37.

Operation and Maintenance of the ERP System

ERP Demystified (Second Edition) By Alexis Leon (2008)

 Operation and Maintenance

• When the ERP system goes live people switch from their old practices to those
required by the new system.
• If everyone is properly trained then each person will know what he or she has to do
when the new system is in place — operation and maintenance (O&M) phase.

• The main activities of O&M phase are:

1. Employee relocation and retraining – The ERP systems will make many jobs
redundant at the same time create new jobs. The organizations should take every
effort to relocate and retrain the employees.
2. Continuous training – The ERP training is an ongoing project. New employees
will join, new features and functionalities will be added making ERP training a
must for existing and new employees.
3. Review – Once the implementation is complete and the organization has started
to use the system and has reached a stable state, a review of the system must be
performed to measure its success.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 O&M Phase
• It is during the O&M phase that the ERP system delivers the full benefits that it is
capable of.
• During the O&M phase the ERP sponsor should monitor the progress of the ERP
system with the assistance of the ERP project manager.
• The main objective of the O&M phase is to ensure that the ERP system achieves its
projected benefits, the users are satisfied and there are no conflicts.
• For the ERP system to function smoothly the co-operation of all the departments is
necessary.
• The project manager and the ERP team can assess the strengths, weaknesses,
opportunities and threats (SWOT) to the ERP system.
• The ERP team should create a help-desk of all the problems that have occurred in the
past and how they were fixed to help the technical support team to answer the
customer queries quickly.
• The help-desk should be kept up-to-date by adding new problems and their solutions.
Thus, over a period of time the efficiency of the technical support team will increase
dramatically.
• During the training phase, the vendors and the external consultants will prepare user
manuals, procedures and best practices documents for training and reference. These
documents and their latest versions also, should be accessible to all users of the
system.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 O&M Phase (contd.)
• The ERP team should produce procedures and work instructions. Procedures and
work instructions describe how tasks are carried out.
• The procedures and work instructions include process descriptions, roles and
responsibilities, process flow, etc.
• The process of producing this documentation commences during the ERP system
design stage and develops through the implementation phase, at the end of which it is
finalized.
• One of the main tasks of the project manager or the ERP team is the training of new
employees on the ERP concepts, tool usages, procedures and best working practices.
• The ERP team should conduct periodic audits to ensure that the various activities—
both manual and automatic—are performed correctly.
• The project manager or the ERP team should also ensure that the data migration has
been done without any problems and the ERP database is up-to-date and not
corrupted so that business functions can be executed flawlessly and decision-making
features can be performed accurately.
• The ERP database together with the help-desks, provide an environment where the
customer care executives can answer customer queries quickly and resolve issues
without delay.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 O&M Phase (contd.)
• Help-desks are repositories of the organizational knowledge that can be used by the
maintenance and support team. The help-desk contains correct operating practices,
problems with the software, how to solve them, details of problem reports and
resolution, etc.
• Many companies post frequently asked questions (FAQs) and their answers on their
support websites and encourage users to first check the FAQ before calling the
technical support. A well-organized and categorized FAQ can substantially reduce the
workload of the technical support personnel. As new problems and their solutions get
added to the help-desk, they will simultaneously get updated on the website too.
• Once the ERP system has reached a stable state necessary actions should be taken to
improve the performance.
• The ERP tools that are implemented are another area that needs maintenance.
• The project manager should be in regular contact with the vendors to see whether any
upgrades or updates are available.
• All patches and upgrades should be installed to ensure that the tools are working at
their maximum efficiency.
• Employees should be given refresher courses on the new functionality that gets added
with each new upgrade.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 Review Questions

1. Most of the promised benefits of the ERP system are obtained during the operation
phase. Discuss.
2. What are the major activities of the O&M phase?
3. Why are employee re-location and re-training important?
4. What is the need for continuous training?
5. What is the need for reviews?
6. Explain the operation of the ERP system.
7. What are the major activities of the operation phase?
8. Explain the ERP maintenance phase.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
38. Measuring the Performance of the ERP System

ERP Demystified (Second Edition) By Alexis Leon (2008)

 Why Performance Measurement?
• When you can measure what you are speaking about, and express it in numbers, you know
something about it; but when you cannot measure it, when you cannot express it in numbers,
your knowledge of it is of a meager and unsatisfactory kind; it may be the beginning of
knowledge, but you have scarcely, in your thoughts, advanced it to the stage of science.
– Lord Kelvin
• Measurement can be applied to find out the success of an ERP implementation.
• It should be done to verify continuously that the organization is moving forward in
the right direction while using the ERP system.
• It is a tool for ensuring that the system’s performance and employees’ efficiency are
improving.
• The reasons that organizations should measure the performance of the ERP system at
regular intervals after implementation are:
1. To characterize in an effort to gain an understanding of processes, products,
resources, and environments and to establish baselines for the organization
2. To evaluate and determine status with respect to plans
3. To improve by identifying road blocks, root causes and other inefficiencies

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 Metrics to Measure Success
• A business metric is any type of measurement used to gauge some quantifiable
component of a company's performance, such as return on investment (ROI),
employee and customer churn rates, revenues, etc.
• Business metrics are part of the broad area of business intelligence, which comprises
a wide variety of applications and technologies for gathering, storing, analyzing, and
providing access to data to help enterprise users make better business decisions.
• Metrics must also demonstrate all of the following characteristics, without which they
are apt to be dismissed or worse, perpetuate a disinclination to evaluate performance:
1. Accurately expresses the phenomenon being measured
2. Objective and not subject to dispute
3. Comprehensible, readily communicated and understood
4. Inexpensive and convenient to compute
5. Timely with data sources readily available
6. Harmless, not inducing inappropriate behavior
• It is very important to measure the performance of the ERP system as failure to do so
will prevent the management from identifying mistakes and performance
degradation before they become critical.
• A good performance monitoring system can help organizations in taking corrective
actions before things get out of hand.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 Metrics
• Metrics help you better control your business processes and learn more about the way your ERP
system and organization works.
• The following are some of the ERP related parameters that you can measure:
1. Productivity improvements
2. Reduction in inventory costs
3. Reduction in material wastage
4. Personnel reduction
5. Other management improvements
6. Financial close cycle reduction
7. IT cost reduction
8. Procurement cost reduction
9. Cash management improvements
10. Revenue improvements
11. Profit increases
12. Transportation/ logistics cost reduction
13. Maintenance reductions
14. On-time delivery improvements

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 Types of Metrics

• There are two types of metrics that can be measured—barometric and diagnostic.
• Barometric metrics are appropriate in every business. They tell you if some problem
is coming and they will warn you about an impending disaster.
• Diagnostic metrics can change from business to business. These metrics are driven
from root cause, seeking and focusing on areas of weakness in a specific situation.
• Some of the ERP diagnostic metric are:
1. Business plan, demand plan, operation plan, master schedule, etc.
2. Schedule stability, BOM, etc.
3. Procurement process accuracy, shop floor control accuracy, etc.
4. First-time quality, safety, customer service, etc.
• Organizations require metrics to be at minimum levels of proficiency. These levels
should not be misconstrued with high performance.
• The key to getting the value from metrics is really not the metric itself or even the
collection of data. The real value comes from the action driven from the data.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 How to Measure?

• There are innumerable means of evaluating ERP performance.

• The organizations must decide and stick to one particular method, which must be put
in use uniformly.
• Some of the factors that should be considered while conducting the performance
measurement are:
1. Organizational structure
2. Suitability in relation to business mode
3. Accurate quantification to facilitate correct measure
4. Account from all relevant sources
5. Perform frequent reviews during operation
6. Solve employee problems and clear their mindsets
7. Classifying measurement areas

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 Review Questions

1. Measurements enable us to gain insight into the process and the project by providing
a mechanism for objective evaluation. Discuss
2. Why are measurement programs important?
3. What are the reasons that organizations should measure the performance of the ERP
system at regular intervals after implementation?
4. How do we use metrics to measure success?
5. Explain the importance of measuring performance.
6. Explain metrics in detail with examples.
7. What are the different types of metrics?
8. How do you measure performance?

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 39. Maximizing the ERP System

ERP Demystified (Second Edition) By Alexis Leon (2008)

 Maximizing Performance

• ERP systems if chosen judiciously, implemented correctly and used properly can
produce dramatic improvements in productivity and efficiency and can make the
organization more competitive.
• Business analytics and business intelligence tools are being integrated into ERP
systems in order to facilitate better, accurate and quicker decision-making.
• Companies have realized that to maximize the value of the information stored in their
ERP systems it is necessary to extend these ERP architectures to include more
advanced reporting, and analytical and decision support capabilities. This is best
accomplished through the application of data warehousing, data mining, OLAP, and
other analysis, reporting and business intelligence tools and techniques.
• The limitations of ERP systems can be eliminated by adding a data warehouse and a
business intelligence front end to your ERP system. Just as ERP fine-tunes resource
planning and management, business intelligence for ERP fine-tunes ERP.
• A data warehouse or data mart organizes ERP data so that it is easily accessible for
on-line analysis.
• Business intelligence systems improve business competitiveness by providing
reporting and analysis tools to the desktop, enabling communication with the entire
supply chain via the Web and automating alerts and actions.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 Maximizing Performance (contd.)
• By allowing flexible reporting and analysis, a business intelligence system can unlock
the value of the data in ERP reports.
• Business intelligence systems provide on-line analytical processing (OLAP) and data
mining tools that managers can use from the desktops to answer the types of
questions that help in discovering significant trends and patterns.
• Businesses can optimize their investment in ERP systems by closing the loop between
the business intelligence system and the ERP system. The loop begins when the
company discovers valuable business information from the ERP system; it closes
when the company feeds those discoveries back into the ERP system to continually
improve business processes.
• Business intelligence systems for ERP can also issue alerts when certain events occur
or thresholds are met, enabling your business to react more quickly to problems and
opportunities.
• The ultimate value from the ERP investment results from integrating the ERP system
not only with a business intelligence front end, but also with the Internet.
• When the organization provides a Web-based interface to the information in the
business intelligence system, the Internet becomes an enterprise information utility
for employees, partners, suppliers and customers.
• Training and education plays a significant role in maximizing the productivity of the
ERP systems.

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
 Review Questions

1. How do you maximize the performance of the ERP system?

2. How does the integration of business analytics, reporting and business intelligence
tools help improve the performance of ERP?
3. How has the power of ERP improved using the Internet?
4. What is the importance of training and learning in maximizing the ERP
performance?

ERP Demystified (Second Edition). Copyright 2008, Alexis Leon. All rights reserved.
BUSINESS MODULES OF ERP

ERP MODULES
Alexis Leon
 ERP MODULES
 Finance
 Manufacturing and Production Planning
 Sales and Distribution
 Plant Maintenance
 Quality Management
 Materials Management
 Human resource
 Financial Module
 Financial Accounting (General Ledger, Accounts Receivable,
Accounts Payable, Fixed Assets)
 Investement Management (Investment
Planning/Budgeting/Controlling, Depreciation
Forecast/Simulation/Calculation)
 Controlling (Overhead Cost Controlling, Activity Based
Costing, Product Cost Accounting, Profitability Analysis)
 Treasury (Cash Management, Treasury Management, Market
Risk Management, Funds Management)
 Enterprise Controlling (Executive Information System,
Business Planning and Budgeting, Profit Center Accounting)
FINANCIAL ACCOUNTING → General Ledger
 General Ledger

General Ledger produces the enterprise’s financial statements including the Balance Sheet, which shows the
enterprise’s assets, liabilities and equity at a point in time, the Income Statement, which shows the
enterprise’s income, expenses and net profit over a period of time, the Cash Flow Statement which shows
sources and applications of cash, and associated financial reports such as the Trial Balance. The rest of the
reports are there to track the numbers on the financial statements back to individual transactions. Most
businesses prepare monthly statements. Every ERP package has a General Ledger module.

General Ledger is unusual in that it receives transactions from many other modules. There are two ways to
accomplish this: Detail and Summarized. In the detail method, every invoice, check, or other such
transaction creates a separate General Ledger transaction. The advantage of this is that the General Ledger
is continuously updated in real time so the entire set of ERP tables is in sync. The disadvantage is that there
are large numbers of transactions. In the summarized method, transactions are accumulated for some period
(typically a day) and posted in summary. Instead of many small transactions, there is a few big ones. The
advantage is that there are far fewer transactions. The disadvantage is that the General Ledger is out of sync
with the rest of the ERP until the data is posted.

General Ledger has the following functions:

 Maintain Chart of Accounts
 Maintain Budgets
 Maintain Recurring Transactions
 Print Financial Statements
 Print Trial Balance
 Allocate Transactions
 Consolidate Transactions
 Periodic Processing
 Maintain Module Information
FINANCIAL ACCOUNTING → General Ledger
FINANCIAL ACCOUNTING → Accounts Payable

Every enterprise purchases goods, services, assets, or office supplies from its suppliers (also known as
vendors). Accounts Payable pays these suppliers on time (taking advantage of payment discounts if
possible) while avoiding duplicate payments and bank over-drafts. Accounts Payable is the last step
in the supply chain where Purchasing is the first. Accounts Payable accepts invoices, selects
invoices to be paid, generates checks and forecasts future cash requirements based on due dates.
Some AP checks are issued to people or organizations that are not worth putting on file since they
are likely to receive only one check. Some enterprises prepay part of the invoice amount because the
supplier requires a deposit. Every ERP has an Accounts Payable module.

 Transactions
The first transaction records a supplier invoice. This can be verified against the related purchase order if
there is one and the receiving report that lists what goods were actually received. Not every
enterprise uses the last two options.
The second transaction pays supplier invoice(s). Each check can pay one or more supplier invoices.
Invoices must be approved for payment before they can be paid.
The vast majority of the module's transactions consist of the above two. The third fundamental transaction
is that of adjustment when things go wrong.
 FINANCIAL ACCOUNTING → Accounts
Receivable
Every business sells products and/or services to its customers. Order Entry creates invoices
when a customer orders something and Accounts Receivable keeps track of what
payments have been made to which invoices. Commonly, it also prepares a report
("Aged Analysis") which shows how long each invoice has been outstanding. Every
ERP has an Accounts Receivable module.
 Collection

If Accounts Receivable invoices become overdue, Collection initiates processes to collect the money. Usually this means a
telephone call followed by a series of dunning letters of increasing severity. If these efforts fail, Legal may
become involved or the invoice may be written off, or sold to a collection agency for a fraction of its face value.
As part of CRM, details of each contact with the customer including date, employee, contact person, and activity
are stored in Customer.

 Transactions

The first transaction records an invoice. This is done by Order Entry/Invoicing rather than Accounts Receivable.

The second transaction records a customer payment. One customer payment can pay one or more invoices. Payment can
be in cash, by debit card, credit card, or check. Somethimes payments are received without information about
what invoices are being paid.

The vast majority of the module's transactions consist of the above two. The third fundamental transaction is that of
adjustment when things go wrong.
FINANCIAL ACCOUNTING → Asset Accounting

 A "fixed asset" is something the enterprise has purchased that has a

useful life of more than one year. Fixed Assets keeps track of all these
objects and allocates part of their purchase price to each year of their life.
There are a variety of ways in which this allocation can be done. For
some assets, the allocation or "depreciation" is specified by law. Not all
ERP packages have a Fixed Assets module.
 Fixed Assets has the following functions:
* Maintain Asset Information
* Enter Transactions
* Generate Depreciation
* Maintain Module Information
 FINANCIAL MODULE-INVESTMENT MANAGEMENT
(Investment Planning/Budgeting/Controlling,
Depreciation Forecast/Simulation/Calculation)

 Every enterprise has a reserve of funds. As the enterprise grows larger,

the total reserve becomes larger and larger. Eventually, it is large enough
that it is prudent for the enterprise to invest part of it to gain a higher rate
of return than would be possible in a checking account. These
investments include GICs, mutual funds, stocks, bonds, and other
investment options. Investment Manager keeps track of these
investments. Only large ERP packages have an Investment Manager
module.
 Investment Manager has the following functions:
* Maintain Investment Information
* Enter Transactions
* Print Investment Summary
* Maintain Module Information
 FINANCIAL MODULE - CONTROLLING
(Overhead Cost Controlling, Activity Based Costing)

 Controlling
The controlling system gathers the functions
required for effective internal cost
accounting. lt offers a versatile information
system, with standard reports and analysis
paths for the most common questions. In
addition, there are features for creating
custom reports to supplement standard
reports.
 Overhead Cost Controlling
 FINANCIAL MODULE - CONTROLLING
(Overhead Cost Controlling, Activity Based Costing,

 Overhead Orders
Overhead orders subsystem collects and analyses
costs, based on individual internal measures. This
system can monitor and automatically check
budgets assigned to each measure.
 Activity-Based Costing
The goals of the entire organization, should come
before the goals of individual departments, when
it comes to business process reengineering. The
Activity-Based Costing module, is a response to
 FINANCIAL MODULE
Treasury (Cash Management, Treasury Management)

 Cash Management
To anlyse financial transactions for a give period. It
also records future developments for purposes of
financial budgeting.
 Treasury Management
It offers functions for managing financial deals and
positions, from trading to transferring data to
Financial Accounting.
 FINANCIAL MODULE
Treasury (Market Risk Management, Funds Management)

 Market Risk Management

It acts as an integrated central risk control station with
monitoring and management functions.s
 Funds Management
It supports Funds Management Process from
budgeting all the way through to payments,
including monitoring expenditures, activities,
resources and revenues.
 FINANCIAL MODULE
Enterprise Controlling
(Executive Informaiton Systems, Business Planning and
Budgeting, and Profit Center Accounting)

 Executive Information Systems

It integrates data from Financial Components, other ERP Components, and
non-ERP data sources both inside and outside the enterprise.
 Business Planning and Budgeting
It supports Business Units and Groups in the calculation of business targets,
such as return on investment. It also supports central investment
planning, budget release and tracking.
 Profit Center Accounting
All business transactions in Financial Accounting, Material Management,
Asset Management, and Sales / Distribution, which affect profits, are
automatically reflected in Profit Center Accounting
SALES AND DISTRBUTION
 SALES AND DISTRBUTION
MAIN MODULES
1. Master Data Management
2. Order Management
3. Warehouse Management
4. Shipping
5. Billing
6. Pricing
7. Sales Support
8. Transportation
 SALES AND DISTRBUTION –
Master Data Management

Master Data
1. Trading Community Architecture
Customer, Supplier, Employee
2. Products
3. Salespersons
4. Sales Territory
SALES AND DISTRBUTION – Order
Management – Sales Order Management
SALES AND DISTRBUTION – Order
Management – Purchase Order Management
 SALES AND DISTRBUTION –
Warehouse Management

1. Inventory Planning
2. Inventory Handling
3. Inventory Location, Assignment
4. Inventory Reporting
5. Inventory Analysis
6. Lot Control
7. Distribution Data Collection
SALES AND DISTRBUTION –
Shipping
SALES AND DISTRBUTION – Billing

1. Invoice
2. Debit and Credit Memo
3. Proforma Invoices
4. Rebates
 SALES AND DISTRBUTION –
Pricing

1. Price Quotations
2. Discounts (Quantity, Payment Terms etc.)
 SALES AND DISTRBUTION –
Sales & Support

1. Price Quotations
2. Discounts (Quantity, Payment Terms etc.)
 SALES AND DISTRBUTION –
Transportation

1. Inward & Outward Movement of Goods

2. Transportation Planning and Processing
MANUFACTURING
 MANUFACTURING
Material and Capacity Planning

1. Material
2. Labor Resources
3. Plant & Machinery
 MANUFACTURING
Shop Floor Control
1. Shop Orders
2. Work Orders
3. Backward and Forward Scheduling
 MANUFACTURING
Quality Management

1. Shop Orders
2. Work Orders
3. Backward and Forward Scheduling
 MANUFACTURING
Cost Management

1. Costing Methods
a) Weighted Average
b) Standard
c) LIFO
d) FIFO

2. Product Cost
 MANUFACTURING
Serialization/Lot Control

1. Lot Control / Batches

2. Serialization / LPN (License Plate Number)
 HUMAN RESOURCES
1. Personnel Management (HR Master Data, Personnel
Administration, Recruitment, Travel Management, Benefits
administration, Salary administration)
2. Organizational Management (Organizational Structure,
Staffing Schedules, Job Descriptions, Planning Scenarios,
Personnel Cost Planning)
3. Payroll Accounting (Gross / net Accounting, History
Function, Multi-Currency Capability, International Solutions)
4. Time Management (Shift Planning, Work Schedules, Time
Recording, Absence Determination)
5. Personnel Development (Career and Succession Planning,
Profile Comparisons, Qualifications Assessments,
Additional Training Determination, Training and Event
Management)
 HUMAN RESOURCES
Personnel Management
Personnel Administration
* Shared Employee Information

HR Master Data: Core HR Data

a) Job
b) Position
c) Grade
d) Employee Master Information

Recruitment
* Automated Hiring Process (Manage Open Positions, Applicant Screening,
Selection, Hiring, Correspondence, Reporting, and Cost Analysis)
* eHiring

Travel Management: Travel Approval to Travel Expense Report

Benefits administration: Define Benefits, Enroll Employees, Cost/Benefit

Simulations

Salary administration: Salary Review Process, Manpower Costing

 HUMAN RESOURCES
Organizational Management

* Graphical Organization Charts

* Staffing Schedules by headcount,
percentage, and working hours
* Work Center Descriptions
* Job Tasks and Description
 HUMAN RESOURCES
Payroll Accounting

* Centralized / Decentralized Payroll

* Apply Business Rules
* Country Specific Payroll (Language,
Currency, and Regulatory Requirements)
 HUMAN RESOURCES
Time Management

* Attendance System
* Leave System
* Overtime/Late Sitting System
* Shift Planning (Manage Staff Shortage and
Excess)
 HUMAN RESOURCES
Personnel Development

* Comparison of Qualification and Profile

* Training Need Analysis
* Training Schedules
 PLANT MAINTENANCE

* Preventive Maintenance Control

* Equipment Tracking
* Component Tracking
* Plant Maintenance Calibration Tracking
* Plant Maintenance Warranty Claims Tracking
 PLANT MAINTENANCE
Preventive Maintenance Control

Planning, Scheduling, and Control of facilities

and Equipment
Monitoring by:
a) Hours of Operation
b) Units of Production Produced
c) Gallons of Fuel Consumed
d) Number of Days in operation since the last
service level
 PLANT MAINTENANCE
Equipment & Component Tracking

Acquisition and Utilization History

Asset Management
Identification of Chronic Problems
 PLANT MAINTENANCE
Plant Maintenance Warranty Claims Tracking

* Establish Type and Length of Warranty

* History of Warranty Maintenance
 QUALITY MANAGEMENT
1. Quality Planning (Management of basic data for quality
planning and inspection planning, Material Specifications,
Inspection Planning)
2. Quality Inspection (Trigger Inspections, Inspection
Processing with inspection plan selection and sample
calculation, Print shop papers for sampling and inspection,
record results and defects, make the usage decision and
trigger follow-up actions)
3. Quality Control (Dynamic sample determination on the
basis of the quality level history, application of statistical
process control techniques using quality control charts,
Quality Scores for inspection lots, Quality notifications for
processing internal or external problems and initiating
corrective action to correct the problems, Inspection lot
processing and problem processing)
 QUALITY MANAGEMENT
Computer Integrated Quality Management (CIQ)

* Material Management (Purchasing, Inventory

Management, Warehouse Management, Material
Requirements Planning)
* Production (Work Scheduling, Shop Floor Control)
* Sales and Distribution (Delivery, Creation of Quality
Certificates)
 MATERIALS MANAGEMENT
 Pre-Purchasing Activities
 Purchasing
 Vendor Evaluation
 Inventory Management
 Invoice Verification and Material Inspection
MATERIALS MANAGEMENT
Pre-Purchasing Activities
 MATERIALS MANAGEMENT
Purchasing Activities

Purchasing Integration with other modules

1.Cost Accounting System
2.Financial Accounting System
3.Sales and Distribution
 MATERIALS MANAGEMENT
Vendor Evaluation

1. Deliver Date, Prices etc.  Purhcase Order

2. Quality Results  Quality Management
3. Lead Times  Material Planning
 MATERIALS MANAGEMENT
Inventory Management

1. Maintenance of Stock
1. Quantity
2. Value
 MATERIALS MANAGEMENT
Invoice Verification and Material Inspection

1. 2 Way  PO Quantity
2. 3 Way  PO Quantity + Receive Quantity
3. 4 Way  PO Quantity + Receive Quantity + Inspection Quantity