01 Sap Overview

IBM Global Services

ERP / SAP Overview

© Copyright IBM Corporation 2003

IBM Global Services

ERP Overview

Enterprise Resource Planning Slide 2

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Enterprise Resource Planning

... synchronization of Company functions...

Purchase

Manufacturi ng

Financ e

Sales Slide 3

ERP / SAP Overview | September 2003

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IBM Global Services

Enterprise Resource Planning … and extended to the complete value chain...

Tier I Component Manufacturer

Vehicle OEM Tier II Component Supplier Slide 4

ERP / SAP Overview | September 2003

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IBM Global Services

Enterprise Resource Planning ... delivering administrative and decision support with...

Decision support and analysis Processes monitoring & feedback Administrativ e registration

Slide 5

ERP / SAP Overview | September 2003

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IBM Global Services

What is an ERP solution...? …. Integrated across the primary and support processes Distributio n Manufacturi Marketing ng

Materials

Planning and Executio n

Engineering

Financ e

Sales Human Resources

Slide 6

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

The ERP application  An integrated suite of business applications, which.. -

-

-

Closely links, monitors, and controls primary enterprise resources like manpower, machine, material, methods, market and money Enables corporates to readily change their processes to adapt to the ever changing business scenario Provides expertise in industry specific business processes

 Entails -

Slide 7

Parameterization / Configuration Designing & Customization Testing and Implementation Training

ERP / SAP Overview | September 2003

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Why clients buy ERP?  Corporate Initiatives -

Strategic initiatives  A requisite capability in a competitive global business

-

Operational initiative  A foundation for performance and cost improvement via integration

-

Organizational initiative  To initiate a major organizational change within the company

 Technology -

IT is making the transition from a supporting operational entity to becoming a strategic competitive tool.

 BECAUSE OTHERS ARE BUYING IT!!!

Slide 8

ERP / SAP Overview | September 2003

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IBM Global Services

Recent business trends favoring ERP growth  Business Process Reengineering ( BPR )  Most large companies are attempting to cut in-house development costs, improve customer service, and speed products to market by reorganizing their existing business processes

 Software Pricing  Licensing and pricing of mainframe based packaged applications are tied to the size of mainframe system on which the applications run, but now customers are now demanding user-based licensing options and major corporate applications like SAP provide this instead of the conventional platform-based pricing technique

Slide 9

ERP / SAP Overview | September 2003

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IBM Global Services

Recent business trends favoring ERP growth  Globalization  As businesses are becoming more global in scope, people are demanding packaged corporate applications that are available in a variety of languages with support for multiple currencies

 Integration  As more and more companies are going for BPR, there is increase in demand for integrated solution e.g.. different applications sharing a common database and thus enabling data definitions and business rules to be applied across an entire organization with the facility of doing modifications at one location only

Slide 10

ERP / SAP Overview | September 2003

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IBM Global Services

Business process benefits clients expect from an ERP project       

Global process/ Product management Integrated Supply Chain Management Leverage purchasing and vendor management Order cycle time/ customer service improvement Inventory reductions Reduced information systems costs on an ongoing basis Improved business management through worldwide integration and information

Vendors

Inbound Logistics

Manufacturing

Transportation Distribution

Logistics and Distribution

Slide 11

ERP / SAP Overview | September 2003

Delivery

Customer

Consumer

Sales & Customer Service

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IBM Global Services

Major ERP vendors

Slide 12



SAP R/3



Peoplesoft



Oracle



Baan



JD Edwards

ERP / SAP Overview | September 2003

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IBM Global Services

What results can be expected from an “ERP culture”?

❑ Reduced working capital requirements ❑ Improved customer service ❑ Improved direct labour productivity ❑ Reduced purchase costs ERP ❑ Reduced obsolescence ❑ Reduced overtime ❑ Having the figures to make decisions ❑ Having accountability throughout the organization ❑ Improved quality of life

Slide 13

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

SAP R/3 Overview Systems Applications & Products in Data Processing

Slide 14

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

SAP AG – At a Glance Founded in Germany in 1972 Market Leader in Industrial Enterprise Application (IEA) About 56% market share in the ERP market Worldwide presence in over 50 countries 18,000+ employees Trained consultants doubled since 1996 (40,000) About 20,000 companies in 120 countries Around 64,500 installations of SAP Strength lies in its high degree of integration, mainly for large, global corporate enterprises – Significant presence in Global Fortune 500 companies Slide 15

ERP / SAP Overview | September 2003

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SAP R/1 , R/2 •

The R/1 system – Developed for ICI Chemical – Released 1972 – Focused on Sales & Distribution and Materials Management – Discontinued after release of R/2 •

R/2 Basis System

Slide 16

The R/2 system – Reorganized as leading mainframe software for large multinational corporations – No sales effort planned – reactive only – 4,300 copies worldwide in 1993 – Mainframe-based to replace user legacy software; co-existence and migration strategy underway for R/2 and R/3

ERP / SAP Overview | September 2003

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SAP R/3 : A comprehensive business solution SD

Sales & Distribution

MM

PP

R/3

Materials Mgmt.

Product Planning

QM Quality Mgmt.

CO

Controlling

TR

Treasury

Client/Server PS PM ABAP/4 WF

Project System

Plant Maintenance

HR

Human Resources

Slide 17

FI

Financial Accounting

ERP / SAP Overview | September 2003

Workflow

IS

Industry Solutions

© Copyright IBM Corporation 2003

IBM Global Services

SAP R/3 : 3 Tier Architecture The Presentation Layer Those SAP R/3 software components that specialize in interacting with end-users form the Presentation Layer.

The Application Layer Those SAP R/3 software components that specialize in processing business applications form the Application Layer.

The Database Layer Those SAP R/3 software components that specialize in the management , storage and retrieval of data form the Database Layer Slide 18

ERP / SAP Overview | September 2003

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SAP R/3 : 3 Tier Architecture

Presentation Layer components

Application Layer components

Database Layer components

reside in:

reside in:

reside in:

Presentation servers: Systems capable of providing a graphical interface.

Application servers: Specialized systems multiple CPUs and vast amounts of RAM.

Database servers: Specialized systems with fast and large hard drives.

Slide 19

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

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SAP R/3 : 3 Tier Architecture Presentation Layer components are installed across many PCs.

The Application Layer components are installed across one or more highend servers. The Database Layer components are installed on high-end database server. Slide 20

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

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SAP R/3 Overview SD

Sales & Distribution

MM

PP

R/3

Materials Mgmt.

Product Planning



QM Quality Mgmt.

CO

Controlling

TR

Treasury

Client/Server PS PM ABAP/4 WF

Project System

Plant Maintenance

HR

Human Resources

Slide 21

FI

Financial Accounting

ERP / SAP Overview | September 2003

Workflow

IS

Industry Solutions

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IBM Global Services

Integration All business processes throughout the supply chain are executed in one system sharing all information SAP R/3

Workflow

S U P P L I E R

Slide 22

C U S

Procurement

Production

Distribution

T

MM

PP

SD

O M

Finance and Accounting FI

ERP / SAP Overview | September 2003

E CO

R

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SD: Sales and Distribution

SAP R/3

SD

Slide 23

Sales & Distribution . . . . . . . .

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

SD Overview

SD

Inquiry Quotation

Purchasing Materials Planning

Sales Order

Production

Pricing Delivery to Customer

Picking Packing

Customer Stock

Goods Issue Invoicing

Slide 24

ERP / SAP Overview | September 2003

Goods Receipt

Transportation

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IBM Global Services

Process Chain: Sales Distribution Sales/Distribution Chain Inbound Logistics from Materials Management

Sales Order & Distribution Process

Outbound Logistics to Customer

Receive Payment FI

Support Customer Sales (Customer Info Analysis) - Optional -

Create Invoice FI/CO/PA - Create pick list - Create transportation work list - Create loading work list

Issue Goods (Ship Product)

Process Customer Inquires - Optional -

FI MM Create Delivery Note

(Documents) - Check credit

Check product availability - Determine pricing - Estimate delivery schedule - Determine conditions of sale -

Provide Customer Quotations - Optional -

Create Sales Order FI/CO/PA MM PP

Support Customer Agreements - Optional -

(Activities) Slide 25

ERP / SAP Overview | September 2003

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Order Entry FI

PP MM FI

Credit Management Dynamic Availability Check Cash Forecast

?

OK

Slide 26

ERP / SAP Overview | September 2003

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IBM Global Services

Delivery/Shipment Processing FI

MM WM

MM Ship to party: C100 Item Material Qty 10 6301 10 20 6412 10 30 1507 25 . . . .

Delivery Note

Credit Management Static Availability Check Picking List

Picking Packing Transportation Slide 27

ERP / SAP Overview | September 2003

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Picking/Packing Sales Order Delivery Picking without Picking Confirmation Print Picking List

Picking with Picking Confirmation Picking Request

Confirm Picking Request

Picking Confirmation

Goods Issue Slide 28

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

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Invoicing CO PA CO Profit Center Accounting/Profitability Analysis PCA

FI FI

Accounts Receivable/General Ledger Cash Forecast

Single Invoices Collective Invoices

EDI

Invoice Lists Credit/Debit Notes

Slide 29

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

MM Overview

SAP R/3

MM

Slide 30

Materials Management . .

ERP / SAP Overview | September 2003

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IBM Global Services

MM Overview

MM

Material requirement planning

External procurement

Internal procurement

Purchasing

Production

Invoice verification

Goods receipt

Warehouse management

Inventory management Goods issue

Internal and external accounting Slide 31

ERP / SAP Overview | September 2003

Transfer posting

Master data Material Batch Vendor Customer G/L Storage bins ...

Sales and distribution © Copyright IBM Corporation 2003

IBM Global Services

Material - Central Master “Record” for Logistic 456

123 Inventory Quality Sales Information Production Information Desc:---------------------

Inventory Purchasing Desc:---------------------

Raw Material - 456

Product - 123

Slide 32

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Data in the Vendor Master Maintenance Level Purchase Organization

Client

Company Code

• Mandatory maintenance at the Purchasing Organization Level • Optional Maintenance at the Plant Level, the Vendor Sub-Range Level or a combination of the two

General Data Address Phone and Fax Number Control Data

Slide 33

Purchasing Data Terms of Payment Contact Person Minimum Order Value

ERP / SAP Overview | September 2003

Account Data Payment Terms Payment Method Accounting Clerk

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IBM Global Services

External Procurement Environment

Source List Quota Arrangement

Outline Agreement

Goods Receipt

Slide 34

ERP / SAP Overview | September 2003

Requirement Determination

RFQ

Purchase Requisition

Quotation

Source Determination Vendor Selection

Purchase Order

Price History Purchasing Data Info Record Invoice Receipt

© Copyright IBM Corporation 2003

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Goods Movement Ad hoc. Goods Receipt

Delivery

Production

Inventory

Inventory Transfer Posting

Goods Issue Consumption Slide 35

Samples

Goods Issue Sales Order

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Invoice Verification CO FI Vendor

Vendor Vendor invoiceinvoice Vendor 3

Orders / Projects /Cost centers G/L accounts / Accounts payable

Payment

Tolerance Check?

Invoice Verification

e.g...

OK !

Blocked Invoice Release of Blocked Invoice

Delivery Invoice Preliminary Posting Automatic Price Update Slide 36

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

PP Overview

SAP R/3

PP

Slide 37

Production Planning . .

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

PP Production Planning Cycle Sales and Operations Planning Master Production Scheduling

Master Data Material Master Bill of Materials Work Centers Routings PRT

Sales & Distribution

Demand Management

Materials Management

MRP

Capacity Planning

MRP List

Plant Maintenance

Costing

Slide 38

Production Order Cycle or Purchase Order Cycle

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Production : Process Chain Production Chain Inbound Logistics from Procurement or Production Chain

Outbound Logistics to Materials Management or Sales Chain

Manufacturing Process

Archive/Delete Order

Determine Production Requirements via MRP Output or Manually)

Settle Production Order FI CO

Create production order (via conversion of planned order to production order or manually)

Transfer Produced Goods to Inventory FI

Check material availability (Automatic)

Confirm production of goods is completed

Release Production Order Print shop floor papers (actual workorders)

Produce Goods

Withdraw materials from inventory (automatic/manual) MM Slide 39

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Production Planning

Production Planning Functionality Master Data Sales and Operations Planning & Demand Management MRP Production Order & Capacity Plannin

Slide 40

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Material Requirements Planning Demands Quantity: 12.000

Stochastic Deterministic

Demands 3. Qrt 4. Qrt

Planning

Bill of Material Explosion

Capacity Planning Lot Sizing Procedures Net Change Slide 41

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

MRP - Planning Procedures Planning Procedures

Deterministic MRP

Consumption-Based Planning

Forecast-Based Planning

Reorder Point Planning

Automatic Reorder Point Slide 42

ERP / SAP Overview | September 2003

Manual Reorder Point © Copyright IBM Corporation 2003

IBM Global Services

Production Control MM

FI CO

Goods Issue Costs

Open

Production Order

Release

Production Order

Planned Orders

Slide 43

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

QM Overview

SAP R/3

QM

Slide 44

Quality Management . .

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

QM

QM Overview

 The QM application module is a FI SD Financial Sales & quality control and information Accounting Distribution system supporting quality CO MM Materials Controlling Mgmt. planning, inspection, and control PP AM Product Fixed Assets for manufacturing Planning Mgmt. and procurement

R/3

QM

PS

Quality Mgmt.

PM

Plant Maintenance

HR

Human Resources

Slide 45

ERP / SAP Overview | September 2003

WF

Project System

Workflow

IS

Industry Solutions

© Copyright IBM Corporation 2003

IBM Global Services

QM in Logistics

QM

Goods receipt  History-dependent intensity of quality inspections

Production • Inspection during production • Defects recording in QM • Control charts Goods issue • Quality management in SD (certifies quality) Slide 46

ERP / SAP Overview | September 2003

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PM Overview

SAP R/3

PM

Slide 47

Plant Maintenance . .

ERP / SAP Overview | September 2003

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PM

Plant Maintenance - Overview Master Data Pre-defined work steps

Parts/Supplies

External Services

Material Requisitions

Reporting

Notifications Create Work Orders

Planned Work Orders

Schedule WO’s

Close and Settle WO

Emergencies Labor

Slide 48

ERP / SAP Overview | September 2003

Special Tools

Shop Papers Preventive/Predictive Maint. WO’s

© Copyright IBM Corporation 2003

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FI Overview

SAP R/3

Fi

Slide 49

Finance . .

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Components of FI

FI-GL

General Ledger

FI-SL FI-AR

Legal Consolidation

Accounts Payable

FI-AA

Slide 50

Special Ledger

Accounts Receivable

FI-LC FI-AP

FI

ERP / SAP Overview | September 2003

Asset Accounting

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IBM Global Services

Corporate Structure Financial Management Area

Financial Management Area

Financial Management Area

Corp. Group Level

Company Code (Company) Legal Entity Controlling Area

Controlling Area

Controlling Area

Plant

Controlling Area

Controlling Level

Cost Centers Management Units

Work Place/Job Slide 51

ERP / SAP Overview | September 2003

Material Product © Copyright IBM Corporation 2003

IBM Global Services

The Elements of Financial Accounting Foreign Exchange Management

Finance Information System Executive Information System G/L Information System

Business Analysis

Cash Management and Forecast

Multiledger Accounts Payable Invoice Verification

Bank Accounts Receivables Payables General Ledger

Extended General Ledger

Accounts Receivable Credit Management

Consolidation Slide 52

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

The Components of FI Functionality

Configuration • Organizational Structures – Company Codes – Business Area • Organization of Accounting – Ledger/Sub-ledger • Chart of Accounts • Credit Control – Setting Credit Limits • Master Records – G/L Accounts – Customers – Vendors – Banks • Chart of Depreciation – Depreciation Areas – Assets

Documents/Transactions Posting Payment Terms Foreign Currency Taxes Special G/L Transactions Planning Payment Program

Fiscal Year Adjustments Balance Sheets/Income Statements Closings On-Line Display Interest Calculation Correspondence Fixed Assets Reporting Analysis Legal Consolidations

Modules General Ledger Accounts Payable Accounts Receivable Asset Accounting

• Extended General Ledger • Group Company

Special Ledger Legal Consolidations Credit Management Cash Management and Forecast Treasury

FI

• Number Ranges Slide 53

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

CO Overview

SAP R/3

CO

Slide 54

Controlling. .

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

CO

Components of CO

CO Modules

CO Configuration Organization Structures

• Cost Center Accounting

• Profit Center Acctg.

Master Data

• Order and Project Acctg.

• Product Costing

• Transaction-Based Postings

• Activity-Based Costing

Planning Setup Criteria and Values

• Periodic Allocations

• Product Costing • Budgeting • Profitability Analysis

Valuation

• Business Planning & Control

Functionality • Settlement

• Planning

• Internal Orders

• Transaction-Based Posting

• Open Item Management

CO Slide 55

ERP / SAP Overview | September 2003

• Profitability Analysis • Overhead Management

• Periodic Allocations • Monitoring Actual Activities vs. Planned

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The Elements of Managerial Accounting Overhead Cost Controlling

Overhead Cost Controlling

Cost Centers

Profitability Analysis PA

Cost of Sales

Report Structure: Market Segment Region Division

PCA

Cost of Period

Controlling

Slide 56

ERP / SAP Overview | September 2003

Report Structure: Profit Center GL Accounts © Copyright IBM Corporation 2003

IBM Global Services

Integration Within FI/CO FI Financial Accounting Asset Accounting

Asset Accounting

Management Accounting Overhead Cost Controlling

Asset Accounting

Gen. Ledger Accounting

Investment Controlling

Accounts Receivable

Actual Costing

Plant Maintenance

Accounts Payable

Static Standard Costing

Cash Management

Flexible Standard Costing

Account Revenue

CO

Chart of Accounts

Cost Center Controlling

Product & Production Controlling Mass Production

Cost of Sales Accounting

Continuous Flow Prod.

Period Accounting

Batch Production Make to Order Prod.

Order Controlling Central Documents Slide 57

Project Controlling ERP / SAP Overview | September 2003

Sales & Profitability Controlling

Central Line Items Central Totals

© Copyright IBM Corporation 2003

IBM Global Services

Integration

Planned Requirement

MM

PP Customer Order

MRP

Requirement on component level Purchase Order

Planned Order

Shipping

Production Order

Invoicing

Goods Receipt

Account Receivable

Production completed

FI

Invoice Verification

FI

SD

Order Settlement

CO

Accounts Payable Slide 58

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003 Which modules are involved?

IBM Global Services

SAP R/3 : Components Application

Master Data Transaction Data

ABAP Programs Organization Structure Configuration

Key Data Elements Functionality Configurations

Slide 59

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

What is Customization ?

Customization •

the adaptation of application software to customerspecific needs is accomplished in two ways :

Coding Programming customer-specific code that replaces or complements components of the application

Configuration Rendering the application appropriate to a specific customer by specifying data on which the application operates

Slide 60

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Organizational Structures in R/3 Organizational Units Cost Accounting

Client

External Logistics

Controlling Areas

Accounting

Company Codes Sales Organizations

Internal Logistics (MRP/Production)

Purchasing Organizations

Valuation Areas Plants

Inventory Management Slide 61

ERP / SAP Overview | September 2003

Storage Locations/Batches/Special Stocks © Copyright IBM Corporation 2003

IBM Global Services

Organizational Structure in SAP R/3 Production Planning

Financial Accounting Company Code

Plant

Controlling

Human Resources

Client

Controlling Area

Personnel Area

Sales and Distribution Sales Area Slide 62

ERP / SAP Overview | September 2003

Materials Management Purchasing Organization © Copyright IBM Corporation 2003

IBM Global Services

ABAP Programming SAP R/3 applications are written in the ABAP programming language, and run within the application layer of the R/3 System. ABAP programs communicate with the database management system of the central relational database (RDBMS), and with the graphical user interface (SAPgui) at presentation level.

Slide 63

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Why we need ABAP Developments?

SAP Solution

SAP R/3 scope

Slide 64

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

SAP Solution

SAP R/3 scope

Slide 65

ERP / SAP Overview | September 2003

Specific company requirements

© Copyright IBM Corporation 2003

IBM Global Services

SAP Solution

SAP R/3 scope

Specific company requirements

New Functionality Development

Slide 66

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

SAP Solution

SAP R/3 scope

Specific company requirements

New Functionality Development

Non SAP applications

Slide 67

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003

IBM Global Services

Types of ABAP Developments

• Reports • Interfaces • Conversions • Enhancements

Slide 68

ERP / SAP Overview | September 2003

© Copyright IBM Corporation 2003