Enterpris

e
Resource
Planning
 What is ERP?

ERP is a solution, which

Enterprise Resource Planning

facilitates company-wide integrated

information systems, covering all
functional areas

performs core Corporate activities and

increases customer service augmenting
Corporate Image
 Why ERP?

For Management – to know what is happening

Enterprise Resource Planning

in the company

For cycle time reduction

To achieve cost control

To shun the geographical gaps

To be Competitive
Expected benefits of ERP
• Streamlining business processes

• Standardizing of various business processes

• Eliminating duplication of data entry

• On-line sharing of information for Decision Making

• Bringing in transparency in our operations.

 Industry Wide Advantages

 Manufacturing Sector – Speeding up the whole

Process
 Distribution and retail stores – Accessing the
status of the
goods
 Transport Sector – Transmit commodities
through online
transactions
 Project Service industry – Fastens the
compilation of reports
 EVOLUTION OF ERP
ERP
MRP II
+ SALES & DISTRIBUTION
+ MAINTENANCE
+ HR
+ PROJECTS

MRP II

MRP
+ MANUFACTURING / QLY
+ PLANNING
+ FINANCE

MRP
ERP : Enterprise Resource Planning
MATERIAL / MRP II : Manufacturing Resource
INVENTORY
PURCHASE & STORES
Planning
MRP : Material Requirement
Planning
1970 1980 1990 2000
 ERP Vendors
•Local ERP

–RAMCO Marshal
–MASTEK Mamis
•International

–SAP ORACLE
–JDE Peoplesoft
–Baan Mfg*Pro
–BPCS Avalon
About
SAP
System Applications & Products in Data Processing is the world's leading
provider of business software solution, providing unique support to its customers
and partners for streamlining operations and achieving significant efficiencies
throughout their supply chains.

• Leader in Products and Technology - Most complete E-Business Suite

• Unparalleled Global Spread – 69,700 Installations in 120+ countries
• The Largest Installed Base – 21,600 Companies run SAP
• Matchless Business Experience
– Providing 25 Industry Solutions
– 30 years of blending industry expertise
• Providing Solutions for Customers of all Sizes
• Fully integrated with modular structure
• Best Practices approach
 SAP R/3 Modules

FI
SD Financial
Sales & Accounting
Distrib.
MM CO
Materials Controlling
Manage-
PP ment AM
R/3
Production Asset
Planning Management

QM Client / Server PS
Quality Project
Manage- ABAP/4 System
ment PM WF
Plant Workflow
Mainten-
ance HR IS
Human Industry
Resources Solutions
 Technical Architecture
SAP’s Client/Server Structure
Central DB (Stores all Data and
Application Programs)

Database Changes

Application Logic
Output Data to Input Data Output Data to
User from User User

User Interaction
Illustration: SAP R/3 Basis softwareis the
“middleware” of the R/3 System

R/3 Basis External

components Computing
(“middleware”) environment

Windows NT
UNIX
Oracle

Informix
Request for
computing
resources

What does a Basis Consultant do? 1.## What is Basis?

 Illustration: Why does SAP R/3 use a
client-server architecture?
PC Software program SAP Client Server Software

SAP Component

SAP Component

B
Software components
SAP Component

A B C
C

BC 010 1.## R/3’s three tiered client server architecture

 Illustration: Logical Groupings or
“layers” of SAP R/3 Components
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

What does a Basis Consultant do? 1.## What is Basis?

 Illustration: Physical distribution of R/3’s
three layered client-server architecture
Presentation Layer components are installed across many PCs.

The Application Layer

components are installed
across one or more high-
end servers.

The Database Layer

components are installed on
one high-end database server.

Introduction to R/3’s client/server technology.## What does a Basis Consultant do?

 Sales and Distribution
Processing

MATERIALS MANAGEMENT
Sales Support
Sales
activity

Sales
SALES INFORMATION SYSTEM

Inquiry

Quotation Contract

Delivery Subsequent Sales Scheduling

free of delivery free order Returns agreement
USD charge of charge

Shipping
Delivery

A NA M SL AI RET A M
Billing
Debit memo Invoice Credit memo

FINANCIAL ACCOUNTING
 Materials Management

8. Payment 1.Requirements
determination
2. Source
determination

7. Invoice
3. Vendor selection
verificat
ion

4. Order Processing
6. Goods receipt &
inventory management
5. Order follow-up
House of Finance
EIS
Information Warehouse
Group EC
accounting
T
FI CO
R

TREASURY ACCOUNTING CONTROLLING

Funds Center GL/AP/AR Profitability

Consolidations Center
Cash Assets and liabilities Profitability
flow ... Costs
Risk ...
Mgmt
...
IM
Capital investment & financing Return on investment
Financial Accounting (FI)

- Organizational Structure -
 SAP Enterprise System

Organizational Structure
• A hierarchy in which the organizational units
in an enterprise are arranged according to
tasks and functions.
• Are static data and are rarely changed
– Once you have decided on an organizational structure it is
not easy to change it
• The definition of organization units is a
fundamental step, it is a critical factor in how
the company will be structured
Organizational Units and Basic Settings
 Organizational Units in
R/3 - FI

Client 000
Client 001
Client 400
...

Company Company Company Company

Code 1000 Code 2000 Code 3000 Code 4000
 Financial Accounting (FI)

Company
• Consolidated financial statements are
created at the company level
• A company can include one or more
company codes
• All company codes must use the same
chart of accounts and fiscal year
• Company is not required in the definition of
an enterprise (optional)
 Financial Accounting (FI)

Chart of Accounts
• A listing of the accounts (assets,
liabilities, equity, revenues, and
expenses) that are contained in
the General Ledger
• A chart of accounts must be
assigned to every company code
in order to create the General
Ledger for that company
• Several company codes can use
the same chart of accounts
 Chart of Accounts

Chart of Accounts

The three steps to create and use a chart of accounts :

l Define the chart of accounts,
l Define the properties of the chart of accounts,
l Assign the chart of accounts to company codes.

INT IKR CAUS

 Financial Accounting (FI)

Company Code
• A legally independent entity
• The smallest organizational unit for which
accounting can be carried out
• Business transactions are processed at this level
• Accounts are managed at this level
• Legal financial statements, such as the balance
sheet and the income statement, are generated at
this level using the General Ledger balances
 Financial Accounting (FI)

Fiscal Year Variant

• Specifies the accounting fiscal year
for reporting purposes
• Special periods are created to aid in
the quarterly or year-end adjusting
process completed prior to preparing
financial statements
• A single fiscal year variant is
assigned to each company code
 Financial Accounting (FI)

Credit Control Area

• An organizational unit or area of
responsibility created to control
customer credit limits
• A company code is assigned to one
and only one credit control area
• Multiple company codes can be
assigned to one credit control area
 Financial Accounting (FI)

Client

Chart of Fiscal Year

Company
Accounts Variant

Credit Control
Area

Company
Code
 Account Groups for the G/L Accounts

Cash accounts
General Ledger Company code segment

Chart of accts sgmnt

Konto 001111

Cash Cash
unt
000000- 099999 Acco
C 000000-099999 oup
gr
100000- 199999

Asst
200000- 299999

Matl
300000- 399999
Account group l The number ranges of the
control accounts
P/L
400000- 499999

l The field status of the fields

Liab
500000- 599999 in the company code
...
segment of the master
600000- 699999
record
General Ledger Master Data

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G/L account master Data –Structure

31
Sales and Distribution (SD) Financial Accounting (FI)

Accounts Receivable Integra

tion

Reconciliation Account
Customer 189 Customer 142
Accounts Receivable
100 300 Reconciliation

950

Customer 135 Customer 123

400 150

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Materials Management (MM) Financial Accounting (FI)

Accounts Payable Integra

tion

Reconciliation Account
Vendor 100234 Vendor 100435
Accounts Payable
200 250 Reconciliation

950

Vendor 100621 Vendor 100846

100 300

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 Unit 4

Materials Management (MM)

- Organizational Structures -

42
 Materials Management (MM)

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

43
 Integra
Materials Management (MM)
tion

Organizational Structures
• Plant
• Valuation Area
• Storage Locations
• Purchasing Organizations
• Purchasing Groups

44
 Integra
Materials Management (MM)
tion

Plant
• Lowest valuation area
• Organizational level where Material
Requirements (MRP) runs
• Generally used to describe a
production site, a distribution center
or centralized warehouse
• May be a physical or logical unit

45
 Integra
Materials Management (MM)
tion

Valuation Area
• The valuation area determines at
which level a material is valuated
(inventory value is established)
• SAP R/3 allows valuation at the
company code or plant level, but
recommends valuation area be set at
the plant level

46
 Materials Management (MM)

Storage Location
• Subdivision of a plant
• Where materials are managed
(inventory management)
– Raw Materials
– Maintenance, Repair, and Other
– Finished Product
• May be a physical or logical unit

47
Corporate Structure

48
 Integra
Materials Management (MM)
tion

Purchasing Organization
• Organizational unit responsible for the
procurement of materials and services.
• SAP requires that purchasing
organizations be assigned at the plant
level
• A purchasing organization can be
assigned to more than one plant
• A purchasing organization can be
assigned to a company code

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Organization of Purchasing
Centralized/Distributed Purchasing

50
 Materials Management (MM)

Organizational Relationships

• Purchasing
Organization/Purchasing Group
Purchasing
Organization P001

Purchasing Purchasing Purchasing Purchasing

Group P001 Group P002 Group P003 Group P004

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 Integra
Materials Management (MM)
tion

Fiscal Period
• In order to execute any material
postings, the current fiscal period
has to be activated
• By initializing the company code for
material management, the first
major integration between Financial
Accounting (FI) and Logistics is
completed

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Material Types

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 Materials Management (MM)
Material Master
Material Types
• Standard material types are used
in all industries.
– ROH: Raw Materials
• Purchased externally only
• No sales view
– HAWA: Trading Goods
• Always purchased externally
• Sold without any change to the material
• No manufacturing views exist

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 Materials Management (MM)
Material Master
Material Types (continued)
– FERT: Finished Products
• Are produced internally
• Normally no purchasing views exist

- HIBE: Operating Supplies

. contain purchasing data, but not sales data

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 Materials Management (MM)

Purchasing Tolerances

• A tolerance limit is set for allowed

variance before a warning/error
message is displayed
– Price variance
• Compares the price in the purchase order with
the valuation price stored in the material master
– Maximum cash discount
• This tolerance limit is set to assure that cash
discounts do not exceed allowable discounts
– Purchasing value key

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Goods Receipts Tolerances

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Invoice Receipts Tolerances

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Automatic Account Assignment

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All the Best for your
Interview