Introduction to SAP

September 30, 2003

SAP Overview - Agenda

1. SAP R/3 System Overview
SAP R/3 and Modules SAP Organization Structure SAP Master Data SAP Security

2.

SAP R/3 Module Overview and Master Data

Sales and Distribution Materials Management and Finance & Controlling

3.

SAP R/3 System Benefits

System Integration Data Consistency Business Processes

Presentation Objectives

Provide an introduction to the SAP R/3 system Introduce and define SAP R/3 terms Explain the systems functionality Explain the purpose and function of master data Introduce SAP R/3s approach to business processes

SAP R/3 System Overview

SAP R/3 Overview: SAP R/3

Systems, Applications and Products in Data Processing German software company, founded in 1972 Has been the market leader in ERP (Enterprise Resource Planning) software, technology and product development R/3 indicates Real Time 3 Tier Architecture.

SAP R/3 Overview: SAP R/3

The R/3 system was designed for use in open, or client/server environments. R/3 works with a common database. This means information entered into the system by one part of the organization is immediately available to all other parts of the organization.

SAP R/3 Overview: SAP R/3 Application Modules

u u u u u u u MRP Purchasing Goods Movement Invoice Verification Inventory Management Vendor Evaluation Purchasing Information u u u u Sales Support Inquiries Quotations Orders u Shipping u Invoicing u Sales Information u u u u u General Ledger Accounts Receivable Accounts Payable Cash Management Financial Controlling u Financial Assets Management u Consolidation u Foreign Currencies & Taxation

S D
S le & as

F I
F ac l in n ia A c u tin con g

u u u u u u u u

Sales Planning Production Planning MRP / MRP II Forecasting Capacity Planning Production Activity Costing Project Management

M M
Mte ls a ria

D trib tio is u n

C O
C n llin o tro g

P P
P dc n ro u tio P n in la n g

Mm g t.

A M
F e As ts ix d s e

u u u u u

Cost Element Accounting Cost Center Accounting Activity Based Cost Accounting Activities and Services Costing Order and Project Accounting

Q M
u u u u u Quality Planning Quality Inspection Quality Control Quality Documentation Quality Information
Qa u lity Mm g t.

R/3
P M
Pn la t Min n n e a te a c

Mm g t.

P S
P je t ro c

u u u u

Technical Asset Mgmt. Investment Control Traditional Asset Acct. Investment Mgmt.

W F H R
H mn ua Rs u e e o rc s

Ss m y te

IS
In u try ds S lu n o tio s

Wrk w o flo

u u u u

Funds Management Resource Management Quality Control Time Management

u Maintenance & Inspection Planning u Processing of plant maintenance orders u Management of completion confirmations u History Management u Plant Maintenance Information

u Automates Business Processes u Supports all modules

u u u u u

Payroll Travel Expense Accounting Benefits Recruitment Personnel Administration

u u u u u

Workforce Planning Training Administration Organization Mgmt. Personnel Administration Time Management

u Result of the ICOEs u Industry specific functionality

SAP R/3 Overview: SAP R/3 Application Modules

Real time processing Data is entered once. Where it originates GUI Icons, User friendly Immediate checking, processing, and information availability

S D M M P P
Po rd u tio c Mte a r ls ia Mm g t . S le a s& D tr is ib ti u o n

F I
Fa in n cl ia Ac co

C O
Cn o tr o g llin

A M
Fe ix d As t s es MP gS m t.

Qn M
Qla u li Pa n nty in g Mm g t.

R/3

u tin n g

P M
Pn la t Min at eac nn e

W F H R
Hm u a n Rs eo uc s re

Po r je c t Ss yt e m

IS
In u d sy tr S lu ot io s n

Wr ok flo w

Integration Common cross-department data basis (no redundancy in data storage) Up-to-date information Software development tools (for enhancements and own developments) Usability Convenient standardized user interface Optional menu/command mode Intelligent online documentation and error dialog Catchword catalog (detailed explanation of typical terms Search aids (matchcode) Mutiple transactions simultaneously (alternatives session) Long-running transactions in background processing SAP is internet ready
8

The Multis Multi-Company Multi-Language Multi-Currency

SAP R/3 Overview: System Wide Features

SAP Organization Structure Master Data Security

SAP R/3 Overview: SAP Organizational Structure

The fundamental data and functional architecture of the R/3 system...
Defines the legal and organizational structure of a company from different points of view. Includes flexible organizational units for creating a comprehensive company structure. Links different application areas in the R/3 system to create an integrated company structure.

10

SAP R/3 Overview: SAP Organizational Structure

Client
Client is the highest level in SAP R/3. The data within one client may not be accessed while working in another, different client.
Client Chart of Accounts

Controlling Area A

Controlling Area B

Company A

Company B Plant 2

Company C Plant 3

Some data is managed at the client level because every one in Plant 1 the corporate group of companies will want to refer to exactly the Sloc A Sloc B same information.

Sloc A

Sloc A

11

SAP R/3 Overview: SAP Organizational Structure

Chart of Accounts
Consists of an organized list of all General Ledger accounts for an organization Can be specific to a single Company Code or used across multiple Company Codes Can be used for one or multiple Controlling Areas Can be maintained in different languages
Client Chart of Accounts

Controlling Area A

Controlling Area B

Company A

Company B

Company C

Plant 1

Plant 2

Plant 3

Sloc A

Sloc B

Sloc A

Sloc A

12

SAP R/3 Overview: SAP Organizational Structure

Client

Controlling Area
An organizational unit within a corporation in which the internal management of costs and profits can be performed
Chart of Accounts

Controlling Area A

Controlling Area B

Company A

Company B

Company C

Plant 1

Plant 2

Plant 3

Sloc A

Sloc B

Sloc A

Sloc A

13

SAP R/3 Overview: SAP Organizational Structure

Company Code
The identification number of an independent accounting unit that can generate its own financial statement. It is a legal requirement that a group that operates in several countries must establish a separate company code unit for each country.
Client Chart of Accounts

Controlling Area A

Controlling Area B

Company A

Company B

Company C

Plant 1

Plant 2

Plant 3

Sloc A

Sloc B

Sloc A

Sloc A

14

SAP R/3 Overview: SAP Organizational Structure

Plant
A plant is the central organizational unit to the production planning and inventory management concept Typically represents a manufacturing location or distri bution center
Client Chart of Accounts

Controlling Area A

Controlling Area B

Company A

Company B

Company C

A plant can be production site or a group of storage locations that share materials. Sloc A

Plant 1

Plant 2

Plant 3

Sloc B

Sloc A

Sloc A

15

SAP R/3 Overview: SAP Organizational Structure

Storage Location
A physical or virtual location that the system uses to manage inventory. Defines the location of materials within a Plant Inventory is managed in storage locations at the quantity level.
Client Chart of Accounts

Controlling Area A

Controlling Area B

Company A

Company B

Company C

May be a warehouse, storeroom, or a specific location within a war Sloc A ehouse or storeroom

Plant 1

Plant 2

Plant 3

Sloc B

Sloc A

Sloc A

16

SAP R/3 Overview: Master Data

Master Data refers to core information that is used by the various SAP modules. This information is typically entered only once, after which, the user will refer to the information to accomplish other tasks. The master data files can also be updated with new information so that its use as a reference is always accurate. SAPs functional modules share and use the various master data records across multiple areas and processes.

MM PP SD Master Data

FI/CO QM WM

17

SAP R/3 Overview: Master Data - Types of Master data

Sales and Distribution: Material masters Customer Masters Customer Material lists Customer Price records
G/L Account Master

Customer Master

Purchasing: Material masters Vendor master Info Records Source Lists Vendor Master
Purchasing ?
Quotation RFQ

Client
Chart of Accounts A G/L Account Bal sheet acct BANK X Chart of Accounts B

Account group FIN. . .

Company Codes

CC 0001 Currency Line item Display . . USD

CC 0003 Currency Line item Display . . CAD X

Vendor

Finance and Controlling: Material masters G/L Accounts Cost Centers Profit Centers

Inventory Management Material masters Plants Storage locations

18

SAP R/3 Overview: Master Data - Material Master

SAP R/3

Material Master Record

Purchasing Central repository of material data for all areas within logistics:
Finished

Sales Order Processing

Invoice Verification

Products Semi-finished products Raw materials Consumables Marketing Materials

Inventory Management

19

SAP R/3 Overview: Master Data - Key Data in the Material Master
Client level data
Description and texts Units of measure, weights, volumes Material type

Sales organization data

Sales organization, distribution channel, shipping points...

Inventory Management and Purchasing organization data

Purchasing group, receipt processing time, quality inspection indicator, storage location

Planning data
Planning type, MRP controller, lot size data, forecast consumption data

Finance and Controlling data

Material valuation, cost estimate data

20

SAP R/3 Overview: Master Data - Terms and Concepts

Material
A generic term for any article, item or service that is subject to materials management. Material numbers are assigned internally by SAP or externally by the user.

Record
A collection of data pertaining to one item.

View
A view groups together on a screen all the data for an item that a particular department creates in a master record. Individual views can be processed separately.

21

SAP R/3 Overview: Master Data - Terms and Concepts

Document
A document contains text explaining components or functionalities in the SAP system. The document type distinguishes the business transactions to be posted. A document class explains the purpose of the document.

Field
The area on a screen where information is input or displayed.

Extendable Master
A master record in which a view has not yet been created.

22

SAP R/3 Overview: Master Data - Terms and Concepts

Populate
Filling in information for a field in a view or document.

Maintaining
The act of placing information into a view or document , or continuing to provide updated information into specific master records.

Default
The system automatically populates fields with pre-determined data, however, changes may still be input manually.

23

SAP R/3 Security

SAP R/3 Overview: Security

Security
Controls the authority to perform a particular action in the R/3 System. Profiles , Objects , Authorizations
Each authorization refers to one authorization object and defines one or more permissible values for each authorization field listed in the authorization object. Authorizations are combined in profiles which are entered in a user's master record.

25

SAP R/3 Overview: Security - Profiles

An authorization profile gives users access to the system. A profile contains individual authorizations, which are identified by the authorization name and one or more authorization objects. If a profile is specified in a user master record, the user has all the authorizations defined in this profile.

26

SAP R/3 Overview: Security - Objects

Authorization objects allow you to define complex authorizations. An authorization object groups together up to 10 authorization fields in an AND relationship in order to check whether a user is allowed to perform a certain action. To pass an authorization test for an object, the user must satisfy the authorization check for each field in the object.

27

SAP R/3 Overview: Security - Authorizations

This field contains the name of a program group that allows users to
Execute programs Schedule jobs for background processing Maintain programs Maintain variants

When creating a program, you can specify an authorization group as one of the program attributes. This allows you to group together programs for the purposes of authorization checking.

28

An Overview Typical Business Cycle

VENDOR USER COMPANY Controlling Internal Reporting
Profit Center Accounting

CUSTOMER

Sales Processing
Sales Order Delivery* Billing

Delivery of Goods / Services

Customer Invoice

Cost Center Accounting

Interface

Financial Accounting Legal Reporting FI General Ledger FI Postings

FI Account Payable FI Account Receivable

Receipt of Goods / Services

Vendor Invoice

Receipt of Payment Payment to Vendor

Cost Element Accounting

* Delivery if materials are sold 29

Module Overview: Sales and Distribution (SD)

SAP R/3 Overview: SAP R/3 Application Modules

Sales and Distribution (SD)
The SD application module helps to optimize all the tasks and activities carried out in sales, delivery, and billing

31

Module Overview: SD

Sales and Distribution (SD)

The process of taking orders, checking availability, delivering goods, invoicing customers, and receiving payment. Its functionality includes the following:
Sales order processing Delivery Billing Customer payment Sales Information System (SIS)

Customer Order

32

Module Overview: SD SD Process

Quotes

Sales Order Processing

Delivery

Billing

Customer Payment

Planning, Reporting and Analysis

The sales order is a legally binding agreement between a sales organization and a sold-to party concerning the delivery of materials or the provision of services. The sales order specifies prices, quantities and dates. The "Delivery" is the central shipping document. Delivery creation initiates shipping activities such as picking and delivery scheduling. The data generated during shipping processing is recorded. The invoiced payment process resolves discrepancies between invoice. the order, receipt, and

33

Module Overview: SD SD Process

Quotes

Sales Order Processing

Delivery

Billing

Customer Payment

Planning, Reporting and Analysis

Billing and customer payment complete the sales and distribution process You can create billing documents with references to sales orders and deliveries. You can bill explicitly, process a billing due list or bill in batch.

34

Integrated Business Process Overview

Sales Logistics FI
G/L COS // G/L COS Inventory Inventory AR AR Invoice // Invoice GL GL Revenue Revenue Customer Customer Payment Payment

SD
Quotes Quotes Sales Order Sales Order Processing Processing Delivery Delivery Billing Billing

Planning, Reporting and Analysis

35

Module Overview: SD Sales Information System

Standard analyses

90 80 70 60 50 40 30 20 10 0 1st 2nd 3rd 4th Qtr Qtr Qtr Qtr East West North

These functions enable you to target specific key figures and to analyze them in detail.
You can specify the level of detail in which you wish to view the information. The values for each list can also be viewed graphically.

Flexible analyses

Enables you to group together and aggregate key figures yourself and easily create reports.

36

Module Overview: SD Organization Structure

Company A
Sales Org A Dist Channel 1 Sales Org B

Company B
Sales Org C

Dist Channel 2

Sales Organization
Logical selling unit Division a1 Division a2 Division a3 Division b1 Division a2 Geographical or other logical subdivision of Company

Plant 1000

Plant 2000

Plant 3000

Division Combination of similar products Often used to define Product Line

Distribution Channel
Usually the sales channels (i.e., Wholesale, Retail, Direct Sale, Merchandising, Mail Order, et c.)

37

Module Overview: SD Master Data

Sales and Distribution data elements are comprised of:
Material masters Customer Masters Customer Material lists Customer Price records Output Business Partners Sales Organization Distribution Channel Division Sales Group Sales Reps

38

Module Overview: Materials Management (MM)

SAP R/3 Overview: SAP R/3 Application Modules

Material Management (MM) The MM application module supports the procurement and inventory functions occurring in day-to-day business operations

40

Module Overview: MM

Materials Management (MM)

Purchasing in SAP refers to the process of requisitioning, vendor sourcing, purchasing, receiving, and paying for materials and services used throughout the organization. Inventory Management manages materials in a plant by material number. Inventory management is used to plan, enter, and check goods movements.

41

Module Overview: MM Purchasing

Requirement for Goods / Services Purchase Requisition Purchase Order Goods Receipt Invoice Verification Vendor Payment

Planning, Reporting and Analysis

The SAP R/3 system supports procurement of materials through approved suppliers and materials. The business process begins with the buyer determining the source to fulfill the goods requirement and ends with vendor payment for goods. The invoiced payment process resolves discrepancies between receipt, and invoice. the order,

42

Integrated Business Process Overview

Purchasing FI
G/L Inventory / / G/L Inventory GRIR GRIR G/L GRIR/ G/L GRIR/ Expense AP Expense AP Invoice Invoice Vendor Vendor Payment Payment

MM

Requirement Requirement for Goods // for Goods Services Services

Purchase Purchase Order Order

Goods Goods Receipt Receipt

Invoice Invoice Verification Verification

Planning, Reporting and Analysis

43

Module Overview: MM Purchasing Organization Structure

Company A Company B

Purch Org A

Purch Org B

Purch Org C

Purch Group 1

Purch Group 2

Purch Group 2

Purchasing Organization
Responsible for procuring materials and services for one or more Plants Capable of spanning Companies to produce a central purchasing organization Negotiates prices and delivery conditions with the vendor Required for entry of all purchase orders Can be a central buying group responsible for company wide purchases

Plant 1000

Plant 2000

Plant 3000

Purchasing Group
Individual buyer per Plant Group of buyers per Plant

44

Module Overview: MM Inventory Management

Materials are managed on both a quantity and value basis. Work is managed at the plant and storage location levels. Inventory management is used for performing physical inventories and inventory counts within the SAP system.
Building 1 Plant

Storage locations Building 2

45

Module Overview: MM Master Data

Materials Management Master Data Elements are comprised of:
Material masters Vendor master Info Records

46

Module Overview: Financial Accounting and Controlling (FI/CO)

SAP R/3 Overview: SAP R/3 Application Modules

Financial Accounting (FI)
The FI application module is designed for automated management and external reporting of general ledger, accounts receivable, accounts payable, and other sub-ledger accounts with a pre-defined chart of accounts

48

Module Overview: FI/CO Financial Accounting

Financial Accounting (FI)
The central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. Recording all business transactions in a fully integrated software system ensures that the accounting data is always complete and accurate.
FI

49

Module Overview: FI/CO Financial Accounting

Financial Accounting (FI)
SAP R/3 Financial Accounting applications in-scope include:
General Ledger Accounting Accounts Payable Accounts Receivable

50

SAP R/3 Overview: SAP R/3 Application Modules

Controlling (CO)
The CO application module represents the companys flow of cost and revenue CO is a management instrument for organizational decisions

51

Module Overview: FI/CO Controlling

Controlling (CO)
Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the services provided by an organization.

CO

52

Module Overview: FI/CO Controlling

Controlling (CO)
SAP R/3 Controlling applications in-scope include:
Budgeting Cost centers / Elements Internal Order Accounting Profit center Accounting

CO

53

Module Overview: FI/CO Master Data

FI/CO Master Data Elements include
G/L Accounts Cost Centers Profit Centers

54

Module Overview: FI/CO Organization Structure

Client Chart of Accounts

FI
Controlling Area Controlling Area Company A Company B Company C

Profit Center Hierarchy

Cost Center Hierarchy Cost Center A Manufacturing

CO

Profit Center A Profit Center A1

Profit Center B

55

Module Overview: FI/CO Organization Structure

Cost Center
The smallest area of cost responsibility within a companys overall organizational str ucture Must be assigned to a standard hierarchy structure May define alternative hierarchy structures for roll-up analysis Cost Centers may capture the following types of postings for internal allocation purpo ses: Transfer postings Postings from distribution Postings from internal cost allocations Represent lowest hierarchical level in cost center accounting

Profit Center
Calculates net profit at organization level A business unit within a company which monitors both costs and revenue and whic h behaves as if it is an independent unit op erating in the marketplace All objects with profit related data must be assigned to a profit center, including cost c enters, internal orders, sales order line ite ms, projects, assets, etc. Must be assigned to a standard hierarchy structure May define alternative hierarchy structures for profitability roll-up analysis Represents lowest hierarchical level in profit center accounting

56

Module Overview: FI/CO FI/CO Processing and Reporting

Transaction Processing (FI) Financial Reporting (FI) Management Reporting (CO)

Cost Center Accounting

MM

Accounts Payable

General Ledger Internal Order Accounting

SD

Accounts Receivable Financial Statements Profit Center Accounting

57

SAP R/3 System Benefits

SAP R/3 System Benefits

Multi-Lingual

Secure Information

Multi-Currency

Integrated

Best Business Practices

Enterprise-Wide
59

SAP R/3 System Benefits: SAP and Integration

The value of integration: Integrated systems enable simplified business processes, standard data definition, and a common business language Simplified business processes enhance productivity to allow focus on value added activities Integrated database allows data to be entered only once and all related information to be updated automatically Integrated applications instill confidence in information and eliminates need for redundant analysis and reconciliation

60

SAP R/3 System Benefits: SAP and Business Processes

Purchase Order Goods Receipt Manufacture Product Delivery

MM, FI, CO, PP

MM, FI, CO, QM, WM

MM, FI, PP CO, QM, WM

MM, SD, FI, CO, WM

61