following apply to the G/L account: Is it tax-relevant? Is it a tax account? Is it a tax-relevant G/L account? Use Tax-relevant account? You decide whether you want to use the account for tax-relevant postings. If not, leave the field blank. Tax account? You decide whether you want to use the account exclusively for posting taxes. Define the type of tax on sales and purchases you want to use the account for: Input tax or output tax? Use the proposed keys from the possible entries help. Tax-relevant G/L account? You decide whether you want to use the account as a G/L account to which you make tax-relevant postings. Define the tax code which can be used to post to the account. When posting to this account, the system then checks whether the tax code in the line item is permitted for this account. This is useful if you always post to this account using the same tax rate. When you post to this account, the tax code is defaulted and can no longer be changed (for example, the account "Domestic trip costs taxed flat rate" in Germany). Use the tax codes proposed from the possible entries help. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) Open item management Indicates that the account is subjected to an affirmative clearing process involving the matching of debits to credits with the purpose of closing each individual line item For example, reconciliation accounts You can only archive an accounting document if all of its individual line items have been cleared Used in A/P and A/R You want to be able to close each individual line/material If you set the "Open item management" indicator in the master record for an account, the line items in this account is marked as open or cleared. The balance of an account with open item management is equal to the balance of the open items. General ledger accounts are kept with open item management if you need to check whether there is an offsetting posting for a given business transaction. You should use open item management for bank clearing accounts, clearing accounts for goods receipt/invoice receipt, and salary clearing accounts. Bank accounts, however, do not use open item management. If you subsequently define open item management for a G/L account, this entry only applies to the items which are posted afterwards. At the date of the change, the account must display a zero balance. Also, when canceling this indicator, the balance must be zero. You therefore have to clear the remaining open items before making the change in the master record. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) Line item display Select if it is desirable to view all the debit and credit detail for the account Remember that when posting items to such accounts and displaying line items, additional storage space and system time are required If you want to display all the credit and debits You also need to specify how it is sorted. Indicates that line item display is possible in this account. For line item display, the system stores an entry per line item in an index table which contains the link between line item and account. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) Line item display should not be used for the following accounts: Reconciliation accounts Accounts that have a summation function and are analyzed by another application such as revenue or stock accounts Output and input tax accounts, since tax information is required only in connection with the document Procedure Do not set this indicator for accounts in which the number of postings is so great that line item display online would not be advantageous. These accounts include, for example: Tax accounts Receivables Payables Certain revenue and expense accounts July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) Sort Key Necessary when line item display is selected Determines the data field that will be used to sort the line items Posting date Document date Cost center If you turn on line item display, you have to turn on the sort key. The system uses a standard sort sequence for displaying line items. Among other things, it sorts the items according to the content of the Allocation field. This field can be filled either manually or automatically (by the system) when a document line item is entered. For this purpose, the system requires rules that determine which information is to be taken from the document header or from the document line item and placed in the field. The rules can be stored in the master record of an account which enables you to determine the standard sort sequence on an account-specific basis. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) Reconciliation accounts When you post to a sub-ledger, the system automatically concurrently posts to the corresponding reconciliation account in the general ledger In this way, the general ledger is automatically updated and remains in balance with the individual account totals Sales to an individual customer You use this to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account. The "Receivables from goods and services" account is an example of a reconciliation account for customers. Enter Customer in the Reconciliation account for account type field. Enter a Vendor in this field for a vendor reconciliation account. Using the reconciliation account procedure, it is possible to create a balance sheet and a profit and loss statement at any time, since the amounts posted to subledger accounts are also posted automatically in the general ledger. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 General Ledger Company Code Data (continued) General Ledger Reconciliation Accounts A/R, A/P, GR/IR General Ledger Debit Credit $$ Subsidiary Ledger Accounts A/R, A/P, GR/IR Debit Credit GR/IR Debit Credit A/R Debit Credit A/P When you post items to a subsidiary ledger, the SAP system automatically posts the same data to the general ledger at the same time. Each subsidiary ledger has one or more reconciliation accounts in the general ledger. These reconciliation accounts ensure that the balance of G/L accounts is always zero. This means that you can draw up financial statements at any time without having to transfer totals from the subledgers to the general ledger. $$ $$ $$ July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Receivable Reconciliation Account
Version 4.1 Accounts Receivable Reconciliation Account July 2007 Accounts Receivable Reconciliation 950 300 Customer 142 150 Customer 123 400 Customer 135 100 Customer 189 All customers (group of customers) are rolled into the Accounts Receivable Reconciliation accounts July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Receivable Integration
Version 4.1 July 2007 Accounts Receivable Integration Goods Issue Sales Order SD Sales and Distribution CGS Decrease to Inventory Revenue Increase to A/R The A/R system is integrated. MM/SD/FI Rolls into Balance Sheet Income Statement Balance Sheet July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Payable Reconciliation Account
Version 4.1 Accounts Payable Reconciliation Account July 2007 Accounts Payable Reconciliation 950 250 Vendor 200 Vendor 100 Vendor 300 Vendor July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Payable Integration
Version 4.1 July 2007 Accounts Payable Integration Goods Receipt Invoice Receipt Increase to Inventory Increase to GR/IR Increase to A/P Decrease to GR/IR Balance Sheet July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Line Item Display Account number 100999 Bank Account Company code C999
Version 4.1 Line Item Display July 2007 Account number Bank Account Company code C999 Period Debit Credit DC bal Balance C/f bal ,000.00 Period 1 5, , , ,710.00 Period 2 25, , , ,710.00 Period 1 Doc. no. DT Doc.date Currency Amount KZ 01/05/04 USD 1, KZ 01/06/04 USD SA 01/08/04 USD – DZ 01/14/ USD 5,250.00 An account balance shows the: · Opening balance (carry forward balance from the previous year) · Total of all transactions per posting period, broken down into debits and credits (transaction figures) Using these figures the system also calculates the: · Balance per posting period · Accumulated account balance In addition to the above balances, the system displays the gross sales/purchases per period for each account. The balances from special G/L account transactions are also included in an account balance. These include bills of exchange and down payments. While displaying account balances, you can view document amounts posted in foreign currency in the respective local currency. You can also choose between: · Account balances of both the items that are part of sales or purchases and the items that are not part of sales or purchases · Account balances of only items that are part of sales or purchases · Account balances of special G/L transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 6, Group 1 – Exercises Create Bank Account
Version 4.1 Unit 6, Group 1 – Exercises July 2007 Create Bank Account Create Accounts Receivable Reconciliation Account Create Trading Goods Inventory Account Create Operating Supplies Inventory Account Create Accounts Payable Reconciliation Account Create Goods Receipt / Invoice Receipt Reconciliation Account Create Output Tax Account Create Input Tax Account Create Retained Earnings Account Create Common Stock Account July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 6, Group 2 – Exercises July 2007 Create Trading Goods Consumption Expense Account Create Operating Supplies Expense Account Create Utilities Expense Account Create Purchase Price Difference Expense Account Create Information Technology Expense Account Create Miscellaneous Expense Account Create Cost of Goods Sold Run General Ledger List of Accounts Report July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Materials Management (MM) D2
Version 4.1 July 2007 Unit 7 Materials Management (MM) D2 - Master Data and Rules - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration Rules MM Master Data We will be covering rules and master data for Material Management. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Master Data Master data is relatively fixed Material master data Vendor master data Purchasing information record General Ledger master data Before making the master data configurations, you must have completely defined the organizational structures Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Materials Management (MM) July 2007 ERP FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality Mgmt. PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets SD Sales and Distribution FI Financial Accounting MM Materials Mgmt. CO Controlling ERP PP Production Planning AM Fixed Assets Mgmt. SM Service Mgmt. EC Enterprise Controlling Client / Server Integrated Business Solution QM Quality Mgmt. PS Project System PM Plant Maintenance WF Workflow HR Human Resources IS Industry Solutions Green ones (and blue): Logistics Start out with sales and distribution Yellow HR was added later in SAP’s life (1990) Red: Tracking side of house. (Financials) Purple:Workflow is the least understood by faculty and students Allow the movement of information in the enterprise to the people who need it. (e.g. Credit limit – s, updates) Industry Solutions: Each install is tracked by SAP and the configuration is monitored by industry. This way SAP knows the whole set of answer of how industries works with their best business practices. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 7, Part 1 – Overview (Master Data)
Version 4.1 Unit 7, Part 1 – Overview (Master Data) July 2007 Unit Concept Procure-to-Pay Process Vendor Master Data Purchasing Information Record July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit Concept The purchasing process involves the acquisition of goods and services to support the creation of goods and services in the organization Master data and rules required for the purchasing process is presented This is fundamental for the acquisition of goods for a distribution company. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Master Data – General Business rules and supportive information are stored in master data records Each master data record is unique in name or number Internal or external number ranges are possible Usually created or converted (legacy system) in the beginning Maintained by numerous organizations Master data created at the client level Can go across multiple organizations or plants. Internal number ranges are system generated. External are user/company determined Business transactions are posted to accounts and managed using those accounts. You must create a master record for each account that you require. The master record controls how business transactions are recorded and processed by the system. Specifications you make in master records are used: As default values when you post items to the account. For example, the terms of payment you specify in the master record are defaulted for document entry. For processing business transactions For instance, bank details and the payment methods (check or bank transfer, for example) are required for automatic payments. For working with master records. You can prevent certain users from accessing an account by setting up authorization groups. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Master Data – General (continued)
Version 4.1 July 2007 Master Data – General (continued) Vendor master records are maintained by both accounts payable (A/P) and purchasing Material master records are maintained by purchasing, sales, production, accounting, etc. Purchasing information records are maintained primarily by purchasing All kinds of view – Different part of data. Vendors information is pertinent to both A/P and purchasing. Both departments have information that they need to maintain, though maintain primarily by purchasing and used by A/P Infor Records are records pertinent to the Vendor and the Material. We will be discussing them shortly July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master Organization of the Data
Version 4.1 Vendor Master Organization of the Data July 2007 General Data: Address Purchasing Data Vendor 10001 General Data Company Code Data Financial Accounting (FI) Purchasing Organization Data (MM) The customer master record is broken into three areas: General Data: demographic data Company Code Data: Financial Accounting – Accounting information Sales Data – Sales information General Data General data does not depend on the company code, the sales and distribution organization or the purchasing organization. General data applies to one business partner for all company codes, and in all sales areas and purchasing organizations. It includes: Company name Address Telephone number General data is not limited to information used by both Financial Accounting and Logistics. The unloading point, for example, is unique for a customer and is only relevant for Sales and Distribution. However, because it is not part of the sales and distribution organization of your company, it is not sales and distribution data. It is general data. If you edit a master record using the customer or vendor number without specifying a sales area, a purchasing organization, or a company code, the system displays only general data screens. The department that creates the master record for a business partner also enters general data. If Financial Accounting creates the master record, it must also enter general data, such as the address. When Logistics then enters data, the general data for the business partner exists. Logistics can display the general data. Company Code Data Company code data only applies to one company code. This data is only relevant to Financial Accounting, and includes: Account management data Insurance data If you edit a master record, you must specify the customer or vendor number and company code to access the screens containing company code data. You can only invoice a business transaction if the data on the payer partner function is entered in the Financial Accounting view. Sales and Distribution Data The data for one customer can differ for each sales area. The sales area is a combination of sales organization, distribution channel and division. This data is only relevant to Sales and Distribution, and includes: Pricing data Delivery priority Shipping conditions If you edit a customer master record, you must enter the customer number and the sales area in order to access screens containing sales and distribution data. You can only process sales and distribution transactions, for example, a sales order, after entering the sales and distribution data for a customer. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master Data A master record must be created for every vendor
Version 4.1 July 2007 Vendor Master Data A master record must be created for every vendor General data, Company Code data (Financial Accounting - FI), and Purchasing Org data (Material Management - MM) Purch. org data Purchasing data Partner functions Company code data Account management Payment transactions General data Address Control data Payment transactions Vendor master has to be created for every vendor in the system Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 01/26/98 July 2007 Vendor Master Includes all data necessary for processing business transactions and corresponding with vendors Information is shared between the accounting and purchasing departments We need to have the address because we are going to send them a check. General data This is data that applies to every company code and every purchasing organization in your company. The general area includes, for example, the vendor’s name, address, language, and telephone number. Company code data This is data that is specific to an individual company code. Company code data includes, for example, the reconciliation account number and payment terms. Purchasing organization data This is data relevant to the purchasing organization of your company. For example, requests for quotations, purchase orders, and invoice verifications are stored in this section. language on vendor or customer – The language they communicate in. All communications will be in their language Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007 8 6 7 7 7

Vendor Master – Typical Screens
Version 4.1 July 2007 Vendor Master – Typical Screens Address Control Payment Transactions Accounting Information Correspondence Purchasing Data Partner Functions Address has typical demographic information Control has tax and accounting information – Payment Payment Transactions – Who makes the payments (bank or alternative payor) Correspondence – Who and how to contact the people in the purchasing Org Purchasing Data – Who is the sales person, What conditions, terms, Inocterms (International Chamber of Commerce shipping) Dunning works on this side Partner functions – Defines who is responsible for what action. We order material They did not ship it Note letting them know that we did not receive it Escalation July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master General Data – Address
Version 4.1 Vendor Master General Data – Address July 2007 General Data – Address Address Vendor Name Search Term Street address City, Region Postal code Country Communication Language Telephone, Fax, Address Name: Name of the vendor. Search Term: A method to find your vendor by match-codes. Street: Optional entry. City: Mandatory entry. Postal Code: Mandatory entry. Country: Mandatory entry. Communication Language key Mandatory entry: This is the language the vendor uses. All communications to them will be in this language July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master General Data – Control Data
Version 4.1 July 2007 Vendor Master General Data – Control Data Account Control Customer Authorization Trading partner Group key Tax Information Tax codes Fiscal address Country code City code Reference Data / Area International locator number Industry Transport zone Account control Customer If the Customer is a Vendor as well, enter the Customer number here. Account Number of Vendor or Creditor Group key If the customer or the vendor belongs to a group, you can enter a group key here. The group key is freely assignable. If you create a matchcode using this group key, group evaluations are possible. Authorization Group The authorization group allows extended authorization protection for particular objects. The authorization groups are freely definable. The authorization groups usually occur in authorization objects together with an activity. Tax information Tax code 1 Number, with which the customer reports to the tax authorities. Tax code 2 Number, with which the customer reports to the tax authorities. Fiscal address Account number of the master record containing the fiscal address. County code Key for county taxes. City code Key is used for city taxes. Tax jurisdiction code This code is used in the US to determine tax rates. Reference data / area Industry Freely definable name for a group of companies (e.g.trade, manufacturing). Transport Zone Region, where the ship-to party is located. International location number (part 1) Here you enter the first 7 digits of the international location number. The International Location Number (ILN) is assigned (in Germany by the Centrale for Coorganisation GmbH)) when a company is founded. It consists of 13 digits, the last digit being the check digit. There are two categories of location numbers: Participants who only need an ILN to cleary and unmistakably identify themselves for communication with the business partner are given a category 1 ILN. This cannot be used to identify articles by means of EAN. Participants who wish to assign the location numbers for their own enterprise areas are given a category 2 ILN. For a category 2 ILN, digits 1 to 7 are described as basis number. This is used as basis for the creation of article numbers (EAN). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master General Data – Payment Transactions
Version 4.1 July 2007 Vendor Master General Data – Payment Transactions Bank Details Bank Key Bank Account Account Holder Partner Bank Type Payment Transactions Alternative Payee Instruction Key Bank Key When you define the country key, you also specify the country-specific definition of the bank key. Normally, you manage banks using their bank number. The bank number in the control data for the bank is then displayed twice, that is, as the bank key too. In certain countries, the bank account number takes on this function; then there are no bank numbers and the bank data is managed using the account number. For data medium exchange, you may find it useful to be able to enter foreign business partners without a bank number, even if there are bank numbers in the country in question. In this case, the bank key can be assigned internally. Bank Account Number This field contains the number under which the account is managed at the bank. Account Holder Name Here you can enter another name that the payment program can use if the name of the account holder is not the same as the name of the customer or vendor. Partner bank type Key you enter in the line item to specify which business partner's bank the system should use. Procedure In the business partner's master record: If several bank accounts exist in a customer or vendor master record, you can assign different keys for these accounts. Account Number of the Alternative Payee The account number of the vendor with whom automatic payment transactions are carried out. Instruction key for data medium exchange For automatic payment transactions, this field (along with the house bank country and the payment method determined by the payment program) controls which statements are given to the participating banks when carrying out the payment order. This field is used in countries such as Germany, Austria, the Netherlands, Spain, Norway, Finland, and Japan as well as for the internnational SWIFT format, MT100. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master – Company Code – Accounting Information
Version 4.1 July 2007 Vendor Master – Company Code – Accounting Information Accounting Information Reconciliation Account Sort Key Release Group Interest Calculation Interest Calculation Indication Interest Calculation Frequency Withholding Tax Withholding Tax Code Exemption Number Reconciliation Account in General Ledger The reconciliation account in G/L accounting is the account which is updated parallel to the subledger account for normal postings (for example, invoice or payment). For special postings (for example, down payment or bill of exchange), this account is replaced by another account (for example, 'down payments received' instead of 'receivables'). The replacement takes place due to the special G/L indicator which you must specify for these types of postings. Key for sorting according to assignment numbers Indicates the layout rule for the Allocation field in the document line item. Use The system uses a standard sort sequence for displaying line items. Among other things, it sorts the items according to the content of the Allocation field. This field can be filled either manually or automatically (by the system) when a document line item is entered. For this purpose, the system requires rules that determine which information is to be taken from the document header or from the document line item and placed in the field. The rules can be stored in the master record of an account which enables you to determine the standard sort sequence on an account-specific basis. Release Approval Group The release approval group can be freely assigned. You use it to classify vendors and customers, which means that the release approval group can be defined for vendors and customers. By using the release approval group, you can determine release approval paths and those people with release approval. Interest calculation indicator Enter an interest calculation indicator here if the account is to be included in automatic interest calculation. Interest calculation frequency in months An entry in this field determines the intervals (in months) at which interest is to be calculated automatically for this account (account balance interest calculation). The interest calculation frequency is added to the date of the last interest calculation. Withholding Tax Code The withholding tax code can be compared to a tax sub-category which must be taken into consideration when reporting tax to the tax authorities. The tax codes are unique per country. For each tax code, the tax rate, the portion of the invoices to be taxed and further properties are stored in a table. Certificate Number of the Withholding Tax Exemption Number of the certificate which is issued for temporary exemption from withholding tax. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master – Company Code – Payment Transactions
Version 4.1 Vendor Master – Company Code – Payment Transactions July 2007 Payment Data Payment Terms Tolerance Group Check Double Invoice Check Cashing Time Automatic Payment Transactions Payment Methods Alternate Payee Payment Block Invoice Verification Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. It is used in sales orders, purchase orders, and invoices. Terms of payment provide information for: Cash management Dunning procedures Payment transactions Tolerance Group Each tolerance group contains settings that affect cash discount and payment difference processing. These settings become effective during payment entry. Check Flag for Double Invoices or Credit Memos Indicator which means that incoming invoices and credit memos are checked for double entries at the time of entry. Probable time until check is paid Number of days which usually pass until the vendor has cashed your check. Use During automatic payment transactions, the system calculates the value date for check payments using this information and stores the date in the line item. The date is calculated as follows: Value date = posting date + check cashing time In Cash Management, the value date is used as information about the expected cash outflow. List of the Payment Methods to be Considered List of payment methods which may be used in automatic payment transactions with this customer/vendor if you do not specify a payment method in the item to be paid. If you do specify a particular payment method in the item to be paid, this specification has priority over the specifications in the master record. You may also specify payment methods in the item which are not listed in the master record. Account number of the alternative payee The account number of the vendor with whom automatic payment transactions are to be carried out. Block key for payment Block key used to block an open item or an account for payment transactions. The block key can be used as follows: 1. During automatic payment transactions, the block key affects open items if it is: Stored in the master record or Entered in the document. If you enter the block in the master record, the exception list will include all the open items for this account. The block keys '*' and '+' are of special importance and function as follows: If the * block key is entered in the master record, none of the items in this account are included in the automatic payment process. If the + block key is entered in the master record, only those items for which a payment method is explicitly defined are included in the automatic payment process. The "A" block key also has a special function: It is generally set automatically when a down payment is entered. For this reason, you should neither delete the "A", nor use it for other purposes. A block key can be set or deleted during payment proposal processing if you select the option Change in payment proposal permitted. 2. The block key in the document will affect manual payments only if you have selected the Blocked for manual payments option for the block key. The block key you set in the master record has no effect on manual payments. However, it is possible to make system settings so that a warning is shown, explaining that this is the case. You do so by customizing message 671 in work area F5 in the message control . 3. You must select the Not changeable option for the block key that is relevant to payment release in financial accounting. Tolerance group; Invoice Verification Settings for vendor-specific parameters in Invoice Verification. Only one tolerance group can be assigned to a vendor in the one company code. For each tolerance group you can define: by how much the actual value of an invoice can differ from the expected value and still be accepted by the system; whether invoices can be automatically reduced. These settings are valid in Logistics Invoice Verification. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master – Company Code – Correspondence Accounting
Version 4.1 Vendor Master – Company Code – Correspondence Accounting July 2007 Dunning Data Dunning Procedure Dunning Block Dunning Recipient Date of Legal Dunning Procedure Correspondence Local Processing Accounting Clerk Account With Vendor Dunning procedure This field contains the key for the dunning procedure to be used. Dunning block Key which reflects the reason for a dunning block indicator. Account number of the dunning recipient Account number of the vendor who is to receive the dunning notice. Date of the legal dunning proceedings Date on which a legal dunning procedure was initiated. Use The printing of dunning notices in the legal dunning procedure generates an internal notice about any further account movements. A dunning notice is not created for the customer. If the Legal dunning procedure field in the master record contains a date, this means that the account is involved in a legal dunning procedure. The relationship between this date and the dunning date does not affect how the account is processed. The printing of account movements in the legal dunning procedure differs from the normal printing of dunning notices as follows: You must specify a separate form for your dunning procedure in Customizing. For more information, see Customizing (IMG) under Dunning Forms. The dunning program also displays text element 520 "Legal dunning procedure". This makes it possible to display the date of the legal dunning procedure from the master record. The program also displays the documents blocked for dunning and those with a payment method (automatic debit, bank direct debit). Although dunning notices are printed, the dunning level does not change in the master record or in the items. New dunning level = old dunning level. The program only updates the date of the last dunning run. Indicator: Local processing? Indicates that payment transactions and dunning notices are created for the branch. Normally automatic payment transactions and dunning notices are created for the head office. Accounting clerk Identification code for the accounting clerk. The name of the accounting clerk defined by this identification code can be used in the payment program for correspondence and reporting (for example, open item lists). Our account number with the vendor This field contains the account number the company is listed under at the vendor . July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master – Purch. Org. Data – Purchasing Data
Version 4.1 Vendor Master – Purch. Org. Data – Purchasing Data July 2007 Conditions Order Currency Terms of Payment Incoterms Minimum Order Value Sales Data Salesperson Control Data Acknowledgement Required Returns to Vendor Automatic Purchase Order Default Data Material Purchasing Group Planned Delivery Time Purchase order currency Key for the currency on which an order placed with a vendor is based. Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. Incoterms (part 1) Commonly-used trading terms that comply with the standards established by the International Chamber of Commerce (ICC). Use Incoterms specify certain internationally recognised procedures that the shipper and the receiving party must follow for the shipping transaction to be successfully completed. Example If goods are shipped through a port of departure, the appropriate Incoterm might be: FOB ("Free On Board"). You can provide further details (for example, the name of the port) in the secondary Incoterm field: FOB Boston, for example. Minimum order value Minimum value specified for purchase orders issued to the relevant vendor. Sales Person Responsible salesperson at vendor's office Order acknowledgment requirement Determines whether the purchasing document ( purchase order, outline purchase agreement , etc.) is to be acknowledged by the vendor. Indicates whether vendor is returns vendor Indicates that a vendor return is carried out using shipping processing. Automatic generation of purchase order allowed Allows you to automatically generate purchase orders from purchase requisitions if the requisition has been assigned to a vendor (source of supply). Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Internally, the purchasing group is responsible for the procurement of a material or a class of materials. Externally, it is the medium through which contacts with the vendor are maintained. Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master – Purch. Org. Data – Partner Functions
Version 4.1 Vendor Master – Purch. Org. Data – Partner Functions July 2007 Partner Functions Partner Function Partner Name Partner function The abbreviated form of the name that identifies the partner function. Example The ship-to party in your system could be abbreviated, for example, to "SH". July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Vendor Master – Purch. Org. Data – Account Group
Version 4.1 July 2007 Vendor Master – Purch. Org. Data – Account Group Vendor masters are assigned to a vendor account group Through field status maintenance, vendor account groups can be setup for one-time vendors, regional vendors, and internal vendors The vendor account group controls both type and number range assignment for vendors Can be set up for type of vendors – Account groups determine: The type of number assignment, A number range for assigning account numbers, Which fields are displayed and whether their entry is optional or required (field status) when you enter or change vendor master data. Whether the account is for one-time vendors For vendors whom you only supply once or rarely, you can create a special vendor master record, the master record for "one-time accounts". In contrast to other master records, no data specific to a single customer is stored in the one-time master record, since this account is used for more than one customer. The customer-specific entries such as address and bank details are not entered until the document for the transaction is entered into the system. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchasing Info Record
Version 4.1 July 2007 Purchasing Info Record The purchasing info record provides continuously updated information about the relationship of a specific material with a specific vendor Order unit, price, price changes, tolerances, reminder infos, historic data, statistics, texts Choice of automatic or manual updating Information about the relationship we have with that vendor. The purchasing info record is a source of information for Purchasing on a certain material and the supplier of this material. It contains data such as the vendor’s current prices and conditions for this material, the number of the last PO, or the time interval in which the vendor can supply the material. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Source List The source list stores information about where to acquire a given material for a given period of time It specifies whether this source should be used by Materials Requirement Planning (MRP) Who we buy material from. Who’s dependable You use the source list to determine the valid source of supply at a certain point in time. The source list contains all the sources of supply defined for a material and the periods during which procurement from these sources is possible. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 7, Group 1 – Exercises Vendor Account Groups
Version 4.1 Unit 7, Group 1 – Exercises July 2007 Vendor Account Groups Create Vendor Master Accounting Record Create Vendor Master Purchasing Record Create Vendor Master Record Centrally July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 7, Part 2 – Overview (Rules)
Version 4.1 Unit 7, Part 2 – Overview (Rules) July 2007 Fiscal Period Plant Parameters MRP July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Fiscal Period In order to execute any material postings, the current fiscal period has to be activated By initializing the company code for material management, the first major integration between Financial Accounting (FI) and Logistics is completed This exercise is critical If you create a material fiscal period in the future YOU CANNOT post for any reason. Before data can be posted in FI-SL, you must define accounting periods and allowed accounting periods. Accounting period definitions determine the fiscal year(s) and posting periods that are available on the system; allowed accounting periods determine which posting periods are open for posting data. You can define your fiscal calendars so that the system identifies data by a unique posting period. You only define the end date for the period. The system uses the business transaction date (posting date) to calculate to which fiscal period of a special purpose ledger the transaction data should be posted. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Plant Parameters Material Requirements Planning (MRP) controllers
Version 4.1 July 2007 Plant Parameters Material Requirements Planning (MRP) controllers Individuals responsible for running and maintaining Material Requirements Planning data and reports Negative stock allowance If a material is allowed to go negative for inventory stock Plant Parameters define the rules for material management. There are a wide variety of rules that we will see in exercises Indicate if we allow negative stock Some organizations allow negative stock because their receiving is physically done before it is updated in the system. The time-phase difference is for execution of the system. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Plant Parameters – (continued)
Version 4.1 July 2007 Plant Parameters – (continued) Purchasing Special purchasing rules External purchasing only settings Planned orders Rescheduling Conversion to purchase requisitions Days and Floats – For instance, do we have to place the PO today for it to be conveyed to the vendor for tomorrow (e.g. 1 day float) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Plant Parameters – (continued)
Version 4.1 July 2007 Plant Parameters – (continued) Document number ranges Planned orders Purchase requisitions Material Requirements Planning (MRP) lists Reservations Each of these different order types can/will have their own number ranges. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Requirements Planning
Version 4.1 July 2007 Material Requirements Planning Detailed planning level Primary Functions Monitor inventory stocks Determine material needs Quantity Timing Generate purchase or production orders The central role of MRP is to monitor stocks and in particular, to automatically create procurement proposals for purchasing and production (planned orders, purchase requisitions or delivery schedules). This target is achieved by using various materials planning methods which each cover different procedures. Consumption-based planning is based on past consumption values and uses the forecast or other statistical procedures to determine future requirements. The procedures in consumption-based planning do not refer to the master production schedule. That is, the net requirements calculation is not triggered either by planned independent requirements or dependent requirement. Instead, it is triggered when stock levels fall below a predefined reorder point or by forecast requirements calculated using past consumption values. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Materials Requirements Planning (continued)
Version 4.1 July 2007 Materials Requirements Planning (continued) Integrates Production Planning (PP) module with the Materials Management (MM) module Prerequisites for Materials Requirement Planning (MRP) Activate Material Requirements Planning (MRP) for a plant Material Master created Material Requirements Planning view Material Requirements Planning type July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Requirements Planning Basic Process
Version 4.1 July 2007 Material Requirements Planning Basic Process Exploding the Bill of Material (if using production) Netting Out Inventory Lot Sizing Time-phasing requirements Exploding the BOM allows the system to plan at all levels of the BOM The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Lot-sizing procedures The standard lot-sizing procedures are available in the ERP System. However, you can quite easily integrate your own formulas without much effort. Time phase requirements are what is needed, how much, and when to meet the supply/demand July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Requirements Planning Net Requirements
Version 4.1 July 2007 Material Requirements Planning Net Requirements Material Requirements Planning (MRP) calculates the quantity of material needed, if any, based on Sales Orders Material Reservations Repair Parts Inventory Purchase Orders Etc… The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Process Flow The system calculates plant stock. For all storage locations which belong to this plant and which are not excluded from materials planning or are planned separately, the following stocks are grouped together to form plant stock: Unrestricted-use stock Stock in quality inspection Unrestricted-use consignment stock Consignment warehouse stock in quality inspection In Customizing for MRP in the IMG activity Availability of Stock in Transfer/Blocked Stock/ Restricted Stock, you can also determine whether stock in transfer, blocked stock and restricted-use stock are included in the plant. The system also takes into account all the goods issues and receipts for a material. Receipts are, for example, planned orders or purchase requisitions and issues are, for example, customer requirements, planned independent requirements, or reservations. Therefore, the system checks to make sure that for each issue date, the requirement is covered by one or several receipts or by warehouse stock. If this is not the case, the system then calculates the shortage quantity and creates a procurement proposal. The lot-sizing procedure, scrap and rounding determine the quantity in the procurement proposal (see Calculating Procurement Quantity). The net requirements calculation supports the following types of planning: Reorder point planning, forecast-based planning, material requirements planning (MRP). In each procedure, the system calculates the available stock differently July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Requirements Planning Net Requirements – (continued)
Version 4.1 July 2007 Material Requirements Planning Net Requirements – (continued) If adequate inventory is not available to meet Material Requirements Planning (MRP) needs then the system generates Planned Production Orders Planned Purchase Orders The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal. Process Flow The system calculates plant stock. For all storage locations which belong to this plant and which are not excluded from materials planning or are planned separately, the following stocks are grouped together to form plant stock: Unrestricted-use stock Stock in quality inspection Unrestricted-use consignment stock Consignment warehouse stock in quality inspection In Customizing for MRP in the IMG activity Availability of Stock in Transfer/Blocked Stock/ Restricted Stock, you can also determine whether stock in transfer, blocked stock and restricted-use stock are included in the plant. The system also takes into account all the goods issues and receipts for a material. Receipts are, for example, planned orders or purchase requisitions and issues are, for example, customer requirements, planned independent requirements, or reservations. Therefore, the system checks to make sure that for each issue date, the requirement is covered by one or several receipts or by warehouse stock. If this is not the case, the system then calculates the shortage quantity and creates a procurement proposal. The lot-sizing procedure, scrap and rounding determine the quantity in the procurement proposal (see Calculating Procurement Quantity). The net requirements calculation supports the following types of planning: Reorder point planning, forecast-based planning, material requirements planning (MRP). In each procedure, the system calculates the available stock differently July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Requirements Planning Lot Sizing
Version 4.1 July 2007 Material Requirements Planning Lot Sizing Static Based on fixed values in the Material Master Periodic Groups net requirements together from multiple periods Optimum Calculates the optimum lot size for a several periods of net requirements The lot-size calculation is carried out in MRP. In the net requirements calculation, the system determines material shortages for each requirement date. These shortage quantities must be covered by receipt elements. The system then calculates the quantities required for the receipts in the planning run in the procurement quantity calculation. In static lot-sizing procedures, the procurement quantity is calculated exclusively by means of the quantity specifications entered in the material master. Features The following static lot-sizing procedures are available: Lot-for-lot order quantity Fixed lot size Fixed lot size with splitting and overlapping Replenishment up to maximum stock level In period lot-sizing procedures, the system groups several requirements within a time interval together to form a lot. You can define the following periods: days weeks months periods of flexible length equal to posting periods freely definable periods according to a planning calendar The system can interpret the period start of the planning calendar as the availability date or as the delivery date. In static and period lot-sizing procedures, the costs resulting from stock keeping, from the setup procedures or from purchasing are not taken into consideration. The aim of optimum lot-sizing procedures, on the other hand, is to group shortages together in such a way that costs are minimized. These costs include lot size independent costs (setup or order costs) and storage costs. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 7, Group 2 – Exercises Initialize Fiscal Period for Company Code
Version 4.1 Unit 7, Group 2 – Exercises July 2007 Initialize Fiscal Period for Company Code Maintain Plant Parameters for Material Management Activate Materials Requirements Planning July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 7, Part 3 Overview (Material Master)
Version 4.1 Unit 7, Part 3 Overview (Material Master) July 2007 Industry Sector Material Type Maintenance Features Organizational Levels Primary Views Materials with the same basic attributes are grouped together and assigned to a material type. This allows you to manage different materials in a uniform manner in accordance with your company's requirements. Industry Sector Key that specifies the branch of industry to which the material is assigned. If you frequently assign materials to the same industry sector, it is useful to define it as a default to save you having to keep entering it whenever you create or access a material master record. Likewise, if you always require the same views when creating or accessing material master records, you can define that they are selected by default in the Select View(s) dialog box. Like the industry sector, you can also predefine the organizational levels for which you maintain data, and the profiles you use. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Industry Sector
Version 4.1 July 2007 Material Master – Industry Sector Records are grouped according to industry sector and material type Determines the industry specific data that will appear on the master record When you create a material master record, you are required to classify the material according to industry sector and material type. Like material types, industry sectors have control functions in the ERP System. For example, it is a factor determining the screen sequence and field selection in a material master record. Once you have assigned an industry sector to a material, you cannot change the industry sector. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Material Type
Version 4.1 July 2007 Material Master – Material Type Material types group materials with the same attributes Material type information determines: What views are maintained Whether internal or external procurement is allowed If changes in material quantity are updated Which general ledger accounts are updated Every material has a material type Material Type controls the views and fields to create the material Material types are controlled at the client level Materials with the same basic attributes are grouped together and assigned to a material type. This allows you to manage different materials in a uniform manner in accordance with your company's requirements. When you create a material master record, the material type you choose determines: Whether the material is intended for a specific purpose, for example, as a configurable material or process material Whether the material number can be assigned internally or externally The number range from which the material number is taken Which screens appear and in what sequence Which departmental data you may enter What procurement type the material has; that is, whether it is manufactured in-house or procured externally, or both Together with the plant, the material type determines the material's inventory management requirement; that is: Whether changes in quantity are updated in the material master record Whether changes in value are also updated in the stock accounts in financial accounting In addition, the accounts affected by a material entering or leaving the warehouse depend on the material type. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Material Types
Version 4.1 July 2007 Material Master – Material Types Standard material types are used in all industries. ROH: Raw Materials Purchased externally only No sales view HAWA: Trading Goods Always purchased externally Sold without any change to the material No manufacturing views exist ROH German acronym for Raw materials Raw materials (ROH) Raw materials are always procured externally and then processed. A material master record of this type contains purchasing data, but not sales data since they cannot be sold. Trading goods (HAWA) Trading goods are always procured externally and then sold. A material master record of this material type can contain purchasing data and sales data. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Material Types (continued)
Version 4.1 July 2007 Material Master – Material Types (continued) FERT: Finished Products Are produced internally Normally no purchasing views exist Finished products (FERT) Finished products are produced in-house. Since they cannot be ordered by Purchasing, a material master record of this material type does not contain purchasing data. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master Additional Material Types
Version 4.1 July 2007 Material Master Additional Material Types HIBE: Operating Supplies VERP: Customer returnable packaging LEER: Empty containers KMAT: Configurable material ERSA: Spare parts DIEN: Services Operating supplies (HIBE) Operating supplies are procured externally and required for the manufacture of other products. A material master record of this material type can contain purchasing data, but not sales data. Packaging materials (VERP) Packaging materials are used to transport goods and come with the goods free of charge. A material master record of this material type is managed on both a quantity basis and value basis. Empties (industry LEER, retail LGUT) Empties are a type of returnable transport packaging generally subject to a deposit. They can consist of several components grouped together in a bill of material (BOM) that are assigned to a full product. For example, an empty crate and the empty bottles are assigned to the full product beer. Each of the components in the BOM has a separate material master record. Configurable materials (KMAT) Configurable materials are materials that can have different variants. For example, an automobile can have different types of paintwork, trim, and engine. The Material is configurable indicator is already set for this material type in Customizing for the Material Master in Define Attributes of Material Types. Spare parts (ERSA) Spare parts are used to replace defective parts. They may be kept in stock. A material master record of this material type can contain purchasing data, but not sales data. Services (DIEN) Services can be performed internally or procured externally (outsourced). They cannot be stored or transported. Construction work Janitorial/cleaning services Legal services Savings on Customer Returnable containers Configurable – Dell or Gateway July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master Additional Material Types (continued)
Version 4.1 July 2007 Material Master Additional Material Types (continued) NLAG: Non-stock, non-valuated material UNBW: Non-valuated, stocked material FHMI: Production resources/tools WETT: Competitive products PROD: Product group IBAU: Maintenance assembly (Plant Maintenance) Nonstock materials (NLAG) Nonstock materials are not held in stock because they are consumed immediately. Nonvaluated materials (UNBW) Nonvaluated materials are managed on a quantity basis, but not by value. Production resources/tools (FHMI) Production resources/tools are procured externally and used in production or plant maintenance. A material master record of this material type can contain purchasing data, but not sales data. It is managed on a quantity basis. Jigs and fixtures Measuring and test equipment Competitive products (WETT) Observing and evaluating the activities of your competitors is essential for optimum market analysis. You can enter basic data on the products of your competitors in material master records of this material type. By specifying a competitor number, you can assign the product to a particular competitor. Maintenance assemblies (IBAU) Maintenance assemblies are not individual objects, but logical elements to separate technical objects into more clearly defined units in plant maintenance. For example, an automobile can be a technical object, and the engine, gearbox, chassis, and so on the maintenance assemblies. A material master record of this material type can contain basic data and classification data. Product groups (PROD) Product groups aggregate materials according to certain freely definable criteria. For example, the products may be similar to each other in some way, or they may be finished products that were produced on the same machine. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master Maintenance
Version 4.1 July 2007 Material Master Maintenance Defaults - speeds entry of data by using the most frequently used field values (plant, purchasing organization, etc.) Reference Material - speeds entry of data by copying data from existing material master Profiles - speeds entry of data by copying standard data created in a profile into a selected view Materials Requirements Planning (MRP) Collective entry of storage location data - speeds creation of multiple storage locations If you frequently assign materials to the same industry sector, it is useful to define it as a default to save you having to keep entering it whenever you create or access a material master record. Likewise, if you always require the same views when creating or accessing material master records, you can define that they are selected by default in the Select View(s) dialog box. Like the industry sector, you can also predefine the organizational levels for which you maintain data, and the profiles you use. Reference material Number of the material whose data you want the system to copy as default values. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Material Master Data Material master data can be related to all organizational levels General information of a material (description, number, base unit of measure) Has to be related to the highest level of organization - the client The material master has a hierarchical structure resembling the organizational structure of a company. Some material data is valid at all organizational levels, while other data is valid only at certain levels. Client Company Code Plant Storage Location Purchasing Organization Sales Organization Warehouse Number Storage Type July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Levels
Version 4.1 July 2007 Material Master – Levels Client Description Units of measure Material number Engineering data Plant Planning data Manufacturing data Purchasing data Client data is used enterprise wide. It will default for all lower levels Plant data can be plant specific. Demand at one plant may result in a production order Another plant’s demand may result in a transfer order from the production plant. These causes different ‘behaviors’ in operations per plant. Thus, material master is partially independent Different plant views – we do not have to create the same material over again at each plant Different functions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Levels (continued)
Version 4.1 Material Master – Levels (continued) July 2007 Storage Location Stock quantities Storage Location An organizational unit allowing the differentiation of material stocks within a plant. All data referring to a particular storage location is stored at storage location level. This applies mainly to storage location stocks. A plant may contain one or more storage locations. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Views
Version 4.1 July 2007 Material Master – Views Basic data 1, 2 Classification Sales: sales organization data 1, 2 Sales: general/plant data Sales text Purchasing Purchase order text Forecasting 256 fields available in the material master. You do not need them all By selecting the views, by default, it will result of that information being created regardless is you access the screen or not. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Views (continued)
Version 4.1 July 2007 Material Master – Views (continued) MRP 1, 2, 3, 4 Work scheduling Storage Warehouse management Quality management Accounting 1, 2 Costing 1, 2 256 fields available in the material master. You do not need them all By selecting the views, by default, it will result of that information being created regardless is you access the screen or not. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Material Management
Version 4.1 Material Master – Material Management July 2007 Basic Data Purchasing MRP 1,2,3 General Plant Data/Storage Accounting 1 Purchasing View MRP 1 Barrel Pen Once you create a view, you can only change a view. You cannot delete it. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Basic Data
Version 4.1 July 2007 Material Master – Basic Data General data Basic Unit of Measure Unit of measure in which stocks of the material are managed Material Group Key that you use to group together several materials or services with the same attributes Division Used to determine the sales area and the business area for a material, product, or service Once you create a view, you can only change a view. You cannot delete it. Base Unit of Measure Unit of measure in which stocks of the material are managed. The system converts all the quantities you enter in other units of measure (alternative units of measure) to the base unit of measure. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. Use You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Division A way of grouping materials, products, or services. The system uses divisions to determine the sales areas and the business areas for a material, product, or service. A product or service is always assigned to just one division. From the point of view of sales and distribution, the use of divisions lets you organize your sales structure around groups of similar products or product lines. This allows the people in a division who process orders and service customers to specialize within a manageable area of expertise. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Basic Data (continued)
Version 4.1 July 2007 Material Master – Basic Data (continued) Dimensions/EANs Gross weight Used to check storage capacity in warehouse Net weight Weight excluding packaging and extras – this is needed for sales and distribution Weight Unit Unit of Measure for weight Volume The space that the material occupies per unit of volume Once you create a view, you can only change a view. You cannot delete it. Gross weight Gross weight expressed in the unit of weight specified by you in the Unit of weight field. Use The system can use the gross weight at a later stage, depending on what kind of capacity check you run, to check storage bin capacity for warehouse management purposes. Net weight Net weight expressed in the unit of weight specified by you in the Unit of weight field. This is the weight shipped or without packaging Weight Unit Unit referring to the gross weight or net weight of the material. Volume Space that the material occupies per unit of volume. The volume refers to the unit specified in the "Volume unit" field. The volume and its unit always refer to the base unit of measure. International Article Number (EAN/UPC) Glossary definition The EAN on the Basic Data screen always relates to the base unit of measure. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Purchasing View
Version 4.1 July 2007 Material Master – Purchasing View General Data Order Unit The unit of measure in which a company purchases the product Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Purchasing Values Purchasing Value Key Define the reminder days and tolerance limits for purchasing Order unit Specifies the unit of measure in which the material is ordered. Procedure Enter a value in this field only if you want to use a unit of measure differing from the base unit of measure. If the field does not contain an entry, the system will assume that the unit of measure is the base unit of measure. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. Use You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Purchasing Value Key Key defining the reminder days and tolerance limits valid, as well as the shipping instructions and order acknowledgment requirement of the material for Purchasing. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Plant Data/Storage 1
Version 4.1 July 2007 Material Master – Plant Data/Storage 1 General Data Container Requirements Define the regulations that govern which type of container the material must be stored and shipped in Storage Conditions Defines the conditions on how a material must be stored or warehoused Shelf Life Data Minimum remaining shelf life Minimum time the material must keep upon goods receipt for the goods receipt to be accepted by the system Total Shelf Life Period of time the material will keep in total, from the date of production or receipt to the shelf life expiration date Container requirements Key for the regulation that governs which type of container the material must be stored and shipped in. Storage conditions Indicates what storage conditions are required for the material. Minimum remaining shelf life Minimum amount of time for which the material must keep upon goods receipt for the goods receipt to be accepted by the system. Total shelf life Period for which the material will keep in total, that is, from the date of production to the shelf life expiration date. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – MRP 1 General Data MRP Procedures Purchasing Group
Version 4.1 July 2007 Material Master – MRP 1 General Data Purchasing Group The buyer(s) who are responsible for certain purchasing activities MRP Procedures MRP Type Determines whether and how the material is planned Reorder Point If stock falls below this point, the system is flagged to create a planned order MRP Controller The person(s) responsible for the material planning Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. MRP Type Key that determines whether and how the material is planned. You have the following options: manual reorder point planning automatic reorder point planning forecast-based planning material requirements planning with forecasts for unplanned consumption master production scheduling (MPS) Reorder point If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry. MRP Controller Specifies the number of the MRP controller or group of MRP controllers responsible for material planning for the material. Lot size (materials planning) Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced. Minimum lot size Minimum procurement quantity Fixed lot size Quantity that will be ordered or produced in the event of a shortage. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – MRP 1 (continued)
Version 4.1 July 2007 Material Master – MRP 1 (continued) Lot Size Data Lot Size The lot sizing procedure to calculate the quantity to be produced or procured Minimum Lot Size The smallest order quantity Fixed Lot Size The quantity to be ordered Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. MRP Type Key that determines whether and how the material is planned. You have the following options: manual reorder point planning automatic reorder point planning forecast-based planning material requirements planning with forecasts for unplanned consumption master production scheduling (MPS) Reorder point If the stock falls below this quantity, the system flags the material for requirements planning by creating a planning file entry. MRP Controller Specifies the number of the MRP controller or group of MRP controllers responsible for material planning for the material. Lot size (materials planning) Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced. Minimum lot size Minimum procurement quantity Fixed lot size Quantity that will be ordered or produced in the event of a shortage. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – MRP 2 Scheduling Net Requirement Calculation
Version 4.1 July 2007 Material Master – MRP 2 Scheduling Planned Delivery Time Number of calendar days needed to obtain the material Scheduling Margin Key Used to determine the floats required for scheduling Net Requirement Calculation Safety Stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. Procedure If you have different vendors for a material, you must specify an average value. The same applies if you order the material from a fixed vendor that has varying delivery times. Scheduling Margin Key for Floats Key that the system uses to determine the floats required for scheduling an order. You define the following floats with the scheduling margin key: The specified order dates or production dates (scheduled dates) form the starting point for scheduling an order and the scheduling type determines whether the start or finish date is required to do this. Since disturbances and delays in the production process can never be completely avoided, you can plan in additional time floats at the beginning and end of an order (float before production, float after production). You define the duration of these floats in the master record of the material to be produced. Scheduling determines the required dates using these floats. The float before production is a start float. It has two functions: It can compensate for delays in the staging of the material components. If there is a capacity bottleneck at the work centers involved, the production dates can be moved forward in the future. In this way it serves as a float for capacity leveling. The float after production is a finish float. It is used to compensate for unexpected disturbances in the production process, so that they do not delay the scheduled finish date. The floats before and after production are defined for each material using a scheduling margin key. This scheduling margin key is automatically transferred from the material master when an order is created. However, you can change the times in the order. opening period float after production (only in the case of in-house production) float before production (only in the case of in-house production) release period (only in the case of production order management) Floats are maintained in workdays. Safety stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. The risk of shortfalls is reduced by having a safety stock. The safety stock exists to cover both excess material consumption within the replenishment lead time and any additional requirements that may occur due to delivery delays. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – MRP 3 Availability Check
Version 4.1 July 2007 Material Master – MRP 3 Availability Check Specifies whether and how the system checks availability and generates requirements for materials planning Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. Procedure If you have different vendors for a material, you must specify an average value. The same applies if you order the material from a fixed vendor that has varying delivery times. Scheduling Margin Key for Floats Key that the system uses to determine the floats required for scheduling an order. You define the following floats with the scheduling margin key: opening period float after production (only in the case of in-house production) float before production (only in the case of in-house production) release period (only in the case of production order management) Floats are maintained in workdays. Safety stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. The risk of shortfalls is reduced by having a safety stock. Checking Group for Availability Check This field has two uses: 1. Specifies whether and how the system checks availability and generates requirements for materials planning. 2. In Flexible Planning, defines - together with the checking rule - the different MRP elements that make up this key figure. The sum of these elements gives the key figure. Use 1: Availability Checking and Materials Planning Use The value you enter for use 1 (see above) is a default value which defines: Which MRP elements (for example, purchase orders, reservations) the system includes in the availability check Whether the system checks availability only until the end of the replenishment lead time or whether it checks availability over the entire period for which MRP elements exist Whether the system generates individual requirements or summarized requirements if you enter sales orders or deliveries for the material Use 2: Flexible Planning Dependencies If you use this field to define the MRP elements of a key figure for Flexible Planning, you must also select Document KF in the Customizing parameters of the information structure. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Accounting 1
Version 4.1 July 2007 Material Master – Accounting 1 Current Valuation Valuation Class Allows the stock values of materials of the same material type to be posted to different G/L accounts. Allows the stock values of materials of different material types to be posted to the same G/L account. Determines together with other factors the G/L accounts updated for a valuation-relevant transaction (Material Movements) Price Unit Number of units to which the price refers Price Control Indicator Indicates the price control used to valuate the stock of a material. You have the following options: Standard price Moving average price Price Unit Number of units to which the price refers. Example If 10 gallons of gasoline cost $12.00, the price unit is 10. Standard Price Standard price of the material Use The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period. Moving Average Price/Periodic Unit Price Price of the material. This can be one of the following: Periodic unit price (only if the material ledger is activated for the material) The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned. It changes the price with each valuation-relevant movement. The system changes the periodic unit price if you settle the material ledger and then save the data. The valuation of stocks at moving average price or periodic unit price means that the price of the material is adapted to the continual fluctuations in the procurement price. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Accounting 1 (continued)
Version 4.1 July 2007 Material Master – Accounting 1 (continued) Current Valuation Price Control Indicator The price control used to valuate the stock of a material (e.g, Standard or Moving Average Price) Standard Price The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period Moving Average Price The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned Price Control Indicator Indicates the price control used to valuate the stock of a material. You have the following options: Standard price Moving average price Price Unit Number of units to which the price refers. Example If 10 gallons of gasoline cost $12.00, the price unit is 10. Standard Price Standard price of the material Use The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period. Moving Average Price/Periodic Unit Price Price of the material. This can be one of the following: Periodic unit price (only if the material ledger is activated for the material) The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned. It changes the price with each valuation-relevant movement. The system changes the periodic unit price if you settle the material ledger and then save the data. The valuation of stocks at moving average price or periodic unit price means that the price of the material is adapted to the continual fluctuations in the procurement price. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 7, Group 3 – Exercises July 2007 Define Attribute for Material Types (Set Updating/Deselect Classification) Create Material Master for Trading Goods (Optional Exercise) Create Material Master for Operating Supplies July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 8 Financial Accounting (FI) - Rules - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration Rules FI Finance Rules July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 8 – Overview Posting Periods
Version 4.1 Unit 8 – Overview July 2007 Posting Periods Tolerance Groups for Account Postings Accounts Payable Settlement Document Numbers July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Posting Periods Before it is possible to post documents, it is necessary to define posting periods Fiscal years are divided into one or more posting periods Each posting period is delimited by both a start and finish date A common division of a fiscal year involves defining 16 posting periods months and 4 quarter ending posting periods A fiscal year is divided into posting periods. Each posting period is defined by a start and a finish date. Before you can post documents, you must define posting periods, which in turn define the fiscal year. In addition to the posting periods, you can also define special periods for year-end closing. In order to assign business transactions to different time periods, you must define a fiscal year with posting periods. Defining the fiscal year is obligatory. You define your fiscal year as fiscal year variants which you then assign to your company code. One fiscal year variant can be used by several company codes. You have the following options for defining fiscal year variants: Fiscal year same as calendar year Fiscal year differs from calendar year (non-calendar fiscal year). The posting periods can also be different to the calendar months. When you record a document, you enter the posting date. When you post the document, the system uses the posting date specified to automatically determine the posting period. The posting period consists of a month and a fiscal year. These are both displayed in the document overview. The posting period determined is entered in the document and the transaction figures for this period are updated. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Tolerances Groups for Account Postings
Version 4.1 July 2007 Tolerances Groups for Account Postings Internal control – amount limits that serve to define the maximum authorization levels for your employees Must be at least one entry for every company code Can be defined for an employee group with employees being assigned to a given group to effect the control Can be undefined at the group level meaning that the control is effective for everyone who is not a member of a group You can also additionally differentiate these settings by company code. Since the same rules usually apply to a group of employees, enter the values for employee groups. You can then enter amount limits and tolerances per employee group and company code. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Tolerances Groups for Account Postings (continued)
Version 4.1 July 2007 Tolerances Groups for Account Postings (continued) Internal control – amount limits that serve to define the maximum authorization levels for your employees with respect to: A single transaction A customer or vendor account line item Discount percentage granted to a line item Payment differences that can be accepted in settlement of an account (e.g., accounts payable) The system also checks authorizations and tolerances. An employee might only be authorized to post to certain accounts within one company code. You can define tolerances for each employee or for a group of employees. Tolerances include a maximum cash discount percentage rate, a maximum amount per customer or vendor line item and a maximum amount per document. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Payable Settlement
Version 4.1 July 2007 Accounts Payable Settlement Purchase Order Debit Credit Payment Program Invoice Receipt Verification This is the 3-way match process. The purchase quantity and price is matched against the invoice price and goods receipt quantity. If all 3 match then it is eligible for payment. Goods Receipt July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Payable Settlement (continued)
Version 4.1 July 2007 Accounts Payable Settlement (continued) Select payment method and bank Select items for payment Calculate the payment amount, taking account of cash discount periods Post the payment document Print payment medium Planning and Parameter Specifications If you have several house banks that you can use for your payment transactions and have limited funds in these accounts, you will have to plan the cash balances available for each bank account and specify the ranking order by which the program is to use these accounts. In addition, because there are several house banks available to the payment program you have to enter the order in which the bank accounts are selected. Before every payment run, you need to specify which company codes, account types, and accounts to include in the payment run. Furthermore, you have to enter the desired posting date, the possible payment methods, and the date of the next payment run. There are also some other optional specifications that you can make. Creating the Payment Proposal Once the specifications for the payment run are complete, you can schedule the payment proposal. In a window, you either enter the desired start date and time or arrange for immediate execution. The status display shows you which step the job currently is at. If the payment proposal is created, the system first checks the results, reading the proposal log and recording any exceptions in it. This includes the reading of the proposal log in which all exceptions are recorded. By displaying or printing the payment proposal list or by editing the payment proposal, you can get an overview of the payments proposed by the program. Editing the Payment Proposal You can divide payment proposal processing between the clerks responsible. To do this, you must specify the accounting clerk ID stored in the master record after accessing payment proposal editing. It is possible to make changes when editing the payment proposal. You can make changes to the payment (payment method, house bank) and the items paid (block indicator, cash discount). All changes you make affect only the payment proposal. No changes are made to the source documents. Executing the Payment Run and Payment Medium Programs Once you have accepted the payment proposal or have finished editing it, you can schedule the payment run. The job created for the payment run will contain either only the payment program as one step or an extra step for each payment medium program and each variant. In the latter case, you need to specify which variants to use for each payment medium program prior to scheduling the payment run. In scheduling the run, you specify the desired start time and select the print programs option. If you want to run only the payment program first, you can schedule the print programs for a different time in a separate job. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Document Numbers All posted transactions must have a unique number assigned to it Usually these numbers are system generated The numbers serve to specifically identify the business content of a transaction so that it may be recalled at a later time The actual system stored document number includes information respecting the year, date, and company codes In the SAP System, every document is assigned a number that identifies it uniquely within a fiscal year and company code. You can define number ranges as follows: You can define number ranges for each company code. Thus, each company code can use the same number interval. You can define number range intervals as year-specific. You define number ranges in the system separately for master records and documents. You can therefore use the same number range keys for both master records and documents. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Document Numbers – (continued)
Version 4.1 July 2007 Document Numbers – (continued) Before any documents can be posted to a company or company code, there must be a number range assigned to the document type New transaction document number ranges must be created at the start of each new fiscal year For each document number interval, you must specify a validity limit (year value). You can define the same number range for several fiscal years. After changing fiscal years, the system starts assigning numbers again from the lower limit of the interval. The same document numbers are assigned in each fiscal year, but are uniquely identified by the year specification. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 8 – Exercises Define Posting Periods Variant
Version 4.1 Unit 8 – Exercises July 2007 Define Posting Periods Variant Open and Close Posting Periods Assign Posting Periods Variant to Company Code Create Tolerance Groups for Account Postings Setup Payment Program Create Tolerance Groups for Accounts Receivable and Accounts Payable Create Financial Accounting (FI) Document Numbers July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 9 Financial Accounting (FI) - Transactions - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration FI Transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Transaction Data Includes internal and external exchanges that describe business activities Unlike master data, aggregate transactional data is dynamic – each transaction is unique July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 9 – Overview Document Principles Document Types Posting Keys
Version 4.1 Unit 9 – Overview July 2007 Document Principles Document Types Posting Keys July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Document Principles Each completed accounting transaction writes data to the database and creates a unique electronic document Each document contains information such as: Responsible person Date and time of the transaction Commercial content including company codes Definition The result of a posting in Financial Accounting. There are two types of documents: Original documents and processing documents. Examples of original documents: Receipts Invoices Checks Bank statements Examples of processing documents: Accounting documents Sample documents Recurring entry documents The accounting document represents the original document in the system. The other processing documents can be used to simplify document entry. The document remains as a connecting unit in the system until it is archived. Use You can only check whether postings are correct in the compact journal and general ledger by means of documents. Every posting must therefore have a document. Documents are the link between the business transaction and the posting in accounting. Only complete documents can be posted. A document is complete when its debit and credit items balance to zero. You must enter the minimum account assignments designated by the system: For example, document date, posting date, document type, posting key, account number, and amount. Data must also be entered in all other fields that were defined as required fields when making system settings. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Document Principles – (continued)
Version 4.1 July 2007 Document Principles – (continued) An accounting document captures the entire transaction in a manner that facilitates recall for reporting purposes It remains as a complete unit in the system until archived Once created, a document can not be deleted from the database Data is of no value unless you can generate report from them. They can only be archived if complete All line items cleared July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Document Principles – (continued) The SAP ERP document principle provides a solid framework for a strong internal control system Audit trails allow an accountant 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 to trace individual transactions to the effected account balance(s) on a financial statement Once you create a document in financial accounting you cannot delete it. You must reverse it. Not all transactions are reversible July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Document Principles – (continued) Each posted accounting document has a header This is the header screen you get to see. The part of a document that contains information valid for the whole document, for example, document date and number. It also contains controlling information such as the document type. If you don’t want a field to show up, suppress it. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Document Principles – (continued) Each posted accounting document has at least two lines (e.g., debit and credit) You have to have at least 2-line items : Double entry system You can have as many as you want: Debits have to equal credits This transaction is using master data. We did not enter the G/L account manually July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Document Types A way to categorize different transactions
Version 4.1 July 2007 Document Types A way to categorize different transactions Many different document types are supplied in the system Document types are associated with number ranges All documents of the same document type are stored in the system by document number Determine the type of account that can be posted to A key that is used to classify accounting documents and distinguish between business transactions to be posted. The document type is entered in the document header and applies to the whole document. Use The document type has the following functions: Differentiating between business transactions. The document type tells you instantly what sort of business transaction is in question. This is useful, for example, when displaying line items for an account. Controlling the posting to account types (vendor, customer, or G/L accounts). The document type determines which account types that particular document can be posted to. Assigning document numbers. A number range is assigned to every document type. The numbers for the documents you create are taken from this number range. The original documents from one number range should be stored together. In this way, the document type controls document storage. If you don’t like the document type out there… create a new one Never change the defaults. You cannot go back July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Document Types – (continued)
Version 4.1 July 2007 Document Types – (continued) SA – General ledger account documents Sachkonto DR – Customer invoices DG – Customer credit memos DZ – Customer payments KR – Vendor invoices Kreditorenrechnungen KG – Vendor credit memos KZ – Vendor payments KN – Vendor net invoices and credit memos Document types have already been defined in the standard system. The most important document types are these. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Posting Keys Determine whether the item to be posted is a debit or a credit Determine the type of account that can be posted Two-character numerical key that controls the entry of line items. The posting key determines: Account type Debit/credit posting Layout of entry screens Use When you enter a posting, enter a posting key for each item. This key determines how the item is posted. Posting keys are defined at client level and therefore apply to all company codes. The posting key determines: The data you can enter in the line item How data you post is processed How the system updates the data you enter Posting keys are differentiated by customer, vendor and G/L accounts. Apart from the General Ledger Accounting (FI-GL) and Accounts Receivable and Payable (FI-AR/AP) components, there are also posting keys for asset and material accounts July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Posting Keys – (continued)
Version 4.1 Posting Keys – (continued) July 2007 The posting key (PK) has a control function that pertains to the document line items. It determines the following: Account type for posting the line item Debit or credit posting of line items Field status for additional information Keeps track of line items and where these line items are posted to. The document type specifies which account types you can post to. The posting key specifies which account types you can post to. A posting key can only be entered for an account type which is permitted for that document type. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Posting Keys – (continued)
Version 4.1 July 2007 Posting Keys – (continued) General Ledger 40 50 Vendors 2 3 Common Posting Keys Assets 70 75 Material 89 99 Customers 1 General Ledger 40 Debit entry Debit G/L account Credit entry Credit G/L account Assets 70 Debit asset Debit Asset 75 Credit asset Credit Asset Material 89 Stock inwrd movement Debit Material Stock outwd movement Credit Material Vendors 02 Reverse credit memo Debit Customer Bank charges Debit Customer Customers 00 Act assignment model 01 Invoice Debit Customer July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 9 – Exercises Review Document Types
Version 4.1 Unit 9 – Exercises July 2007 Review Document Types Post Initial Cash Investment by Owners Post Purchase of Operating Supplies Display and Review General Ledger Account Balances and Individual Line Items July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 10 Financial Accounting (FI) - Transactions - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration FI Transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 10 – Overview Monthly Rent Cycle Invoice Receipt Invoice Entry
Version 4.1 Unit 10 – Overview July 2007 Monthly Rent Cycle Invoice Receipt Invoice Entry Accounts Payable Settlement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Monthly Rent Cycle Invoice Rental Receipt Agreement Accounts Payable
Version 4.1 Monthly Rent Cycle July 2007 Invoice Receipt Rental Agreement Accounts Payable The monthly rent cycle is: Base upon the lease we make a payable invoice Pay it July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Invoice Receipt Invoice Receipt Invoice Verification Version 4.1
July 2007 Invoice Receipt Invoice Receipt Invoice Verification The invoice receipt steps are as follows: The invoice receipt (bill from vendor) Verification of invoice Creation of A/P based upon the vendor master data. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Accounts Payable Settlement Select payment method and bank Select items for payment Calculate the payment amount, taking account of cash discount periods Post the payment document Print payment medium Payment program configuration involves determining: What is to be paid. To do this, you specify rules according to which the open items are selected and grouped for payment. When payment is carried out. The due date of the open items determines when payment is carried out. However, you can specify the payment deadline in more detail via configuration. To whom the payment is made. You specify the payee. How the payment is made. You determine rules that are used to select a payment method. From where the payment is made. You determine rules that are used to select a bank and a bank account for the payment. The above rules and conditions must be defined if the payment program is to determine the above-mentioned information automatically. However, you can also specify this information manually. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 10 – Exercises Create Vendor Master Record for Landlord
Version 4.1 Unit 10 – Exercises July 2007 Create Vendor Master Record for Landlord Create Rent Expense Account Create Invoice Receipt for Rent Expense Display and Review General Ledger Account Balances and Individual Line Items Display and Review Vendor Account Balances and Individual Line Items Post Payment to Landlord Display and Review General Ledger and Vendor Account Balances and Individual Line Items July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 11 Materials Management (MM) - Rules - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration Rules MM Rules for material management Reservations Tolerances Purchasing Goods Receipt Invoice Receipt Valuation Account Assignment Invoice Verification July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 11 – Overview Reservations Tolerances
Version 4.1 Unit 11 – Overview July 2007 Reservations Tolerances Purchasing Goods Receipt Invoice Receipt Automatic Account Assignment Invoice Verification July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Reservations A request to have a material ready for issue at a future date for a production order, sales order, etc. The purpose of a reservation is to ensure that a material is available when required and not assigned to another use The purpose of a reservation is to ensure that a material will be available when it is needed. It also serves to simplify and accelerate the goods issue process and prepare the tasks at the point of goods issue. It is also important that reservations are taken into account by Material Requirements Planning (MRP), which means that required materials are procured in time if they are out of stock. You enter reservations for planned receipts for either of the following reasons: to plan goods receipts from production if your company does not use the PP Production Orders component to plan goods receipts from vendors, if your company does not use the MM Purchasing component July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchasing Tolerances
Version 4.1 July 2007 Purchasing Tolerances A tolerance limit is set for allowed variance before a warning/error message is displayed Price variance Compares the price in the purchase order with the valuation price stored in the material master Maximum cash discount This tolerance limit is set to assure that cash discounts do not exceed allowable discounts Now earlier created tolerances in accounting for AR/AP Now we will have some material tolerances Tolerances can be set at the material level or the vendor info record level. This allows for the tailoring of tolerances as needed. In the Customizing system for Inventory Management, you can define two tolerances for variances in the order price quantity: Tolerance for an error message: if the variance is larger than this tolerance specified, the system issues an error message, and you cannot post the goods receipt. Tolerance for a warning message: if the variance reaches this tolerance specified, the system issues a warning message during entry of the goods receipt. However, you can still post the goods receipt. The buyer receives a message pointing out the discrepancy. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipts Tolerances
Version 4.1 July 2007 Goods Receipts Tolerances Purchase order price quantity – there are two tolerance levels maintained per item The maximum percentage variance before a goods receipt postings is not allowed A percent variance that generates a warning message but allows posting Moving average price variance – the maximum allowable moving average price change allowed Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods. In this step, you set the tolerance limits for goods receipts. When processing a goods receipt, the system checks each item to determine whether the goods receipt varies from the purchase order or the material master data. The different types of variances are defined by tolerance keys. For each tolerance key, tolerance limits can be set per company code. The following variances are checked in Inventory Management: Variance in the purchase order price quantity For this variance, two tolerance keys are provided: Tolerance key B1 (error message) You use tolerance key B1 to define the maximum percentage variance. If the variance is greater than the maximum variance, the system creates an error message. The user cannot post the goods receipt. Tolerance key B2 (warning message) Tolerance key B2 defines the percentage variance from which a warning message is to be issued. It is possible to post the goods receipt. Variance for the moving average price of the material You use tolerance key VP to define the percentage variance from which a warning message is issued. This warning message indicates a price change. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Invoice Receipts Tolerances
Version 4.1 July 2007 Invoice Receipts Tolerances Many tolerance limits that can be configured for invoice receipts: price, quantity, and blanket purchase orders These tolerances include: Amount for item with or without order reference Form small differences automatically Percentage Over/Under Quantity Variance Exceed amount: quantity variance Blanket purchase order – value and time limit Price variance When you enter an invoice, the system proposes certain values from the purchase order or goods receipt. If the invoice item differs from the default values, you must determine the reason for the variance by contacting the purchasing or goods receipt department or the vendor. It is too time-consuming to investigate very small variances. So tolerance limits can be defined in the system. If variances in an invoice item are within these limits, they are accepted by the system. If a tolerance limit is exceeded, you receive a system message. You can still post the invoice but it will be automatically blocked for payment if it exceeds the upper tolerance limit (see also Tolerances). If the invoice is blocked, all the items are blocked. Even if the invoice only displays variances in one item, the whole invoice is blocked for payment. If you post an invoice with a blocking reason, the system carries out two steps: The account postings resulting from the invoice are made. In the vendor item, the system enters an R in the field Payment block so that Financial Accounting cannot make payment for the invoice. The following blocking reasons exist for variances in invoice items (the relevant blocking indicator is specified in parentheses): Quantity variance (M) A quantity variance exists if the invoiced quantity is larger than the difference between the quantities delivered and those already invoiced. In the SAP System, a quantity variance is treated differently depending on the amount of the variance. The product of the order price and the variance quantity is used as the basis for determining whether the invoice is to be blocked. Lower priced items are permitted relatively large quantity differences, whereas more expensive items are allowed only very small differences. Price variance (P) A price variance exists if the invoiced price (invoiced amount divided by the invoiced quantity) is not the same as the net order price. Variance in order price quantity (G) A variance in order price quantity exists if the ratio between the order price quantity and the order quantity in the invoice differs from the ratio specified at goods receipt (or if it differs from the ratio in the purchase order, if no goods receipt has taken place). Schedule variance (T) A schedule variance exists if the date of invoice entry is before the delivery date specified in the purchase order. In the SAP system, schedule variances are treated differently depending on the value of the invoice items. The product of the invoice item value and the number of days variance is used as a basis for determining whether the invoice is to be blocked. In this way, relatively large schedule variances are allowed for lower value items, whereas only very small schedule variances are permitted for high value invoice items (When an invoice refers to a scheduling agreement, the system does not check for a schedule variance, since there is no clearly fixed delivery date in a scheduling agreement.). Quality inspection (I) If a material is defined as being relevant for quality management, goods receipts for this material are posted to stock in quality inspection. Invoices for the material are blocked until the inspection has been successfully completed. If more than one goods receipts is posted for an order item, an inspection is carried out for every goods receipt. A distinction is made between two different scenarios in Invoice Verification: Goods-receipt-based Invoice Verification has been defined in the purchase order: The invoice is blocked if the inspection has not been completed for the goods receipt. No goods-receipt-based Invoice Verification has been defined in the purchase order: The invoice is blocked if any goods receipts are still in quality inspection. If an invoice is posted before the goods are received, it cannot be blocked for quality inspection. When Quality Management is active, we recommend you work with goods-receipt-based Invoice Verification. In addition to the fact that invoices are only blocked that pertain to the exact goods receipt, this also ensures that an invoice cannot be posted before the goods receipt and subsequently before the quality inspection has taken place. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment
Version 4.1 July 2007 Automatic Account Assignment Automatic account assignment is created to avoid manual postings of financial transactions which follow goods movements to reflect the values of transferred materials Automatic account assignment is used across all modules to keep track of the values of materials that are being consumed (e.g., production), or transferred into other valuation areas of the company Track all transactions – Debits/Credits automatically through all transactions Receiving Movement Raw Materials Issue The stocks are managed not only on a quantity basis but also by value. The system automatically updates the following data each time there is a goods movement: Quantity and value for Inventory Management Account assignment for cost accounting G/L accounts for financial accounting via automatic account assignment The valuation area is the organizational level at which a material's stock value is managed. The valuation area can be plant level or company code level. In Inventory Management, work is basically done at plant and storage location levels. When you enter a goods movement, you only have to enter the plant and the storage location of the goods. The system derives the company code from the plant via the valuation area. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment (continued)
Version 4.1 July 2007 Automatic Account Assignment (continued) Automatic account assignment is a set of rules and master data which enable the financial tracking of logistics movement The G/L account to which the goods movement is posted is determined by the system through automatic account assignment. You need not enter a G/L account unless you want to post the goods movement to a different account. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment Components
Version 4.1 July 2007 Automatic Account Assignment Components Components of Automatic Account Assignment Chart of Accounts Valuation Grouping Code Transaction Key Modifier for Transaction Key Valuation Class This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the ERP System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the ERP System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment Valuation Grouping Code
Version 4.1 July 2007 Automatic Account Assignment Valuation Grouping Code Valuation grouping code - groups valuation areas together Example: valuation area is plant, five plants exist in the company, all five plants use the same accounts. Multiple valuation groups are possible This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the ERP System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the ERP System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment Valuation Grouping Code
Version 4.1 July 2007 Automatic Account Assignment Valuation Grouping Code Plant – P004 Plant – P001 Grouping Code G001 Plant – P003 Plant – P002 G002 Plant – P005 This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the ERP System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the ERP System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment Transaction Keys
Version 4.1 July 2007 Automatic Account Assignment Transaction Keys Transaction Keys The transaction keys are used to determine accounts or posting keys for line items which are created automatically by the system. The transaction keys are defined in the system. This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the ERP System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the ERP System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment Transaction Keys
Version 4.1 July 2007 Automatic Account Assignment Transaction Keys Transaction Keys Inventory Postings BSX Offsetting Entry for Inventory Postings GBB Materials Management Small Differences DIF Cost (price) differences (PPV) PRD Goods receipt / inv. receipt clearing acct WRX This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the ERP System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the ERP System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Automatic Account Assignment Modifier
Version 4.1 July 2007 Automatic Account Assignment Modifier Modifier – modifies the transaction key for various movement types Blank – Goods receipt from purchase order with account assignment VBR – Goods issue to consumption VAX – Goods issue to sales – post to cost of goods sold AUF – Goods receipt from a production order – post to production settlement Etc. – Many others You can break them apart. Valuation class Break them out This is materials management, you want to bring in the accountants to set up the accounts What are automatic postings? Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the ERP System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the ERP System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Types & Valuation Classes
Version 4.1 July 2007 Material Types & Valuation Classes Account category reference: Builds the link between material types and the valuation class(es) 0009 – Reference for Finished Products 0005 – Reference for Trading Goods 0002 – Reference for Operating Supplies 0001 – Reference for Raw Materials Account Category Reference FERT HAWA HIBE ROH Material Type 7920 3100 3030/3031 3000/3001/3002/3003 Valuation Class The valuation class has the following functions: Allows the stock values of materials of the same material type to be posted to different G/L accounts. Allows the stock values of materials of different material types to be posted to the same G/L account. Determines together with other factors the G/L accounts updated for a valuation-relevant transaction (such as a goods movement). Indicates a grouping of valuation areas to facilitate the administration of the table of standard accounts by minimizing the number of entries. Use Together with other factors, the valuation grouping code determines the G/L accounts to which a goods movement is posted ( automatic account determination). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Types & Valuation Classes
Version 4.1 July 2007 Material Types & Valuation Classes Valuation Class 3000 (Steel) Material Type ROH (Raw Material) Acct Cat. Ref 0001 – Raw Materials Valuation Class 3001 (Paper) Valuation Class 3003 (Plastics) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Automatic Account Assignment Plant P001 Valuation Class 3100 (Trading Good) Grouping Code G000 Goods Movement GBB (Goods Issue) Account Modifier VBR (Iss. To Cons.) Plant P002 Valuation Class 3100 (Trading Good) Grouping Code G000 Goods Movement GBB (Goods Issue) Account Modifier VBR (Iss. To Cons.) Plant P003 Valuation Class 3100 (Trading Good) Grouping Code G001 Goods Movement GBB (Goods Issue) Account Modifier VBR (Iss. To Cons.) Account 790000 Account 790001 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Automatic Account Assignment July 2007 Plant Material Type Points To: G/L Account Account Modifier Transaction Event Key Valuation Grouping Code Valuation Class Represented By: Chart of Accounts Additional Information Goods Movement Valuation Area Material Where Value is recorded: Why 2: Why 1: Where Valued: What: Plant – P001 HAWA Points To: 790000 VBR GBB G000 3100 Represented By: Chart of Accounts -C000 Issued to Consumption Good Issue BPEN000 Where Value is recorded: Why 2: Why 1: Where Valued: What: This example show the valuation class is 3100 Points to HAWA (trading goods) The valuation grouping code is G000 Points to Plant P000 (may point to several plants) Transaction Key is GBB – Goods Movement Account Modifier is VBR (type of goods movement for goods consumption) The affected account is July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Goods Receipt Materials can be received as stock items or non-stock items Receipt is possible from external or internal sources Individually / collectively Tolerance limits can be set for goods receipt Special movement type for initial inventory load If your company uses the MM Purchasing component, deliveries from vendors are most likely the result of purchase orders initiated by the purchasing department. Stock items or non-stock items Production order or external purchase orders One at a time or as a group Tolerances as mentioned earlier Loads may have special movement types. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipt – (continued)
Version 4.1 July 2007 Goods Receipt – (continued) Stock items can be received into restricted or unrestricted stock Non-stock items are received into orders, projects, cost centers Materials that are usually received into inventory can also be received into orders, projects, cost centers Restricted stock is stock that is not available Non-stock does not go into inventory – Costs are used against orders, projects or cost center Material can also go against cost. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Invoice Verification Set parameters for invoice verification
Version 4.1 July 2007 Invoice Verification Set parameters for invoice verification Quantity, price, receiving date, P/O quantity Updates material master if moving average price Automatic account assignment for price differences - if allowed Verify actual versus target Rules for price differences and where are we going to post those. Materials Management, Logistics Invoice Verification has the following features: It completes the material procurement process, which started with the purchase requisition and resulted in a goods receipt. It allows invoices that do not originate in materials procurement (such as services, expenses, course costs) to be processed. It allows credit memos to be processed, either as invoice reversals or return deliveries. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

3-Way Match Purchase order - Target quantity - - Target price -
Version 4.1 3-Way Match July 2007 Purchase order - Target quantity - - Target price - Purchase order is matched against the invoice against the amount of the goods receipt. Purchase order defines what is expected for price and quantity Goods receipt is the actual quantity and will be matched against the PO The Invoice received from the vendor will be matched against the expected quantity from the purchase order. Invoice receipt - Actual price - Goods receipt - Actual quantity - July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Accounts Payable Settlement Purchase Order Debit Credit Payment Program Invoice Receipt Verification Purchase order is matched against the invoice against the amount of the goods receipt. This may vary vendor to vendor according to the vendor info record. If the 3-way match is within tolerance, the payment is sent to the payment program for processing. Goods Receipt July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 11, Group 1 – Exercises July 2007 Set Default Values for Inventory Management Reservations Maintain Purchasing Tolerance Limits Maintain Goods Receipt Tolerances Maintain Invoice Receipt Tolerances Set (Review) Valuation Control Assign Valuation Area Grouping Define (Review) Valuation Classes July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 11, Group 2 – Exercises July 2007 Configure Automatic Postings for Goods Movement Configure Automatic Postings for Taxes Set Parameters for Invoice Verification Create Default Values for Invoice Verification July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 12 Materials Management (MM) - Transactions - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration MM Transactions We are now going to run some material management transactions - Purchasing July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Basic Procurement Process
Version 4.1 July 2007 Basic Procurement Process Requirements Determination - Purchase Requisition Vendor Selection Order Processing - Purchase Order Order Tracking Goods Receipt and Inventory Management Invoice Verification Payment Determination of Requirements Materials requirements are identified either in the user departments or via materials planning and control. (This can cover both MRP proper and the demand-based approach to inventory control. The regular checking of stock levels of materials defined by master records, use of the order-point method, and forecasting on the basis of past usage are important aspects of the latter.) You can enter purchase requisitions yourself, or they can be generated automatically by the materials planning and control system. Vendor Selection and Comparison of Quotations The system is capable of simulating pricing scenarios, allowing you to compare a number of different quotations. Rejection letters can be sent automatically. ce Determination The Purchasing component helps you identify potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds the process of creating requests for quotation (RFQs), which can be sent to vendors electronically via SAP EDI, if desired. Purchase Order Processing The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order. As with purchase requisitions, you can generate Pos yourself or have the system generate them automatically. Vendor scheduling agreements and contracts (in the SAP System, types of longer-term purchase agreement) are also supported. Purchase Order Follow-Up The system checks the reminder periods you have specified and - if necessary - automatically prints reminders or expediters at the predefined intervals. It also provides you with an up-to-date status of all purchase requisitions, quotations, and purchase orders. Goods Receiving and Inventory Management Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods. Invoice Verification The system supports the checking and matching of invoices. The accounts payable clerk is notified of quantity and price variances because the system has access to PO and goods receipt data. This speeds the process of auditing and clearing invoices for payment. Payment – Through A/P - Finance July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007 10

Purchase Requisitions
Version 4.1 July 2007 Purchase Requisitions Internal document Requesting a certain quantity of material or service on a certain date Can be created: Manually Automatically (Materials Requirements Planning (MRP), sales orders, etc.) Release approval procedures are optional You use this component if you wish to give notification of requirements of materials and/or external services and keep track of such requirements. Requisitions can be created either directly or indirectly. "Directly" means that someone from the requesting department enters a purchase requisition manually. The person creating the requisition determines what and how much to order, and the delivery date. "Indirectly" means that the purchase requisition is initiated via another SAP component. The creation indicator in the requisition shows whether the requisition was created directly or indirectly. It is displayed in analyses of requisitions and in the statistical data of a requisition item. Purchase requisitions can be subject to a release (clearance, or approval) procedure July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Requisitions Sources
Version 4.1 July 2007 Purchase Requisitions Sources Manually created by user department Office supplies Projects Prototype materials Automatically created by Planning (Material Requirements Planning (MRP), Master Production Schedule (MPS)) Plant Maintenance Production Orders Sales Orders Manually by user. This can be integrated with Controlling (BPI – II) Materials planning and control can stipulate that a purchase requisition is to be resubmitted to the purchasing department if it has not been processed after a predefined period of time. Requisitions are generated automatically from networks if: A material component with non-stock material or an external service component has been assigned to an operation and The indicator allowing automatic generation of requisitions immediately the network is saved has been set in the network. In this way, requisitions can be forwarded to Purchasing early in the planning phase. If the indicator has not been set, the system passes the data on to materials planning and control when the network is released. The latter component then creates the requisition. Via maintenance orders Requisitions are generated automatically from maintenance orders if: A material component with non-stock material has been assigned to an operation, or An operation with the control key for external services has been created. Requisitions are generated automatically from production orders if: They contain an external processing operation (e.g. subcontracting work). A precondition is that the control key for the operation allows or prescribes external processing. They contain non-stock components July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Requisitions Processing
Version 4.1 July 2007 Purchase Requisitions Processing Create purchase requisition (manually or automatically) Determine source of supply Release procedure (optional) Assign vendor and process Steps involved in the Purchase requisition process. Creation Who Releases (workflow) Vendor assignment July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Requisitions Creating
Version 4.1 July 2007 Purchase Requisitions Creating Default data for line items Delivery dates, plants, purchasing groups, etc. Maintain line item data Materials, quantities, delivery dates, etc. Maintain account assignment (if required) Cost center, General Ledger accounts, project number, etc. Check data Save The default data will come from the material master, vendor info record, vendor master, and User preferences. Update, change or supply the information for line items Maintain account assignment for controlling Verify July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Orders Purchase Orders are: Purchase Orders identify:
Version 4.1 July 2007 Purchase Orders Purchase Orders are: A formal request to a vendor to provide materials or services An internal planning and tracking tool Purchase Orders identify: Vendor Material and/or service Quantity and price Delivery dates Terms of payment The PO is a formal request, not a contract. They coordinate data and identify what, who, when, how much, and when to pay. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Order Structure Header
Version 4.1 July 2007 Purchase Order Structure Header Header - information specific to the entire purchase order Vendor Currency Payment terms The header contains information relevant to the whole document . The items specify the materials or services to be procured. For example, information about the vendor and the document number is contained in the document header, and the material description and the order quantity are specified in each item. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Order Structure Line Items
Version 4.1 July 2007 Purchase Order Structure Line Items Line item details Account assignment Delivery schedule Materials or services quantity Price Description Item category Account assignment – What cost center assigned to. Delivery Schedule – What, how much and when delivered The items specify the materials or services to be procured. For example, information about the vendor and the document number is contained in the document header, and the material description and the order quantity are specified in each item. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Order Request for Quotations Purchase Order
Version 4.1 July 2007 Purchase Order Request for Quotations Purchase Order Order Acknowledgment A purchase order can result in a quotation – To multiple vendors A purchase order itself – Printed, fax, sent, etc. to a vendor Order acknowledgement – Verification of order July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Purchase Order – Output Format
Version 4.1 July 2007 Purchase Order – Output Format Printed and mailed Electronic Data Interchange (EDI) Faxed (hardcopy or electronic) eXtensible Markup Language (XML) Any number of ways to communicate the PO to the vendor. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipt Goods receipt with reference to a purchase order
Version 4.1 July 2007 Goods Receipt Goods receipt with reference to a purchase order Copy data from purchase order Delivery notification Invoice verification Updates purchase order history Inventory update Automatic update of General Ledger (G/L) accounts Goods receiving can check whether the delivery actually corresponds to the order. The system can propose data from the purchase order during entry of the goods receipt (for example, the material ordered, its quantity, and so on). This simplifies both data entry and checking (overdeliveries and underdeliveries). The delivery is marked in the purchase order history. This allows the Purchasing department to monitor the purchase order history and initiate reminder procedures in the event of a late delivery. The vendor invoice is checked against the ordered quantity and the delivered quantity. The goods receipt is valuated on the basis of the purchase order price or the invoice price. All pertinent accounts are updated July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipt (continued)
Version 4.1 July 2007 Goods Receipt (continued) You can search for the purchase order number with Material number, vendor number, etc. If you have any information about the purchase order you look up or order for receipt. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipt – Destinations
Version 4.1 July 2007 Goods Receipt – Destinations Stock - given a storage location, can be posted to three different stock statuses Unrestricted-use Quality inspection Blocked stock (valuated) Consumption - can be assigned a recipient or unloading point Goods receipt for blocked stock - updates inventory, but material is not valuated (conditional acceptance) Stock Update Which stocks are updated in the material master record depends on the destination of the goods: Goods receipt into the warehouse If the goods are destined for the warehouse, the system increases total valuated stock and the stock type (for example, the unrestricted-use stock) by the delivered quantity. The stock value is updated at the same time. Goods receipt into consumption If the goods are destined for consumption, only the consumption statistics are updated in the material master record. The system does not update the consumption statistics in the material master record, if you post goods movements using the special stock types Sales order stock and Project stock. Goods receipt into goods receipt blocked stock If the goods receipt is posted into goods receipt blocked stock (see also Goods Receipts Into Goods Receipt Blocked Stock), the stock level remains the same. The goods are recorded only in goods receipt blocked stock of the purchase order history. Goods receipt into a new storage location If you post goods into a storage location that does not yet exist for this material, the storage location data is automatically created in the material master record when the goods receipt is posted. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipt – Movement Types
Version 4.1 July 2007 Goods Receipt – Movement Types Movement types - stock transactions Goods receipt Goods issue Stock transfer Movement type determines which Quantity fields are updated Stock types are updated General Ledger (G/L) stock or consumption accounts are updated Fields are displayed during document entry Goods receipt A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to an increase in warehouse stock. Goods issue A goods issue (GI) is a goods movement with which a material withdrawal or material issue, a material consumption, or a shipment of goods to a customer is posted. A goods issue leads to a reduction in warehouse stock. Stock transfer A stock transfer is the removal of material from one storage location and its transfer to another storage location. Stock transfers can occur either within the same plant or between two plants. Transfer posting A transfer posting is a general term for stock transfers and changes in stock type or stock category of a material. It is irrelevant whether the posting occurs in conjunction with a physical movement or not. Examples of transfer postings are: Transfer postings from material to material Release from quality inspection stock Transfer of consignment material into company's own stock When you enter a goods movement in the system, you must enter a movement type to differentiate between the various goods movements. A movement type is a three-digit identification key for a goods movement For example, the movement type plays an important role in updating of quantity fields updating of stock and consumption accounts determining which fields are displayed during entry of a document in the system When you enter a goods movement, you start the following chain of events in the system: A material document is generated, which is used as proof of the movement and as a source of information for any other applications involved. If the movement is relevant for Financial Accounting, one or more accounting documents are generated. The stock quantities of the material are updated. The stock values in the material master record are updated, as are the stock and consumption accounts. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipt – Movement Types (continued)
Version 4.1 July 2007 Goods Receipt – Movement Types (continued) 101 - goods receipt for purchase order into warehouse/stores 102 - reversal of goods receipt for purchase order into warehouse/stores 122 - return delivery to vendor 501 - receipt w/o purchase order into unrestricted-use stock July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007 8

Goods Receipt – Account Postings
Version 4.1 July 2007 Goods Receipt – Account Postings Inventory account is debited at standard price Goods Receipt/Inventory Receipt (GR/IR) clearing account is credited at purchase order price Price difference account is debited (credited) with difference between standard price and purchase order price When you enter a goods movement, you start the following chain of events in the system: A material document is generated, which is used as proof of the movement and as a source of information for any other applications involved. If the movement is relevant for Financial Accounting, one or more accounting documents are generated. The stock quantities of the material are updated. The stock values in the material master record are updated, as are the stock and consumption accounts. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007 16

Goods Receipt – Effects
Version 4.1 July 2007 Goods Receipt – Effects Purchase Order (PO) history and Purchase Order (PO) updated Material Master - stock and value updated Notification of goods receipt issued (optional) Transfer request to Warehouse Management system (if active) A goods receipt has the following results in the system: Creation of a Material Document When you post a goods receipt, the system automatically creates a material document which serves as proof of the goods movement. Creation of an Accounting Document Parallel to the material document, the system creates an accounting document. The accounting document contains the posting lines (for the corresponding accounts) that are necessary for the movement. From the screen displaying the material document, you can display the accounting document. Creation of a Goods Receipt/Issue Slip When you enter the goods receipt, you can print the goods receipt/issue slip Sending a Mail Message to Purchasing If the GR message indicator has been set in the purchase order, the buyer automatically receives a message informing him of the delivery. Stock Update Which stocks are updated in the material master record depends on the destination of the goods: Goods receipt into the warehouse If the goods are destined for the warehouse, the system increases total valuated stock and the stock type (for example, the unrestricted-use stock) by the delivered quantity. The stock value is updated at the same time. Goods receipt into consumption If the goods are destined for consumption, only the consumption statistics are updated in the material master record. The system does not update the consumption statistics in the material master record, if you post goods movements using the special stock types Sales order stock and Project stock. Goods receipt into goods receipt blocked stock If the goods receipt is posted into goods receipt blocked stock, the stock level remains the same. The goods are recorded only in goods receipt blocked stock of the purchase order history. Goods receipt into a new storage location If you post goods into a storage location that does not yet exist for this material, the storage location data is automatically created in the material master record when the goods receipt is posted. Note, however, that this is only true if automatic creation of storage location data is allowed for both the plant and the movement type in question in the Customizing system. If automatic creation is not allowed, you must add the new storage location to the material master record before you post a goods receipt to it. Update of G/L Accounts When the goods receipt is posted, the system automatically updates the G/L accounts by the value of the goods receipt Updates can also occur in other related applications. In the case of a goods receipt to consumption, for example, the account assignment object (such as a cost center, order, asset, etc.) is debited. Updates in the Purchase Order When a goods receipt is posted, the following purchasing data is updated: Purchase order history During goods receipt posting, a purchase order history record is automatically created. This record contains data essential for Purchasing, such as: the delivered quantity, the material document number and item, the movement type, and the posting date of the goods receipt. Purchase order item If the "delivery completed" indicator is set in the material document, the order item is considered closed, and the open purchase order quantity is set to zero. Other Updates Depending on the characteristics of the material, movement, and components used, additional updates are carried out in other components. For example, a goods receipt is relevant for: Entries to be made in the planning file or independent requirements reduction in materials planning Statistical data in Inventory Controlling Vendor evaluation data in Purchasing Transfer requirements and quantity in the Warehouse Management System Inspection lots in Quality Management July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007 17

Goods Receipt – Effects (continued)
Version 4.1 July 2007 Goods Receipt – Effects (continued) Material and financial documents created and/or updated Stock and consumption accounts updated Inspection notification in Quality Management (QM) - if active A goods receipt has the following results in the system: Creation of a Material Document When you post a goods receipt, the system automatically creates a material document which serves as proof of the goods movement. Creation of an Accounting Document Parallel to the material document, the system creates an accounting document. The accounting document contains the posting lines (for the corresponding accounts) that are necessary for the movement. From the screen displaying the material document, you can display the accounting document. Creation of a Goods Receipt/Issue Slip When you enter the goods receipt, you can print the goods receipt/issue slip Sending a Mail Message to Purchasing If the GR message indicator has been set in the purchase order, the buyer automatically receives a message informing him of the delivery. Stock Update Which stocks are updated in the material master record depends on the destination of the goods: Goods receipt into the warehouse If the goods are destined for the warehouse, the system increases total valuated stock and the stock type (for example, the unrestricted-use stock) by the delivered quantity. The stock value is updated at the same time. Goods receipt into consumption If the goods are destined for consumption, only the consumption statistics are updated in the material master record. The system does not update the consumption statistics in the material master record, if you post goods movements using the special stock types Sales order stock and Project stock. Goods receipt into goods receipt blocked stock If the goods receipt is posted into goods receipt blocked stock, the stock level remains the same. The goods are recorded only in goods receipt blocked stock of the purchase order history. Goods receipt into a new storage location If you post goods into a storage location that does not yet exist for this material, the storage location data is automatically created in the material master record when the goods receipt is posted. Note, however, that this is only true if automatic creation of storage location data is allowed for both the plant and the movement type in question in the Customizing system. If automatic creation is not allowed, you must add the new storage location to the material master record before you post a goods receipt to it. Update of G/L Accounts When the goods receipt is posted, the system automatically updates the G/L accounts by the value of the goods receipt Updates can also occur in other related applications. In the case of a goods receipt to consumption, for example, the account assignment object (such as a cost center, order, asset, etc.) is debited. Updates in the Purchase Order When a goods receipt is posted, the following purchasing data is updated: Purchase order history During goods receipt posting, a purchase order history record is automatically created. This record contains data essential for Purchasing, such as: the delivered quantity, the material document number and item, the movement type, and the posting date of the goods receipt. Purchase order item If the "delivery completed" indicator is set in the material document, the order item is considered closed, and the open purchase order quantity is set to zero. Other Updates Depending on the characteristics of the material, movement, and components used, additional updates are carried out in other components. For example, a goods receipt is relevant for: Entries to be made in the planning file or independent requirements reduction in materials planning Statistical data in Inventory Controlling Vendor evaluation data in Purchasing Transfer requirements and quantity in the Warehouse Management System Inspection lots in Quality Management July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Invoice Verification Matches the vendor’s invoice to the purchase order and the goods receipt (3rd part of 3-way match) Matches price and quantity Updates the purchase order and its history Updates accounting information Logistics Invoice Verification is a part of Materials Management (MM). It is situated at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification. It is in Logistics Invoice Verification that Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Invoice Payment Selects invoices for payment based on the payment terms in the vendor master or purchase order Generates payment for released invoices Updates accounting information Rules according to which it can determine the open items to be paid and, if expedient, group them together for payment. For example, you can specify grace periods for incoming items, which are taken into consideration when calculating the due date. Specifications for selecting the payee. You can enter an alternative payee in your customer/vendor's master record or in the document itself. Rules used by the payment program to select the payment methods. You can specify payment methods via your customer or vendor's master record or via the open items, or you can have the payment program select them using specified rules. Rules used by the payment program to select the house bank from which the payment is made. House banks are banks where your company (company code) maintains accounts. You can specify a house bank in your customer/vendor's master record or in the line item, or you can have the payment program select it using specified rules. Specifications for automatic postings. The payment program requires information such as document types, posting keys and accounts, in order to carry out the automatic postings. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

3-Way Match for Payment Purchase Order Payment Program Invoice Receipt
Version 4.1 July 2007 3-Way Match for Payment Purchase Order Debit Credit Payment Program Invoice Receipt Verification Purchase order is matched against the invoice against the amount of the goods receipt. This may vary vendor to vendor according to the vendor info record. If the 3-way match is within tolerance, the payment is sent to the payment program for processing. Goods Receipt July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Accounts Payable Settlement Process
Version 4.1 July 2007 Accounts Payable Settlement Process Determines: Open items to be paid When they will be paid Bank from which payment will be made Payment medium Who will get paid Payment process creates a financial accounting document to record the transaction It determines the open items to be paid and creates a proposal list. You can process the proposal list on-line. Among other things, you can change payment methods or banks, block items, or cancel payment blocks. The payment program carries out payment using the proposal list. The payment run includes only the open items contained in the proposal list. The payment program posts documents and provides the data for the form printout and for creating the data carriers, the payment advice notes and the payment summaries. It uses the print program to print the forms and create the data carriers. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007 9

Goods Receipt / Invoice Receipt Reconciliation Account
Version 4.1 Goods Receipt / Invoice Receipt Reconciliation Account July 2007 No impact on Financial Accounting (FI) Purchase requisition Purchase order Materials Management (MM) and Financial Accounting (FI) via automatic account assignment Goods receipt Dr Cr Inventory $100 Dr Cr GR / IR $100 Requisition – Nothing really happens unless we get the goods or pay for them The system does the transactions for you using the automatic account assignment When we receive these, it can match the receipt against the PO Debit Inventory (we now have additional inventory value) Credit GR/IR (we are going to owe/pay for that additional inventory) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Receipt / Invoice Receipt Reconciliation Account
Version 4.1 Goods Receipt / Invoice Receipt Reconciliation Account July 2007 Amount owed is assigned and transferred to vendor account payable Invoice receipt Dr Cr GR / IR $100 Dr Cr Vendor A/P $100 Once we get the receipt – Debit GR/IR – now a wash Vendor AP Credit – we owe Some companies book it as a liability right away (previous slides), but it really isn’t until you receive the goods Unique to SAP July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

vendor and account payable is reduced
Version 4.1 July 2007 Vendor Payment Amount owed is paid to vendor and account payable is reduced Bank Bank Vendor A/P Once we get the receipt – Debit GR/IR – now a wash Vendor AP Credit – we owe (it is debited: now a wash) Some companies book it as a liability right away (previous slides), but it really isn’t until you receive the goods Unique to SAP Credit bank account (paid, now we have less cash) Dr Cr Dr Cr $100 $100 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

(FI – MM) Integration Points
Version 4.1 (FI – MM) Integration Points July 2007 Goods Receipt Invoice Receipt Payment Program AP (Vendor) Inventory GR / IR Bank Dr Cr Dr Cr Dr Cr Dr Cr $100 $100 $100 $100 $100 $100 Goods Receipt Debit Inventory Credit GR/IR Invoice Receipt Debit GR/IR Credit AP Payment Program (A/P) Debit: AP Credit Bank July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Automatic Account Assignment July 2007 Debit posting $100 BSX - inventory posting to trading goods inventory account 201XXX Credit posting $100 WRX goods receipt posting to GR/IR account 310XXX VBR Goods Issue to Consumption (i.e., expense>revenue) 261 GI to Order Offsetting Entry for Inventory Postings July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 12 – Exercises Create Purchase Order for Slick Pens
Version 4.1 Unit 12 – Exercises July 2007 Create Purchase Order for Slick Pens Create Purchase Order for Premier Pens Create Purchase Order for Promotions, Ltd. Create Goods Receipts for Purchase Orders Create Invoice Receipts from Vendors Post Payment to Vendors Display Vendor Line Items July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 13 Materials Management (MM) - Transactions - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration MM Transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 13 – Overview July 2007 A company may want to establish a long term purchasing relationship with a vendor Its is accomplished through a purchasing contract (outline agreement or blanket order) Purchases of that material from that vendor are then simplified and streamlined In the MM Purchasing component, a contract is a type of outline purchase agreement against which release orders (releases) can be issued for agreed materials or services as and when required during a certain overall time-frame. (In the literature and in practice, similar concepts may also be referred to by a number of other terms, such as "systems contract", "blanket order agreement", "blanket contract", and "period contract".) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Buyer/Supplier Relationships
Version 4.1 July 2007 Buyer/Supplier Relationships Antagonistic – parties view each other as the enemy (lose/lose) Adversarial – each party attempts to maximize their gain (win/lose) Cooperative – parties understand the benefits of working together (win/win) Collaborative – parties look for opportunities to create value (win/win) Antagonistic: The two parties do not trust each other and work to undermine each other. Trust and belief in the other is typically in short supply. Adversarial: Low price mentality. Customer tries to get the lowest price possible and the vendor tries to get the highest price. Each tries to cut corners wherever possible to save money Cooperative: Good relationship with each other. They view each other as important to their business and try to do good business together. Try to move to collaborative – This is when the vendor and customer view each other as extensions of themselves. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Buyer/Supplier Relationships
Version 4.1 July 2007 Buyer/Supplier Relationships Long term partnerships are the objective of the supplier evaluation and selection process for contracts Traditional purchasing process Creates an environment of mistrust and low bidder mentality Leads to higher total purchasing costs The objective is to build a strong relationship with one another. Evaluations and purchase transactions are costly, so the objective is to do it well at the beginning and build a long term relationship. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Supplier Evaluation and Selection
Version 4.1 July 2007 Supplier Evaluation and Selection Identify need for long term supplier contract Determine specific sourcing requirements Identify potential suppliers Determine method of evaluating suppliers Select supplier for contract Negotiate and execute contract The vendor evaluation standard analysis enables you to evaluate the data from the vendor evaluation in Purchasing. The analysis is based on data that is updated. This standard analysis allows you to find out whether a certain vendor delivers material on time and in the correct quantity required. The key figures that can be evaluated are the scores for the criteria: quantity reliability, on-time delivery performance, deviation from shipping notification (keeping the confirmation date), shipping instructions, quality audit (is currently not updated). Once the data is compiled it must be evaluated. Based upon the evaluation supplier are selected, negotiations take place, and the contracts are executed. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Benefits of Managing the Supply Base
Version 4.1 July 2007 Benefits of Managing the Supply Base Contract with only world-class suppliers The fewer suppliers the lower the purchasing overhead Purchasing can pursue strategic sourcing issues, instead of clerical functions Streamline the supply chain Improved overall quality Improved delivery performance Less total costs Robust and accurate operations Streamline the supply chain will optimize the communication and accuracy of supply of goods July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Outline Agreement Long-term purchase agreements
Version 4.1 July 2007 Outline Agreement Long-term purchase agreements Outline agreements can be subdivided into the following types: Contracts Scheduling agreements Outline agreements can be subject to a release (approval or clearance) procedure An outline purchase agreement is a longer-term agreement between a purchasing organization and a vendor regarding the supply of materials or the performance of services within a certain period according to predefined terms and conditions. (Outside SAP, such agreements may be referred to by a number of terms, including "blanket", "master", "framework" or "umbrella" agreements) In the SAP System, such agreements are subdivided into: Contracts Centrally agreed contracts Distributed contracts Scheduling agreements Scheduling agreement referencing a centrally agreed contract July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Contract Process Overview
Version 4.1 July 2007 Contract Process Overview Step one is to identify and evaluate suppliers It may involve supplier development The goals are: Develop partnerships with good suppliers Reduce total cost of purchased materials and services Bottom line is we think we are going to save money with a relationship. Vendor evaluation and development The first step is partially outside the software. We must identify and evaluate potential suppliers. While some may be existing vendor, others may not. Existing suppliers will have transactions in the system which we can evaluate. Companies may also want to engage in vendor development. This is usually a continuous improvement program with the vendors. Often called a collaborative effort. The goals of developing a relationship is to weed out the poor suppliers and strengthen the relationship with good ones, and also reduce the cost of purchasing. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Contracting Questions
Version 4.1 July 2007 Contracting Questions How will potential suppliers be evaluated and selected? What procedures will be required to manage the contracts (and suppliers)? How will performance be measured? How many are too many suppliers? Too many suppliers cost money Supplier integration Collaborative agreements Supplier development Without material production shuts down What is the risk? A program definition has to be defined before the evaluation begins. Result must be measurable. Some of the most common evaluation measures: On-time delivery Quality Price Variance The key figures that can be evaluated in the standard analysis vendor evaluation, are scores for the following criterion: On-time delivery performance Quality audit (currently cannot be updated) Quantity reliability Shipping instructions Shipping notification deviation (keeping the confirmation date) Xerox – 80’s benchmarking Thousands of supplier Dozens for the same component Reduced and saved money Sole source is a risk because if they falter in their supply to the company there is not alternative. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Contract Management Supplier performance metrics
Version 4.1 July 2007 Contract Management Supplier performance metrics On-time delivery Material and/or service quality Returned materials Expedite issues Pricing analysis Problem resolution procedures Improve or else Continuous improvement process When to end the contract You can determine the type and number of main criteria yourself. The system supports a maximum of 99 main criteria. You can specify the number of main criteria for each purchasing organization and decide which main criteria are to be covered by the overall score. The following five main criteria are available in the standard system: Price Quality Delivery Gen. service/support These four main criteria serve as a basis for evaluating vendors from whom you procure materials. External service provision This main criterion serves as a basis for evaluating those vendors you employ as external service providers. Reports on the performance metrics give the information necessary to make informed decisions about vendors Corrective action plans Dissolution of contracts for non-performance July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Creating a Contract Is a long-term agreement with a vendor to provide a material or service For an agreed upon period of time At a negotiated price or quantity Can be created manually or with reference to purchase requisition, Request for Quote (RFQ)/quotation etc. You can create a contract as follows: Manually You enter all data relating to the contract manually. Using the referencing technique As reference document (the document you copy from), you can use: Purchase requisitions RFQs/quotations Other contracts You can also combine the two options. For example, you can copy data from a reference document and then change or supplement this data as required. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Two Types of Contracts Quantity contracts are agreements with a particular vendor to purchase a specific quantity of materials. Example: Target quantity of 50,000 meters of electrical wire at $2/meter. (MK) Value contracts are similar to quantity contract except the agreement is to purchase an established monetary value of materials. Example: Target value of $100,000 for electrical wire. (WK) Quantity contracts Use this type of contract if the total quantity to be ordered during the validity period of the contract is known in advance. The contract is regarded as fulfilled when release orders totaling a given quantity have been issued. Value contracts Use this type of contract if the total value of all release orders issued against the contract is not to exceed a certain predefined value. The contract is regarded as fulfilled when release orders totaling a given value have been issued. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Quotations/Contracts Process
Version 4.1 July 2007 Quotations/Contracts Process Requirement for material is identified Process followed to select a vendor Request for Quotation (RFQ) Maintaining a Quotation Comparison of Prices Creating a Contract Creating a Release Order A request for quotation (RFQ) is an invitation extended to a vendor by a purchasing organization to submit a quotation (bid) for the supply of materials or performance of services. A quotation is legally binding on the vendor for a certain period. The quotation is the vendor’s response to a request for quotation issued by a purchasing organization. A quotation consists of items in which the total quantity and delivery date of an offered material or service are specified. An item of a quotation may contain a delivery schedule made up of a number of schedule lines in which the total quantity is broken down into smaller quantities to be delivered on the specified dates over a certain period. Issuing RFQs and Obtaining Quotations You use this process if you wish to manage and compare RFQs issued to vendors and the quotations received from them. You can compare the prices from all quotations received as a result of a competitive bidding process using the price comparison list . The comparison list ranks the quotations by item from lowest to highest price. From there we can optionally create a contract or release an order as discussed earlier July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Request for Quotation (RFQ)
Version 4.1 July 2007 Request for Quotation (RFQ) Is an invitation to a vendor to indicate their terms and conditions (in particular, their price) for the supply of a material or the provision of a service by submitting a quotation Identifies the required material, quantity, and delivery dates A request for quotation (RFQ) is an invitation extended to a vendor by a purchasing organization to submit a quotation (bid) for the supply of materials or performance of services. Structure An RFQ consists of the RFQ header and the items. RFQ header Contains general information on the RFQ, such as the vendor’s address Items Contain the total quantities and delivery dates for the materials or services specified in the RFQ. An item of a quotation may contain a delivery schedule made up of a number of schedule lines in which the total quantity is broken down into smaller quantities to be delivered on the specified dates over a certain period. An item of the procurement type "external service" contains a set of service specifications. The latter can be hierarchically structured. The summary view of such a hierarchical structure is referred to as an outline. The outline comprises a number of levels, each representing a level of the service hierarchy. The RFQ quantities are set out in service lines, representing individual jobs or activities. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Quotation A quotation contains the vendor's pricing and conditions for providing the material or service stated in the Request for Quotation (RFQ) In the SAP component Materials Management (MM) Purchasing, the RFQ and quotation are the same document. You enter the vendor's pricing and conditions in the original RFQ. A quotation is an offer by a vendor to a purchasing organization regarding the supply of materials or performance of services subject to specified conditions. A quotation is legally binding on the vendor for a certain period. The quotation is the vendor’s response to a request for quotation issued by a purchasing organization. A quotation consists of items in which the total quantity and delivery date of an offered material or service are specified. An item of a quotation may contain a delivery schedule made up of a number of schedule lines in which the total quantity is broken down into smaller quantities to be delivered on the specified dates over a certain period. An item of the procurement type External service contains a set of service specifications. The latter can be hierarchically structured. The summary view of such a hierarchical structure is referred to as an outline. The outline comprises a number of levels, each representing a level of the service hierarchy. The quantities of the quotation are set out in service lines, representing individual jobs or activities. If services cannot be defined precisely, value limits are stipulated instead of service lines. Value limits can be set for certain contracts. Conditions can apply at various levels: To the entire quotation At item level, to the material to be supplied or to the planned procurement in the case of services At service line level for individual services (tasks or activities) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Maintaining a Quotation
Version 4.1 July 2007 Maintaining a Quotation Enter each vendor's quotation in the associated Request for Quotation (RFQ) Compare prices using the price comparison list Store the best quote in an info record Optionally, send rejection letters to the losing bidders The answer to the RFQ is entered in the quotation and stored You can compare the prices from all quotations received as a result of a competitive bidding process using the price comparison list . The comparison list ranks the quotations by item from lowest to highest price. You use this component if you wish to store information on a vendor and a material as master data at purchasing organization or plant level. You can create purchasing info records for different procurement types (standard, subcontracting, pipeline, consignment). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Comparison of Prices You can compare the prices from all quotations from the competitive bidding process using the price comparison list The comparison list ranks the quotations by item from lowest to highest price You can compare the prices from all quotations from the competitive bidding process using the price comparison list The comparison list ranks the quotations by item from lowest to highest price July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Creating a Release Order
Version 4.1 July 2007 Creating a Release Order Purchase order that references a contract is called a release orders, they specify: Number of the contract Quantity to be released Delivery date Release order documentation (open quantity, quantity released to date, total value) is automatically updated against the contract when a release order is created Release order and purchase order are the same thing. The release (order) documentation comprises details of ordering activities relating to a contract. The data supplies the following data on each release order: Number of the release order Order date Order quantity Order value If a contract with one of your principal vendors exists for a material, you can create purchase orders referencing this contract. Purchase orders created in this way are called contract release orders. (Outside the SAP System, in particular, these may also be referred to as "blanket releases", "contract releases", "call-off orders" or "call-offs".) Note on the term "release": In MM Purchasing, this term is used A) as a generic term covering various kinds of order document issued against outline agreements (these may be release orders issued against contracts - as here - or scheduling agreement releases, i.e. types of rolling delivery schedule issued against scheduling agreements) and B) in connection with an internal approval or expenditure authorization process for purchasing documents. In both cases, "releasing" can be regarded as equivalent to "giving the green light" to go ahead with a certain action (e.g. to the vendor to deliver a certain quantity of materials, or to Purchasing to create a PO for items requested by a user department). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Creating a Release Order (continued)
Version 4.1 July 2007 Creating a Release Order (continued) The vendor data, price data, and the delivery terms and conditions are copied directly to the release order Release orders can be created from a proposed purchase requisition generated off an Materials Requirement Planning (MRP) run (net requirements) Manually Automatically If a contract with one of your principal vendors exists for a material, you can create purchase orders referencing this contract. Purchase orders created in this way are called contract release orders. The release order can be created automatically or Manually. In a fully integrated environment the majority of release orders are created automatically. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 13 – Exercises July 2007 Create Purchase Outline Agreement (Contract) for Stock Items Run Materials Requirements Planning – Single Item, Single Level Convert Proposed Purchase Requisition to Release Order Review Outline Agreements Create Goods Receipt Create Invoice Receipt from Vendor Post Payment to Vendor July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 14 Sales and Distribution (SD) - Organizational Structures - The first thing we have to do is set up the organizational structure © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration SD Org Data Start building the foundation/legs for Sales and Distribution so we can sell product. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Components of Sales and Distribution
Version 4.1 Components of Sales and Distribution July 2007 Sales and Distribution (SD) Sales Support Credit Mgmt. Shipping Transport Billing Foreign Trade Information System Master Data Sales Support: Computer-Aided Selling Purpose The Sales Support component provides a wide range of functions for opportunity management. It helps your sales and marketing department to support your existing customers and, at the same time, to develop new business. Within the Sales Support environment, all sales personnel in the field and in the office can share valuable information about customers, sales prospects, competitors and their products, and contact people. The Sales Support component is: a source of information for all areas of Sales and Distribution a tool for lead generation, lead qualification, and lead tracking Sales Sales allows you to execute different business transactions based on sales documents defined in the system. Four groups of sales documents are differentiated: Customer inquiries and quotations Sales orders Outline agreements, such as contracts and scheduling agreements Complaints, such as free of charge deliveries, credit and debit memo requests and returns Shipping Transportation Transportation is an essential element in the logistics chain. It affects both incoming and outgoing goods. Effective transportation planning and processing ensure that shipments are dispatched without delay and arrive on schedule. Transportation costs play an essential role in the calculation of the price of a product. It is important to keep these transportation costs to a minimum so that the price of a product remains competitive. Efficient transportation planning and processing helps to keep these costs down. Billing Billing represents the final processing stage for a business transaction in Sales and Distribution. Information on billing is available at every stage of order processing and delivery processing. This component includes the following functions: Creation of: Invoices based on deliveries or services Issue credit and debit memos Pro forma invoices Cancel billing transactions Comprehensive pricing functions Issue rebates Transfer billing data to Financial Accounting (FI) Credit and Risk Management Credit management Outstanding or uncollectible receivables can spoil the success of the company greatly. Credit Management enables you to minimize the credit risk yourself by specifying a specific credit limit for your customers. Thus you can take the financial pulse of a customer or group of customers, identify early warning signs, and enhance your credit-related decision-making. This is particularly useful if your customers are in financially unstable industries or companies, or if you conduct business with countries that are politically unstable or that employ a restrictive exchange rate policy. Customer Service Processing Customer Service enables you to plan and manage a wide range of service scenarios. It includes functions for processing: Service notifications Warranties Service orders Service contracts Service quotations Repair orders Customer Service (CS) draws on functionality from different SAP application components, in particular Plant Maintenance (PM) and Sales and Distribution (SD). For example, CS involves the planning and processing of external services, such as contracts for the maintenance and repair of equipment that a customer has either bought or rented. Maintenance planning and servicing is managed in PM; in SD you can create and maintain the relevant service contracts. Contract-related charges that are incurred in PM are passed on in the form of requests for billing in SD Sales Information Systems - Reports and Analyses The SAP ERP System offers you a wide range of information and analysis tools for sales and distribution. These provide you with a quick overview of your current business situation. You want to determine how many orders customer XY issued in the last quarter. To see this information, you can execute the report "List orders". This gives you a list of orders and also contains information on the items, order value etc. You can set the scope of this list yourself. Foreign Trade / Customs As markets become increasingly more global and business structures more complex, the need for accuracy in handling the foreign trade needs of a business is gaining rapidly in importance. SAP’s ERP Foreign Trade / Customs application (FT) provides the tools you need to compete effectively in today’s fast-paced market. It is designed to help you meet the rapidly changing foreign trade requirements of your business. SAP’s ERP Foreign Trade application enables you to: Manage import and export processes, integrating them efficiently into the supply chain Automatically identify licensing requirements for importing and exporting goods based on current regulations Simplify reporting with automatic procedures for creating, printing and submitting declarations Determine which of your products qualify for preference handling Provide an active interface for sending or retrieving data via internationally available EDI systems and other electronic media Update or change data in all relevant foreign trade documents at any time prior to the final goods issue. Even after you have posted the goods issue, you can still change data in the invoice. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Organization Sales Organization
Version 4.1 July 2007 Sales Organization Sales Organization Sells and distributes products Negotiates terms of sales Responsible for these business transactions Critical organization element to the definition of business markets A sales transaction is linked to only one Sales Organization Legally, a sales organization is included in exactly one company code . You can assign one or more plants to one sales organization. The sales organization has an address. Within a sales organization, you can define your own master data. This allows a sales organization to have its own customer and material master data as well as its own conditions and pricing. You can define your own sales document types within a sales organization. You assign sales offices and your own employees to a sales organization. All items in a sales & distribution document, that is, all items of an order, delivery or a billing document belong to a sales organization. A sales organization is the highest summation level (after the organizational unit Client) for sales statistics with their own statistics currency. The sales organization is used as a selection criterion for the lists of sales documents and for the delivery and billing due list. For each sales organization, you can determine the printer for output differently based on sales and billing documents. A sales organization cannot share any master data with other sales organizations. The master data must be created separately. The data for a distribution channel or a division can, however, be created for several distribution channels or divisions. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Organization – (continued)
Version 4.1 Sales Organization – (continued) July 2007 The upper most level is the sales organization July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Distribution Channel Identifies how products and services reach the customer Can be assigned to one or more Sales Organizations You allocate a distribution channel to one or more sales organizations. You allocate one or more plants to a distribution channel. Within a distribution channel, you can define your own master data for customers or materials as well as your own conditions and pricing. You can create master data for a representative distribution channel which is then also used in other distribution channels. To do this, you have to additionally create the allocation of the representative distribution channel to the other distribution channels. For a distribution channel, you can determine your own sales document types. You can determine sales offices for a distribution channel. All items of a sales document belong to a distribution channel. The entire sales document is therefore entered for a distribution channel. The items of a delivery can belong to different distribution channels. All items of a billing document belong to a distribution channel. The distribution channel can be used as a selection criterion in lists. You can determine the printer destination for messages differently for every distribution channel on the basis of the sales and billing documents. A distribution channel does not fulfill the following criteria: A distribution channel does not have its own address. You cannot allocate your own employees to a distribution channel. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Distribution Channel – (continued)
Version 4.1 Distribution Channel – (continued) July 2007 Retail Dist Channel (RE) Wholesale Dist Channel (WH) US Sales S000 These three make up a sales area. Distribution Channel is attached to the Sales Org Customer can exist in more than one sales area. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Division Often times used to define product line distribution
Version 4.1 July 2007 Division Often times used to define product line distribution Organization level to which customer specific information and requirements are maintained (e.g. pricing, partial delivery) Assigned to one or more Sales Organizations A division is an organizational unit based on responsibility for sales or profits from saleable materials or services. Use Divisions have two main applications: They are organizational units for Sales and Distribution, and they are necessary for business area account assignment for logistics transactions in Financial Accounting. Divisions can be used to describe specific product groups and can form the basis for sales statistics July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Division – (continued)
Version 4.1 July 2007 Division – (continued) Medical Division Chemical Division US Sales S000 A division can be directly attached to the Sales Org. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Area Sales Area comprised of:
Version 4.1 July 2007 Sales Area Sales Area comprised of: Sales Organization Distribution Channel Division Will be used to link together the organizational aspects of sales to customers Used for statistical analysis SD is organized according to sales organization, distribution channel and division. A combination of these three organizational units forms the sales area. These three make up a sales area. Distribution Channel is attached to the Sales Org Customer can exist in more than one sales area. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Area – (continued)
Version 4.1 July 2007 Sales Area – (continued) Retail Dist Channel (RE) Wholesale Dist Channel (WH) US Sales S000 Medical Division Chemical These three make up a sales area. Division is attached to the Distribution Channel is attached to the Sales Org Customer can exist in more than one sales area. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Area – (continued)
Version 4.1 July 2007 Sales Area – (continued) Retail Dist Channel (RE) Wholesale Dist Channel (WH) US Sales S000 Medical Division Chemical These three make up a different sales area sales area. Division is attached to the Distribution Channel is attached to the Sales Org Customer can exist in more than one sales area. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Internal Sales Organization
Version 4.1 July 2007 Internal Sales Organization Typically defines a territory or market Linked to one or more Sales Areas Optional organization structure The organization in Sales is represented by the elements sales office, sales group and salespersons. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Office US Sales S000 Eastern Sales Western Sales Version 4.1
July 2007 Sales Office Eastern Sales Western Sales US Sales S000 Linked to the client Internal Sales Org - The organization in Sales is represented by the elements sales office, sales group and salespersons. The following figure displays a sample organization in business development and sales. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Group Sales Group
Version 4.1 July 2007 Sales Group Sales Group Sub-division of a sales office, territory or market The staff of a sales office may be subdivided into sales groups. For example, sales groups can be defined for individual divisions. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales Person Sales Person
Version 4.1 July 2007 Sales Person Sales Person Defined in Human Resources (HR) — Personnel Admin. Specifically defines an individual rather than a position (sales rep.) in sales processing You can maintain personnel master records for sales representatives in your company. In the personnel master record, you assign the salesperson to the sales office and the sales group. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Internal Sales Organization
Version 4.1 Internal Sales Organization July 2007 Eastern Sales Western Sales US Sales S000 Northeast Sales Group Southeast Northwest Southwest Salesperson 1 4 3 6 5 8 7 2 The organization in Sales is represented by the elements sales office, sales group and salespersons July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Shipping and Loading Points
Version 4.1 July 2007 Shipping and Loading Points Shipping Point Location that performs all delivery related activities Assigned a factory calendar A delivery can be processed from only one shipping point Loading Point A subdivision of the shipping point used for more specialized handling They usually exist physically in a plant Each line item on an order is assigned to an order The shipping point is the top level in the organization for shipping. A shipping point can be allocated to several plants. A shipping point can be divided into several loading points. A delivery is always initiated from exactly one shipping point. Thus, all items of a delivery belong to one shipping point. Groups of deliveries also belong to exactly one shipping point. You can influence delivery scheduling via allocation to departure zones. The shipping point can be proposed automatically during order processing depending on the plant, loading group and shipping condition. A shipping point has an address. The shipping point is used as a selection criterion for lists of deliveries and the work list deliveries. The shipping point is used as a selection criterion for processing deliveries like printing, picking or goods issue. You can determine the printer destination for messages differently for every shipping point on account of shipping documents. In this step, you define the loading points for your company. The definition of loading points is optional, you can still use the SD system without defining loading points. A loading point has the following characteristics: A loading point is a subdivision of a shipping point. The loading point can be entered manually in the delivery header. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Shipping Organization
Version 4.1 Shipping Organization July 2007 Plant P000 Freight Dock FD00 Express Dock ED00 Rail Dock RD00 Loading Point 3 Point 2 Point 1 Point 4 Define it any way you want. It depends upon your organization. In this example we have a plant Assigned to the plant is a shipping point Assigned to the shipping points are loading points. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 14, Group 1 – Exercises Create Sales Organization
Version 4.1 Unit 14, Group 1 – Exercises July 2007 Create Sales Organization Assign Sales Organization to Company Code Define Distribution Channels Assign Distribution Channels to Sales Organization Define Common Distribution Channels Define Division Assign Division to Sales Organization Define Common Divisions Setup Sales Areas July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 14, Group 2 – Exercises Define Loading Groups
Version 4.1 Unit 14, Group 2 – Exercises July 2007 Define Loading Groups Create Shipping Point Assign Plant to Sales Organization and Distribution Channel Assign Shipping Points to Plant July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Sales and Distribution (SD) D3
Version 4.1 July 2007 Unit 15 Sales and Distribution (SD) D3 - Master Data - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration Master Data SD We are now ready to build master data for our sales and distribution functions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Master Data Master data is relatively fixed Material Master Data Vendor Master Data Purchasing Information Record General Ledger Master Data Before making the Master Data configurations, you must have completely defined the organizational structures Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Master Data Core Elements
Version 4.1 Master Data Core Elements July 2007 Material Customer Pricing Master Data The three elements of master data are the customer, material and pricing. You set defaults in the master data to determine how the system will execute the transaction for these items. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Sales Views
Version 4.1 Material Master – Sales Views July 2007 Sales: sales org. 1 Sales: sales org 2 Sales: general/plant Foreign trade export Sales: text Sales Org. 1 View Sales Org. 2 Barrel Pen Once you create a view, you can only change a view. You cannot delete it. The views determine how an material master record will be created. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Sales: Sales Org. 1 View
Version 4.1 July 2007 Material Master – Sales: Sales Org. 1 View General Data Base Unit of Measure The Base Unit of Measure is the unit of measure in which stocks are managed within your company. Division You may enter the Division which your product is in for sales (defaults if entered in the Basic data screen). Material Group A key that’s used to group several materials or services for analysis/reporting as well as search by match code. Sales Unit The unit of measure in which the material is sold, if left blank then uses the base unit of measure. Once you create a view, you can only change a view. You cannot delete it. Base Unit of Measure Unit of measure in which stocks of the material are managed. The system converts all the quantities you enter in other units of measure (alternative units of measure) to the base unit of measure. Procedure You define the base unit of measure and also alternative units of measure and their conversion factors in the material master record. Sales unit Unit of measure in which the material is sold. Enter a value in this field only if you want to use a unit of measure differing from the base unit of measure. If the field does not contain an entry, the system will assume that the unit of measure is the base unit of measure. Division A way of grouping materials, products, or services. The system uses divisions to determine the sales areas and the business areas for a material, product, or service. Use A product or service is always assigned to just one division. From the point of view of sales and distribution, the use of divisions lets you organize your sales structure around groups of similar products or product lines. This allows the people in a division who process orders and service customers to specialize within a manageable area of expertise. Delivering Plant (Own or External) Plant from which the goods should be delivered to the customer. This plant is automatically copied into the sales order item as the default value. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Cash discount indicator Indicator that specifies whether this material qualifies for a cash discount. Conditions Determine the pricing for the material Tax classification material The indicator with which the system determines output tax for the material when processing sales and distribution-specific documents. Minimum order quantity in base unit of measure The minimum quantity a customer may order. Minimum delivery quantity in delivery note processing Minimum quantity that may be delivered to a customer. Delivery unit Only exact multiples of this number can be delivered. Example The delivery unit consists of a number and a unit of measure . In the case of a delivery unit of 30 pieces, 30, 60, 90, and so on pieces can be delivered, but not, however, 100 pieces. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Sales: Sales Org. 1 View (continued)
Version 4.1 July 2007 Material Master – Sales: Sales Org. 1 View (continued) Delivering Plant Plant from which the material is available for sale. Cash discount Indicator used for materials, which allow for a cash discount. Conditions Pricing procedure for the material Tax Data Tax classification material The indicator with which the system determines output tax for the material when processing sales and distribution-specific documents Once you create a view, you can only change a view. You cannot delete it. Base Unit of Measure Unit of measure in which stocks of the material are managed. The system converts all the quantities you enter in other units of measure (alternative units of measure) to the base unit of measure. Procedure You define the base unit of measure and also alternative units of measure and their conversion factors in the material master record. Sales unit Unit of measure in which the material is sold. Enter a value in this field only if you want to use a unit of measure differing from the base unit of measure. If the field does not contain an entry, the system will assume that the unit of measure is the base unit of measure. Division A way of grouping materials, products, or services. The system uses divisions to determine the sales areas and the business areas for a material, product, or service. Use A product or service is always assigned to just one division. From the point of view of sales and distribution, the use of divisions lets you organize your sales structure around groups of similar products or product lines. This allows the people in a division who process orders and service customers to specialize within a manageable area of expertise. Delivering Plant (Own or External) Plant from which the goods should be delivered to the customer. This plant is automatically copied into the sales order item as the default value. Material Group Key that you use to group together several materials or services with the same attributes, and to assign them to a particular material group. You can use material groups to: Restrict the scope of analyses Search specifically for material master records via search helps Cash discount indicator Indicator that specifies whether this material qualifies for a cash discount. Conditions Determine the pricing for the material Tax classification material The indicator with which the system determines output tax for the material when processing sales and distribution-specific documents. Minimum order quantity in base unit of measure The minimum quantity a customer may order. Minimum delivery quantity in delivery note processing Minimum quantity that may be delivered to a customer. Delivery unit Only exact multiples of this number can be delivered. Example The delivery unit consists of a number and a unit of measure . In the case of a delivery unit of 30 pieces, 30, 60, 90, and so on pieces can be delivered, but not, however, 100 pieces. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Material Master – Sales: Sales Org. 1 View (continued) Quantity Stipulations Minimum Order Quantity Minimum quantity a customer may order. Minimum Delivery Quantity Minimum quantity that may be delivered to a customer Delivery Unit The delivery unit consists of a number and a unit of measure. In the case of a delivery unit of 30 pieces, 30, 60, 90, and so on pieces can be delivered, but not, however, 100 pieces. Cash discount indicator Indicator that specifies whether this material qualifies for a cash discount. Conditions Determine the pricing for the material Tax classification material The indicator with which the system determines output tax for the material when processing sales and distribution-specific documents. Minimum order quantity in base unit of measure The minimum quantity a customer may order. Minimum delivery quantity in delivery note processing Minimum quantity that may be delivered to a customer. Delivery unit Only exact multiples of this number can be delivered. Example The delivery unit consists of a number and a unit of measure . In the case of a delivery unit of 30 pieces, 30, 60, 90, and so on pieces can be delivered, but not, however, 100 pieces. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master – Sales: Sales Org. 2 View
Version 4.1 July 2007 Material Master – Sales: Sales Org. 2 View Grouping Terms Material Statistics Group Determine which data the system updates in the logistics information system Material Pricing Group A way of grouping materials to which you want to apply the same conditions Volume Rebate Group Group definition used for rebate settlement. General Item Category Group Materials grouping that helps the system to determine item categories during sales document processing. Material statistics group Definition Specifies a statistics group for this material and helps determine which data the system updates in the logistics information system. Use You can assign statistics groups to each of the following: Item category Sales document type Customer Material When you generate statistics in the logistics information system, the system uses the combination of specified statistics groups to determine the appropriate update sequence. The update sequence in turn determines for exactly which fields the statistics are generated. Material Pricing Group A way of grouping materials to which you want to apply the same conditions. You can create condition records for a material pricing group using the following condition types: Material pricing group (for example, all non-food products) A combination of customer and material pricing group A combination of price group and material group (for example, all wholesale customers and all non-food products) Volume rebate group Group definition that can be used for rebate settlement. General item category group Materials grouping that helps the system to determine item categories during sales document processing. If a group is configured specific to distribution channel, it has priority if the corresponding activity is distribution channel-dependent. Procedure The system automatically suggests an item type in the document depending on the item category group you assign and the sales document type you are processing. Example In the standard system, there are normal items, items that signify services (and therefore need no delivery processing) and items that signify packing material, for example. Item category group from material master A grouping of materials that the system uses to determine item categories during the processing of sales documents. Depending on the item category group that you apply and the sales document type you are processing, the system automatically proposes an item category in the document. In the standard system, for example, there are standard items, items that represent services (and do not require delivery processing), and items that represent packaging materials. Commission group Commission group to which the material is assigned. You can assign two materials to the same commission group as long as each representative who sells these materials receives the same commission percentage for both materials. In other words, the commission percentages within a commission group are always the same for any one representative but may vary for different representatives. MaterialRep. 1Rep. 2Rep. 3A5 %10 %11 %B5 %10 %11 % Materials A and B are sold by these three representatives only. You can therefore assign them to the same commission group. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Material Master – Sales: Sales Org. 2 View (continued) Grouping Terms Item Category Group A grouping of materials that the system uses to determine item categories during the processing of sales documents. Commission Group Commission group to which the material is assigned. Material statistics group Definition Specifies a statistics group for this material and helps determine which data the system updates in the logistics information system. Use You can assign statistics groups to each of the following: Item category Sales document type Customer Material When you generate statistics in the logistics information system, the system uses the combination of specified statistics groups to determine the appropriate update sequence. The update sequence in turn determines for exactly which fields the statistics are generated. Material Pricing Group A way of grouping materials to which you want to apply the same conditions. You can create condition records for a material pricing group using the following condition types: Material pricing group (for example, all non-food products) A combination of customer and material pricing group A combination of price group and material group (for example, all wholesale customers and all non-food products) Volume rebate group Group definition that can be used for rebate settlement. General item category group Materials grouping that helps the system to determine item categories during sales document processing. If a group is configured specific to distribution channel, it has priority if the corresponding activity is distribution channel-dependent. Procedure The system automatically suggests an item type in the document depending on the item category group you assign and the sales document type you are processing. Example In the standard system, there are normal items, items that signify services (and therefore need no delivery processing) and items that signify packing material, for example. Item category group from material master A grouping of materials that the system uses to determine item categories during the processing of sales documents. Depending on the item category group that you apply and the sales document type you are processing, the system automatically proposes an item category in the document. In the standard system, for example, there are standard items, items that represent services (and do not require delivery processing), and items that represent packaging materials. Commission group Commission group to which the material is assigned. You can assign two materials to the same commission group as long as each representative who sells these materials receives the same commission percentage for both materials. In other words, the commission percentages within a commission group are always the same for any one representative but may vary for different representatives. MaterialRep. 1Rep. 2Rep. 3A5 %10 %11 %B5 %10 %11 % Materials A and B are sold by these three representatives only. You can therefore assign them to the same commission group. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master Sales: General/Plant View
Version 4.1 July 2007 Material Master Sales: General/Plant View General Data Base unit The unit of measure in which items are managed in the company Gross weight Used to check storage capacity in warehouse Net weight Weight excluding packaging and extras – this is needed for sales and distribution Avail. Check Option to do an availability check for orders and MRP Base Unit of Measure Unit of measure in which stocks of the material are managed. The system converts all the quantities you enter in other units of measure (alternative units of measure) to the base unit of measure. Procedure You define the base unit of measure and also alternative units of measure and their conversion factors in the material master record. Gross weight Gross weight expressed in the unit of weight specified by you in the Unit of weight field. Net weight Net weight expressed in the unit of weight specified by you in the Unit of weight field. Checking Group for Availability Check This field has two uses: 1. Specifies whether and how the system checks availability and generates requirements for materials planning. 2. In Flexible Planning, defines - together with the checking rule - the different MRP elements that make up this key figure. The sum of these elements gives the key figure. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master Sales: General/Plant View (continued)
Version 4.1 Material Master Sales: General/Plant View (continued) July 2007 Shipping Data (times in days) Transportation Group Group materials that have the same transportation requirements. For example, bulk stock materials Loading Group Loading groups define materials that have the same loading requirements, such as forklift truck, or crane. Transportation group A grouping of materials that share the same route and transportation requirements. Use Transportation groups are used for automatic route scheduling during sales order and delivery note processing. Loading group A grouping of materials that share the same loading requirements. The system uses the loading group as well as the Shipping conditions and Delivering plant to automatically determine the shipping point for the item. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master Sales: General/Plant View (continued)
Version 4.1 July 2007 Material Master Sales: General/Plant View (continued) Packaging Material Data Material group Pack Materials Materials that require similar packaging materials General Plant Parameters Negative stock Indicates if negative stocks of the material are allowed at the plant Profit Center Identifies the profit center in the current controlling area Material Group: Packaging Materials Groups together materials that require similar packaging materials. Example For example, you could use the term 'liquids' to group together all materials that need to be packed in packaging materials suitable for liquids. Negative stocks allowed in plant Indicates that negative stocks of the material are allowed at the plant. Profit Center Key that uniquely identifies the profit center in the current controlling area. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Master Sales: Sales Texts View
Version 4.1 July 2007 Material Master Sales: Sales Texts View Sales Texts Exchange of information throughout the logistics chain In sales and distribution, this exchange of information is supported by texts in master records and documents You can define as many text types as you require (sales texts, shipping texts, internal notes, supplement texts etc.) for master records and documents You store the texts that are to serve as information carriers in the system and in the output in the customer master record, the material master record, and in the sales and distribution documents. In addition the following processing and control functions are supported: Texts are proposed from the master records in the sales and distribution documents, if you have made the appropriate setting. Texts can be copied from a reference sales and distribution document into another sales and distribution document (e.g. from an inquiry into a sales order or from an order into a delivery). The copying of texts can be made language dependent, if required. You can change copied texts. You can integrate standard texts into the sales and distribution documents. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 15, Group 1 – Exercises Create Sales Views for Trading Goods
Version 4.1 Unit 15, Group 1 – Exercises July 2007 Create Sales Views for Trading Goods Create Sales Revenue Account Create Sales Revenue Deduction Account July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Customer Master Data is created by Sales Area
Version 4.1 July 2007 Customer Master Customer Master Data is created by Sales Area Sales Organization Distribution Channel Division US Sales S000 Distribution Channel - RE Division - 01 Sales Area Customer Master data is created by the sales area. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master - (continued)
Version 4.1 Customer Master - (continued) July 2007 General Data: Address Sales Data: Sales Customer 43 General Data Company Code Data Financial Accounting (FI) Sales Data Sales and Distribution (SD) The customer master record is broken into three areas: General Data: demographic data Company Code Data: Financial Accounting – Accounting information Sales Data – Sales information General Data General data does not depend on the company code, the sales and distribution organization or the purchasing organization. General data applies to one business partner for all company codes, and in all sales areas and purchasing organizations. It includes: Company name Address Telephone number General data is not limited to information used by both Financial Accounting and Logistics. The unloading point, for example, is unique for a customer and is only relevant for Sales and Distribution. However, because it is not part of the sales and distribution organization of your company, it is not sales and distribution data. It is general data. If you edit a master record using the customer or vendor number without specifying a sales area, a purchasing organization, or a company code, the system displays only general data screens. The department that creates the master record for a business partner also enters general data. If Financial Accounting creates the master record, it must also enter general data, such as the address. When Logistics then enters data, the general data for the business partner exists. Logistics can display the general data. Company Code Data Company code data only applies to one company code. This data is only relevant to Financial Accounting, and includes: Account management data Insurance data If you edit a master record, you must specify the customer or vendor number and company code to access the screens containing company code data. You can only invoice a business transaction if the data on the payer partner function is entered in the Financial Accounting view. Sales and Distribution Data The data for one customer can differ for each sales area. The sales area is a combination of sales organization, distribution channel and division. This data is only relevant to Sales and Distribution, and includes: Pricing data Delivery priority Shipping conditions If you edit a customer master record, you must enter the customer number and the sales area in order to access screens containing sales and distribution data. You can only process sales and distribution transactions, for example, a sales order, after entering the sales and distribution data for a customer. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master A master record must be created for every customer
Version 4.1 July 2007 Customer Master A master record must be created for every customer General data, Company Code data (Financial Accounting - FI), and Sales Org. data (Sales and Distribution - SD) Sales Org. data Sales Shipping Billing Partner Usage Company Code data Account Mgmt Payment transactions Correspondence General data Address Control data Vendor master has to be created for every vendor in the system Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master General Data – Address
Version 4.1 Customer Master General Data – Address July 2007 General Data – Address Address Customer Name Search Term Street address City, Region Postal code Country Communication Language Telephone, Fax, Address Name: Name of the customer. Search Term: A method to find your customer by match-codes. Street: Optional entry. City: Mandatory entry. Postal Code: Mandatory entry. Country: Mandatory entry. Communication Language key Mandatory entry: This is the language the customer uses. All communications to them will be in this language July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master General Data – Control Data
Version 4.1 July 2007 Customer Master General Data – Control Data Account Control Vendor Authorization Trading partner Group key Tax Information Tax codes Fiscal address Country code City code Reference Data / Area Account control Vendor If the Customer is a Vendor as well, enter the Vendor number here. Account Number of Vendor or Creditor Group key If the customer or the vendor belongs to a group, you can enter a group key here. The group key is freely assignable. If you create a matchcode using this group key, group evaluations are possible. Authorization Group The authorization group allows extended authorization protection for particular objects. The authorization groups are freely definable. The authorization groups usually occur in authorization objects together with an activity. Tax information Tax code 1 Number, with which the customer reports to the tax authorities. Tax code 2 Number, with which the customer reports to the tax authorities. Fiscal address Account number of the master record containing the fiscal address. County code Key for county taxes. City code Key is used for city taxes. Tax jurisdiction code This code is used in the US to determine tax rates. Reference data / area Industry Freely definable name for a group of companies (e.g.trade, manufacturing). Transport Zone Region, where the ship-to party is located. International location number (part 1) Here you enter the first 7 digits of the international location number. The International Location Number (ILN) is assigned (in Germany by the Centrale for Coorganisation GmbH)) when a company is founded. It consists of 13 digits, the last digit being the check digit. There are two categories of location numbers: Participants who only need an ILN to cleary and unmistakably identify themselves for communication with the business partner are given a category 1 ILN. This cannot be used to identify articles by means of EAN. Participants who wish to assign the location numbers for their own enterprise areas are given a category 2 ILN. For a category 2 ILN, digits 1 to 7 are described as basis number. This is used as basis for the creation of article numbers (EAN). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master General Data – Payment Transactions
Version 4.1 July 2007 Customer Master General Data – Payment Transactions Bank Details Country Bank Key Account holder Bank Account Control Key Collection EFT - Country Country. Bank Key Country-specific bank key. Normally, you manage banks using their bank number. The bank number in the control data for the bank is then displayed twice, that is, as the bank key too. In certain countries, the bank account number takes on this function; then there are no bank numbers and the bank data is managed using the account number. Account holder Name of account holder, if different from customer name. Bank Account Number, under which the account is managed at the bank. Control Key This field has different uses in different countries. In the US, this number is used to identify checking vs. savings account. Collection This checkmark is selected, when the customer allows for direct payment collection through the bank. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master General Data – Marketing
Version 4.1 July 2007 Customer Master General Data – Marketing Classification Nielsen ID Customer classification Industry Industry codes Operating Figures Annual sales Number of employees Fiscal year variant Sales Prospecting Legal status Nielsen ID Nielsen indicator. The regional division of the company according to the Nielsen Institute, allows market analysis of your market by the A.C. Nielsen Company. Customer classification Freely definable customer classification field. Industry Branch of industry classification of customer. Industry code 1 Standard Industry Codes (SIC). Operating figures Annual sales Annual sales in currency in year. Number of employees Number of employees in year. Fiscal year variant The fiscal year variant of the company. Sales prospecting Legal status A coding of the legal status of the company i.e. Limited, Incorporated. There may be restrictions based upon the legal status of an organization. For example, you may not be able to buy a state employee lunch or dinner while prospecting. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master General Data – Unloading Point
Version 4.1 July 2007 Customer Master General Data – Unloading Point Unloading Points Unloading point Default Calendar key Default Unloading Point Goods receiving hours Unloading point The customer point at which deliveries are to be unloaded. Customer calendar Defines the factory calendar that your customer uses, specifying days on which deliveries will be accepted. Unloading point default If more than one unloading point is specified, this check box is used to identify which unloading point is to be defaulted. Goods receiving hours Customer specific schedule of receiving hours. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master General Data – Foreign Trade
Version 4.1 Customer Master General Data – Foreign Trade July 2007 Export Data Country key TDO Date (Table of Denial Orders) SDN Date (Specially Designated Nationals) Boycott Date Usage Mainly civilian usage Mainly military usage Classification Biochemical warfare Nuclear nonproliferation National security SAP keeps up to date and send patches/updates all the time. Country key for export Country key for the country that placed this customer on the boycott list. control of customer Table of Denial Orders Check mark indicator for customer who is listed in the Table of Denial Orders list. (US) list (TDO) TDO date Date, on which the customer was last checked on the TDO list. Special Designated List of individuals and companies that US companies shouldn’t trade with or only on a limited basis. Nationals list (SDN) SDN date Last check date for customer on SDN list Boycott Check mark for customers on your company’s boycott list. Boycott date Date, on which the customer was last checked on the company boycott list. Mainly civilian usage Indicators for customer’s product usage. Mainly military usage Indicators for customer’s product usage. Classification Indicators for: Chemical/Biological Warfare, Nuclear Nonproliferation, National security and Missile technology. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master General Data – Contact Persons
Version 4.1 Customer Master General Data – Contact Persons July 2007 Contact Person Name First name Department Function Name Name of contact. Telephone1 First telephone number of the contact. Department Description of the department of the contact for internal purposes. First name First name of contact Form of address e.g. Mr., Ms. Function Job function of contact. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Company Code – Acct Information
Version 4.1 Customer Master Company Code – Acct Information July 2007 Accounting Information Rec. Account Sort key Head office Interest Calculation Interest indicator Interest cycle Interest calculation frequency in months Last interest run Reference Data Previous account number Buying group Reconciliation Account Reconciliation account Sort key This field indicates the standard sort sequence for the display of the line items. Head office This field contains the account number of the head office. Interest calculation Interest indicator Checkmark for automatic interest calculation. frequency Frequency of automatic interest calculation (in months). Last key date System generated date of last interest calculation. Reference data Buying group Number of buying group (if applicable). July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Company Code – Payment Transactions
Version 4.1 Customer Master Company Code – Payment Transactions July 2007 Payment Data Terms of Payment Tolerance group Automatic Payment Transactions Payment methods Payment block Alternative payer Grouping key Lockbox Payment terms Payment terms including optional cash discount. Tolerance group Freely definable group term for the business partner, customer and vendor, which determines the amount up to which payment differences are posted automatically to expense or revenue accounts when clearing items. Record payment history Indicator, which determines that the payment history of this customer is to be recorded. Payment methods List of payment method(s) for automatic payments to this customer/vendor. Alternative payer Account number for alternative payer, if bank collections are not to made via the customer’s account. Lockbox Lockbox identification, to which customer is to make payments. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Company Code – Correspondence
Version 4.1 July 2007 Customer Master Company Code – Correspondence Dunning Data Dunning procedure Dunning block Dunning recipient Correspondence Accounting clerk Acct at customer Customer user Payment Notices To Customer – Sales Accounting – Legal Dunning data Dunning procedure Key for dunning procedure used. Dunning recipient Account number of recipient of dunning letters. Dunning level System generated entry, which indicates dunning level reached by the last dunning run. Last dunned Date of last dunning notice to this customer. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Company Code – Insurance
Version 4.1 July 2007 Customer Master Company Code – Insurance Export Credit Insurance Policy Number Institution Number Amount Insure Valid Until Lead Months Deductible Correspondence Account at customer Account number our company is listed under at the customer. Account statement Indicator ID, which states when to create periodic account statements for this account Customer user Name of accounting contact at customer. Payment notices to (Indicators) Customer (with or without cleared items), Sales, Accounting, Legal department. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Sales and Distribution – Sales
Version 4.1 July 2007 Customer Master Sales and Distribution – Sales Sales Order Sales District Sales Office Sales Group Order Probability Item Proposal Pricing / Statistics Price Group Customer Pricing Procedure Price List Type Customer Statistical Group Sales district Region where customer is located. Sales office Your branch office or sales department that has responsibility for sales in a certain region Sales group Sub section of a sales office. Group of sales people. Order probability Statistical value based on the percentage set in the document type master record and the percentage set in the customer master record. Item proposal Default value Account at customer Account number, our company is listed under at customer. Price group Grouping of customers for pricing purposes Customer pricing procedure Determines, together with other values, the pricing procedure for this customer. Price list type Grouping of customers for pricing purposes Customer statistical group Indicates, which data will be updated in the Logistics Information System. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Sales and Distribution – Shipping
Version 4.1 July 2007 Customer Master Sales and Distribution – Shipping Shipping Delivery Priority Shipping Conditions Delivering Plant Order Combination Partial Delivery Complete Delivery Required By Law Partial Delivery per Item Max Part Deliveries Under/Over delivery Tolerances General Transportation Data Transportation Zone Delivery priority Allows deliveries to be processed based on different priorities. Shipping conditions Determines, how the customer in general wants the goods to be shipped. Delivering plant Plant, from which goods are (default) delivered to the customer. Order combination Indicator, set when customer allows for different orders to be combined for delivery. Partial delivery data Complete delivery Indicator, set for customers, which don’t allow for partial deliveries to take place. Maximum part deliveries Enter here the number of partial deliveries allowed by this customer. (Maximum 9). General transportation data Transport zone Location zone of ship-to party Route determination = shipping conditions + transportation group + transportation zone Transportation time defined per Route in IMG July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Sales and Distribution – Billing
Version 4.1 Customer Master Sales and Distribution – Billing July 2007 Billing Section Subs. Invoice Processing Rebate Price Determination Invoicing Dates Delivery and Payment Terms Incoterms Payment Terms Accounting Account Assignment Group Taxes Tax Classification Billing section Manual invoice maintenance Indicates, if invoice should be printed for further manual processing. Rebate Indicates, if customer is eligible for rebates. Billing schedule Identifies the calendar, which determines the billing schedule for this customer. Delivery and payment terms Incoterms 1 Assigns transportation responsibilities and ownership transfer. Incoterms 2 Additional information. Payment terms Payment terms including optional cash discount. Accounting Account assignment group Determines the revenue accounts for this customer’s sales transactions. Tax data Country Country Tax category Taxes, applicable to this material Tax classification taxable or exempt July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Master Sales and Distribution – Partner Functions
Version 4.1 Customer Master Sales and Distribution – Partner Functions July 2007 Partner Functions Partner Function (PF) Number Partner Description Sample Listing of Partner Functions Types SP – Sold-to-party BP – Bill-to-party PY – Payer SH – Ship-to-party Partner function The abbreviated form of the name that identifies the partner function. Number :Number of an SD business partner Customer description of partner (plant, storage location) Use Sold-to party number sent in by the customer in delivery schedules. The system uses this number to automatically determine the ship-to party. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Business Partners July 2007 Defines all of the parties involved in a business transaction Differentiates between their roles Customer Carrier Employees Etc. You enter data on business partners with whom your company has a business relationship in master records. Master records contain all data necessary for processing business transactions. This is known as master data. If you enter all master data, you spend less time processing business transactions because the system proposes the master data in these transactions. Financial Accounting and Logistics use master data. General data and data relevant to both departments is stored in shared master records to avoid duplication. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Business Partners July 2007 The system will automatically assign a business partner to the customer master and to any transaction There are four default business partner Sold-to Ship-to Bill-to Payer They may be the same or different. More business partners can be added to carry out additional business transactions Facilitate the way our customers do business. Business Partners Definition Business partners are legal or natural persons with whom you have a business relationship. Customers and vendors are business partners with whom you have a relationship involving the transfer of goods and services. Use Business partners have a number of different functions, described as partner functions, in connection with your company. You use partner functions to define the rights and responsibilities of each partner type in a business transaction. When you sell or order goods, for example, your business partners can assume partner functions such as: Customer Partner Functions Vendor Partner Functions Sold-to party Ordering address Ship-to party Goods supplier Bill-to party Invoice presented by Payer Alternative payee Different business partners may carry out one or more partner functions. For this reason, you can assign individual business partners a number of partner functions. You manage data on business partners in master records. Data on partner functions is stored in these master records and used in Financial Accounting and Logistics. Integration A business partner can be a customer and a vendor at the same time if, for example, your customer also supplies goods to you or if a vendor is also one of your customers. In this case, you must create a customer master record and a vendor master record for the business partner. You can create a link between the two master records by entering the vendor number in the customer master record and the customer number in the vendor master record. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Account Group
Version 4.1 July 2007 Customer Account Group Customer masters are assigned to a customer account group Through field status maintenance, account groups can be setup for one-time customers, regional customers, internal … The customer account group controls both type and number range assignment for customers Can be set up for type of vendors – When you create a master record for a business partner, you must enter an account group. The account group determines: Which screens and fields are necessary for entering master data Whether you can or must make an entry in these fields How master record numbers are assigned (externally by you or internally by the system) and the number range from which they are assigned Which partner functions are valid Whether the business partner is a one-time customer or one-time vendor Additionally, for vendor master records only, the account group determines: Whether default purchasing data in the vendor master is to be transferred to article master records and purchasing information records Whether there are any other data retention levels below the purchasing organization level (for example, site or vendor sub-range level) at which data can be retained in the vendor master, and if so, what these are July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Field Status July 2007 Field status controls the use of each field within the customer master determining whether a field is required, optional, suppressed or display only Field status controls are also relevant to a specific activity — create, change, or display The field status can be defined for many types of data. This controls if the field is required, optional, or display only. If you suppress a field, you also suppress its functionality. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Business Partners Sold-to Party
Version 4.1 Business Partners Sold-to Party July 2007 Customer who orders Can default for all partner functions — sold-to, ship-to, payer, bill-to Primary type of business partner Independent and cannot be linked to other sold-to partners Sold-to Ship-to Bill-to Payer Customer who orders Can default for all partner functions — sold-to, ship-to, payer, bill-to Primary type of business partner Independent and cannot be linked to other sold-to partners July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Business Partners Ship-to Party
Version 4.1 Business Partners Ship-to Party July 2007 Sold-to Ship-to Bill-to Payer Receive delivery Can be linked to more than one sold-to address Receive delivery Can be linked to more than one sold-to address A sold-to can have multiple ship-to’s July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Business Partners Bill-to Party
Version 4.1 Business Partners Bill-to Party July 2007 Sold-to Ship-to Bill-to Payer Partner who is delivered the invoice Can be linked to more than one sold-to address Partner who is delivered the invoice Can be linked to more than one sold-to address A sold to can have multiple bill-to’s July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Business Partners Payer
Version 4.1 Business Partners Payer July 2007 Sold-to Ship-to Bill-to Payer Partner who pays the bill Can be linked to more than one sold-to address Partner who pays the bill Can be linked to more than one sold-to address July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Single and Multiple Ship-to Parties
Version 4.1 July 2007 Single and Multiple Ship-to Parties Payer: 10 Bill-to: 10 Ship-to: 10 Sold-to: 10 Single ship-to Multiple ship-to’s Single payer Payer: 10 Bill-to: 10 Ship-to: 10 Sold-to: 10 Ship-to: 11 Here are two examples of ship to. The first is a single sold-to and a single ship-to The seconds is a single sold-to and two ship-to’s July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Business Partners Sold-to Bill-to Payer Ship-to Version 4.1 July 2007
Here is just an example of a possible business partner with multiple ship-to’s a single payer and a single bill-to. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 15, Group 2 – Exercises July 2007 Review Sold-to, Ship-to, and Bill-to Account Groups Create Customer Create Ship-to Party Assign Ship-to Party to Customer July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 16 Sales and Distribution (SD) - Master Data - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration Master Data SD July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Master Data Master Data is relatively fixed
Version 4.1 July 2007 Master Data Master Data is relatively fixed Material Master Data Vendor Master Data Purchasing Information Record General Ledger Master Data Before making the Master Data configurations, you must have completely defined the organizational structures Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Pricing Highly touted “World-class” functionality
Version 4.1 July 2007 Pricing Highly touted “World-class” functionality Very easily tailored to meet business needs A very robust module in SAP Gross to net pricing for material Can do just about anything The pricing in SAP is world class. Its functionality is both wide and deep enabling users to program varied pricing procedures to meet individual organizations needs. The pricing is extendible: You can attach, or extend, external pricing programs or elements outside SAP for pricing It also allows Gross to Net pricing: This allows discounts and reductions from the ‘master’ price. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Standard Pricing Process
Version 4.1 July 2007 Standard Pricing Process Standard Pricing Calculates the gross price Then applies Discounts Surcharges Applicable Taxes Calculates the final price Final price = gross price - discounts + surcharges + taxes The standard pricing process is as follows: A standard or gross prices first calculated, or determined from the tables Any applicable discount, surcharge or tax is determined and adjusted from the gross price. There may be more than one adjustment and the adjustments may be amounts, percentages, or other. The final price is then calculated. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Cost-Plus Pricing Process
Version 4.1 July 2007 Cost-Plus Pricing Process Cost-plus pricing Captures the base cost Then applies Markup Discounts Surcharges Applicable Taxes Calculates the final price Final price = cost + markup - discounts + surcharges + taxes You can set price min’s and max’s on the header and line item Margin control can be turned on The cost plus pricing process is not very much different than the standard pricing process except we work from the bottom up instead of the top down. First, the cost of the material is determined Then an additional markup is added (margins) Any applicable discount, surcharge or tax is determined and adjusted from the adjusted margin price. There may be more than one adjustment and the adjustments may be amounts, percentages, or other. From this the final price is determined. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Pricing Components July 2007 Pricing uses tables to match the condition of order to the applicable pricing routine These routines can Add/Subtract amounts, percentages Give dollar, weight, quantity breaks/additions Accrue You can make prices, surcharges, and discounts dependent on almost all the fields in a document. You define these dependencies using the condition tables. In a condition table, you define the combination of fields for which you can create condition records . You can, for example, define whether a discount is calculated as a percentage or a fixed amount using the condition type. These routines can adjust the price based upon the dollars, weight, quantity or any other field on the order, material master, customer master, or customer info record. The system can also accrue amounts. This can be used for rebates, commissions or whatever a company determines necessary. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Pricing Procedure Pricing uses one of possibly many procedures based upon Item Customer Order type Sales Area The procedure will then apply Prices (Gross) Discounts & Surcharges Freight Taxes First by line item Then header - order type You assign the pricing procedures to the transactions by defining the following dependencies: Customer Sales Document Type Sales area In the pricing procedure, you define which condition types should be taken into account and in which sequence. During pricing, the SAP System automatically determines which pricing procedure is valid for a business transaction and it takes the condition types contained in it into account one after the other. The determination of the procedure depends on the following factors: Customer determination procedure You specify the customer determination procedure in the customer master record for each sales area. Document pricing procedure You specify the document pricing procedure for each sales document type and billing type. To determine the procedure, you allocate the customer determination procedure and the document pricing procedure to a pricing procedure within a sales area. The primary job of a pricing procedure is to define a group of condition types in a particular sequence. The pricing procedure also determines: Which sub-totals appear during pricing To what extent pricing can be processed manually Which method the system uses to calculate percentage discounts and surcharges Which requirements for a particular condition type must be fulfilled before the system takes the condition into account conditions: Prices Surcharges and Discounts Freight Costs Sales Taxes These are: Percent discount Absolute discount Freight Order value Material discount Customer/Material Customer discount Material price July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Pricing Procedure – (continued)
Version 4.1 Pricing Procedure – (continued) July 2007 Pricing conditions for each item on the order Pricing condition uses Pricing procedure Access sequence Conditions type Determines adjustments and price The standard ERP System includes predefined elements for routine pricing activities. For example, the standard system includes condition types for basic pricing elements, such as material prices, customer and material discounts, and surcharges such as freight and sales taxes. In the case of each element, you can use the standard version, modify the standard version, or create entirely new definitions to suit your own business needs. The sequence of activities is generally as follows: Define condition types for each of the price elements (prices, discounts, and surcharges) that occur in your daily business transactions. Define the condition tables that enable you to store and retrieve condition records for each of the different condition types. Define the access sequences that enable the system to find valid condition records. Group condition types and establish their sequence in pricing procedures. pricing procedures : You assign the pricing procedures to the transactions by defining the following dependencies: Customer Sales document type Sales area In the pricing procedure, you define which condition types should be taken into account and in which sequence. During pricing, the SAP System automatically determines which pricing procedure is valid for a business transaction and it takes the condition types contained in it into account one after the other. The determination of the procedure depends on the following factors: Customer determination procedure You specify the customer determination procedure in the customer master record for each sales area. Document pricing procedure You specify the document pricing procedure for each sales document type and billing type. To determine the procedure, you allocate the customer determination procedure and the document pricing procedure to a pricing procedure within a sales area. You can make prices, surcharges, and discounts dependent on almost all the fields in a document. You define these dependencies using the condition tables. In a condition table, you define the combination of fields for which you can create condition records . Price elements are represented in the SAP system by condition types. Price elements can be, for example, prices, surcharges, discounts, taxes or, freight, and are stored in the system in condition records. The access sequence is a search strategy which the SAP System uses to search for condition records valid for a condition type. For example, you can define for a price that the SAP System first searches for a customer-specific price and then for a price list price. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Pricing Procedure = RVAJUS Condition Type PR00 = Price
Version 4.1 Pricing Process July 2007 Line Item in Sales Order PPEN000 Sales Area S000-RE-01 Doc. Pric. Proc. OR=A Cus. Pric. 43 = 1 Pricing Procedure Determination Pricing Procedure = RVAJUS Pricing Procedure Contains List of Condition Types Condition Type PR00 = Price Access Sequence PR02 = Price 10 – Customer/material 20 – Price list cat./currency/material 30 – Material Condition Types Point to Access Sequence The pricing procedure is used for each line item in the order. The system determines the pricing procedure according to information defined in the sales document type and the customer master record. The pricing procedure defines the valid condition types and the sequence in which they appear in the sales order. In the example, the system takes the first condition type (PR00) in the pricing procedure and begins the search for a valid condition record. Each condition type in the pricing procedure can have an access sequence assigned to it. In this case, the system uses access sequence PR00. The system checks the accesses until it finds a valid condition record. (Although you cannot see this in the diagram, each access specifies a particular condition table. The table provides the key with which the system searches for records). In the example, the first access (searching for a customer-specific material price) is unsuccessful. The system moves on to the next access and finds a valid record. The system determines the price according to information stored in the condition record. If a pricing scale exists, the system calculates the appropriate price. In the example, the sales order item is for the material. Using the scale price that applies to quantities of USD 9.50 per piece. Access Sequence Provides the Search Order for Pricing 30 – Material Price = $9.50 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Pricing Process Line Item Pricing Proced. Det.
Version 4.1 Pricing Process July 2007 Line Item Pricing Proced. Det. CTyp points to Access Seq. Access Seq. points to Cond. Tbls. Cond. Tbls. contain the Item Pricing PPEN000 Sales Area Doc. PP Cust. PP PR00 Points to PR02 Points to Cond. Tables Cust. / Mat. Price List / Cur / Mat. Material N / A $ 9.50 This slide is another example of the previous slide with a little more detail The pricing procedure is used for each line item in the order. The system determines the pricing procedure according to information defined in the sales document type and the customer master record. The pricing procedure defines the valid condition types and the sequence in which they appear in the sales order. In the example, the system takes the first condition type (PR00) in the pricing procedure and begins the search for a valid condition record. Each condition type in the pricing procedure can have an access sequence assigned to it. In this case, the system uses access sequence PR00. The system checks the accesses until it finds a valid condition record. (Although you cannot see this in the diagram, each access specifies a particular condition table. The table provides the key with which the system searches for records). In the example, the first access (searching for a customer-specific material price) is unsuccessful. The system moves on to the next access and finds a valid record. The system determines the price according to information stored in the condition record. If a pricing scale exists, the system calculates the appropriate price. In the example, the sales order item is for the material. Using the scale price that applies to quantities of USD 9.50 per piece. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Price Agreements Standard price agreements Detailed price agreements
Version 4.1 Price Agreements July 2007 Standard price agreements Product Customer Customer & material Customer group & material group Detailed price agreements Pricing scales Rebates Customer expected price You can group condition records together using agreements for the purpose of sales deals - comparable to rebate agreements. You can define agreement types for promotions and sales deals and specify different condition types and condition tables. Agreements can be determine adjustments in the pricing procedure: These can be any combination of Product Customer Customer/Material Customer Type and material type Scale Basis In the standard system, a pricing scale can be based on any of the following criteria: Value Quantity Gross weight Net weight Volume A formula specific to your requirements A rebate agreement usually consists of a number of individual agreements in the form of condition records. A rebate agreement and the condition records it contains are uniquely identified by a rebate agreement number. The rebate agreement includes general information and terms that apply to all the condition records it contains. For example, the method of payment and the rebate recipient you specify for a rebate agreement will apply to all the condition records you create within the agreement. Resolving disputed invoices costs some industries (for example, the consumer packaged goods industry) a great deal of time and money. Customers deduct disputed invoices from payments and staff members spend valuable time investigating and researching the reasons for the disputed payment. In addition, prolonged disputes can endanger supplier-customer relations. The extended pricing functions introduced in Release 2.2 enable you to take into account the customer's expected price. By entering the expected price during sales order processing and comparing it with your price, you can help avoid disputed invoices later. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Credit Limits and Checking
Version 4.1 Credit Limits and Checking July 2007 Define automatic credit limit checks to your company’s requirements You can also define at what point the system carries out these checks (order, delivery, goods issue, and so on) A credit representative is automatically alerted to a customer’s critical credit situation as soon as order processing starts Employees can be automatically notified of critical credit situations via internal mail Credit Management includes the following features: Depending on your credit management needs, you can specify your own automatic credit checks based on a variety of criteria. You can also specify at which critical points in the sales and distribution cycle (for example, order entry, delivery, goods issue) the system carries out these checks. During order processing, the credit representative automatically receives information about a customer’s critical credit situation. Critical credit situations can also be automatically communicated to credit management personnel through internal electronic mail. Your credit representatives are in a position to review the credit situation of a customer quickly and accurately and, according to your credit policy, decide whether or not to extend credit. You can also work with Credit Management in distributed systems; for example if you were using centralized Financial Accounting and decentralized SD on several sales computers. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Credit Limits and Checking – (continued)
Version 4.1 Credit Limits and Checking – (continued) July 2007 Credit representatives are able to check a customer’s credit situation to decide whether the customer should be granted credit Works in distributed systems Central financial accounting Non-central sales and distribution on several sales and distribution computers The following section describes the different ways in which you can access information in Credit Management. The table under "Activities" describes how to access these various functions. Customer master record The customer master record contains the data (address, telephone and fax number, dunning procedure, sales data and so on) that you require to be able to conduct business with the customer. Account analysis The account analysis function enables you to call up information on a customer account. You can then view the customer’s payment history (for example, do they usually qualify for cash discount? How many days early do they pay their items on average?). This information assists you in assessing a customer’s liquidity and likely payment record in the future. Line items, line item longest overdue, most recent payment Credit master sheet The credit master sheet displays such credit data as the current and maximum credit limit, and the total of deliveries, orders, and invoices outstanding. Credit overview The credit overview shows certain additional data including dunning data, open items and texts on the customer. Early warning list This list displays which customers are to viewed as critical as determined by the credit check in the Sales and Distribution (SD) application component. A customer is classified as critical if, based on the data that you defined under Automatic Credit Control (in Customizing for Credit Management under Sales and Distribution ® Basic Functions ® Credit Management/Risk Management ® Credit Managment ), he or she would not satisfy the following checks (carried out using the information from the A/R summary), either now or in the near future: a. Longest outstanding open item b. Overdue open items c. Highest dunning level permitted d. Next date on which customer is checked e. Age of the data in the A/R summary f. Percentage of credit limit used up Financial Information System (FIS) You can use the FIS to carry out customer evaluations online, structured according to your own requirements. Due date analyses, payment history evaluations, and DSO figure calculations are just some of the functions you can perform. You can summarize or breakdown the data produced in these reports - from open item display to the customer credit management data - to whatever degree you require. You can also edit and present the data from the reports graphically. Sales Information System (SIS) The SIS enables you to collect, summarize, and evaluate data from sales and distribution processing. Central Financial Accounting and decentralized SD processing The decentralized Sales and Distribution units all have independant credit management. This means maintenance of credit master data, checks in SD, and realeasing via the credit manager are all carried out decentrally. As only credit-relevant data for the corresponding Sales and Distribution unit is available for credit checks on the decentralized Sales and Distribution units for the sales order, delivery and goods issue, and credit account data is also needed from the head office (for example, sum of open items, oldest open item, maximum dunning level), Financial Accounting (FI) makes the A/R Summary available. With the help of the A/R Summary, the credit data can be collected in the central system, and sent, via ALE distribution functions, to decentralized Sales and Distribution processing, and can be evaluated. The A/R summary presents the inquiry in Financial Accounting for credit checks. As the credit-relevant SD data (open sales order, delivery and billing document values) is not distributed, there are specific prerequisites for working with distributed systems. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Credit Check July 2007 You can use this function at any time within service processing to call up information about the current credit status of a customer Credit limit can be checked manually or automatically The system generally checks the planned costs without tax If a customer has exceeded their credit limit, the system issues a warning The credit information is real-time within the system. To ensure quick and effective processing of credit holds, the SAP ERP System offers your credit personnel a working environment that can be tailored to your own needs. A credit representative can generate an overview list of credit holds to be processed and, depending on his or her authorizations, process each document accordingly. The overview list is the basis for the credit representative's work. The most important data is as follows: Next shipping date Credit account (customer number or name) Document number Credit value (document value) Currency Credit limit used (in percentage) Terms of payment Risk category Total status of credit check Credit status (blocking reasons) Date on which the document was created Credit representative who entered data Document value class Processing Blocked Sales and Distribution Documents The credit representatives can sort the overview list according to various criteria and can specify exactly how the list is displayed. They can then review the credit situation of any customer and, according to credit policy, decide how to continue processing the sales and distribution documents. The credit representative can do any of the following: Grant the credit limit and release the document. Do not grant the credit limit and cancel the document. Forward the blocked document to another representative. Recheck blocked documents. Redetermine the priority criteria for blocked documents. This enables you to give priority to and release several documents with a low document value until their credit limit is completely used up, instead doing so for a single document with a high document value that has already exceeded its credit limit. Depending on your credit management needs, you can specify your own automatic credit checks based on a variety of criteria. You can also specify at which critical points in the sales and distribution cycle (for example, order entry, delivery, goods issue) the system carries out these checks. You can define for each checking rule whether the system reacts with an error or a warning. In the case of a warning, the system automatically enters a credit status in the document and saves the document. The status text describes the result of the credit check. It tells you, for example, if the document was blocked because the customer's credit limit was exceeded. Depending on the requirements you define, the document is blocked for further processing for reasons of credit. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Credit Check – (continued)
Version 4.1 July 2007 Credit Check – (continued) The checks can be carried out at various times during the sales order cycle, from order receipt to delivery You can define a credit check for any valid combination of the following data: Risk category Document credit group Credit control area The checks can be carried out at various times during the sales order cycle, from order receipt to delivery. According to your credit policy, you define risk categories and assign them to individual customers, along with specific credit limits. In addition, you define credit groups for document types, known as document credit groups. Document credit groups combine order types and delivery types for credit control purposes. You can define a credit check for any valid combination of the following data: Credit control area Risk category Document credit group July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 16 – Exercises Create Material Prices
Version 4.1 Unit 16 – Exercises July 2007 Create Material Prices Create Customer Specific Material Price Create Customer Discount Establish Credit Limit for Customer July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 17 Sales and Distribution (SD) - Rules - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration Rules SD July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Rules Defines the parameters for Master Data and Transactions Determines functionality for Master Data and Transactions Relatively fixed Changes as policy changes July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Assign Sales Area to Pricing Procedure
Version 4.1 July 2007 Assign Sales Area to Pricing Procedure Pricing Procedure Assignment uses the combination of: Sales Area Document Pricing Procedure Customer Pricing Procedure Each combination of these has a pricing procedure assigned The condition types used to post difference values in credit/debit self-billing documents are, like all condition types, linked with revenue account determination in Financial Accounting. Therefore, they are important for determining the account to which values are posted. Revenue recognition uses revenue account determination. To set up revenue account determination, use transaction VKOA. For example, you can allocate a freight condition to a freight revenue account, or a surcharge for packaging costs to a corresponding account for packaging revenues. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Availability Check In determining the material availability date the system can include specific stocks if selected, such as: Safety stock Stock in transfer Quality inspection stock Blocked stock Restricted use stock All movements of stock The following elements can be included in the availability check: Stock safety stock stock in transfer quality inspection blocked stock Inward/Outward movement of goods purchase orders purchase requisitions planned orders production orders reservations dependent reservations dependent requirements sales requirements delivery requirements Requirements in sales and distribution (sales requirements and delivery requirements) result from all transactions which forward a requirement to Materials Management (MM) or to Production Planning (PP). For example, this could include sales orders or deliveries and quotations as well. Sales and distribution requirements reduce existing stock or inward movements of stock on the material availability date to ensure that other outward movement of stock elements cannot access the quantity reserved in this way. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Credit Checking Static Credit Limit Check
Version 4.1 Credit Checking July 2007 Static Credit Limit Check Open Orders Open Deliveries Open Billing documents Open Items (accounts receivable) Dynamic credit limit with credit horizon check (future dates) Credit check to maximum document value (per order) Static Credit Limit Check The customer's credit exposure may not exceed the established credit limit. The credit exposure is the total combined value of the following documents: - Open orders - Open deliveries - Open billing documents - Open items (accounts receivable) The open order value is the value of the order items which have not yet been delivered. The open delivery value is the value of the delivery items which have not yet been invoiced. The open invoice value is the value of the billing document items which have not yet been forwarded to accounting. The open items represent documents that have been forwarded to accounting but not yet settled by the customer. Dynamic Credit Limit Check with Credit Horizon The customer's credit exposure is split into a static part; open items, open billing, and delivery values (see above), and a dynamic part, the open order value. The open order value includes all undelivered or only partially delivered orders. The value is calculated on the shipping date and stored in an information structure according to a time period that you specify (days, weeks, or months). When you define the credit check, you can then specify a particular horizon date in the future (for example: 10 days or 2 months, depending on the periods you specify). For the purposes of evaluating credit, you want the system to ignore all open orders that are due for delivery after the horizon date. The sum of the static and dynamic parts of the check may not exceed the credit limit. Maximum Document Value The sales order or delivery value may not exceed a specific value which is defined in the credit check. The value is stored in the currency of the credit control area. This check is useful if the credit limit has not yet been defined for a new customer. It is initiated by a risk category which is defined specifically for new customers. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Shipping Functions Shipping Point Determination
Version 4.1 Shipping Functions July 2007 Shipping Point Determination The shipping point is selected for each line item based on the shipping point determination process Shipping point based on: Shipping condition Loading group Delivering plant Shipping points are independent organizational entities within which processing and monitoring of the deliveries as well as goods issue is carried out. A delivery is processed by one shipping point only. A shipping point can be determined for each order item. How the shipping point is determined depends on three factors: The shipping conditions from the customer master record (Shipping screen) For example, it might have been agreed with the customer that the goods are to be delivered as soon as possible. The loading group from the material master record (Sales/Plant Data screen) You could, for example, specify a loading group that defines that the goods must always be loaded with a crane or a forklift. The delivering plant This plant is determined per order item either from the customer master record or from the material master record. However, you can also enter it manually for each order item. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Shipping Functions – (continued)
Version 4.1 Shipping Functions – (continued) July 2007 Route Definition Delivery method and the transit time ‘Dummy’ routes can be used to easily define transit time Route Determination Proposed route is chosen using Shipping point Destination country Transportation zone Shipping condition The route determines the means of transport and the legs involved. It influences transportation scheduling. For example, the system can determine from the route that goods are to be sent by rail to Boston. Therefore, during transportation scheduling, it takes into account how far in advance loading space in the freight car must be reserved. Criteria for Route Proposal in the Sales Order A route can be determined for every order item. Determining the route in the sales order depends on the following factors: Country and departure zone of the shipping point Shipping condition from the sales order For example, it might have been agreed with the customer that the goods are to be delivered as soon as possible. Transportation group from the material master record (Sales/Plant Data screen) You can use the transportation group to group together goods with the same characteristics (for example, bulky goods or goods that must be transported in refrigerated trucks). Country and transportation zone of the ship-to party (Control screen in the customer master record) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Revenue Assignment Determination
Version 4.1 July 2007 Revenue Assignment Determination Transfers billing values from the Sales and Distribution to Finance Used to recognize revenue Keys used to allocate revenue to the proper account The condition types used to post difference values in credit/debit self-billing documents are, like all condition types, linked with revenue account determination in Financial Accounting. Therefore, they are important for determining the account to which values are posted. Revenue recognition uses revenue account determination. To set up revenue account determination, use transaction VKOA. For example, you can allocate a freight condition to a freight revenue account, or a surcharge for packaging costs to a corresponding account for packaging revenues. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Automatic Account Assignment Defines the G/L accounts that billing entries are posted to — revenue, sales deductions, surcharges, freight charges, etc. The automatic account assignment defines the entries to the proper accounts: The proper account is: The G/L accounts posted depend upon: Order Type Conditions: if a price, discount, rebate or other The chart of accounts per the company The sales organization selling it Customer account group The type of pricing procedure Then it is accounted for in the proper general ledger account July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 17 – Exercises Assign Sales Areas to Pricing Procedure
Version 4.1 Unit 17 – Exercises July 2007 Assign Sales Areas to Pricing Procedure Define Availability Check for Sales Orders Assign Sales Document to Credit Check Create Shipping Point Determination Create Revenue Account Assignment Key Check Stock Status July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Unit 18 Sales and Distribution (SD) - Transactions - © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration SD Transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Transaction Data July 2007 Includes internal and external exchanges that describe business activities Unlike master data, aggregate transactional data is dynamic – each transaction is unique Master data does not change very often Org data – should not change Transaction data (application data) – changes every transaction Transaction data uses/comprised of the master data, rules, and org data. Every transaction has an audit trail. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Document Types Inquiry Quotation Returns Contract Sales Order
Version 4.1 Document Types July 2007 Inquiry Quotation Returns Contract Sales Order Cash Sales Consignment Scheduling Agreement Rush Order Debit Memo Returnable Packaging Credit Memo These are all documents types and they have their own processing. Sales-related business transactions are recorded in the system as sales documents. These are grouped into four categories: Pre-sales documents: inquiries and quotations Sales orders Outline agreements, such as contracts and scheduling agreements Customer problems and complaints, leading to free-of-charge deliveries and credit memo requests If your particular business processes require it, you can process deliveries and billing documents directly from a sales document. In addition, some sales documents, such as cash sales and rush orders automatically trigger the creation of subsequent delivery and billing documents. You can represent pre-sales business processes in the system using the functions for inquiries and quotations. Customer inquiries and quotations to the customer can be entered and monitored. For example, a customer inquires whether you have a certain product in your warehouse, how much it will cost, or whether the product will be available for a certain date. The inquiry is therefore a request from the customer for you to provide him with a sales quotation. The sales order is a contractual agreement between a sales organization and a sold-to party about delivering products or providing a service for defined prices, quantities and times. If the customer complains that the price was miscalculated (for example, too high) you request a credit memo for the appropriate sum, and you do not take the goods back. In a rush order transaction, the customer picks up the goods or you deliver the goods on the same day as the order is placed. In the standard system, when you save this sales document type, a delivery is automatically created and billing is related to the delivery. Cash sales is an order type for when the customer orders, picks up and pays for the goods immediately. The delivery is processed as soon as the order has been entered. A cash invoice can be printed immediately from the order and billing is related to the order. Receivables do not occur for the customer as they do for rush or standard orders, because the invoice amount is posted directly to a cash account. You can create a debit memo request if the prices calculated for the customer were too low (for example, if the wrong scale prices were calculated). The debit memo request can be automatically blocked for checking. Once it has been approved, you can remove the block. The system uses the debit memo request to create a debit memo. A return is a sales document used in complaints processing for when a customer sends goods back. Consignment goods are goods which are stored at the customer location but which are owned by your company. The customer is not obliged to pay for these goods until they remove them from consignment stock. Otherwise, the customer can usually return consignment goods which are not required. Consignment processing offers the participating partners several advantages. Customers store the consignment goods at their own warehouses. The customer can access the goods in the consignment warehouse at any time. They are only billed for the goods when they are removed from the warehouse and only for the actual quantity taken. Returnable packaging consists of materials that are stored at the customer location but which remain the property of your company. The customer is only required to pay you for the returnable packaging if he does not return it to you by a specified time. Using this function you can, for example, process euro-pallets. You can also use it to resell returnable packaging to a third party. Since stocks of returnable packaging form part of your valuated stock even when they are at the customer site, you must manage them in your system. Customer contracts are outline customer agreements that display when sales materials or services are sold within a certain time period. A customer scheduling agreement is an outline agreement with the customer containing delivery quantities and dates. These are then entered as schedule lines in a delivery schedule. You can either create schedule lines when you create the scheduling agreement or you can create them later. You fulfill a scheduling agreement by creating the deliveries in the schedule as they become due. You process deliveries for a scheduling agreement in exactly the same way as you process a normal delivery. After you have carried out the delivery, the system updates the Delivered quantity field in the scheduling agreement item with the delivery quantity. The following graphic shows the document flow for scheduling agreements. If the price calculated for the customer was too high (for example, with the wrong scaled prices or because a discount was forgotten), you can create a credit memo request. The credit memo request can be automatically blocked for checking. Once it has been approved, you can remove the block. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Order Processing Functionality
Version 4.1 Order Processing Functionality July 2007 Delivery scheduling Availability check Transfer of requirements to Material Requirements Planning Pricing Credit check Shipping point and route determination Foreign trade and license processing Document flow During sales order processing, the system carries out basic functions, such as: Monitoring sales transactions Checking for availability Transferring requirements to materials planning (MRP) Delivery scheduling Calculating pricing and taxes Checking credit limits Creating printed or electronically transmitted documents (confirmations and so on) Depending on how your system is configured, these functions may be completely automated or may also require some manual processing. The data that results from these basic functions (for example, shipping dates, confirmed quantities, prices and discounts) is stored in the sales document where it can be displayed and, in some cases, changed manually during subsequent processing. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Delivery Scheduling Automatic scheduling of essential shipping activities Calculated using defined activity times Resulting in scheduled activity dates Determined using backward and forward scheduling rules During order entry, each schedule line for an item can contain a requested delivery deadline. The goods should arrive at the customer on this date. At the order processing stage, the system can automatically schedule when the essential shipping activities such as picking, loading and transporting must be started so that the requested delivery date can be kept. The terms used in scheduling are defined below. You must distinguish between times (time duration) needed to carry out certain activities dates that are calculated on the basis of these times Times Values based on past experience of the shipping department are entered in the system in the form of transit times, loading times, pick/pack times, and transportation lead times: The transit time is the time in days that is required to deliver goods from your premises to the customer location. It is defined for a route. The loading time is the time in days that is required for loading a delivery item. It is determined from the shipping point, the route, and the loading group of the material. The pick/pack time is the time in days that is required for allocating goods to a delivery as well as the time in days that is required for picking and packing. It is calculated using the shipping point, the route, and the weight group of the order item. The transportation lead-time is the time in days that is needed to organize the shipping of the goods. This might include booking a ship and reserving a truck from a forwarding agent. It is defined for a route. The following deadlines are of importance for delivery processing: You must start picking and packing activities on the material availability deadline. This deadline must be selected early enough in advance so that the goods are ready by the given loading deadline. The transportation scheduling deadline is the date on which you must start to organize the transportation of the goods. This deadline must be selected early enough to ensure that the means of transport is available by the loading deadline. The loading deadline is the date on which the goods must be available for loading and on which all vehicles that are required to ship these goods must be ready for loading. After the time required for loading the goods (loading time) has expired, goods issue can be carried out. The goods issue deadline is the date on which the goods leave the company in order to arrive punctually at the customer location. The delivery deadline is the date on which the goods are to arrive at the customer location. The difference between the goods issue deadline and the delivery deadline is calculated from the transit time required for the route between the delivering plant and the customer. The delivery deadline can be the customer's requested delivery deadline or the confirmed delivery date (that is, the earliest date on which you can deliver goods to the customer). If backward scheduling determines a date in the past as the date on which a schedule line becomes due for shipping or if the material will not be available on the date calculated, the system automatically carries out forward scheduling to determine the earliest possible shipping deadline. For example, starting from the current date, the system calculates the loading deadline, the goods issue deadline, and then the confirmed delivery date. It does this by adding together the shipping times mentioned above. When you change a sales document, such as adding schedule lines or rescheduling, the system carries out delivery scheduling for all the schedule lines, new and old. Because the material availability date lies in the past for backlog schedule lines, the system performs forward scheduling. This may have the undesired affect of the system rescheduling lines that may have already been confirmed. You can specify for each sales document type that the system is to schedule deliveries only backwards. With no forward scheduling, you can better recognize backlogs in production and the customer receives goods on time. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Delivery Scheduling – (continued)
Version 4.1 Delivery Scheduling – (continued) July 2007 Structure of sales documents Header Line Item # 1 Schedule Line # 1 Schedule Line # 2 All sales documents have basically the same structure. They are made up of a document header and any number of items. The items can in turn be divided into any number of schedule lines. Header data The general data that is valid for the entire document is recorded in the document header. For example, Number of the sold-to party Number of the ship-to party and the payer Document currency and exchange rate Pricing elements for the entire document Delivery date and shipping point Item data Whereas data in the document header applies to all items in the document, some data applies only to specific items. This data is stored at item level and includes the: Material number Target quantity for outline agreements Number of the ship-to party and the payer (an alternative ship-to party or payer can be defined for a particular item) Plant and storage location specifications Pricing elements for the individual items Schedule line data An item consists of one or more schedule lines. The schedule line contains all the data that is needed for a delivery. For example, a customer orders 20 units of a particular material which you enter as one item in the sales order. However, you can only deliver 10 pieces now and the remaining 10 pieces next month so you need to schedule two deliveries. The data for these deliveries (dates, confirmed quantities) are stored in two separate schedule lines. In sales documents where delivery data is not relevant, for example, contracts, credit and debit memo requests, the system does not create any schedule lines. Data recorded in the schedule lines includes the: Schedule line quantity Delivery date Confirmed quantity Line Item # 2 Schedule Line # 1 July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Delivery Scheduling Terminology
Version 4.1 Delivery Scheduling Terminology July 2007 Transportation lead time Time required to schedule transportation Pick/Pack time Time required for picking and packing Load time Time required to load Transit time Time required to transport goods from shipping point to ship-to The transportation lead-time is the time in days that is needed to organize the shipping of the goods. This might include booking a ship and reserving a truck from a forwarding agent. It is defined for a route. The pick/pack time is the time in days that is required for allocating goods to a delivery as well as the time in days that is required for picking and packing. It is calculated using the shipping point, the route, and the weight group of the order item. The loading time is the time in days that is required for loading a delivery item. It is determined from the shipping point, the route, and the loading group of the material. The transit time is the time in days that is required to deliver goods from your premises to the customer location. It is defined for a route. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Backward Scheduling Transit Time (2 days) (1 day) Pick & Pack 2nd 3rd
Version 4.1 Backward Scheduling July 2007 Requested Delv. Date Goods Issue Loading Material Availability Order Date Transp. Sched. Transit Time (2 days) (1 day) Pick & Pack 2nd 3rd 4th 5th 6th 1st Backward scheduling calculates backward from the requested delivery date: In this example the requested date is the 6th Transit time is 2 days – 4th Loading time is one day – 3rd Pick and pack and transportation scheduling can be done simultaneously: the longer of which is 2 days – 1st Pick and pack and trans scheduling time happen concurrently Times Values based on past experience of the shipping department are entered in the system in the form of transit times, loading times, pick/pack times, and transportation lead times: The transit time is the time in days that is required to deliver goods from your premises to the customer location. It is defined for a route. The loading time is the time in days that is required for loading a delivery item. It is determined from the shipping point, the route, and the loading group of the material. The pick/pack time is the time in days that is required for allocating goods to a delivery as well as the time in days that is required for picking and packing. It is calculated using the shipping point, the route, and the weight group of the order item. The transportation lead-time is the time in days that is needed to organize the shipping of the goods. This might include booking a ship and reserving a truck from a forwarding agent. It is defined for a route. If you have not maintained any working times in the shipping point, the unit for the time specification is the day (workday = 24 hours) with two decimal places If you have maintained the working times in the shipping point, the unit for the time specification is hours, minutes, and seconds. You can also enter the factory calendar of the forwarding agent for the route when you define the transit time. This factory calendar can be different from your company's calendar. For example, the forwarding agent might operate a 6-day-week. You may only enter the transit time in days with two decimal places, even if you have maintained the working times in the shipping point. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Forward Scheduling Transit Time (2 days) Loading (1 day) Transp.
Version 4.1 Forward Scheduling July 2007 Transit Time (2 days) Loading (1 day) Transp. Sched. New Delv. Date 1st 3rd 4th 5th 6th 2nd Pick & Pack Time (2 days) 7th Requested Goods Issue Material Availability Order If you cannot backward schedule the system will forward schedule for you. The material is available on the 2nd Simultaneously we can schedule the longer of pick and pack and scheduling time: 2 days: 4th Loading time is 1 day: 5th 2 day delivery time: the customer can have the goods on the 7th. Times Values based on past experience of the shipping department are entered in the system in the form of transit times, loading times, pick/pack times, and transportation lead times: The transit time is the time in days that is required to deliver goods from your premises to the customer location. It is defined for a route. The loading time is the time in days that is required for loading a delivery item. It is determined from the shipping point, the route, and the loading group of the material. The pick/pack time is the time in days that is required for allocating goods to a delivery as well as the time in days that is required for picking and packing. It is calculated using the shipping point, the route, and the weight group of the order item. The transportation lead-time is the time in days that is needed to organize the shipping of the goods. This might include booking a ship and reserving a truck from a forwarding agent. It is defined for a route. If you have not maintained any working times in the shipping point, the unit for the time specification is the day (workday = 24 hours) with two decimal places If you have maintained the working times in the shipping point, the unit for the time specification is hours, minutes, and seconds. You can also enter the factory calendar of the forwarding agent for the route when you define the transit time. This factory calendar can be different from your company's calendar. For example, the forwarding agent might operate a 6-day-week. You may only enter the transit time in days with two decimal places, even if you have maintained the working times in the shipping point. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Availability Check Determines the material availability date
Version 4.1 Availability Check July 2007 Determines the material availability date Considers inward and outward movement of inventory — customizable Influences partial deliveries by Proposing a quantity that can be delivered on the requested date (complete delivery) Determines earliest date for full delivery Determines the number and dates for partial deliveries to fulfill the order When you enter a sales order, you can only confirm the delivery of the goods for the required delivery date if the goods are available for all the necessary processing activities which take place before delivery: The shipping department must ensure that freight forwarding or another shipping company is advised early enough so that sufficient time remains for packing and loading to be carried out. An availability check can be carried out on the deadline date for availability for the goods. The procurement department must ensure that the production and purchasing departments are advised of inadequate stock quantities so that goods can either be produced punctually or ordered. Sales transfers the information on materials ordered as requirements to material requirements planning. Requirements are planned outward movements of stock. The transfer of requirements informs production that goods must be produced, or advises purchasing that purchase requisitions have been created for which purchase orders must be created and sent to the suppliers. An availability check can only be carried out if these requirements are transferred. Requirements in sales and distribution (sales requirements and delivery requirements) result from all transactions which forward a requirement to Materials Management (MM) or to Production Planning (PP). For example, this could include sales orders or deliveries and quotations as well. Sales and distribution requirements reduce existing stock or inward movements of stock on the material availability date to ensure that other outward movement of stock elements cannot access the quantity reserved in this way. If the goods ordered by the customer are not available on the requested date, the system branches automatically during sales document processing to a further screen where delivery proposals are offered for selection. The system determines these proposals on the basis of the availability situation. This screen also provides you with information on the scope of the check, the current ATP quantity, and the availability situation across all plants. One-time delivery on the requested delivery date In this section, the system checks whether the requested delivery date can be kept to. If stock of the material is available to make a delivery on the requested delivery date, the stock quantity is confirmed here. If there is no stock available, confirmed quantity zero is displayed. Complete delivery In this section, the system checks whether there will be sufficient stock for complete delivery at a later date: If there is sufficient stock available at a later date to cover the required quantity in the sales document, the system proposes the date here. If the system determines that complete delivery cannot be made at a later date, no date is proposed in this section. When availability is checked including replenishment lead time, the date which is proposed in this section is the date on which the replenishment lead time period ends if the stock before the end of replenishment lead time does not cover the order quantity. When availability is checked excluding replenishment lead time, the system bases its calculations on the stock and the planned inward movements of stock. Delivery proposal In this section, the system checks whether and for which dates partial deliveries can be made. Partial deliveries are displayed for different dates. These dates are based on the planned inward and outward movements of stock. During an availability check which takes replenishment lead time into account, the date on which replenishment lead time ends is displayed if insufficient stock means that no partial deliveries can be made before replenishment lead time ends. During an availability check which does not take replenishment lead time into account, the system displays the dates on which partial deliveries can be made with the available stock. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Availability Check – (continued)
Version 4.1 July 2007 Availability Check – (continued) In determining the material availability date the system can include specific stocks if selected, such as: Safety stock Stock in transfer Quality inspection stock Blocked stock Restricted use stock All movements of stock The following elements can be included in the availability check: Stock safety stock stock in transfer quality inspection blocked stock Inward/Outward movement of goods purchase orders purchase requisitions planned orders production orders reservations dependent reservations dependent requirements sales requirements delivery requirements Requirements in sales and distribution (sales requirements and delivery requirements) result from all transactions which forward a requirement to Materials Management (MM) or to Production Planning (PP). For example, this could include sales orders or deliveries and quotations as well. Sales and distribution requirements reduce existing stock or inward movements of stock on the material availability date to ensure that other outward movement of stock elements cannot access the quantity reserved in this way. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Transfer Requirements to Material Requirements Planning
Version 4.1 Transfer Requirements to Material Requirements Planning July 2007 Ordered quantities are passed to Material Requirements Planning Controlled by the schedule line category Blocking of documents can affect requirements passing — delivery block You can pass on data planned in Flexible Planning or Standard SOP to Demand Management. Demand Management determines the requirement dates and requirement quantities for important assemblies and specifies the strategies for planning and producing/procuring finished products. The result of Demand Management is the demand program. The demand program differentiates planned independent requirements and customer independent requirements. It gives the information needed in MPS and MRP for planning at SKU level. The placing of sales orders eventually consumes planned requirements and triggers updating to the Sales Information System. This actual data can then be used as input for future sales planning. Schedule Lines Together with the sales document types and item categories, the schedule line categories contained in the standard SAP ERP System cover the most common business transactions. The SAP System can only copy items of a sales document to a delivery if they have schedule lines. The control of the schedule lines depends on the schedule line category. You must define schedule line categories or adapt them to your requirements. You must allocate the schedule line categories to the item categories depending on the MRP type. If necessary, you must define schedule line types for scheduling agreements. You can block sales orders for the following subsequent functions: For shipping The system does not let you create a delivery for a sales order that is blocked for shipping. You receive an error message telling you that the order is blocked for delivery. For billing The system does not allow you to create a billing document for a delivery that is blocked for billing in the underlying sales order. When you try to create individual billing documents, the system enters a message in the relevant log. In the case of collective processing of billing documents, the delivery is not included in the billing due list. This blocking can prevent the passing of requirements to MRP. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Pricing Highly touted “world-class” functionality
Version 4.1 Pricing July 2007 Highly touted “world-class” functionality Very easily tailored to meet business needs A very robust module in SAP Gross to net pricing for material The pricing in SAP is world class. It functionality is both wide and deep enabling users to program varied pricing procedures to meet individual organizations needs. The pricing is extendible: You can attach, or extend, external pricing programs or elements outside SAP for pricing It also allows Gross to Net pricing: This allows discounts and reductions from the ‘master’ price. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Credit Check Efficient means to implement credit management
Version 4.1 Credit Check July 2007 Efficient means to implement credit management Integrated with Financial Accounting (FI) -- Via credit control area Automatically alerts when a credit check fails Comprehensive credit management reporting A large number of outstanding receivables or bad debts can have a not inconsiderable impact on company performance. Using Credit Management, you can minimize your credit risk by defining a credit limit for your customers. This is especially important if you do business with customers in financially unstable sectors or countries, or trade with countries that are politically unstable or that adopt a restrictive exchange rate policy. Integration If you implement the Accounts Receivable (FI-AR) application component to manage your receivables, but a non-SAP system for sales and distribution processing, Credit Management enables you to assign a credit limit to each customer. When you post an invoice (in FI-AR) the system then checks whether the amount exceeds the credit limit. Facilities like the credit master sheet or early warning list help you monitor the customer’s credit situation. If you implement both the Accounts Receivable (FI-AR) and Sales and Distribution (SD) application components, you can specify in Customizing when (at the point of order, delivery, goods issue and so on) and to what extent a check on the customer’s credit limit is to take place. You can define automatic credit limit checks according to a range of criteria and in line with your company’s requirements You can also define at what point the system carries out these checks (order, delivery, goods issue, and so on). The credit representative is automatically alerted to a customer’s critical credit situation as soon as order processing starts. The relevant employees can be automatically notified of critical credit situations via internal mail. Your credit representatives are able to check a customer’s credit situation quickly and reliably, and, in line with the appropriate credit policy, to decide whether the customer should be granted credit. Using Credit Management you can work in distributed systems. A distributed system is one with central financial accounting and non-central sales and distribution on several sales and distribution computers. Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. For example, if your credit management is centralized, you can define one credit control area for all of your company codes. If, on the other hand, your credit policy requires decentralized credit management, you can define credit control areas for each company code or each group of company codes. Credit limits and credit exposure are managed at both credit control area and customer level. Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. Credit limits and credit exposure are managed at both credit control area and customer level. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Shipping Point and Route Determination
Version 4.1 Shipping Point and Route Determination July 2007 A shipping point is determined for each line item — shipping point determination A delivery can only be processed from one shipping point Routes - route to be traveled & transit time are determined using customized rules Routes can be used to simply define transit time In this step, you define the shipping points in your company or edit shipping points that already exist. In order to adapt the functional scope of a shipping point to the organization in your company, you should process the following check list: The shipping point is the top level in the organization for shipping. A shipping point can be allocated to several plants. A shipping point can be divided into several loading points. A delivery is always initiated from exactly one shipping point. Thus, all items of a delivery belong to one shipping point. Groups of deliveries also belong to exactly one shipping point. You can influence delivery scheduling via allocation to departure zones. The shipping point can be proposed automatically during order processing depending on the plant, loading group and shipping condition. A shipping point has an address. The shipping point is used as a selection criterion for lists of deliveries and the work list deliveries. The shipping point is used as a selection criterion for processing deliveries like printing, picking or goods issue. You can determine the printer destination for messages differently for every shipping point on account of shipping documents. Using routes, you can combine sales order items according to shipping criteria. The system determines routes automatically for a sales order item and can repeat the procedure for a delivery (see section Route determination). In order to define routes, proceed as follows: Define the modes of transport. Define the shipping types. Define the transportation connection points and maintain the relevant data on the detail screen. Define the routes and route stages. You can also maintain the route stages for several stages. The SAP System determines routes automatically for each sales document item. It determines the itinerary and mode of transport in shipping. Routes are determined depending on the following criteria: Country and departure zone (departure zone of the shipping point) Shipping conditions agreed in the sales order The shipping condition is defined in shipping point determination. Transportation group of the material Country and transportation zone (receiving zone) of the ship-to party The SAP System copies the route from the sales document item into the delivery at header level. To define route determination, you must edit the following points: Define transportation zones for each country. These transportation zones can be either departure zones for the shipping point or receiving zones for the ship-to party. Assign the departure zones to the shipping points. Define transportation groups for the materials. Specify the routes to be selected according to the given criteria in sales processing. Define the delivery types for which route determination should be repeated and set the necessary indicator in the appropriate delivery types. Define the weight groups. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Foreign Trade and License Processing
Version 4.1 Foreign Trade and License Processing July 2007 Predefined trade areas — NAFTA, EU Automated reporting for trade areas Automated controls License management Embargo lists Control by customer, country, product, point in time As countries move increasingly toward a global market economy, businesses become more involved in and influenced by foreign trade. This affects not only the vendor and customer relationship, but that of foreign subsidiaries within a single company. With this opening of market opportunities come regulations, licenses, import tariffs, and an increasing amount of paperwork required by government agencies and other legal entities. SAP Retail provides extensive support for world-wide export/import trade as well as deliveries within specific trade areas (such as the EU or NAFTA), thus automating the burdensome paperwork and freeing your shipping and receiving departments to concentrate on moving merchandise quickly. ERP functionality includes: Maintenance of data specific to foreign trade in the following master records: Customer master Vendor record Article master Purchasing info record Copying data specific to foreign trade into purchasing and sales documents Data interface for the retrieval of export-specific data Export control Government reporting Preference procedures July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Document Flow July 2007 The document flow feature allows you to find the status of an order at any point in time. The SAP system updated the order status every time a change is made to any of the documents created in the customer order management cycle (Order to Cash). The sales documents you create are individual documents but they can also form part of a chain of inter-related documents. For example, you may record a customer’s telephone inquiry in the system. The customer next requests a quotation, which you then create by referring to the inquiry. The customer later places an order on the basis of the quotation and you create a sales order with reference to the quotation. You ship the goods and bill the customer. After delivery of the goods, the customer claims credit for some damaged goods and you create a free-of-charge delivery with reference to the sales order. The entire chain of documents – the inquiry, the quotation, the sales order, the delivery, the invoice, and the subsequent delivery free of charge – creates a document flow or history. The flow of data from one document into another reduces manual activity and makes problem resolution easier. Inquiry and quotation management in the Sales Information System help you to plan and control your sales. The system always updates the preceding documents. However, if you also want it to update the subsequent documents in the document flow, you must make the relevant settings in Customizing for copying control. Copying control and documents flow are defined for documents in: Sales support Sales Shipping Transportation Billing July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 18 – Exercises Create Sales Order Check Stock Status
Version 4.1 Unit 18 – Exercises July 2007 Create Sales Order Check Stock Status Create Delivery Note for Sales Order Pick Materials on Delivery Note Post Goods Issue Bill Customer Post Receipt of Customer Payment Review Document Flow July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Material Listing and Exclusion
Version 4.1 July 2007 Material Listing and Exclusion Inclusions or exclusions (availability) of material for a customer or a customer group Material Listing — products that can be sold Material Exclusion — products that cannot be sold July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Product Substitution Material Determination
Version 4.1 Product Substitution Material Determination July 2007 Substitution of materials during sales order processing Automatic Manual Examples: Substitute a standard product with an appropriate replacement material Substitute based on a customer preference Substitute based on selection list (manual) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Material Info Record
Version 4.1 July 2007 Customer Material Info Record Data on a material defined for one specific customer is stored in the customer material information records Customer-specific material number Customer-specific material description Customer-specific data on deliveries and delivery tolerances Data on a material defined for one specific customer is stored in the customer material information records. This data includes the customer-specific material number the customer-specific material description customer-specific data on deliveries and delivery tolerances If, for example, one of your customers uses a number for a material, which differs from the number your company uses to identify it, you can store the material number used by the customer in the customer material information record. Features During order entry, items can be entered by specifying the material number used by the customer. You also enter a customer material number in the order view of the sales order. You can then use both material numbers during the order entry, the material number your company uses or the one defined by the customer, because the system can carry out allocation automatically. Data on the delivery and the individual delivery tolerances agreed upon with the customer for the material in question can also be checked and transferred to the sales order item. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 19 – Exercises Create Customer Material Info Record
Version 4.1 Unit 19 – Exercises July 2007 Create Customer Material Info Record Create Sales Order Using Customer Info Record Create Delivery Note for Sales Order Pick Materials on Delivery Note Post Goods Issue Bill Customer Post Receipt of Customer Payment July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Scheduling Agreements
Version 4.1 Scheduling Agreements July 2007 Defines specific product quantities and delivery dates for a customer Schedule lines and processed through standard delivery processing Availability check is performed during creation and quantities are passed to MRP System automatically updates delivered quantities Along with contract agreements in Purchasing, you can have Contracts in Sales Orders In the last decade, component suppliers have had to follow the example of the manufacturers they supply: to survive the changing market, they have had to reduce costs, increase quality, and increase speed of delivery. The push to improve business processes has brought about many innovations in the industry, such as just-in-time processing. SAP has taken these innovations into account to provide component suppliers with the functions they need to better manage their business. The scheduling agreement is used as a basis for delivering a material. The customer sends in scheduling agreement releases, referred to as delivery schedules, at regular intervals to release a quantity of the material. Data that applies to the entire document appears in the header; data about materials appears at item level; and delivery dates and quantities appear in the schedule lines within the delivery schedule. Additionally, the system maintains a history that permits you to compare and contrast various generations of delivery schedules. The scheduled lines will be passed to MRP as demand. These may be considered demand in the same vein as normal sales orders Once the items are delivered the scheduling agreement is updated. This ensures the proper execution of the agreement July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Scheduling Agreements (continued)
Version 4.1 July 2007 Scheduling Agreements (continued) Delivery 02/ 05/ 08/ 11/ Scheduling Agreement Date Qty 02/15 150 05/15 150 08/15 150 11/15 300 Could have contracts or scheduling agreement Each agreement line item for here creates its own delivery. Notice the 5 day lead time for delivery The first due date is 2/15 and the delivery starts on 2/10 And so on. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 20 – Exercises Create Scheduling Agreement
Version 4.1 Unit 20 – Exercises July 2007 Create Scheduling Agreement Process Deliveries for a Scheduling Agreement Display Scheduling Agreement Check Stock Status Bill Customer Run Customer Credit Check Post Receipt of Customer Payment July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Business Process Integration FI SD MM Transactions July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Item Proposal Frequently occurring combinations of material and quantities used by a customer System can suggest the item proposal during order entry Transferred into a sales order document Selected from a selection list Can be assigned to more than one customer master records If a customer frequently orders the same combination of materials, or if you recommend a particular selection of products for an opening order, you can store the frequently used data as an item proposal in the system. If you wish, the item proposal may also include proposed order quantities. During sales order processing, you can then copy all or some of the materials and quantity data from the item proposal directly into your document (sales order, quotation, and so on). In addition, you can assign a particular item proposal to one or more specific customer master records. The system can then automatically propose the number of the assigned item proposal whenever you process sales orders for the relevant customers. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 21 – Exercises Create Item Proposal
Version 4.1 Unit 21 – Exercises July 2007 Create Item Proposal Assign Item Proposal to Customer Create Sales Order Using Item Proposal Create Sales Order Value Discount Run Material Requirements Planning Create Purchasing Information Record for PPEN Assign Source of Supply Create Purchase Order via Requisition Assignment List Create Goods Receipt Create Invoice Receipt from Vendor Post Payment to Vendor July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Shipping Overview Comprehensive functionality to support picking, packing and loading functions Work list and deadline monitoring Functions with backorder processing Tightly coupled to the MM and FI modules Facility for transportation management Shipping is an important part of the logistics chain in which guaranteed customer service and distribution planning support play major roles. In shipping processing, all delivery procedure decisions can be made at the start of the process by Taking into account general business agreements with your customer Recording special material requests Defining shipping conditions in the sales order The result is an efficient and largely automatic shipping process in which manual changes are only necessary under certain circumstances. The shipping module supports the following functions, which include but are not limited to: Deadline monitoring for reference documents due for shipment (sales orders and purchase orders, for instance) Creating and processing outbound deliveries Planning and monitoring of worklists for shipping activities Monitoring material availability and processing outstanding orders Backorder processing Monitoring the warehouse's capacity situation Picking (with optional link to the Warehouse Management system) Packing deliveries Information support for transportation planning Support of foreign trade requirements Printing and transmitting shipping documents Processing goods issue Controlling using overviews of Deliveries currently in process Activities that still are to be carried out Possible bottlenecks July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Shipping Overview – (continued)
Version 4.1 July 2007 Shipping Overview – (continued) Order Combination Order 1 Order 2 Order 3 Delivery 8…12 Partial Delivery Order 4 Delivery 8…13 Delivery 8…14 Delivery 8…15 Complete Delivery Order 5 Delivery 8…16 Shipments can work in multiple combinations with orders Multiple orders can be consolidated for one shipment A order can be split into multiple shipments One order and one shipment Each of these is determinant upon the rules setup for the customer and the products being sold. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Shipping Overview – (continued) Delivery creation activities checks order and materials to determine if a delivery is possible delivery block, incompleteness confirms availability confirms export/foreign trade requirements determines total weight & volume The shipping module supports the following functions, which include but are not limited to: Deadline monitoring for reference documents due for shipment (sales orders and purchase orders, for instance) Creating and processing outbound deliveries Planning and monitoring of worklists for shipping activities Monitoring material availability and processing outstanding orders Monitoring the warehouse's capacity situation Picking (with optional link to the Warehouse Management system) Packing deliveries Information support for transportation planning Support of foreign trade requirements Printing and transmitting shipping documents Processing goods issue Controlling using overviews of Deliveries currently in process Activities that still are to be carried out Possible bottlenecks Determines the total weight and volume to be used for delivery and the calculation of cost from the freight tables. The general data relevant for the outbound delivery is stored in the document header. This data is valid for the entire document. The general data may include: Shipping point Data about delivery scheduling and transportation scheduling (for example, the goods issue date or the date of delivery to the ship-to party) Weights and volumes of the entire outbound delivery Sold-to party and the ship-to party numbers Route July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Shipping Overview – (continued) Delivery creation activities generates packing proposal considers partial deliveries updates route assignment assigns picking location determines lot batches updates sales order: status, delivery qty The shipping module supports the following functions, which include but are not limited to: Deadline monitoring for reference documents due for shipment (sales orders and purchase orders, for instance) Creating and processing outbound deliveries Planning and monitoring of worklists for shipping activities Monitoring material availability and processing outstanding orders Monitoring the warehouse's capacity situation Picking (with optional link to the Warehouse Management system) Packing deliveries Information support for transportation planning Support of foreign trade requirements Printing and transmitting shipping documents Processing goods issue Controlling using overviews of Deliveries currently in process Activities that still are to be carried out Possible bottlenecks Determines the total weight and volume to be used for delivery and the calculation of cost from the freight tables. The general data relevant for the outbound delivery is stored in the document header. This data is valid for the entire document. The general data may include: Shipping point Data about delivery scheduling and transportation scheduling (for example, the goods issue date or the date of delivery to the ship-to party) Weights and volumes of the entire outbound delivery Sold-to party and the ship-to party numbers Route Lot batches are used when a material is produced in batches, like paint. These material batches cannot be mixed. For instance, if you paint a room with two different batches of paint there is a probability that one side of the room may turn out in a different shade of the same color which is very noticeable. With each change/update of the shipping document the corresponding information on the sales document is thusly updated. This includes dates, quantities delivered, materials delivered. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Each step in the delivery process updates the delivery note status
Version 4.1 July 2007 Delivery Notes Initiates the delivery process Control mechanism for the process Changes to delivery are allowable - products, quantities Each step in the delivery process updates the delivery note status Picking Packing Loading Post Goods Issue Delivery Note Once the sales order is entered the delivery notes starts the delivery process. Along with most processes in SAP it is configurable and can be tailored per order or customer. As soon as the material availability date or the transportation scheduling date for a schedule line is reached, the schedule line becomes due for shipping. When you create an outbound delivery, you initiate shipping activities such as picking and transportation scheduling. In its role as central object of the goods issue process, the outbound delivery supports all shipping activities including picking, packing, transportation and goods issue. During the outbound delivery process, shipping-planning information is recorded, status of shipping activities is monitored and data accumulated during shipping processing is documented. When the outbound delivery is created, the shipping activities, such as picking or delivery scheduling, are initiated, and data that is generated during shipping processing is included in the delivery. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Delivery Due List Produces a work-list of deliveries
Version 4.1 July 2007 Delivery Due List Produces a work-list of deliveries Encompasses deliveries and transfers Can be scheduled to run in batch Automatically combines deliveries At item and schedule line level, the following prerequisites must be fulfilled: The schedule line must be due for shipping on the specified selection date. A schedule line becomes due for shipping as soon as the material availability date or the transportation scheduling date is reached. The schedule line cannot be blocked for delivery. You can set a delivery block for a schedule line manually in the sales document. You do this, for example, if a free of charge delivery has to be checked before the schedule line can be delivered. Contrary to the delivery block on the header level, the delivery block on the schedule line level always works even if you have not made any assignments in Customizing. The delivery quantity must be greater than one. The items in the order must be fully processed. If they are incomplete, you must first edit the incompleteness log in the order. For more information on the incompletion log, refer to the section Working with the Incompletion Log The product status of the material must permit delivery. New products, for example, have not yet been released for delivery. They cannot be included in the delivery because of their product status. Sufficient quantity of the material must be available. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Picking Quantities based on delivery
Version 4.1 July 2007 Picking Quantities based on delivery Assigned date when picking should begin Automated storage location assignment Supports serial number tracking and batch management Integrated with Warehouse Management (WM) The picking process involves taking goods from a storage location and staging the right quantity in a picking area where the goods will be prepared for shipping. The delivery notes creates controls: Material number Delivery quantity Plant and storage location specifications Picking date Weights and volumes of the individual items Tolerances for under- or over delivery The system will also automatically assign the storage location from where the goods are to be picked. Depending on the picking procedure being used, you can either determine delivery-relevant data before picking or wait until after picking is completed to record it. Delivery-relevant data may be made up of the following: Which batches a material is picked from Which serial numbers are picked Which valuation types the stock is taken from The picking process can be integrated with warehouse management. This will initiate an automated directed pick process. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Packing Identifies which packaging is to be used for specified products Identifies and updates accounts associated with returnable packaging Tracks the packed product by container Insures weight/volume restrictions are enforced The Packing component and related packing information enables you to: Update the stock situation of packing materials Monitor returnable packaging stocks at the customer's or forwarding agent's place of business Help you find you what was in a particular container (for example, if a customer maintains that they have received an incomplete delivery) Make sure that the weight and volume limits have been adhered to Ensure that products have been packed correctly July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Goods Issue Event that indicates the change in ownership of the products Reduces inventory Automatically updates the G/L accounts Ends the shipping process and prevents changes to the shipping documents The outbound delivery forms the basis of goods issue posting. The data required for goods issue posting is copied from the outbound delivery into the goods issue document, which cannot be changed manually. Any changes must be made in the outbound delivery itself. In this way, you can be sure that the goods issue document is an accurate reflection of the outbound delivery. When you post goods issue for an outbound delivery, the following functions are carried out on the basis of the goods issue document: Warehouse stock of the material is reduced by the delivery quantity Value changes are posted to the balance sheet account in inventory accounting Requirements are reduced by the delivery quantity The serial number status is updated Goods issue posting is automatically recorded in the document flow Stock determination is executed for the vendor's consignment stock A worklist for the proof of delivery is generated After goods issue is posted for an outbound delivery, the scope for changing the delivery document becomes very limited. This prevents there being any discrepancies between the goods issue document and the outbound delivery. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Goods Issue – (continued)
Version 4.1 July 2007 Goods Issue – (continued) General Ledger Cost of Goods Sold 1000 Debit Credit Inventory 1000 Debit Credit At goods issue the automatic accounting instructions credit inventory and debits cost of goods sold. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 22, Group 1 – Exercises Run Delivery Due List
Version 4.1 Unit 22, Group 1 – Exercises July 2007 Run Delivery Due List Pick Materials on Delivery Note Post Goods Issue July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Billing Overview Automated invoicing based on sales orders and/or deliveries Functionality for processing credit/debit memos and rebates Integration with Financial Accounting (FI) and Controlling (CO) Updates customer’s credit data Can create pro forma invoices Billing represents the final processing stage for a business transaction in Sales and Distribution. Information on billing is available at every stage of order processing and delivery processing. This component includes the following functions: Creation of: Invoices based on deliveries or services Issue credit and debit memos Pro forma invoices Cancel billing transactions Comprehensive pricing functions Issue rebates Transfer billing data to Financial Accounting (FI) Integration with Accounting consists of forwarding billing data to Financial Accounting (FI - Accounts Receivable) Controlling (CO) When you create a billing document, the system automatically creates all relevant accounting documents for: General Ledger Profit center Profitability Analysis Cost Accounting Accounting Integration with Financial Accounting consists of forwarding billing data in invoices, credit and debit memos to Financial Accounting. The system posts offsetting entries to the appropriate accounts and makes sure that FI can recognize all billing documents belonging to one business transaction (for example, a credit memo to an invoice) Integration with Controlling consists of assigning costs and revenues to the appropriate sub-ledgers. With the billing of the customer the payment is now outstanding and due. This will affect the customer’s credit until it is paid. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Billing Overview – (continued)
Version 4.1 July 2007 Billing Overview – (continued) Sales Invoice Sold To: Rushmore Group Sales Org: S001 Dist Channel: RE Division: 01 Conditions/Price: $500 General Ledger Account Assignment Debit Credit Customer A/R Recon 500 Revenue The invoice generates 3 automatic accounting instructions: Credits the revenue account Debits the customer’s account Simultaneously debits the A/R reconcilliation account (total A/R) July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Delivery based Invoicing
Version 4.1 July 2007 Billing Methods Collective Invoicing Delivery based Invoicing Delivery 8…34 Delivery 8…33 Order 14 Order 9 Delivery 8…56 Invoice 9…68 Order 6 Delivery 8…20 Delivery 8…21 Invoice 9…45 Invoice 9…46 Split Order 32 Delivery 8…86 Invoice 9…92 Invoice 9…91 The following methods may be used in Billing: One individual billing document per sales document You can set the system to create one billing document for each sales document, e.g. one invoice per delivery. A collective billing document for several sales documents As long as certain data agrees, you can also combine different documents (orders and/or deliveries) fully or partially in a common billing document The following prerequisites must be met: the header data appearing in the billing document must agree the split conditions specified do not apply several billing documents for one or more sales documents ( invoice split) If you want to guarantee that invoices are created separately according to certain criteria, you can do this by defining certain split criteria. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Billing Plans Periodic — total amount for a planned billing period
Version 4.1 July 2007 Billing Plans Periodic — total amount for a planned billing period Milestone — distributing the total amount over multiple billing dates - typically used with the project system (PS) Installment — evenly proportioned amounts and defined payment dates Resource related — consumed resources such as service or consulting Periodic billing means billing a total amount for each individual billing date in the plan. For example, if you are creating a rental contract, the system can propose a schedule of monthly rental payments, according to the length and conditions of the contract. Milestone billing means distributing the total amount to be billed over multiple billing dates in the billing plan. For example, you can use a billing plan for billing a make-to-order item that is assigned to a project in the SAP Project System. When you enter the project-related make-to-order item in the sales order (or assembly order), the system proposes a billing plan based on milestones defined for networks in the project. As each milestone is successfully reached, the customer is billed either a percentage of the entire project cost or simply a pre-defined amount. The installment plan allows the customer to pay in installments. With the installment plan the system creates one invoice for all installments. On the basis of this billing document you can print an invoice listing all the installments with the relevant payment dates and amounts to be paid by those dates. The installments are calculated by the system by taking a percentage of the total invoice amount for each installment. These percentages can be defined by your system administrator. The system takes into account any rounding differences for the last payment date. For each installment the system creates a customer line item in financial accounting. The installments are defined by the payment terms, which are controlled by the payment terms key. Your system administrator can define the following data for this key: the number of installments the payment dates the percentage of the billing value Resource-Related Billing The price for customer-specific services are not always defined in a contract as fixed prices, nor can they always be determined using standard pricing. This is the case if, for example, no empirical values exist for specific services, and therefore the services cannot be calculated adequately before conclusion of a contract. Typical examples of this are: Make-to-order production External plant maintenance in the service company Specific services such as consulting You carry out resource-related billing for these orders. In the billing document, single material, internal activities, and costs are assigned to the customer afterwards. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Billing Documents Explicitly specify documents
Version 4.1 July 2007 Billing Documents Explicitly specify documents Billing due list — builds a work list of invoices that should be generated Automatic posting to Financial Accounting (FI) Billing document is the umbrella term for invoices, credit memos, debit memos, pro forma invoices and cancellation documents. The invoice list lets you create, at specified time intervals or on specific dates, a list of billing documents (invoices, credit and debit memos) to send to a particular payer. The billing documents in the invoice list can be single or collective documents (collective invoices combine items from more than one delivery). The standard version of the SAP ERP System includes two types of invoice lists: for invoices and debit memos for credit memos Like all parts of sales order processing in ERP, billing is integrated into the organizational structures. Thus you can assign the billing transactions a specific sales organization, a distribution channel, and a division. Since billing has an interface to Financial Accounting, the organizational structures of the accounting department, (the company codes as well as the sales organizations assigned to the company codes) are important. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 22, Group 2 – Exercises Run Billing Due List, Invoice Customers
Version 4.1 Unit 22, Group 2 – Exercises July 2007 Run Billing Due List, Invoice Customers Post Receipt of Customer Payment July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Return Delivery Note Customer Return Order received Goods
Version 4.1 July 2007 Customer Return Delivery Note Customer Return Order received Goods Receipt Payment to Customer If the customer complains, for instance, that the goods were faulty, you take the goods back to check them. Once you have checked the goods, you can implement one of the following activities: - Send the customer a credit memo - Make a subsequent delivery of the goods, free of charge Quality Inspection Create Credit Memo July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Customer Return – (continued)
Version 4.1 July 2007 Customer Return – (continued) 1 2 3 Order 14 Delivery 8…56 Return Order Return Delivery Invoice 9…68 Payment Credit Memo Quality Inspection Return to Inventory Sales returns processing manages merchandise that the customer has returned due to complaints. You enter the returned merchandise in the system and subject them to an analysis (in the laboratory, for example). When the analysis is complete, you use the results of that analysis to decide whether the merchandise can be reused. You can trace this procedure through the document flow for sales returns processing. There are 3 components in a return. The product(s) are ordered, delivered and invoiced (paid) There is a request for a return Return delivery An optional quality inspection is run Undamaged, unopened product is returned to stock inventory A credit memo is created and then paid for the returned merchandise according to the terms of returns After you have checked the goods, you can implement one of the following activities for the complaint: Approve it by deleting the block reject it by entering a reason for rejection. You should bear in mind the following: The quantity for which the customer should receive credit. The order quantity rather than the delivered quantity is used as the basis for the credit memo. If the customer returns only some of the goods and disposes of the remaining goods himself, you can still create a credit memo for the full amount. On the other hand, you can create a partial credit memo for certain items even if the customer returns the entire quantity. To do this, the quantity to be ordered in the return has to be reduced to the quantity to be credited. Whether the customer should receive a replacement. If the customer is to receive replacement goods, do not create a credit memo. You can enter a reason for rejection for the appropriate items in the return. You then create a free of charge subsequent delivery with reference to the return in order to send the replacement goods to the customer. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Customer Return – (continued) Returns document Billing block can be proposed Use the Order reason field to identify the reason for the return Full access to pricing and ability to re-price Return delivery Issues a goods receipt to place material into inventory The Sales Returns component is used to manage full products in the consumer products industry (for example, in the beverage industry) that the customer has returned due to a complaint. The complaints are all related to quality defects, not incorrect deliveries. The path that the returned merchandise takes often has to be tracked in detail – for example, returned beer first has to be sent to a lab (e.g. in a brewery) for inspection. Once the analysis of the returned merchandise is complete, the vendor or manufacturer determines · The status of the merchandise and whether it can be reused · Whether the customer will be credited for the merchandise and, if so, in what amount In practice, time delays occur between entry of the returns in the system, analysis, and settlement. The Sales Returns component gives you an overview of your physical warehouse stocks and the corresponding postings whenever you require. · You can enter sales returns with or without a reference to a previous sales (return) document. You can use the driver’s return delivery note, for example, as a template. · The system provides the order items from the sales returns document as a template for entering the results of the analysis. You can therefore immediately see which materials are pending for analysis and in which amounts. · You can link the results of the analyses with the entered order items from the sales returns document – individually or jointly, in full or partial quantities – and settle them immediately in the system. · You can create an empties credit memo immediately, without having to wait for the results of the analysis. The system generates a credit memo for the customer for the deposit value of the empties as soon as the allegedly defective merchandise is returned. Because the empties do not usually have any defects, you can credit the customer with the deposit value of the allegedly defective merchandise in advance. · The system checks whether your entries for the analysis items are permissible. · The system generates logs and updates the document flows that reflect the current status of sales returns processing. · The system generates the appropriate credit memos (SAP SD documents) and documents for warehouse stock postings (SAP MM documents) based on the results of the analysis. The system can create the documents immediately or later in background processing. If problems occur during background processing, you are notified via express mail. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 July 2007 Customer Return – (continued) Credit memo Billing block must be cleared from Return Posts to Financial Accounting (FI) Can be processed in batch (background) Can be processed collectively (grouped) The system can automatically propose a delivery or billing block when you enter a complaint. This may be necessary if one department enters complaints and another department reviews them. The system generates logs and updates the document flows that reflect the current status of sales returns processing. · The system generates the appropriate credit memos (SAP SD documents) and documents for warehouse stock postings (SAP MM documents) based on the results of the analysis. The system can create the documents immediately or later in background processing. If problems occur during background processing, you are notified via express mail. These returns can be processed one at a time or in batched. July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Unit 23, Group 1 – Exercises Create Goods Return Order
Version 4.1 Unit 23, Group 1 – Exercises July 2007 Create Goods Return Order Create Delivery Note for Return Order Receive Materials from Goods Return Order Check Document Flow Review Stock Overview July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Version 4.1 Unit 23, Group 2 – Exercises July 2007 Transfer Returned Stock to Unrestricted Use Post Customer Credit Create Billing Document Release Billing Document to Accounting Check Document Flow Post Payment of Customer Refund July 2007 © SAP AG and The Rushmore Group, LLC 2007 © SAP AG and The Rushmore Group, LLC 2007

Business Process Integration II
ECC 6.0 January 2008 Business Process Integration II Presented by The Rushmore Group, LLC © SAP AG and The Rushmore Group, LLC 2008

Agenda - Day 1 Business Process Integration I Review Controlling (CO)
ECC 6.0 January 2008 Agenda - Day 1 Business Process Integration I Review Financial Accounting (FI) Materials Management (MM) Sales and Distribution (SD) Controlling (CO) Organization Data Master Data January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Agenda - Day 2 Controlling (CO) Production Planning (PP) Rules
ECC 6.0 January 2008 Agenda - Day 2 Controlling (CO) Rules Transactions Production Planning (PP) Organizational Data Master Data January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Agenda - Day 3 Production Planning (PP) Quality Management (QM)
ECC 6.0 January 2008 Agenda - Day 3 Production Planning (PP) Transactions Quality Management (QM) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Agenda - Day 4 Production Planning (PP) Sales and Distribution (SD)
ECC 6.0 January 2008 Agenda - Day 4 Production Planning (PP) Troubleshooting Sales and Distribution (SD) Transactions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Agenda - Day 5 Sales and Distribution (SD) Transactions Administration
ECC 6.0 January 2008 Agenda - Day 5 Sales and Distribution (SD) Transactions Administration Student Monitoring Trouble shooting January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Course Materials Business Process Integration Slides
ECC 6.0 January 2008 Course Materials Business Process Integration Slides Business Process Integration Exercises January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

BPI – II Roadmap Procurement Process Production Process Sales Order
ECC 6.0 BPI – II Roadmap January 2008 Purchase Order Purchase Requisition Procurement Process Schedule and Release Goods Receipt Convert Production Proposal Production Process Goods Issue Run MPS w/MRP Invoice Receipt Sales Order Process Check Availability Completion Confirmation Payment to Vendor Sales Order Entry Quality Inspection Pick Materials Goods Receipt Order Settlement Receipt of Payment Post Goods Issue Invoice Customer January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 2 Controlling (CO) - Overview - ECC 6.0 January 2008
© SAP AG and The Rushmore Group, LLC 2008

R/3 Controlling (CO) Client / Server Integrated Business Solution SD
ECC 6.0 Controlling (CO) January 2008 R/3 FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 2 - Section 1 Overview
ECC 6.0 Unit 2 - Section 1 Overview January 2008 Objectives Target Audience Components of Controlling Reporting Interrelated and Closely Connected with Financial Accounting (FI) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Objectives Controlling (Managerial Accounting) is designed to collect data for the preparation and analysis of reports for use by internal users Utilizes the SAP R/3 information system to help the organization meet its strategic objectives Involves planning, monitoring, reporting, advising, and informing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Target Audience Senior Management Executives Controllers
ECC 6.0 January 2008 Target Audience Senior Management Executives Controllers Department Managers January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Components of Controlling
ECC 6.0 Components of Controlling January 2008 Controlling (CO) Cost Element Acct Center Product Internal Orders Activity Based Costing Profit Profitability Analysis January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Components of Controlling January 2008 Cost and Revenue Element Accounting Overhead Cost Controlling Cost Center Accounting Internal Orders Activity-Based Costing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Components of Controlling January 2008 Product Cost Controlling: Product Cost Planning Cost Object Controlling Actual Costing/ Material Ledger Profitability Management Profitability Analysis Profit Center Accounting January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Reporting Responsibility Accounting Profit Analysis by Market Segments
ECC 6.0 January 2008 Reporting Responsibility Accounting Profit Analysis by Market Segments Profitability Segments Profit Centers January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Interrelated and Closely Connected Income Statement Bal. Sheet
ECC 6.0 Interrelated and Closely Connected January 2008 (FI) Transaction Document Amount G/L Account # Cost Center (CO) Transaction Cost Element Income Statement Bal. Sheet Financial Accounting Supplies Exp. Bank 100 100 Controlling Cost Center 100 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 - Organizational Structures -
January 2008 Controlling (CO) - Organizational Structures - © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Organizational Data A hierarchy in which the organizational units in an enterprise are arranged according to tasks and functions. Are static data and are rarely changed Once you have decided on an organizational structure it is not easy to change it The definition of organization units is a fundamental step, it is a critical factor in how the company will be structured January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Controlling Area An organizational unit that serves to broadly define a managerial accounting and reporting system Each company code can be assigned to one and only one controlling area Controlling areas can consist of multiple company codes thereby enabling cross-company allocations January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Controlling Area (continued)
ECC 6.0 Controlling Area (continued) January 2008 Overhead Cost Accounting Modules SD MM HR FI Cost and Revenue Accounting Profit Center Accounting Product Cost Controlling Profitability Analysis January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Organizational Structure January 2008 Client Chart of Accounts Company Fiscal Year Variant Credit Control Area Controlling Area Company Code January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Organizational Structure January 2008 Client 100 Chart of Accounts Fiscal Year Variant Pen Inc. Credit Control Area Controlling Area Company Code January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Standard Hierarchy An organizational unit that serves to refine and focus a managerial accounting and reporting sub-system A mapping of responsibility to individual managers Mapping of cost centers facilitates expense Collection Tracking Reporting January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 2 Exercises Create Controlling Area
ECC 6.0 Unit 2 Exercises January 2008 Create Controlling Area Assign Company Code to Controlling Area Create Cost Center Standard Hierarchy January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Master Data Master data is relatively fixed Material master data Vendor master data Purchasing information record General Ledger master data Before making the master data configurations, you must have completely defined the organizational structures January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Financial Accounting (FI) January 2008 R/3 FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 3 - Overview Components of Financial Accounting Master Data
ECC 6.0 Unit 3 - Overview January 2008 Components of Financial Accounting Master Data Chart of Accounts Balance Sheet Accounts Income Statement Accounts Reconciliation Accounts January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Components of Financial Accounting January 2008 Financial Accounting (FI) Accounts Receivable Payable Special Purpose Ledger Fixed Assets Banks General January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Master Data A unique master record is created for each general ledger account General ledger accounts are created at the client and company code level Business transactions are posted to the portfolio of general ledger accounts made available to a company through the assignment of a specific chart of accounts January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Chart of Accounts Balance Sheet Accounts (Assets, Liabilities, and Equity) Income Statement Accounts (Revenues and Expenses) Reconciliation Accounts (Sub-accounts for A/R, A/P, etc.) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 3 Exercises Create Raw Materials Inventory Account
ECC 6.0 Unit 3 Exercises January 2008 Create Raw Materials Inventory Account Create Finished Goods Account Create Raw Materials Expense Account Create Finished Goods Expense Account Create Labor Expense Account Create Production Order Settlement Account Create Production Variance Account January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 4 Controlling (CO) - Master Data - ECC 6.0 January 2008

Unit 4 – Section 1 Overview
ECC 6.0 Unit 4 – Section 1 Overview January 2008 Standard Hierarchy Cost Centers Cost Center Groups January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Standard Hierarchy Standard hierarchies are maintained in Cost Center Accounting (CCA) master data maintenance A specific name is assigned to identify a standard hierarchy Each standard hierarchy is attached to the appropriate Controlling Area All cost centers of interest must be entered in the Standard Hierarchy January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Cost Centers Units that are distinguished, for example, by area of responsibility, location, or type of activity Copy center Security department Maintenance department One or more value-added activities are performed within each cost center Can be permanent or temporary (e.g., internal order) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Cost Centers (continued)
ECC 6.0 Cost Centers (continued) January 2008 Operates as a collector and assignor of responsibility for expenditures A way to identify and track where costs are incurred for evaluation purposes January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Cost Center Groups Logical groupings of cost centers in the standard hierarchy to establish accountability and responsibility for one or more cost centers Facilitates reporting, planning, and allocating costs at a more aggregated level January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 4 – Section 1 Exercises
ECC 6.0 Unit 4 – Section 1 Exercises January 2008 Maintain Cost Center Standard Hierarchy January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Controlling (CO) - Master Data - ECC 6.0 January 2008

Unit 4 – Section 2 Overview
ECC 6.0 Unit 4 – Section 2 Overview January 2008 Cost Elements Primary Cost Elements Secondary Cost Elements Cost Element Groups Statistical Key Figures January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Cost Elements Used to categorize costs
ECC 6.0 January 2008 Cost Elements Used to categorize costs Primary cost elements originate with Financial Accounting (FI) postings and are linked in whole to Controlling (CO) objects (maintain their source and identity) Secondary cost elements are used exclusively in Controlling (CO) for allocations and settlements to and between Controlling (CO) objects (may not maintain their source and identity) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Cost Elements (continued) General Ledger Accounts
ECC 6.0 Cost Elements (continued) January 2008 Controlling Financial Accounting Total Cost Elements General Ledger Accounts Income Statement Balance Sheet Secondary Cost Elements Primary Cost Elements Expense Accounts Revenue Accounts January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Primary Cost Elements Linked to expenditure accounts in the chart of accounts (not just expense accounts, may include capital acquisition accounts) Costs are immediately posted to assigned Controlling (CO) objects (e.g., cost center or internal order) upon posting in Financial Accounting (FI) The elements source identity - salaries, utilities, selling expenses - is maintained within Controlling (CO) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Primary Cost Elements (cont.)
ECC 6.0 Primary Cost Elements (cont.) January 2008 Income Balance Statement Sheet Account Account General Ledger Account Posting Rent Expense Acct. Payable Debit Credit 1,500 Debit Credit 1,500 Primary Cost Element for Rent Expense Cost Center A January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Secondary Cost Elements
ECC 6.0 January 2008 Secondary Cost Elements Used exclusively in Controlling (CO) for allocations, re-postings, and settlements between Controlling objects The source identity of the cost element may become blurred or completely lost during re-posting procedures January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Secondary Cost Elements (cont.)
ECC 6.0 Secondary Cost Elements (cont.) January 2008 Income Balance Statement Sheet Account Account General Ledger Account Posting Rent Expense Acct. Payable Debit Credit 1,500 Debit Credit 1,500 Secondary Cost Element Cost Center A CC 2 CC 3 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Secondary Cost Elements (continued)
ECC 6.0 Secondary Cost Elements (continued) January 2008 Cost Center 2 Debit Credit 1,500 Rent Expense 1,750 Cost Center A Sec. Cost Element Primary Cost Element Cost Center 3 1,500 2,500 2,000 Supplies Expense 2,000 Debit Credit Sec. Cost Element 2,500 Primary Cost Element Cost Center 4 Debit Credit 2,000 Labor Expense Sec. Cost Element 2,250 Primary Cost Element January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Cost Element Groups Logical groupings of primary and secondary cost elements Facilitates reporting, planning, and allocating costs Total Costs Total Primary Costs Total Secondary Costs Wages Utilities Materials Internal Order Settlement January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Statistical Key Figures
ECC 6.0 January 2008 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 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Statistical Key Figures
ECC 6.0 January 2008 Statistical Key Figures Cost Center Activity (20 Hours) 6 Hours Work Center 10 Hours Maintenance Department 4 Hours Information Services Department January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Unit 4 – Section 2 Exercises January 2008 Create Primary Cost Elements Create Secondary Cost Elements Create Cost Element Group Create Statistical Key Figure January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 5 Controlling (CO) - Rules - ECC 6.0 January 2008

ECC 6.0 January 2008 Rules Defines the parameters for Master Data and Transactions Determines functionality for Master Data and Transactions Relatively fixed Changes as policy changes January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 5 - Overview Controlling and Settlement Document Number Ranges
ECC 6.0 Unit 5 - Overview January 2008 Controlling and Settlement Document Number Ranges January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Controlling and Settlement Document Number Ranges
ECC 6.0 Controlling and Settlement Document Number Ranges January 2008 Each Controlling Area is assigned document number ranges to permit the identification and tracking of primary and secondary cost element postings These are grouped into intervals serving to segregate different transaction types Every transaction involving the posting of primary and secondary cost elements is supported by a unique numbered document January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 5 Exercises Create Controlling Document Number Ranges
ECC 6.0 Unit 5 Exercises January 2008 Create Controlling Document Number Ranges Define Controlling Settlement Document Number Ranges January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 6 Controlling (CO) D4 - Transactions - ECC 6.0 January 2008

ECC 6.0 January 2008 Business Process Integration CO Transactions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Transaction Data Includes transactions that describe business activities Unlike master data, aggregate transactional data is dynamic - it constantly changes, usually many times per day Transactions use organizational structure, master data and rules January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 6 - Overview Monthly Rent Cycle Invoice Receipt Invoice Entry
ECC 6.0 Unit 6 - Overview January 2008 Monthly Rent Cycle Invoice Receipt Invoice Entry Post Primary Cost Element Display Account Balance Re-Posting Primary Cost Element January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Monthly Rent Cycle Invoice Receipt Rental Agreement Post Primary
ECC 6.0 Monthly Rent Cycle January 2008 Invoice Receipt Rental Agreement Post Primary Cost Element Post Secondary Cost Elements January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Invoice Receipt Invoice Receipt Invoice Verification ECC 6.0
January 2008 Invoice Receipt Invoice Verification January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Invoice Entry Vendor Information Type of Transaction Invoice Header
ECC 6.0 Invoice Entry January 2008 Vendor Information Type of Transaction Invoice Header Line Items January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Post Primary Cost Elements
ECC 6.0 Post Primary Cost Elements January 2008 Income Balance Statement Sheet Account Account General Ledger Account Posting Rent Expense Acct. Payable Debit Credit 1,500 Debit Credit 1,500 Primary Cost Element for Rent Expense Cost Center A January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Display Account Balance
ECC 6.0 Display Account Balance January 2008 Account number Rent Expense Company code C999 Period Debit Credit DC bal Balance C/f bal Period 1 3, , ,000.00 Period 2 1, , ,500.00 Period 1 Doc. no. DT Doc.date Currency Amount KR 01/01/04 USD 1,500.00 KR 01/26/04 USD 1, January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Re-Posting Primary Cost Element
ECC 6.0 Re-Posting Primary Cost Element January 2008 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 6 - Exercises Post Invoice Receipt from Vendor
ECC 6.0 Unit 6 - Exercises January 2008 Post Invoice Receipt from Vendor Post Payment to Vendor Display Individual Line Items Re-post Expense Between Cost Centers January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 7 Controlling (CO) - Transactions - ECC 6.0 January 2008

Unit 7 - Overview Cost Center Allocations Types of Allocations
ECC 6.0 Unit 7 - Overview January 2008 Cost Center Allocations Types of Allocations Distributions Assessments January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Cost Center Allocations
ECC 6.0 January 2008 Cost Center Allocations Define Sender and Receiver Rules Percentage, portions, fixed Identify Sender Cost center or internal order (what object has the amounts?) Cost element (which expenditures are we interested in transferring?) Identify Receiver Cost center or internal order (where do the amounts need to go to?) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Types of Allocations Distributions – primary cost elements
ECC 6.0 January 2008 Types of Allocations Distributions – primary cost elements Assessments – combination of primary and/or secondary cost elements January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Types of Allocations (continued)
ECC 6.0 January 2008 Types of Allocations (continued) Distributions – primary cost elements Assessments – combination of primary and/or secondary cost elements January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Distributions Method for periodically allocating primary cost elements
ECC 6.0 January 2008 Distributions Method for periodically allocating primary cost elements Primary cost elements maintain their identities in both the sending and receiving objects Sender and receiver cost centers are fully documented in a unique Controlling (CO) document January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Distributions (continued)
ECC 6.0 Distributions (continued) January 2008 Sending cost center Receiving cost centers Primary cost element maintains its identity A010 – Administration Rent Expense $1,500 Distribution January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Distributions (continued)
ECC 6.0 Distributions (continued) January 2008 Receiving cost centers Sending cost center Primary cost element maintains its identity A010 – Administration Rent Expense $1,500 Distributions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Unit 7 – Section 1 Exercises January 2008 Post Statistical Key Figure Create G/L Document Entry Create Distribution Cycle Review Actual Line Item Report January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Types of Allocations Distributions – primary cost elements
ECC 6.0 January 2008 Types of Allocations Distributions – primary cost elements Assessments – combination of primary and/or secondary cost elements January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Assessments A method of allocating both primary and secondary cost elements Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element Sender and receiver cost centers are fully documented in a unique Controlling (CO) document January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Assessments (continued)
ECC 6.0 Assessments (continued) January 2008 Receiving cost center Sending cost center Primary and secondary cost elements A020 – IT Software Expense $4,200 Supplies Expense $500 Assessment January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 7 – Section Exercises
ECC 6.0 Unit 7 – Section Exercises January 2008 Post Information Supplies Expense Post Information Technology Expense Review Actual Individual Line Item Report Create Assessment Cycle January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 8 Controlling (CO) - Transactions - ECC 6.0 January 2008

ECC 6.0 January 2008 Transaction Data Includes transactions that describe business activities Unlike master data, aggregate transactional data is dynamic - it constantly changes, usually many times per day Transactions use organizational structure, master data, and rules January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 8 - Overview Internal Orders Internal Order Types
ECC 6.0 Unit 8 - Overview January 2008 Internal Orders Internal Order Types Maintaining Internal Order Types Posting to Internal Orders Settlement of Internal Orders January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Internal Orders Temporary cost center
ECC 6.0 January 2008 Internal Orders Temporary cost center Cost object for collecting, planning, and monitoring costs for an limited-time event, a small project, or a special activity Company picnic Trade show Recruiting campaign Costs are settled monthly or at the end of the life cycle January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Internal Orders (continued)
ECC 6.0 Internal Orders (continued) January 2008 Internal order management is the most detailed operational level of cost and activity accounting Cost monitoring, Object-related aspects Assisting decision-making (e.g., when you need to decide between in-house production and external procurement ) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Internal Order Types Each order is assigned to an order type
ECC 6.0 January 2008 Internal Order Types Each order is assigned to an order type Enable orders to be classified by category or purpose Contain control information such as: Status management Number range January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Maintaining Internal Order Types
ECC 6.0 January 2008 Maintaining Internal Order Types Internal Order types are managed at the client level Assign each order to an order type Transfers parameters to the internal order Internal Order types determine Transactions that you can use to process January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Posting to Internal Orders
ECC 6.0 January 2008 Posting to Internal Orders Sources include: Financial Accounting (FI) postings with concurrent passing to internal order Materials Management (MM) goods movements Controlling (CO) cost allocations and overhead applications January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Settlement of Internal Orders
ECC 6.0 January 2008 Settlement of Internal Orders All of the collected costs in an internal order need to be settled to another object Costs are settled to one or more receiving objects Cost centers, internal orders, project, fixed asset, General Ledger (G/L) account, etc. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Settlement of Internal Orders (continued)
ECC 6.0 Settlement of Internal Orders (continued) January 2008 A precise settlement rule is defined for each internal order Basic settlement percent of the costs are settled to one cost center or G/L account Robust settlement - costs are settled to a wide range of receivers and split according to your specifications January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Settlement of Internal Orders (continued)
ECC 6.0 Settlement of Internal Orders (continued) January 2008 Internal Order FI CO MM Accrual Orders Overhead Cost Accounting Cost Center 101 Cost Center 102 G/L Account & Receiver January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 8 - Section 1 Exercises
ECC 6.0 Unit 8 - Section 1 Exercises January 2008 Create Internal Order Type Maintain and Configure Internal Order Settlement Structure Create and Release Internal Order for Company Meeting Post Payments to Vendors for Cruise Display Individual Line Items January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Unit 8 - Section 2 Exercises January 2008 Create Purchase Requisition for Consumption to Internal Order Create Purchase Order Create Goods Receipt Create Invoice Receipt from Vendor Post Payment to Vendor Review Cleared Items Display Individual Line Items Settle Internal Order Review Actual Line Item Report January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Planning (PP)
ECC 6.0 January 2008 Unit 9 Production Planning (PP) - Overview - © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Production Planning (PP) January 2008 R/3 FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 9 - Overview Components of Production Planning
ECC 6.0 Unit 9 - Overview January 2008 Components of Production Planning Production Process Overview Planning Process Overview MRP Elements of a Production Order January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Components of Production Planning
ECC 6.0 Components of Production Planning January 2008 Production Planning (PP) SOP Capacity MRP Product Cost Repetitive Mfg. Control KANBAN Master Data DRP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Process (Make-to-Stock)
ECC 6.0 Production Process (Make-to-Stock) January 2008 Capacity Planning Schedule and Release Production Proposal (Planning/Other) Shop Floor Documents Order Settlement Goods Issue Goods Receipt Completion Confirmation January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Planning Process Execution High Level Planning Detailed Planning
ECC 6.0 January 2008 Planning Process Execution High Level Planning Procurement Process CO/PA Detailed Planning Forecasting Sales and Operations Planning Demand Management MPS MRP Execution Sales Information System Manufacturing Execution Order Settlement January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Material Requirements Planning A set of techniques utilizing bills of materials, inventory data (lead times and current status) and the master production schedule to calculate requirements for raw materials, components, and subassemblies A time-phased planning tool with a defined, specific algorithm Balances supply and demand January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Process Inventory Master Schedule Planning Rules Bill of Material
ECC 6.0 MRP Process January 2008 Inventory Master Schedule Planning Rules Bill of Material Orders Forecasts MRP Process Recommended Procurement Production Inputs Outputs January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Requirements Planning Elements
ECC 6.0 January 2008 Material Requirements Planning Elements Requirement elements (demand) Withdrawals from inventory Maintenance must be done at source of demand Two types of demand Replenishment elements (supply) Receipts into inventory Maintenance can be adjusted manually January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Elements of A Production Order
ECC 6.0 January 2008 Elements of A Production Order Work Center Raw Materials & Sub-Components Production Order Operations Bill of Material Components (Production Parts List) Production Routing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Unit 10 Production Planning (PP) - Organizational Structures, Master Data, and Rules - © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Business Process Integration Org Data Rules PP Master Data PP PP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 10 - Overview Production Process Overview Organization
ECC 6.0 Unit 10 - Overview January 2008 Production Process Overview Organization MRP Control Parameters General Planning Parameters Material Master Planning Parameters January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Organization Plant specific organizational units
ECC 6.0 January 2008 Organization Plant specific organizational units Materials Requirements Planning controller Production controller/production scheduler/planner group Person responsible (financially) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Organization Non-plant specific organizational units Capacity planner
ECC 6.0 January 2008 Organization Non-plant specific organizational units Capacity planner January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Control Parameters
ECC 6.0 MRP Control Parameters January 2008 Environment Number range Master Data Materials Requirements Planning controllers Float times Planned Orders Conversion order type Dependant requirement availability January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Control Parameters (continued)
ECC 6.0 MRP Control Parameters (continued) January 2008 Planning run Bill of Material (BOM) selection External procurement Planning horizon Availability Check Material Production Resource/Tool (PRT ) Capacity Scheduling Control Parameters January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

General Planning Parameters
ECC 6.0 General Planning Parameters January 2008 Order Type Control Parameters Types of routings, BOM’s per order type: manually or automatically Availability checking Create Confirmation Parameters Reservations Status Updates Define Valuation of Goods Received Moving Average Price Control evaluation January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Planning Parameters
ECC 6.0 Material Master Planning Parameters January 2008 Materials Requirements Planning views for materials Work Scheduling views for manufactured products January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Unit 10 - Section 1 Exercises January 2008 Maintain Plant Parameters for Production Planning Define Storage Locations for Work in Process and Raw Material Inventory Create Production Scheduling Profile Create Production Scheduler Control Parameters for Material Requirements Planning (MRP) Assign Availability Check to Order Type January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Unit 10 - Section 2 Exercises January 2008 Define Scheduling Parameters for Operations Define Control Parameters for Order Type Create Confirmation Parameters Define Valuation for Goods Received January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 11 - Overview Material Group Material Master Material Types
ECC 6.0 Unit 11 - Overview January 2008 Material Group Material Master Material Types Material Master Views Purchasing Info Record Source List January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Material Group The material group field allows similar materials to be managed together Material group is used in reporting Executive Information Systems (EIS) Logistics Information Systems (LIS) Etc. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Material Master Material master data can be related directly to all organizational levels General information of a material (description, number, base unit of measure) however has to be related to the highest level of organization - the client Further tailor the material master at the plant level or lower January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Type Categorizes materials Defines the material attributes
ECC 6.0 January 2008 Material Type Categorizes materials Defines the material attributes Valuation Procurement Price control Etc. Controls transaction involving the material Controls screen sequence, number assignment, field selection, account determination January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Types Standard material types are used in all industries
ECC 6.0 January 2008 Material Types Standard material types are used in all industries ROH: Raw Materials Purchased externally only No sales view HAWA: Trading Goods Always purchased externally Sold without any change to the material No manufacturing views exist FERT: Finished Products Are normally produced internally No purchasing views exist January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Additional Material Type
ECC 6.0 January 2008 Additional Material Type HIBE: Operating Supplies VERP: Customer returnable packaging LEER: Empty containers KMAT: Configurable material ERSA: Spare parts DIEN: Services January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Views Basic data Classification
ECC 6.0 January 2008 Material Master Views Basic data Classification Sales: sales organization data Sales: general/plant data Sales text Purchasing Purchase order text Forecasting Purchasing View MRP 1 Executive Pen January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Views (continued)
ECC 6.0 January 2008 Material Master Views (continued) MRP 1, 2 Work scheduling Storage Warehouse management Quality management Accounting Costing Purchasing View MRP 1 Executive Pen January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Basic Data
ECC 6.0 Material Master Basic Data January 2008 General data Basic Unit of Measure Unit of measure in which stocks of the material are managed Material Group Key that you use to group together several materials or services with the same attributes Division Used to determine the sales area and the business area for a material, product, or service January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Basic Data (cont.)
ECC 6.0 January 2008 Material Master Basic Data (cont.) Dimensions/EANs Gross weight Used to check storage capacity in warehouse Net weight Weight excluding packaging and extras – this is needed for sales and distribution Weight Unit Unit of Measure for weight Volume The space that the material occupies per unit of volume January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Sales: Sales Org. 1 View
ECC 6.0 January 2008 Material Master Sales: Sales Org. 1 View General data Base Unit of Measure The Base Unit of Measure is the unit of measure in which stocks are managed within your company. Division You may enter the Division which your product is in for sales (defaults if entered in the Basic data screen). Material Group A key that’s used to group several materials or services for analysis/reporting as well as search by match code. Sales Unit The unit of measure in which the material is sold, if left blank then uses the base unit of measure. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Purchasing View
ECC 6.0 January 2008 Material Master Purchasing View General data Order Unit The unit of measure in which a company purchases the product Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Purchasing Values Purchasing Value Key Define the reminder days and tolerance limits for purchasing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Forecasting
ECC 6.0 January 2008 Material Master Forecasting Number of Periods Required Historical Periods The number of historical values the system uses for the forecast Forecast Periods Number of period splits for which a forecast should be created Forecast Values The numeric quantity for future periods Consumption Values The sum of planned and unplanned consumption January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master MRP 1 General Data MRP Procedures Purchasing Group
ECC 6.0 January 2008 Material Master MRP 1 General Data Purchasing Group The buyer(s) who are responsible for certain purchasing activities MRP Procedures MRP Type Determines whether and how the material is planned Reorder Point If stock falls below this point, the system is flagged to create a planned order MRP Controller The person(s) responsible for the material planning January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master MRP 1 (cont.)
ECC 6.0 January 2008 Material Master MRP 1 (cont.) Lot Size Data Lot Size The lot sizing procedure to calculate the quantity to be produced or procured Minimum Lot Size The smallest order quantity Fixed Lot Size The quantity to be ordered January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master MRP 2 Scheduling Net Requirement Calculation
ECC 6.0 January 2008 Material Master MRP 2 Scheduling Planned Delivery Time Number of calendar days needed to obtain the material Scheduling Margin Key Used to determine the floats required for scheduling Net Requirement Calculation Safety Stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master MRP 3 Availability Check
ECC 6.0 January 2008 Material Master MRP 3 Availability Check Specifies whether and how the system checks availability and generates requirements for materials planning January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Accounting
ECC 6.0 January 2008 Material Master Accounting Current Valuation Price Control Indicator The control used to valuate the stock of a material Price Unit Number of units to which the price refers Standard Price The valuation of material stocks at standard prices means that all goods movements are valuated at the same price over an extended period Moving Average Price The system calculates the moving average price automatically by dividing the material value in the stock account by the total of all storage location stocks in the plant concerned January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Costing
ECC 6.0 January 2008 Material Master Costing General Data Overhead Group Assigns same overhead rate to group Standard Cost Estimate Future Planned cost of material in future Current Current standard cost of material Previous Historical standard cost of material January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master Costing
ECC 6.0 January 2008 Material Master Costing Planned Prices Future price of material Valuation Data Valuation Class Class type for G/L posting January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Purchasing Info Record The purchasing info record provides continuously updated information about the relationship of a specific material with a specific vendor Order unit Price and price changes Tolerances Reminder info’s and historic data Statistics, texts Automatic or manual updating January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Purchasing Info Record Material 1 Info Record Vendor 1 Info Record Material 2 Info Record Vendor 2 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Source List You use the source list to determine the valid source of supply at a given period in time. It specifies whether the particular source should be used by Materials Requirements Planning January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 11 - Exercises Create Material Master for Raw Materials
ECC 6.0 January 2008 Unit 11 - Exercises Create Material Master for Raw Materials Create Material Master for Finished Products Create Vendor Master Records Centrally January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Management (MM)
ECC 6.0 January 2008 Unit 12 Material Management (MM) - Transaction Data - © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Business Process Integration MM Transactions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Materials Management (MM) January 2008 R/3 FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 12 - Overview Procure-to-Pay business process ECC 6.0
January 2008 Procure-to-Pay business process January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Procurement Process (Procure-to-Pay) January 2008 Purchase Requisition Purchase Order 3-Way Match Notify Vendor Payment to Vendor Vendor Shipment Invoice Receipt Goods Receipt January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 12 - Exercises Create Purchase Order Create Goods Receipt
ECC 6.0 Unit 12 - Exercises January 2008 Create Purchase Order Create Goods Receipt Maintain Automatic Account Assignments Create Invoice Receipt Display Vendors Invoice (Gross) Documents Post Payment to Vendors January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Business Process Integration PP Master Data PP January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 13 - Overview Bill of Material Master Data
ECC 6.0 Unit 13 - Overview January 2008 Bill of Material Master Data Work Center Master Data Work Center Control Key Routing Routing Use Material Types and Production Controlling Activities For Production Activity Prices January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Bill of Material Master Data
ECC 6.0 January 2008 Bill of Material Master Data Bill of Materials (BOM’s) are created as single-level relationships between one parent material and the sub-component material EPEN Barrel Cap Crown Cartridge Band Clip January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Bill of Material Master Data Variant Bill of Material (BOM) Several products with a large proportion of identical parts. EPEN - Red Red Cartridge Band Etc. Black Cartridge Band Etc. EPEN - Black January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Bill of Material Master Data Multiple Bill Of Materials (BOM) One product produced from alternative components or processes, where the differences are small (usually the quantity of a component). BOM 1 = lot size BOM 2 = lot size 101 – 999 Black Cartridge (Buy) Band Etc. EPEN - Black Black Cartridge (Make) Band Etc. EPEN - Black January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Bill of Material Master Data Where is the Bill Of Material (BOM) used? MRP uses the BOM to determine dependent requirements Controlling uses the Bill Of Material (BOM) to calculate product costs Production uses the Bill Of Material (BOM) to issue the proper quantities of components and raw materials to the shop floor January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Master Data
ECC 6.0 January 2008 Work Center Master Data Unique production or assembly area May include Equipment Groups of equipment Production lines Employees Groups of employees Operations carried out at work center January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Work Center Master Data Work center used to define capacities Labor Machine Output Emissions Capacities used in Capacity requirements planning (CRP) Detailed scheduling Costing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Work Center Master Data Assigned Cost center Work Center only assigned to one cost center Human Resources (HR) Qualifications Positions People January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Work Centers have multiple views Basic data Default values
ECC 6.0 January 2008 Work Center Work Centers have multiple views Basic data Default values Capacity overview Scheduling Cost center assignment Technical data January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Work Center Control Key
ECC 6.0 January 2008 Work Center Control Key Scheduling Determine capacity requirements Inspection characteristics required Automatic goods receipt by operation Print time tickets & confirmations Rework Cost Schedule external operations – std values Confirmations January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing Routings enable you to plan the production of materials
ECC 6.0 January 2008 Routing Routings enable you to plan the production of materials Routings are used as a template for production orders and run schedules as well as a basis for product costing. Routing is a sequence of operations which detail the manufacture of a product January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing Routing are used to determine: Operations Work centers
ECC 6.0 January 2008 Routing Routing are used to determine: Operations Work centers Material components Production resources and tools Quality Checks January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing Use Routings will be used in Scheduling (dates, times) Costing
ECC 6.0 January 2008 Routing Use Routings will be used in Scheduling (dates, times) Costing Capacity planning Production orders January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Routing Standard Sequence Alternate Sequence Parallel Sequence
ECC 6.0 January 2008 Routing Standard Sequence Alternate Sequence Parallel Sequence Operation 10 Operation 20 Operation 30 Operation 40 Operation 10 Operation 20 Operation 30 Operation 40 Operation 25 Operation 20 Operation 10 Operation 30 Operation 40 Operation 25 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Types Allowed In Production
ECC 6.0 January 2008 Material Types Allowed In Production Multiple material types may be used in a routing/BOM Raw materials Semi-finished product Trading goods are allowed but not standard Text or Reference materials common January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Display Routing List A collective report displaying the available routings and the material allocations to operations Four General Types Operations Related Component Related PRT Related General List (Operation Control Ticket January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Controlling Activities for Production
ECC 6.0 January 2008 Controlling Activities for Production Used to perform internal cost allocation, where activities by a cost center are measured Labor time Machine hours Output activities are valued Allocation of an activity type is always made with the allocation cost element created in activity type planning January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Activity Prices Prices (costs) for planned activities
ECC 6.0 January 2008 Activity Prices Prices (costs) for planned activities Fixed or Variable Labor = $$/hour Machine = $/hour Overhead = % January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 13 - Exercises Create Bill of Material
ECC 6.0 Unit 13 - Exercises January 2008 Create Bill of Material Create Person Responsible for Work Center Create Work Center Location Review Work Center Control Keys Create Capacity Create Activity Type Labor (Labor Hours) Set Activity Prices Create Work Center for Production Create Finished Products Routing Display Routing List January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Business Process Integration PP Transactions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 14 - Overview Planning Process Elements of High Level Planning
ECC 6.0 Unit 14 - Overview January 2008 Planning Process Elements of High Level Planning Forecasting Planning Strategies Creation of Demand Demand Origination Transferring Demand Plan to Production MRP Process Product Groups January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Planning Process Execution High Level Planning Detailed Planning
ECC 6.0 Planning Process January 2008 Execution High Level Planning Procurement Process CO/PA Detailed Planning Forecasting Sales and Operations Planning Demand Management MPS MRP Execution Sales Information System Manufacturing Execution Order Settlement January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Elements of High Level Planning
ECC 6.0 January 2008 Elements of High Level Planning Three components of high level planning Forecasting Sales and Operations Planning Planning strategy for a product Demand Management High level planning feeds Master Production Schedule (MPS) and in turn, feeds Materials Requirements Planning (MRP) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Forecasting Based on Statistical algorithms to determine ‘fit’
ECC 6.0 January 2008 Forecasting Based on Historical consumption (sales or other) data Budgeting Statistical algorithms to determine ‘fit’ Models Constant, seasonal, trend, seasonal trend Estimation of future demand January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Planning Strategies Planning strategies represent the business procedures for The planning of production quantities Dates Wide range of strategies January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Planning Strategies January 2008 Multiple types of planning strategies based upon environment Make-To-Stock (MTS) Planning components Make-To-order (MTO) Driven by sales orders Configurable materials Mass customization of one Assembly orders January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Creation of The Demand Program Production Plan
ECC 6.0 Creation of The Demand Program Production Plan January 2008 The result of Demand Management is the demand program Data Elements of the Production Plan Time Buckets Sales Production Stock levels Days supply January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Transfer Planned Demand to Production
ECC 6.0 January 2008 Transfer Planned Demand to Production Differentiates planned independent requirements and customer independent requirements Gives the information needed in MPS and MRP for planning at the material level Sales orders may consume planned requirements and update the Sales Information System This data can be used for future sales planning (forecasting) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Material Requirements Planning A set of techniques utilizing bills of materials, inventory data (lead times and current status) and the master production schedule to calculate requirements for raw materials, components, and subassemblies A time-phased planning tool with a defined, specific algorithm Balances supply and demand January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Process Outputs Inputs MRP Process Inventory Master Schedule
ECC 6.0 MRP Process January 2008 Inventory Master Schedule Planning Rules Bill of Material Orders Forecasts MRP Process Recommended Procurement Production Inputs Outputs January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Basic Process Netting out inventory Lot sizing procedure
ECC 6.0 January 2008 MRP Basic Process Netting out inventory Lot sizing procedure Procurement Process Scheduling BOM explosion January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Demand Types Independent demand Forecasted
ECC 6.0 January 2008 MRP Demand Types Independent demand Forecasted Unrelated to other items May be based on historical records Suitable for: Finished Goods, Supplies, Spare parts January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Demand Types Dependent demand
ECC 6.0 January 2008 MRP Demand Types Dependent demand Is calculated from higher source of demand Should not be forecasted Bill of Material (BOM) for the Executive Pen Suitable for components, sub-assemblies, raw material, packaging January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Inventory Balances
ECC 6.0 January 2008 MRP Inventory Balances Material Requirements Planning calculation begins with “on hand” balance Inventory accuracy is critical to Materials Requirements Planning effectiveness. Overstated = high likelihood of shortage Understated = excess inventory, Unnecessary expenditure, aged inventory and revision level out of control Wrong parameters in, wrong results out “garbage in garbage out” GIGO January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Parameters Replenishment Lead times
ECC 6.0 January 2008 MRP Parameters Replenishment Lead times Purchasing lead time + setup time + production time + tear-down time + etc. Shorter Lead Times = lower Inventory, better service, better cash flow, and less work January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Parameters (continued)
ECC 6.0 January 2008 MRP Parameters (continued) Safety stock Replaces ZERO in Materials Requirements Planning (MRP) calculations Should be carefully monitored Lot Size Strategy Static Periodic Optimum January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 MRP Planned Orders Replenishment Elements Created by Materials Requirements Planning (MRP) Dependent demand based on Bill of Material (BOM) Processing Firmed: changes only recommended Changed by the planner Converted into a production order System assumes recommendations have been acted upon January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

MRP Reports Materials Requirements Planning (MRP) List
ECC 6.0 January 2008 MRP Reports Materials Requirements Planning (MRP) List Batch Process Snapshot of last planning run Stock/Requirements list Real-time Dynamically updates changes Supply (i.e. Available inventory) Demand January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Product Groups A product group combines other product groups and materials Manufacturing procedure Product design Market niche, etc. Proportional Factors (Percentages) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Product Groups Multi-level or single-level
ECC 6.0 Product Groups January 2008 Multi-level or single-level A product group is multi-level if it contains other product groups Lowest level in a product group hierarchy always consists of materials. A product group is single-level if its members are materials only A material or product group can be a member of more than one owner product group January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 14 - Exercises Create Product Group Create a Production Plan
ECC 6.0 Unit 14 - Exercises January 2008 Create Product Group Create a Production Plan Display Stock/Requirements List Transfer Planning Data to Demand Management Review Demand Management January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Business Process Integration PP Transactions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 15 - Overview Production Process Defining Production Orders
ECC 6.0 Unit 15 - Overview January 2008 Production Process Defining Production Orders Production Order Release Production Order Elements Production Order Completions Production Order Costs Production Order Settlements Productions Order Status January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Production Order Defines Material is to be processed
ECC 6.0 January 2008 Production Order Production Order Defines Material is to be processed At what location (work center) At what time How much work is required Resources to be used Order costs settlement January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Standard Process
ECC 6.0 Production Order Standard Process January 2008 Documents/Procedures used in the manufacture of material Order creation/Order Conversion Capacity planning Order scheduling Order release/processing Shop floor documents Completion confirmation Goods receipts Order settlement January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Release
ECC 6.0 January 2008 Production Order Release When a production order is created the following actions are carried out: A routing selected: operations and sequences The bill of materials transferred Reservations generated for bill of material items in stock January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Release (cont.)
ECC 6.0 Production Order Release (cont.) January 2008 When a production order is created the following actions are carried out: The planned costs are generated The capacity requirements generated for the work centers Purchase requisitions generated for non-stock items and externally-processed operations January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Elements
ECC 6.0 January 2008 Production Order Elements Order header Order number Material produced Plant Quantity Dates PRT Tooling Equipment Operations Tasks Work centers Times Dates Control keys Components Material components Quantity January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Completion and Settlement
ECC 6.0 Production Order Completion and Settlement January 2008 Completion confirmation Quantities of material used Operations completed Time Personnel Costs Planned costs and actual costs Settlement rule for the order for accounts/cost centers Settlement profile Settlement receiver January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Completions
ECC 6.0 January 2008 Production Order Completions Completion confirmation: Confirms both the yield and scrap quantities Backflushing Can create goods movements Reduction of component reservations Receipt of product if automatic Goods Receipt (G/R) set Activity costs January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Costs
ECC 6.0 January 2008 Production Order Costs Planned costs Primary Costs Material Costs (BOM) Based on material master price for each component Cost for External Processing Secondary Cost Production Costs (Routing) Material Overhead Costs Production Overhead Costs January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Costs
ECC 6.0 January 2008 Production Order Costs Actual costs Primary Costs BOM components Updated when goods are issued to order, or when purchased materials are received Secondary Costs Uses routing Time Cards from Operations May include activity costs Material Overhead Costs Production Overhead Costs Gets updated at completion confirmation January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Settlement
ECC 6.0 January 2008 Production Order Settlement Settlement Profile Receivers Maximum number of distributions Calculated as percentage or equivalence numbers Default value for settlement structure Settlement structure Determines how the debit cost elements are assigned to settlement cost elements. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Settlement
ECC 6.0 January 2008 Production Order Settlement Settlement Rule Automatically assigned to order Distribution rule (cost receiver, settlement share and type) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Production Order Status
ECC 6.0 January 2008 Production Order Status REL: Released CRTD: Created PRT: Printed CNF: Confirmed DLV: Delivered PRC: Pre-costed GMPS: Goods movement posted MACM: Material Committed MANC: Mat. Availability not checked NTUP: Dates are not updated SETC: Settlement rule created January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 15 - Exercises Run Master Production Scheduling
ECC 6.0 Unit 15 - Exercises January 2008 Run Master Production Scheduling Display Stock/Requirements List Convert Planned Order to Production Order Issue Goods to Production Order Confirm Production Completion Receipt of Goods from Production Order Settle Costs of Production Order January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Management (QM)
ECC 6.0 January 2008 Unit 16 Quality Management (QM) - Overview, Organizational Structure, Master Data, Rules, and Transactions - © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Business Process Integration QM Transactions Org Data Rules QM Master Data QM QM January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Management (QM)
ECC 6.0 Quality Management (QM) January 2008 R/3 FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 16 - Overview Quality and ISO-9000 Quality Components
ECC 6.0 Unit 16 - Overview January 2008 Quality and ISO-9000 Quality Components Quality Planning Quality Planning Inspection Quality Master Data Material Master January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Management 20 Areas Defined by ISO-9000
ECC 6.0 Quality Management 20 Areas Defined by ISO-9000 January 2008 Management responsibility Quality management system Contract review Design control Document and data control Purchasing Control of customer supplied product Product identification and traceability Process control Inspection and testing January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Management 20 Areas Defined by ISO-9000 (continued)
ECC 6.0 Quality Management 20 Areas Defined by ISO-9000 (continued) January 2008 Control of inspection, measuring and test equipment Inspection and test status Control of nonconforming product Corrective and preventive action Handling, storage, packaging, preservation and delivery Control of quality records Internal quality audits Training Servicing Statistical techniques January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Management Integration
ECC 6.0 Quality Management Integration January 2008 Procurement – inspection of incoming materials Sales and Distribution – inspection and certificates for outgoing product (including ISO 9000 certificates) Production – inspection of work in process Plant Maintenance – equipment inspection Service Management – quality correction plans HR – employee certification verification for quality inspections January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Components of Quality Module
ECC 6.0 January 2008 Components of Quality Module Quality Planning Quality Inspection Quality Control Quality Certificates Quality Notifications January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Components of Quality Planning
ECC 6.0 January 2008 Components of Quality Planning Basic data (for example, material master, catalogs, inspection characteristics, inspection methods and sampling procedures). Inspection planning (inspection plans, reference operation sets, material specifications). Inspection lot processing (inspection lot creation and inspection lot completion) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Planning Manage quality information
ECC 6.0 January 2008 Quality Planning Manage quality information Materials Vendors Manufacturers Customers Internal Monitor the QM systems of vendors and manufacturers January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Master Data Catalogs Inspection Characteristics
ECC 6.0 January 2008 Quality Master Data Catalogs Manage, uniformly define, and standardize information Inspection Characteristics Describes the inspection criteria for materials, parts, and products January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Master Data (continued)
ECC 6.0 Quality Master Data (continued) January 2008 Inspection Methods How to carry out an inspection for an inspection characteristic (test) Sample Determination How much to inspect January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Material Master Material master contains the control parameters you need to process quality inspections Define parameters based on the inspection type Triggering events for quality inspections Inspection with or without a task list With or without a material specification Whether results are to be recorded for inspection characteristics January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Master - Quality
ECC 6.0 Material Master - Quality January 2008 Catalog profile Plt. Material Status Post to insp. stock indicator QM control key Default for quality notification or defaults Status to limit the use of the material in plant If used, posts to inspection stock at goods receipt (otherwise available) Controls the conditions that apply to the quality management processes January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Components of Quality Inspection
ECC 6.0 January 2008 Components of Quality Inspection Inspection lot creation Results recording Defects recording Inspection lot completion Usage decision January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Planning Inspections
ECC 6.0 January 2008 Quality Planning Inspections Plan inspections for goods receipt, stock transfers, for production orders, for predefined inspection points, in shipping when deliveries are created and plan recurring inspections Plan inspection operations in work processes Plan a source inspection at the vendor’s premises and trigger this inspection before the delivery date January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Certificates Certifies the Quality of the Goods
ECC 6.0 January 2008 Quality Certificates Certifies the Quality of the Goods Created Automatically at Delivery Customer Specific Specifications General Specifications Certificate of Analysis Certificate of Inspection January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Quality Notification Functions for recording and processing different types of problems Problems resulting from poor-quality goods or services. Describes a problem and identify the affected reference objects Record individual defect items that relate to the problem and analyze their causes Describes a business object’s nonconformance with a quality requirement Offer structure for storing the causes of and Corrections for defects found Can record the names of all persons (partners) who are involved with the problem January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Quality Notification (continued)
ECC 6.0 Quality Notification (continued) January 2008 Quality Notifications can help process the following internal or external problems: Complaint filed by Customers Complaints against vendors Company-internal problem User Specific Problems Creates request to take appropriate action Specify the corrective actions to be taken Used as a tool for continuous process improvement Log all activities that have been carried out for the problem January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Unit 16 - Section 1 Exercises January 2008 Create Quality View on The Material Master Maintain Plant Settings for Quality Display Stock/Requirements List Run Master Production Schedule Convert Planned Order to Production Order January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Unit 16 - Section 2 Exercises January 2008 Goods Issue to Production Order Enter Completion Confirmation of Production Order Goods Receipt from Production Record Usage Decisions Check Stock Status Settle Costs of Production Order January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Business Process Integration Org Data Master Data Rules CO FI SD QM MM PP Transactions January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Sales and Distribution (SD) January 2008 R/3 FI Financial Accounting CO Controlling PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales and Distribution PP Production Planning QM Quality PM Plant Maintenance SM Service Client / Server Integrated Business Solution EC Enterprise AM Fixed Assets January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 17 - Overview Sales Order Shipping Overview Billing Overview
ECC 6.0 Unit 17 - Overview January 2008 Sales Order Shipping Overview Delivery Creation Delivery Notes Picking Packing Goods Issue Billing Overview Payment January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Shipping Overview Functionality to support picking, packing, loading processes and goods issue Work list and deadline monitoring Availability and backorder processing Integrated with the Material Management (MM) and Finance (FI) modules Facility for transportation management Shipping Documents Foreign Trade January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Shipping Overview (continued)
ECC 6.0 Shipping Overview (continued) January 2008 Order Combination Order 1 Order 2 Order 3 Delivery 8…12 Partial Delivery Order 4 Delivery 8…13 Delivery 8…14 Delivery 8…15 Complete Delivery Order 5 Delivery 8…16 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Delivery Creation Activities
ECC 6.0 January 2008 Delivery Creation Activities Checks order and materials to determine if a delivery is possible — delivery block (hold), completeness Confirms availability Confirms export/foreign trade requirements Determines total weight & volume January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Delivery Creation Activities (cont.)
ECC 6.0 Delivery Creation Activities (cont.) January 2008 Generates packing proposal Calculates weight and volume Checks scheduling Considers partial deliveries Updates route assignment Assigns picking location Determines batches Quality check (if needed) Updates sales order January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Delivery Creation Multiple ways to create a delivery
ECC 6.0 January 2008 Delivery Creation Multiple ways to create a delivery Delivery due List Produces a work-list of deliveries Can be scheduled to run in batch Automatically consolidates deliveries From order document Manually Includes deliveries and transfers January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Delivery Document Initiates the delivery process
ECC 6.0 January 2008 Delivery Document Initiates the delivery process Control mechanism for the process Picking Packing Loading Posting Goods Issue Changes to delivery are allowable - products, quantities January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Picking Quantities based on delivery
ECC 6.0 January 2008 Picking Quantities based on delivery Assigned date when picking should begin Automated storage location assignment Supports serial number/lot number tracking and batch management Integrated with Warehouse Management (WM) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Packing Identifies which packaging is to be used for specified products (customer preference and UCC-128 considerations) Identifies and updates accounts associated with returnable packaging Tracks the packed product by container Insures weight/volume restrictions are enforced January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Goods Issue Event that indicates the change in ownership of the products Reduces inventory Automatically updates the General Ledger (G/L) accounts Ends the shipping process and prevents updates the status of the shipping documents January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Goods Issue General Ledger
ECC 6.0 Goods Issue January 2008 General Ledger Cost of Goods Sold Inventory Debit Credit Debit Credit 1000 1000 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Billing Overview Automated invoicing based on sales orders and/or deliveries Functionality for processing credit/debit memos and rebates Integration with Finance (FI) & Controlling (CO) Updates customer’s credit data Can create pro forma invoices January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Delivery based Invoicing
ECC 6.0 January 2008 Billing Methods Collective Invoicing Delivery based Invoicing Delivery 8…34 Delivery 8…33 Order 14 Order 9 Delivery 8…56 Invoice 9…68 Order 6 Delivery 8…20 Delivery 8…21 Invoice 9…45 Invoice 9…46 Split Order 32 Delivery 8…86 Invoice 9…92 Invoice 9…91 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Billing Documents Explicitly specify documents
ECC 6.0 January 2008 Billing Documents Explicitly specify documents Billing due list — builds a work list of invoices that should be generated Automatic posting to Finance (FI) module January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Automatic Account Assignment Defines the General Ledger (G/L) accounts that billing entries are posted Revenue Deduction Freight charges Other applicable General Ledger (G/L) accounts January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Postings to Accounting
ECC 6.0 Postings to Accounting January 2008 Sales Invoice Sold To: Rushmore Group Sales Org: S001 Dist Channel: RE Division: 01 Conditions/Price: $500 General Ledger Account Assignment Debit Credit Customer A/R Recon 500 Revenue January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Billing Plans Periodic — total amount for a planned billing period
ECC 6.0 January 2008 Billing Plans Periodic — total amount for a planned billing period Milestone — distributing the total amount over multiple billing dates - generally used with the Project System (PS) Installment — evenly proportioned amounts and defined payment dates Resource related — consumed resources such as service or consulting January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

BPI – II Final Roadmap Procurement Process Production Process
ECC 6.0 BPI – II Final Roadmap January 2008 Purchase Order Purchase Requisition Procurement Process Schedule and Release Goods Receipt Convert Production Proposal Production Process Goods Issue Run MPS w/MRP Invoice Receipt Sales Order Process Check Availability Completion Confirmation Payment to Vendor Sales Order Entry Quality Inspection Pick Materials Goods Receipt Order Settlement Receipt of Payment Post Goods Issue Invoice Customer January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Unit 17 - Exercises Create Sales Order Create Delivery
ECC 6.0 January 2008 Unit 17 - Exercises Create Sales Order Create Delivery Pick Materials on Delivery Note Post Goods Issue Create Billing for Customer Post Receipt of Customer Payment Review Document Flow Complete all Activities to Satisfy the Order-to-Cash Cycle January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Business Process Integration I

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Business Process Integration I

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