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Is 466 Advanced topics in information Systems Lecturer : Nouf Almujally 5 – 10 – 2011 College Of Computer Science and Information, Information Systems.

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Presentation on theme: "Is 466 Advanced topics in information Systems Lecturer : Nouf Almujally 5 – 10 – 2011 College Of Computer Science and Information, Information Systems."— Presentation transcript:

1 is 466 Advanced topics in information Systems Lecturer : Nouf Almujally 5 – 10 – 2011
College Of Computer Science and Information, Information Systems Department

2 Lessons Learnt from Lecture4
Lecture - 4 March 1999 ITN286 - Process Engineering and EWS Lessons Learnt from Lecture4 Instance? each install of the SAP R/3 software on an individual application server How To web‑enable the SAP Applications? QUT Brisbane, Dr. Michael Rosemann

3 Objectives Business Process Integration Organizational Elements of FI
Organisational Data Master Data Rules Transaction Data Organizational Elements of FI Organizational Elements of CO Organizational Elements of SD Organizational Elements of MM Material Management Module

4 Business Process Integration
FI SD MM Transactions Org Data Master Data FI MM SD Rules FI MM SD FI MM SD

5 Business Process Integration
“The Stool” : a metaphor for the SAP structure There are four basic components needed to run execute SAP: Organizational Data Master Data Rules Transactions The Legs which ‘hold up’ the transactions Transactions cannot be run unless these are setup. The legs are typically configured during the implementation process. 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.

6 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 Data that is defined when the system is installed An example is the table with country codes. 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.

7 Master Data Master data is relatively fixed
Before making the master data configurations, you must have completely defined the organizational structures Master data is created centrally and shared among applications and business processes. Ex. Material master data contains all information about the materials a company procures, manufactures, stores and ships Purchasing information record contains information on a specific material and a vendor supplying this material 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.

8 Master Data (Con.) Vendor master data contains information about the vendors that supply an enterprise. It contains data such as: the vendor’s name and address The currency used for ordering from the vendor Names of important contact persons (sales staff) General Ledger master data It serves as a complete record of all business transactions of a company.

9 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.

10 Transaction Data Data resulting from executing business process steps.
Unlike master data, transactional data is dynamic – each transaction is unique  An example of transaction data is: The goods in a warehouse which change after each purchase order The company is selling some materials to one of the customer. So they will prepare a sales order for the customer. When they will generate a sales order means they are doing some sales transactions. Those transactional data will be stored in Transactional table. 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.

11 Con.

12 SAP Organizational Elements

13 Definition Definition of Organizational Elements:
In the SAP R/3 System, organizational elements form structures that represent the legal and organizational views of a company. These views include: accounting, manufacturing planning and execution, materials management, and sales and distribution. In summary, the organizational elements and their structures form the framework in which all business transactions are processed.

14 Mapping our organization to SAP Organizational data
Client Company Code Plant Storage Locations Sales Organization Division SAP Enterprise Company Subsidiary Factory Sales Organization Division Examples: The highest-level element of all organizational elements is the Client. The Client represents the enterprise/headquarters group. A Company Code is a unit included in the balance sheet of a legally-independent enterprise and is the central organizational element of Financial Accounting. In the context of Sales and Distribution, the Sales Organization is the central organizational element that controls the terms of sale to the customer. Division is usually used to represent product line. In the context of Production Planning, Plant is the central organizational unit. A Plant can manufacture product, distribute product, or provide a service. In Inventory Management, material stocks can be differentiated within one plant according to Storage Location. Organizational elements may be assigned to a single application (such as Sales Organization assigned to Sales and Distribution, or to several applications (such as Plant assigned to Materials Management and Production Planning). Warehouses

15 Material Management Organizational Structure
Client 401 Company USA Germany Purchasing Organization N. America Europe Plant New York California Hamburg Material Management’s Organizational Structure  A company is made up of a variety of operational groups. These groups or organizational units can include sales, purchasing, accounting, distribution, and so forth. SAP’s R/3 System is designed to support each of these groups. Different software applications in the R/3 System can be linked to these organization units to create a completely integrated company structure. Flexible organizational units in the R/3 System let you represent your organization with a comprehensive company structure. The combination and integration of organizational units form the legal and structural basis of a company. For example, organizational units can interface with materials management, sales and distribution, and financial accounting. Different application areas in the R/3 System can be linked through organizational units to create a completely integrated company structure. Purchasing Organization A purchasing organization is an organizational unit that procures materials or services. It negotiates purchasing conditions for plants to which it has been assigned. The system can be set up flexibly to support Purchasing. For example, for a company with centralized purchasing where a single purchasing organization is responsible for the different company codes and plants within a corporate group. The system also supports decentralized purchasing where different purchasing organizations are responsible for certain company codes and plants. A mixture of organizations and responsibilities is also possible using references between purchasing organizations. In this way, a certain purchasing organization can access more advantageous terms and conditions. Purchasing Group A purchasing organization is divided into purchasing groups (groups of buyers) that are responsible for operational tasks. A purchasing group can also be responsible for several purchasing organizations. Company Code Company code is the smallest organizational unit for which a complete self-contained set of accounts can be drawn up for purposes of external reporting. This involves recording all relevant transactions and generating all supporting documents for the legally-required financial statements such as balance sheets and profit and loss statements. Plant A plant is an operating unit concerned with production and planning, or a combination of locations with material stocks, known as storage locations. It is a central organizational unit in materials management. Storage Location A storage location is the total of all storage bins in a plant that are managed together. Storage Location Receiving Warehouse Receiving Warehouse

16 Key Organizational Elements
Client: self-contained unit in SAP system with separate master records and complete set of database tables. Root of the organizational hierarchy. Highest organizational element. The Client represents the enterprise/headquarters group. All related companies contained in the same client. Generally one client per SAP production instance. Master data is created at the client level.

17 Financial Accounting View (FI)

18 Key Organizational Elements - FI
Company Code: a distinct legal entity contained within an ERP system. “Distinct legal entity” - reports its operations independently. Accounts are managed by company code. Business transactions are carried out at the company code level. Client may contain 1 or more company codes. A company code can be in only 1 client. Business Area: Internal organizational unit used to create balance sheets and profit and loss statements below the company code level  (optional)

19 Controlling View (CO) CO Controlling Area FI Company Code CO CO
Cost Center Profit Center FI Business Area

20 Key Organizational Elements - CO
Controlling Area: Independent organizational structure for which costs and revenues are collected can have many company codes assigned to it Profit Center: a unit that collects revenue usually product lines (cost centers are assigned to profit centers) Cost Center: a unit that collects commonly related costs

21 Sales and Distribution View (SD)

22 Key Organizational Elements - SD
Sales Organization: central organizational element controlling terms of sale to customer. Distribution Channel: mechanism through which goods and/or services reach the customer. Ex. wholesale, retail and direct sales. Division: logical groupings of related products. Sales Area: a unique combination of a sales organization, distribution channel, and division.

23 Materials Management View (MM)

24 Key Organizational Elements - MM
Plant: location where goods or services are produced, maintained, or distributed. Each plant belongs to only 1 company code. A company code may have multiple plants. Storage location: place within a plant where goods are stored. Each plant must have at least one storage location. Each storage location belongs to only 1 plant. Purchasing Organization: part of organization responsible for procuring materials and services. Negotiates purchases, sets pricing conditions, engages in strategic purchase planning, sets contracts.

25 Material Management Conditions
Purchase Organization PO linked to one, many or no CC PO has to be linked to one or many plants Plant PL has to be assigned to a CC PL can have one to many Storage locations Storage Location Many SL to one PL

26 Material Management Module

27 Materials Management Module
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. Purchasing (MM-PUR)  Purpose The R/3 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.

28 Components of Materials Management
(MM) Logistics Invoice Verification Material Master Physical Inventory Valuation MRP Service Entry Sheet Product Catalog Purchasing Mgmt. Foreign Trade/ Customs

29 Procurement Process (Procure-to-Pay)
Purchase Requisition Purchase Order Notify Vendor Payment to Vendor Vendor Shipment Invoice Receipt Goods Receipt

30 Procurement Process This is a standard view of the procure to pay process and the most common.

31 Procurement Process Starts with a requisition that needs to be filled.
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 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.

32 3-Way Match for Payment Purchase Order Payment Program Invoice Receipt
Debit Credit Payment Program Invoice Receipt Verification Goods Receipt

33 Outcomes of the Procurement Process
Purchase Requisition Purchase Order Goods receipt Invoice Receipt Pay the Vendor

34 1- 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.)

35 Purchase Requisition (con.)
What are types of information required? Materials Quantities Delivery dates Plants Purchasing groups, etc.

36 2- Purchase Orders Purchase Orders are: The process:
A formal request to a vendor to provide materials or services An internal planning and tracking tool. The process: Request for Quotations The business sends out RFQ to the vendors and the vendors respond back with Quotations with prices.  quotation evaluation Purchase Order Printed, fax, sent, etc. to a vendor

37 Purchase Order (con.) What are types of information required? Vendor
Material and/or service Quantity and price Delivery dates Terms of payment

38 3- 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

39 Goods Receipt (con.)

40 4- Invoice Receipt © SAP AG and The Rushmore Group, LLC 2007

41 Invoice Verification Matches the vendor’s invoice to the purchase order and the goods receipt (3-way match) Matches price and quantity Updates the purchase order and its history Updates accounting information

42 5- Pay the Vendor Selects invoices for payment based on the payment terms in the vendor master or purchase order Generates payment for released invoices Updates accounting information

43 Pay the Vendor (con.) July 2007 Version 4.1
© SAP AG and The Rushmore Group, LLC 2007

44 Questions ??

45 What should you do this week ?
Review the lectures. Do the Tutorial and submit it online: Due date: Friday. Read The assignment to discuss it during the tutorial. Consult Lecturer if any questions related to the subject.

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