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Flya Kite Fully Integrated Case

Student Text
(MM, PP, SD, FI/CO, HR)

Flya Kite Case:

Processing transactions through the
logistics and support processes of SAP
Ross Quarles
Fawzi Noman
Version 5.0
11/01/2010
Sam Houston State University
Huntsville, Texas

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Table of Contents Student Text

I.

Chapter 1: Introduction
General description of case for students and introduction to basic SAP modules
and terminology, business processes, and types of data.

II.

Chapter 2: Procurement Logistics (MM)

Discussion of the procurement process in SAP along with descriptions of the
exercises in the Student Exercises document that require students to create vendor
and material master records and go through the purchasing cycle from purchase
requisition to logistics invoice verification.

III.

Chapter 3: Production Logistics (PP)

Discussion of the production logistics process along with descriptions of the
exercises in the Student Exercises document that require students to create MRP
views for materials, BOM, routing, run MRP, convert planned orders, issue goods
to manufacturing, confirmation of completion, and order settlement.

IV.

Chapter 4: Sales Logistics (SD)

Contains description of the sales and distributions logistics process along with
descriptions of the exercises in the Student Exercises document that require
students to create customers, create sales views for trading goods and finished
products, material prices, discounts, customer material info records, item proposal,
customer inquiry, create sale orders, create delivery, pick goods, post goods issue,
and bill the customer.

V.

Chapter 5: Financial Accounting and Controlling (FI and CO)

Contains discussion of both the financial accounting and controlling administrative
processes along with descriptions of the exercises in the Student Exercises
document that require students to create and/or process general ledger accounts,
primary cost elements, vendor records, general ledger document entry, posting
vendor invoices, posting outgoing payments, receiving customer payments,
distribution cycle, and assessment cycle.

VI.

Chapter 6: Human Capital Management (HCM)1

Contains discussion of human resources administrative process along with
descriptions of the exercises in the Student Exercises document that require
creation of HR organizational structure, creation of jobs and positions, entering
job evaluations and pay grades, entering initial applicant data, and hiring an
applicant.

This chapter was developed by Professor Kathy Utecht of Sam Houston State University

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CHAPTER 1: Introduction
Case Overview
Flya Kite is an integrated case with exercises that allow participants to process transactions
for sales logistics, production logistics, procurement logistics, accounting/controlling, and
human resources. The case is preconfigured with all control/configuration data and master
data necessary to process those transactions. However, for each area, the case has optional
exercises that can be used by participants to set up the master data required for transaction
processing. Each participant will utilize his/her own set of master data (either self-created or
pre-established) to process transactions within Flya Kite.
The case can be used in its entirety (all sets of exercises either with pre-established master
data or with self-created master data) in classes that have the objective of addressing the
primary business processes of sales, production, procurement and materials management,
etc. Alternatively, each set of exercises addressing a particular logistics or support area can
be used independently in classes where only that business area is of concern (again with or
without master data creation exercises). Through the use of the Flya Kite case, in total or in
part, students are introduced to SAP navigation, master data use (and optional creation),
transaction processing, the flow of data through each business process, and the integration
of the various processes with one another. This feature allows the use of the case across
disciplines with minimum detailed knowledge of the complete SAP system on the part of the
instructor. Its best use would be to introduce students to how transactions are processed and
how processing makes use of master data to process transactions across the value chain.
SAP Overview
SAP (Systems, Applications and Products in Data Processing) started operations in Germany
in 1972. It is the worlds largest vendor of standard application software, the fourth largest
software vendor in the world, and the market leader in enterprise applications software. The
most current version of R/3 utilizes client server technology and contains over 30,000
relational data tables that enable a company to link its business processes in a real-time
environment. Each instance (installation) of SAP can be distinctively configured to fit the
needs and requirements of customer operations (within limits).
Basic SAP Modules
Flya Kite utilizes the five basic modules of SAP R/3 as described in the following table.

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SAP
Module
MM
PP
SD
FI
CO

HR

Function (Process)
Materials Management
(Procurement Logistics)
Production / MRP
(Production Logistics)
Sales and Distribution
(Sales Logistics)
Financial Accounting
(Support Process)
Cost Accounting
(Support Process)
Human Resources
(Support Process)

Functional Areas
Purchasing, invoice verification, inventory
management, warehouse management
MRP, production orders, bills of materials, work
centers, routing instructions, batch management
Order entry, picking/packing/shipping, invoicing,
inquiries, quotes, sales reporting
General ledger, A/R, A/PAY financial reporting, cash
management legal consolidation
Cost accounting and internal reporting by cost center,
internal order, project, profit center, or other unit,
profitability analysis
Employee master data, training records gross/net
calculation, payroll, planning and reporting

The various modules of SAP R/3 are highly integrated. Much of the data in the system are
shared. The table below indicates some of the sharing aspects of master data in SAP.
Master Data Record
General Ledger Accounts
Customer Master Records
Vendor Master Records
Material Master Records

Modules Using Record

FI, CO, SD,MM, PP, HR
FI, SD
FI, MM, PP
SD, MM, PP, CO

SAP General Terms

There are a number of terms that have specific usage and meaning in dealing with SAP.
Some of these general terms are identified below.
Client: The highest level in a SAP instance. A client is a self contained unit with a
separate set of master records and its own set of configuration tables. An instance
(installation) can have more than one client (e.g., a training client, a testing client, and
a production client). In using SAP the user logs on to a particular client that usually
has a three digit numeric identifier.
Company Code: Represents an independent legal accounting entity that contains a
balanced set of books as required by law or regulation. A client may have more than
one company code (e.g. a company code for the US, one for Germany, one for
Canada, etc.)
Chart of Accounts: A list of all accounts in the General Ledger for a company code.
Each company code must be assigned one, and only one chart of accounts. However,
more than one company code can use the same (i.e., identical) chart of accounts.
SAP comes preconfigured with a large number of charts of account. For example, the

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delivered US chart of accounts is CAUS. Accounts can be added to, deleted from, or
modified in the delivered chart of accounts as desired by the user.
Passwords: Each user has his or her own password. On the initial log in to the
system, the user must change a generic delivered password to his/her own. The
password must be at least three characters long, cannot begin with a ! or ?, and the
first three characters unique and not contained in the user name.
Roles and Profiles: Roles specify the sets of tasks or activities that can be
performed by a particular user within the system. A role is assigned to each user.
When the user logs on, the system automatically presents a specific menu for that
users assigned role. For example, a receiving clerk can perform only certain tasks
within the SAP system. When a receiving clerk logs on, that users role will define
what the user will be allowed to view, create, change, delete, etc. Profiles work in the
same manner as do roles to restrict authorization for access to the system. User
profiles and roles are entered by system administrators into user master records thus
enabling users to access and use specific functions within the system. In the Flya Kite
case, users will have authorization to all master data and transaction processing
applications. This would be highly unusual in actual practice given the need for
internal controls and separation of duties.
Session: Each instance in which a user is connected to the SAP system is known as
a session. A user can have up to nine sessions open at any given time (but each
session is logged into the same client and company code).
Configuration: Configuration is table-driven customization of the SAP system to
meet specific customer requirements. In configuration the user sets values in tables to
cause the system to function in a desired manner. Configuration is somewhat like
setting the defaults in a word process or spreadsheet application. It does not change
the underlying source code in the system. In the Flya Kite case there are no
configuration exercises. The case system has been preconfigured.

Business Processes
A business process can be described as a set of linked activities that transform an input into
a more valuable output thus creating value. In many cases business processes are classified
as operational processes or as support processes. At the most basic level, a typical business
utilizes three operational processes: procurement (purchasing and materials management),
production, and sales and distribution (customer order management). The typical support
processes include accounting/controlling and human resources. While these processes have
specific identities, they are linked together (integrated) in order to carry out the day to day
activities of a business. For example, the sale of a manufactured product involves not only
the sales process but also production (the creation of the product), procurement (of
necessary raw materials), accounting/controlling to determine the profit on the sale, and
human resources to ensure the operations are staffed with qualified or trained employees.
These linkages of activities across business processes necessitate the sharing of data across
those processes, regardless of which process created the data initially. For example, data
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related to a finished product may be initially created in the production process, but the data
are also required in the procurement process and, of course, in accounting/controlling for
costing purposes, as well as in calculating pay based on work production hours. SAP as an
integrated ERP system utilizes the principle of a common data record for a given object that
can be accessed by any process that has need of the various attributes contained in that
common record.
Business processes are often viewed as elements of a logistics value chains. From this
perspective the operational processes are defined as sales logistics, production logistics, and
procurement logistics. This is the approach taken in the overall structure of the Flya Kite
case. The case is separated into the sections as outlined below.
Types of Data
There are three differing types of data within the SAP system: control or configuration data,
master data, and transaction data. Control or configuration data include system and
technical functions of the SAP system itself. These data drive the logic of the applications
within the system and is primarily used for defining the details of business processes. For the
Flya Kite case, all control/configuration data have been pre-established so that no
configuration is necessary to complete the case exercises.
Master data represent the various business entities present in the system, both internal and
external. For example, master data include internal entities such as the company, a plant, a
sales area, a cost center, an account, a material, a routing, a bill of material, or a personnel
file. In addition there are external entities that are a part of the systems master data such as
vendors, customers, employees, and even competitors. From one perspective, master data
can be thought of as providing the which or the what that is of interest in the activities of
the business process. The attributes of the fields within master data are relatively stable. For
example, the master data for a customer containing specific values for the customers
attributes such as name, address, delivery priority, terms of payment, etc. vary little over time.
Once the master data record for the customer is set up in the system, it is rarely changed.
Also, once set up within the system, it can also be accessed by any business process that
may have use for the master data. For example, a customer master record may be used in
sales, transportation and shipping, production, marketing, accounting, or any other process
that may have use for data contained in the master record. The sets of exercises in Flya Kite
contain optional exercises that can be used to set up master data for each of the logistics
areas and for accounting. If these optional exercises are not assigned or completed, the
case contains pre-established master data records for each process that can be used to
process transactions in the transaction processing exercises. As an additional alternative,
the optional exercises involving creation of master data can also be used to create additional
master data beyond that contained in the case. This allows creation of transaction
processing exercises in addition to those already contained in the case.
Transaction data describe a business event or may be the result of a business process. For
example, a sales order would contain transaction data that have resulted from a customer
placing an order to purchase a product from the company. The various attributes necessary
to process that sales order transaction would include such data as the customer (which
allows detailed customer data to be drawn from the customer master record), the item or
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items being sold (which would draw data from the material master records for those items),
the quantities being sold, the desired delivery date, the customer PO number, etc. While the
customer master data for this transaction would be the same for various sales orders to that
customer, the other data such as items wanted, quantities, delivery dates, etc. would most
likely vary from order to order. For this reason, transaction data vary from event to event.
Transaction data may also arise as the result of the outcome of a completed business
process. For example, the system may process an inquiry to determine the current stock
quantity level for a raw material. That inquiry is a transaction that extracts the data for the
quantity on hand in the warehouse. This too, of course, will vary over time. Other examples,
pertaining to human resources, would involve the hiring of employees and pay transactions.
From one perspective, therefore, transaction data can be viewed as resulting from the events
or activities that are taking place in the business. The transaction data represent the
recorded attributes, elements, and results or outcomes of business events and activities, and,
as a result is the most volatile and frequently used data in day to day business operations.
Each of the logistics and support processes addressed in Flya Kite contains exercises that
require the processing of transactions through the particular process.

References:
Curran, Thomas A., and Andrew Ladd. SAP R/3 Business Blueprint. Upper Saddle River,
NJ, Prentice Hall, 2000.
McDonald, Kevin, et al. Mastering the SAP Business Information Warehouse. New York:
John Wiley & Sons, 2002.
Hernandez, Jose A., Jim Keogh, and Franklin F. Martinez. SAP R/3 Handbook. 3rd ed. New
York: McGraw-Hill, 2006.
Hayen, Roger. SAP R/3 Enterprise Software, An Introduction. New York: McGraw-Hill, 2007.
SAP Help Portal. <http//help.sap.com>

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