Understand sap

© 2008 SAP AG
Introduction to SAP ERP
Abstract
This teaching material is intended to explain how the fundamental
business processes interact with SAP ERP in the functional areas
of Sales and Distribution, Materials Management, Production
Planning, Financial Accounting, Controlling, and Human Capital
Management.
SAP University Alliances
Version 1.0
Authors Stephen Tracy
Bret Wagner
Stefan Weidner
Product
SAP ERP 6.0
Global Bike Inc.
Level
Beginner
Focus
Cross-functional integration
SD, MM, PP, FI, CO

SAP ERP
Page 1-2© 2008 SAP AG
Course Content
 Introduction to SAP
 Navigation
 Sales & Distribution
 Materials Management
 Production Planning
 Financial Accounting
 Controlling

SAP ERP
SAP
“Systems, Applications, and Products in Data Processing”
 Name of the Company
- SAP AG
- SAP America
- SAP UK
 Name of the Software
- SAP R/2
- SAP R/3
- SAP ERP

SAP ERP
Who is SAP?
 SAP AG
- Founded in Walldorf, Germany in 1972
- World’s Largest Business Software Company
- World’s Third-largest Independent Software Provider
 Company Statistics
- Over 40,000 employees in more then 50 countries
- 1500 Business Partners
- 36,200 customers in more then 120 countries
- 12 million users
- 100,600 installations
Source: SAP AG website

SAP ERP
Integrated Business Solution Vendors
 SAP (Systems, Applications, & Products in Data Processing)
- SAP ERP, All-in-One, Business by Design, Business One
 Oracle Applications
- Oracle, JD Edwards, PeopleSoft, Siebel, Retek
 Microsoft Business Solutions
- Dynamics: Great Plains, Navision, Axapta, Soloman
 The Sage Group
- Sage Software – Accpac ERP, PeachTree
 SSA Global Technologies
- BAAN

SAP ERP
SAP Architecture
 World-wide usage
 Designed to satisfy the information needs for business sizes (small
local to large all international)
- Multi-lingual
- Multi-currency
 Designed to satisfy the information needs for all industries

SAP ERP
SAP ERP
 Enables a company to link it’s business processes
 Ties together disparate business functions (integrated business
solution)
 Helps the organization run smoothly
 Real-time environment
 Scalable and flexible

SAP ERP
SAP Architecture
 Client/Server Environment
- Client – hardware/software environment that can make a request for
services for a central repository of resources
- Server – hardware/software combination that can provide services to a
group of clients in a controlled environment
 Three – Tier Structure
- GUI
• Graphical User Interface or Web Interface
- Application Server
• One or more, help distribute work load
- Database Server
• One single data repository

SAP ERP
SAP Architecture
Database
Application
Presentation
Browser ClientPCs, Laptops, etc.
Network
Application
Servers
Database
Internet
Transaction
Server
Web Server

SAP ERP
SAP Business Suite
SAP NetWeaver
SAP SCM
SAP PLM
SAP
SRM
SAP
CRM
SAP
ERP ECC 6.0

SAP ERP
SAP Business Suite
SAP NetWeaver
SAP SCM
SAP PLM
SAP
SRM
SAP
CRM
SAP
ECC
SD
MM
PP
QM
PM
HR IS
WF
AM
CO
FI
PS
SAP R/3
Client/Server
ABAP
Basis

SAP ERP
SAP Software Applications
 Solutions
- SAP ERP
- SAP CRM
- SAP PLM
- SAP SCM
- SAP SRM
- SAP Analytics
- SAP Manufacturing
- SAP Service
- SAP Mobile Solutions
- SAP xApps
 Small & Medium Size Solutions
- Business One
- Business by Design
- SAP All-in-One
 Platforms
- Enterprise Services Architecture
- SAP NetWeaver Platform

SAP ERP
SAP ERP Business Modules
 Collections of logically related transactions within identifiable
business functions
- MM (“Buy”)
- PP (“Make”)
- SD (“Sell”)
- FI and CO (“Track”)
- HCM

SAP ERP
SAP ERP Core Applications
 Logistics
- Sales & Distribution
- Plant Maintenance
- Materials Management
- Production Planning
- Quality Management
 Accounting
- Financial Accounting
- Controlling
- Asset Management
- Treasury
 Human Resources
- Personnel Management
- Benefits
- Payroll

SAP ERP
SAP Industry Solutions
 Aerospace & Defense
 Automotive
 Banking
 Chemicals
 Consumer Products
 Defense & Security
 Engineering, Const.
 Healthcare
 High Tech
 Higher Education
 Industrial Machinery
 Insurance
 Life Sciences
 Logistics Service Prod.
 Media
 Mill Products
 Mining
 Oil & Gas
 Pharmaceuticals
 Postal Services
 Professional Services
 Public Sector
 Railways
 Retail
 Telecommunications
 Utilities
 Wholesale Distribution

© 2008 SAP AG
Navigation
Abstract
This material explains how to navigate in SAP systems. It is aimed at
students at educational institutions, such as schools, universities of
cooperative education, universities of applied sciences, and other
universities, with no previous experience of SAP software. It can be used
in the classroom or for self-study.
On completion of the course, students will be able to navigate through the
user interface to deal with business processes and case studies.
Version 1.0
Bret Wagner
Stefan Weidner
Product
All
Level
Beginner
Focus
SAP ERP

SAP ERP
Content
 User guidance
 User specific settings
 Navigation in SAP Easy Access Menu
 Help

SAP ERP
Learning Targets
At the end of this chapter you can
 Name the window elements
 Navigate in an SAP system
 Apply personal system settings
 Effectively use Help

SAP ERP
Log on to an SAP system

SAP ERP
SAP Easy Access Menu

SAP ERP
Role-based User Menu

SAP ERP
DYNPRO Elements
Radiobutton
Alternative 1 (nur eine Alternative möglich!)
ODER Alternative 2
oder .....
oder .....
oder .....
Anzeigen Ändern
Checkbox
Auswahl 1 (Mehrfachwahl möglich!)
Auswahl 4
Auswahl 2
Auswahl 3
Überblick
Check box
Radio buttons
Press buttons
Input fields
Tabs
System function bar
Application function bar
Command field
(transaction code)
Status bar

SAP ERP
ENJOY Initiative – Old Design
Initial screen Header data
Position detailsPosition overview

SAP ERP
ENJOY Initiative – New Design
header data
position
overview
position
details

SAP ERP
Help Functions
F1: Description of Input Fields
F4: value list

SAP ERP
SAP Help Portal
http://help.sap.com

SAP ERP
Favorites

SAP ERP
Transaction Codes

SAP ERP
Transaction SEARCH_SAP_MENU

SAP ERP
Transaction ICON

SAP ERP
Multiple Selection

SAP ERP
User Profile Settings (local)

SAP ERP
User Profile Settings (SAP System)

SAP ERP
Desktop Shortcut

SAP ERP
Summary
You are now able to:
- Name the window elements
- Navigate in an SAP system
- Apply personal system settings
- Effectively use help

© 2008 SAP AG
Global Bike Inc.
Abstract
This material explains the company on which the introduction
material is based on. It describes its enterprise structure in detail.
Version 1.0
Bret Wagner
Stefan Weidner
Product
SAP ERP
Level
Beginner
Focus
Global Bike Inc.
Integration

SAP ERP
Global Bike Incorporated
 Company in the bicycle business
 Initially buys and re-sells different lines of bicycles
 Sells to both wholesale and Internet – procure and distribute
 Later acquires a production facility to manufacture its own product
– produce and distribute

SAP ERP
Core Business Processes
Global Bike Inc.
 Sell – Sales and Distribution (SD)
 Buy – Procurement (MM)
 Plan – Production Planning (PP)
 Make – Manufacturing Execution (PP)
 Track – Financial Accounting (FI)
 Track – Controlling (CO)

SAP ERP
Two Approaches of Learning
 Standard Training
- Level 1: Introductory
- Level 2: Business processes
- Level 3: Configuration
 Business Process Integration Approach
- Cross functional
- Understand business processes and their relationship to SAP's
organizational structure
- Highlight integration/configuration

SAP ERP
Source Unknown

SAP ERP
Process Integration
Sales Order
Process
Sales Order
Entry Check
Availability
Procurement
Process
Pick
Materials
Purchase
Requisition
Purchase
Order
Goods
Receipt
Invoice
Receipt
Payment
to Vendor
Post Goods
IssueInvoice
Customer
Receipt of
Payment
Run MRP

SAP ERP
Process Integration
Sales Order
Process
Sales Order
Entry
Check
Availability
Procurement
Process
Pick
Materials
Purchase
Requisition
Purchase
Order
Goods
Receipt
Invoice
Receipt
Payment
to Vendor
Post Goods
IssueInvoice
Customer
Receipt of
Payment
Run MRP

SAP ERP
Process Integration
Goods
Issue
Sales Order
Process
Sales Order
Entry
Check
Availability
Production
Process
Run MPS
w/MRP
Convert Production
Proposal Schedule
and Release
Procurement
Process
Pick
Materials
Purchase
Requisition
Purchase
Order
Goods
Receipt
Invoice
Receipt
Payment
to Vendor
Completion
Confirmation
Goods
Receipt
Quality
Inspection
Order
Settlement
Post Goods
Issue
Invoice
Customer
Receipt of
Payment

SAP ERP
Enterprise Structure (Global Bike Inc.)
Plant
Client
Chart of
Accounts
Company
Code
Fiscal Year
Variant
Credit Control
Area
Purchasing
Organization
Purchasing
Group
Shipping
Point
Sales
Organization
Distribution
Channel
Division
Sales Area
Controlling
Area
SL10 SL20

SAP ERP

© 2008 SAP AG
Sales and Distribution (SD)
Version 1.0
Bret Wagner
Stefan Weidner
Product
SAP ERP 6.0
Global Bike Inc.
Level
Beginner
Focus
Sales and Distribution

SAP ERP
Functionality
 Sales Support
 Sales
 Shipping and Transportation
 Billing
 Credit Management
 Foreign Trade

SAP ERP
Chapter Overview
 Sales and Distribution Org. Levels
 Sales and Distribution Master Data
 Sales Order Process
- Order-to-Cash

SAP ERP
Organizational Structure
 S&D Structure
 Client
 Company Code
 Sales Area
- Sales Organization
- Distribution Channel
- Division
 Plant
 Shipping Point
 Loading Point
 Internal Sales Structure
 Sales Offices
 Sales Groups
 Salesperson

SAP ERP
Structure for Sales Order Processing
Client 410
Company Code
C100
Plant P100 Plant P101
Sales Area
Sales Org
S100
Distribution
Channel (RE)
Division
(01)

SAP ERP
Internal Sales Structure
US Sales Office
S100
Western Sales
Office
Northwest Sales
Group
Southwest Sales
Group
Salesperson 1
Eastern Sales
Office
Northwest Sales
Group
Southwest Sales
Group
Salesperson 2
Salesperson 3
Salesperson 4
Salesperson 5
Salesperson 6 Salesperson 7
Salesperson 8
Salesperson 9

SAP ERP
Structure for Distribution
Client 410
Company Code
C100
Shipping Point
Express Dock
Loading Point
LP01
Shipping Point
Freight Dock
Shipping Point
Rail Dock
Loading Point
LP02
Loading Point
LP03

SAP ERP
SD Master Data
Customer Master
Material Master
Sales Condition

SAP ERP
Customer Master Data
 Customer Master
- Contains all of the information
necessary for processing orders,
deliveries, invoices and customer
payment
- Every customer MUST have a
master record
 Created by Sales Area
- Sales Organization
- Distribution Channel
- Division

SAP ERP
Customer Master Data
 The customer master information
is divided into 3 areas:
- General Data
- Company Code Data
- Sales Area Data

SAP ERP
Customer Master
Company Code 102
Company Code 101
Company Code 100
Client 410
Sales Org. 101
Sales Org. 100
General Information relevant for the entire organization:
Name
Address
Communication
Company Code specific information:
Acc. Mgmt
Payment
Bank
Sales Area specific information:
Sales Office
Currency

SAP ERP
Material Master Data
 Material Master
- Contains all the information a
company needs to manage about
a material
- It is used by most components
within the SAP system
• Sales and Distribution
• Materials Management
• Production
• Plant Maintenance
• Accounting/Controlling
• Quality Management
- Material master data is stored in
functional segments called Views

SAP ERP
Material Master Views
Material Master
Basic Data
Sales Data
Controlling Data
Forecasting Data
Purchasing Data
Mat. Plan. Data
Accounting Data
Storage Data
Quality Data

SAP ERP
Material Master
Sales Org 102
Sales Org 101
Sales Org 100
Client 410
Storage Location 20
Storage Location 10
Name
Weight
U/M
Sales specific information: Delivery Plant
Loading Grp
Storage Location specific information:
Stock Qty

SAP ERP
Customer Material Information Record
 Data on a material defined for a
specific customer is stored in a
Customer material info record.
 Info Records contain:
- Customer-specific material
number
- Customer-specific material
description
- Customer-specific data on
deliveries and delivery tolerances
 You can also maintain default text
to appear on sales orders for that
customer

SAP ERP
Condition Master (Pricing)
 Condition master data includes:
- Prices
- Surcharges
- Discounts
- Freights
- Taxes
 You can define the condition
master to be dependent on
various data:
- Material specific
- Customer specific
 Conditions can be dependent on
any document field

SAP ERP
Output
 Output is information that is sent
to the customer using various
media, such as:
- E-mail
- Mail
- EDI
- Fax
- XML
 Output examples:
- Quotation
- Confirmation
- Invoice

SAP ERP
Sales Order Process
Sales Order
Entry
Post Goods
Issue
Invoice
Customer
Pick
Materials
Receipt of
Customer Payment
Pack
Materials
Check
Availability
Pre-sales
Activities

SAP ERP
Pre-Sales Activities (CRM Light)
 Sales Support is a component of SD that assists in the sales,
distribution, and marketing of a companies products and services
to its customers. It contains the following functionality:
- Creating and tracking customer contacts and communications (sales
activity)
• Phone call records
• On-site meeting
• Letters
• Campaign communication
- Implementing and tracking direct mailing, internet, and trade fair
campaigns based on customer attributes
 Pre-sales documents need to be managed within the presales
activities: Inquiries and Quotations. These documents help identify
possible sales related activity and determine sales probability.

SAP ERP
Pre-Sales Activities (CRM Light)
 The ultimate goal of all pre-
sales activities is to equip the
sales technician with all the
information necessary to
negotiate and complete the
potential sale.
 Information needed:
- Past sales activity
- Past communication
- Contact information
- General Company info
- Credit limits and usage
- Current backorders
 360º view of your customer

SAP ERP
Inquiry
 An inquiry is a customer’s request to a company for information or
quotation in respect to their products or services without obligation
to purchase.
- How much will it cost
- Material/Service availability
- May contain specific quantities and dates
 The inquiry is maintained in the system and a quotation is created
to address questions for the potential customer.

SAP ERP
Quotation
 The quotation presents the
customer with a legally binding
offer to deliver specific products
or a selection of a certain amount
of products in a specified
timeframe at a pre-defined price.
Quotation
DATE February 25, 2008
123 Any Street Quotation # 20000001
Battle Creek, MI 49015 Customer ID
Phone (605) 555-1212 Fax (605) 555-1414
Bill To: Quotation valid until: June 4, 2008
Prepared by: S. Tracy
1234 North Main
Kansas City, MO 64118
(123) 555-1212
Comments or special instructions:
Quantity Description Unit Price AMOUNT
10 185.00 1,850.00
(5.00) (50.00)
5 269.00 1,345.00
- -
5.00% (157.25)
TOTAL 2,987.75$
If you have any questions concerning this quotation, contact:
Steve Tracy
(605) 555-1212
12345@GBI.com
KB-0013-00
Discount
TB-0014-00
Discount
Total Discount
Heartland Bike Company
GBI
THANK YOU FOR YOUR BUSINESS!

SAP ERP
Sales Order
 Sales order processing can originate from a variety of documents
and activities
- Customer contacts us for order: phone, internet, email
- Existing Contract
- Quotations
 The electronic document that is created should contain the
following basic information:
- Customer Information
- Material/service and quantity
- Pricing (conditions)
- Specific delivery dates and quantities
- Shipping information
- Billing Information

SAP ERP
Sales Order
 The sales document is made up
of three primary areas:
- Header
• Data relevant for the entire sales
order: Ex: customer data, total
cost of the order
- Line Item
• Information about the specific
product: Ex: material and
quantity, cost of an individual line
- Schedule Lines
• Uniquely belongs to a Line Item,
contains delivery quantities and
dates for partial deliveries

SAP ERP
Sales Order
 The sales order contains all of the information needed to process
your customers request, the following information is determined for
each sales order:
- Delivering Schedule
- Shipping point and route determination
- Availability Check
- Transfer of requirements to MRP
- Pricing
- Credit limit check

SAP ERP
Delivery Scheduling
 When an order is created the you must enter a requested delivery
date for the order or each line item.
 The system will then determine a delivery timeline, this will be
used when determining our material availability, or ATP (Availability
to Promise) date.
 The system will determine this date using forward and backward
scheduling rules you have defined.

SAP ERP
Backward Scheduling
Requested
Delv. Date
Goods
IssueLoading
Material
Availability
Order
Date
Transp.
Sched.
Transit
Time
(2 days)
Loading
Time
(1 day)
Pick & Pack
Time
(2 days)
Transp.
Sched.
Time
(1 day)
2nd 3rd 4th 5th 6th1st

SAP ERP
Forward Scheduling
Transit
Time
(2 days)
Loading
Time
(1 day)
Transp.
Sched.
Time
(1 day)
New
Delv.
Date
1st 3rd 4th 5th 6th2nd
Pick & Pack
Time (2 days)
7th
Requested
Delv.
Date
Goods
IssueLoading
Material
Availability
Order
Date
Transp.
Sched.

SAP ERP
Shipping & Route Determination
 During the creation of the sales order the system must determine
the shipping point from which the material will be shipped and the
route the material will take to get from your warehouse to your
customers location.
 A shipping point is determined for each line item within the order.
 The route determination will is used to define the transit time of the
material that we used in scheduling.

SAP ERP
Availability Check
 Availability Check
- Determines the material
availability date
- Considers all inward and outward
inventory movements
 Proposes 3 methods of delivery
- One-time delivery
- Complete delivery
- Delayed proposal
 Rules are created by YOU

SAP ERP
Transfer to Planning
 The order is transferred to
Material Requirements Planning
as an (CIR) Customer
Independent Requirement. If a
deficit is found the system will
propose a Purchase Req. or
Order to fulfill the shortage.

SAP ERP
Pricing
 The system displays pricing information for all sales documents on
the pricing screens at both the header and the line item level.
- Header pricing is valid for the whole order it is the cumulative of all line
items within the order
- Line item pricing is for each specific material.
 The system will automatically search for price, discounts,
surcharges, calculate taxes and freight. You have the ability to
manually manipulate the pricing at both the header and line item
level within the sales order by entering a condition type and
amount.
- Taxes and freight can be set-up so we can’t manually enter

SAP ERP
Credit Check
 Allows your company to manage its credit exposure and risk for
each customer by specifying credit limits.
 During the sales order process the system will alert the sales rep
about the customers credit situation that arises, if necessary the
system can be configured to block orders and deliveries.

SAP ERP
Shipping & Transportation
 The shipping process begins when you create the delivery
document for the sales order. This document controls, supports,
and monitors numerous sub-processes for shipping processing:
- Picking
- Packing
- Post Goods Issue
 Integrated with the Material Management (MM) and Finance (FI)
modules

SAP ERP
Shipping
Order
Combination
Sales Order 1
Sales Order 2
Sales Order 3
Delivery 8…12
Partial
Delivery
Sales Order 4
Delivery 8…13
Delivery 8…14
Delivery 8…15
Complete
Delivery
Sales Order 5
Delivery 8…16

SAP ERP
Delivery Creation
 Checks order and materials to determine if a delivery is possible
— delivery block (hold), completeness
 Confirms availability
 Confirms export/foreign trade requirements
 Determines total weight & volume

SAP ERP
Delivery Creation
 Generates packing proposal
 Calculates weight and volume
 Checks scheduling
 Considers partial deliveries
 Updates route assignment
 Assigns picking location
 Updates sales order
 Determines batches
 Quality check (if needed)
 Updates sales order

SAP ERP
Delivery Document
 The Delivery Document initiates the delivery process and is the
control mechanism for this process
- Picking
- Packing
- Loading
- Posting Goods Issue
 Changes to delivery are allowable - products, quantities

SAP ERP
Picking
 Quantities based on delivery note
 Assigned date when picking should begin
 Automated storage location assignment
 Supports serial number/lot number tracking and batch
management
 Integrated with Warehouse Management (WM)

SAP ERP
Loading and Packing
 Identifies which packaging is to be used for specified products
(customer preference and UCC-128 considerations)
 Identifies and updates accounts associated with returnable
packaging
 Tracks the packed product by container
 Insures weight/volume restrictions are enforced
 All packed items are assigned to the required means of
transportation

SAP ERP
Goods issue
 Event that indicates the legal change in ownership of the products
 Reduces inventory and enters Cost of Goods Sold
 Automatically updates the General Ledger (G/L) accounts
 Ends the shipping process and updates the status of the shipping
documents

SAP ERP
Billing
 The billing document is created by coping data from the sales
order and/or delivery document.
- Order-based billing
- Delivery-based billing
 The billing process is used to generate the customer invoice.
 It will update the customer’s credit status.

SAP ERP
Billing Documents
 The billing document will
automatically create a debit
posting to your customer sub-
ledger account and credit
your revenue account.
 It is at this point that the sales
process is passed over to
Financial Accounting to await
payment.

SAP ERP
Billing Methods
Collective
Invoicing
Delivery based
Invoicing
Delivery 8…34
Delivery 8…33
Order 14
Order 9
Delivery 8…56
Invoice 9…68
Order 6
Delivery 8…20
Delivery 8…21
Invoice 9…45
Invoice 9…46
Split
Invoicing
Order 32 Delivery 8…86
Invoice 9…92
Invoice 9…91

SAP ERP
Payment
 Payment is the final step in the sales order process, this step is
managed by the Financial Accounting department.
 Final payment includes:
- Posting payments against invoices.
- Reconciling differences between payment and invoice.
 Payment will create a posting clearing the liability in the A/R
account and increases your bank account.

SAP ERP
Document Flow
 The document flow and order
status feature allows you to find
the status of an order at any point
in time. The SAP updates the
order status every time a change
is made to any document created
in the customer order
management cycle
(Order-to-Cash).

SAP ERP
Sales Order Process Debugging
 “Never again did I learn so much in
such a short time, because twenty
participants made mistakes for me!
You cannot make so many mistakes
all alone”
SAP Co-founder Klaus Tschira, on his experiences teaching
COBOL to clients at IBM.

SAP ERP
 Document Flow
- Gives Order Process Status
 List of Sales Orders (VA05)
- Tool to Find Order
- Need student’s user id/data set number

SAP ERP
SD1
SD2
SD3
SD4
SD5
SD6

© 2008 SAP AG
Materials Management (MM)
Version 1.0
Bret Wagner
Stefan Weidner
Product
SAP ERP 6.0
Global Bike Inc.
Level
Beginner
Focus
Materials Management

SAP ERP
Functionality
 Inventory Management
 Purchasing
 MRP
 Physical Inventory
 Valuation
 Service Master
 Invoice Verification
 Product Catalogs

SAP ERP
Page 1-100© 2008 SAP AG
Chapter Overview
 Organization Structure
 Master Data
 Procurement Process
- Procure-to-Pay Process

SAP ERP
Page 1-101© 2008 SAP AG
Organizational Structure for Procurement
 Client
- An independent environment in the system
 Company Code
- Smallest org unit for which you can maintain a legal set of books
 Plant
- Operating area or branch within a company
• i.e. manufacturing facility or distribution facility
 Purchasing Organization
- The buying activity for a plant takes place at the purchasing
organization
 Purchasing Group
- Key that represents the buyer or group of buyers

SAP ERP
Page 1-102© 2008 SAP AG
Purchasing Specific Structure
 Purchasing Organization
- Organization unit responsible for procuring services and materials
- Negotiates conditions of the purchase with the vendors
 Purchasing Group
- Buyer or group of buyers who are responsible for certain purchasing
activities
- Channel of communication for vendors

SAP ERP
Page 1-103© 2008 SAP AG
Purchasing Organization / Group
Centralized vs.
Decentralized
Purchasing
Purchasing Org
100
Company Code
100
Company Code
101
Plant 100
Purchasing Org
100
Purchasing Org
100
Company Code
100
Plant 100 Plant 101

SAP ERP
Page 1-104© 2008 SAP AG
Structure for Procurement
Client 410
Company Code
C100
Purchasing Org
P100
Purchasing
Group 100
Purchasing Org
P101

SAP ERP
Page 1-105© 2008 SAP AG
MM Master Data
Vendor Master Data
Purchasing Info Record
Output Master Data
Condition Master Data

SAP ERP
Page 1-106© 2008 SAP AG
Vendor Master Data
 Vendor Master
- Contains all the necessary
information needed to business
with an external supplier
- Used and maintained primarily by
the Purchasing and Accounting
Departments
- Every vendor MUST have a
master record

SAP ERP
Page 1-107© 2008 SAP AG
Vendor Master Views
 Client Level
- Address
- Vendor Number
- Preferred Communication
 Company Code Data
- Reconciliation Account
- Terms of Payment
- Bank Account
 Purchase Org Data
- Purchasing Currency
- Salesman’s Name
- Vendor Partners
General Data
Company Code Data
Financial Accounting (FI)
Purchasing Data
Materials Mgmt (MM)

SAP ERP
Page 1-108© 2008 SAP AG
Vendor Master
Company Code 102
Company Code 101
Company Code 100
Client 410
Purchasing Org. 101
Purchasing Org. 100
Name
Address
Communication
Company Code specific information:
Acc. Mgmt
Payment
Bank
Purchasing Org. specific information:
Incoterms
Currency

SAP ERP
Page 1-109© 2008 SAP AG
 Material Master
- Contains all the information a
company needs to manage about
a material
- It is used by most components
within the SAP system
• Sales and Distribution
• Materials Management
• Production
• Plant Maintenance
• Accounting/Controlling
• Quality Management
- Material master data is stored in
functional segments called Views

SAP ERP
Page 1-110© 2008 SAP AG
Material Master Views
Material Master
Basic Data
Sales Data
Controlling Data
Forecasting Data
Purchasing Data
Mat. Plan. Data
Accounting Data
Storage Data
Quality Data

SAP ERP
Page 1-111© 2008 SAP AG
Material Master
Plant 102
Plant 101
Plant 100
Client 410
Storage Location 20
Storage Location 10
Name
Weight
U/M
Plant specific information: Purchasing Data
Work Sch.
MRP
Storage Location specific information:
Stock Qty
Picking

SAP ERP
Page 1-112© 2008 SAP AG
Purchasing Information Record
 Framework for Purchase
Order
- Contains the relationship
between a vendor and a
material
 Can be created:
- Manually
- Automatically – Quotations
- Automatically – Pur Orders
 Reporting
- Vendor Evaluation
Material Master Vendor Master
Purchasing
Information Record

SAP ERP
Page 1-113© 2008 SAP AG
Purchasing Information Record
 Allows buyers to quickly
determine:
- Which vendors have offered or
supplied specific materials
 Info Records contain:
- Data on pricing and conditions
- Last purchase order
- Tolerance limits for deliveries
- Specific lead times
- Availability periods
- Vendor Evaluation data
 Serves as default information for
Purchase Orders

SAP ERP
Page 1-114© 2008 SAP AG
Master Data in Use
Purchase
Order
45......01
Material Master Vendor Master
Purchasing
Information Record

SAP ERP
Page 1-115© 2008 SAP AG
Procurement Process
Purchase
Requisition
Payment
to Vendor
Notify
Vendor
Vendor
Shipment
Invoice
Receipt
Goods
Receipt
Purchase
Order
Vendor
Selection

SAP ERP
Page 1-116© 2008 SAP AG
Purchase Requisition
 Internal Document instructing the purchasing department to
request a specific good or service for a specified time
 Requisitions can be created two ways:
- Directly - Manually
• person creating determines: what, how much, and when
- Indirectly - Automatically
• MRP, Production Orders, Maintenance Orders, Sales Orders

SAP ERP
Page 1-117© 2008 SAP AG
Requisition Sourcing
 Once the requisition has been assigned a source of supply it can
be released for processing
 There are a variety of ways that a purchasing department can
process a requisition to determine the appropriate Source of
Supply:
- Internal Sourcing Requirements
- Source List
- Outlined Agreement
- RFQ

SAP ERP
Page 1-118© 2008 SAP AG
Internal Sourcing
 The requisition for materials could be satisfied by sources within
our company.
- It is possible that a plant within your firm could represent a potential
source of supply for the material needed (centralized warehouse)
- If an internal source is identified the requirement is covered by an
internal procurement transaction (stock transport order)

SAP ERP
Page 1-119© 2008 SAP AG
Source List
 A source list is a record that specifies the allowed means for
procuring a material for a certain plant within a given time period.
- If the list contains a sole source the system will assign the vendor to
the requisition.
- If several options exist the system will display a list of vendors for you
to choose from.
- If no source has been established the system will revert to search
information records and outline agreements.

SAP ERP
Page 1-120© 2008 SAP AG
Outline Agreement
 Requisitions can be satisfied through existing longer-term
purchasing agreement
 These agreements are subdivided into:
- Contracts
• Consists of items defining the individual materials, material groups, or
services with prices and in many cases quantities
– Quantity
– Value
- Scheduling Agreements
• Total quantity of material is spread over a certain period in a delivery
schedule, consisting of line items indicating quantities and their planned
delivery date

SAP ERP
Page 1-121© 2008 SAP AG
Request for Quotation
 If nothing exist in the system we may need to submit a request for
quotation to our vendors. An RFQ is an invitation to a vendor by a
Purchasing Organization to submit a bid for the supply of materials
or services
- The accepted quotations will generate Purchasing Information Records
- Perform Quotation Price Comparisons
- Finally Select a Quotation
Pur
Req.
generate
RFQ
Vendor
1
Vendor
2
Vendor
3
Quote
Quote
Quote
P.O.
45…12
Reject
Letter
Eval.

SAP ERP
Page 1-122© 2008 SAP AG
Quotation from Vendor
 The quotation received by your company is a legally binding offer,
should decide to do business with the vendor, containing price’s
and conditions for the materials specified in the RFQ for a
predefined period of time.
- In SAP the RFQ and the Quotation will be become a single document,
you will enter the vendor’s response in the RFQ you created.

SAP ERP
Page 1-123© 2008 SAP AG
Vendor Evaluation once Identified
 Vendor evaluation helps purchasing evaluate vendors for sourcing while
also enabling the company to monitor vendor relationships through
performance scores and criteria you put in place.
- Supports a maximum of 99 main criteria and 20 subcriteria for each main:
• Price
– Price Level
– Price History
• Quality
– Goods Receipt
– Quality Audit
– Complaints/Rejection level
• Delivery
– On-time delivery performance
– Quantity reliability
– Compliance with shipping instructions
– Confirmation Date
- You then must establish a scoring range (1 -100) and determine the weight
factors of scores for each.

SAP ERP
Page 1-124© 2008 SAP AG
Purchase Order
 A purchase order is a formal request to a vendor for a specific
material or service under the stated conditions
 Purchase Orders can be created manually
- Reference a Purchase Order
- Reference a Purchase Requisition
- Reference a RFQ/Quotation
- Without Reference
 Purchase Orders can be create automatically

SAP ERP
Page 1-125© 2008 SAP AG
Purchase Order
 A purchase order can be used for
a variety of purposes, the item
category (procurement type)
defined in the PO will dictate the
use of the order and the process
that the order will follow:
- Standard
• Stock or Consumption
- Services
- Subcontracting
- Third-Party
- Consignment

SAP ERP
Page 1-126© 2008 SAP AG
Purchase Order Structure
Header
Vendor Date
Doc. Number Currency
Terms of Payment PO Price
Item Overview
Materials Price/UofM
Quantities
Delivery Date
Line Item
PO History Tolerances
Line Price
Delivery Schedule
Purchase
Order
45......01

SAP ERP
Page 1-127© 2008 SAP AG
Purchase Order Output
 Once a Purchase Order has been created the vendor needs to be
notified
- Printed
- E-mail
- EDI
- Fax
- XML
 There are a variety of forms that aid in the purchasing process and
are generated from the Purchase Order
- Purchase Order Output
- Order Acknowledgement Forms
- Reminders
- Schedule Agreements

SAP ERP
Page 1-128© 2008 SAP AG
Goods Receipt
Purchase
Order
45......01
Vendor
Notify Vendor
Shipment
Goods
Receipt

SAP ERP
Page 1-129© 2008 SAP AG
Goods Receipt
 Goods movement in which we accept goods into our system
 If materials are delivered against a Purchase Order we will
reference that Order
- Determine if we got what we ordered
- System can purpose data for us from the PO
• Material, quantity
- Purchase Order History is update with the receipt
- Updates Physical Inventory
- Updates Inventory G/L Account

SAP ERP
Page 1-130© 2008 SAP AG
Material Movements
 When a goods movement takes place it is represented by a
Movement Type
- Movement types are three-digit keys used to represent a movement of
goods
• 101 – goods receipt into warehouse
• 103 – goods receipt into GR blocked stock
• 122 – return delivery to vendor
• 231 – consumption for a sales order
• 561 – initial entry of stock
 Destinations for Receipt of Goods
- Warehouse – Unrestricted, Quality, Blocked
- Quality
- Goods Receipt Blocked Stock

SAP ERP
Page 1-131© 2008 SAP AG
Effects of a Goods Receipt
 When a Goods Movement for the receipt of goods takes place a
series of events occur
- Material Document is Created
- Accounting Document is Created
- Stock Quantities are Updated
- Stock Values are Updated
- Purchase Order is Updated
- Output can be generated (GR slip / pallet label)

SAP ERP
Page 1-132© 2008 SAP AG
Invoice Processing
 Incoming Invoices are reference against a Purchase Order to verify
their content, prices, and arithmetic.
 If discrepancies arise between the purchase order or goods receipt
and the invoice the system with generate a warning or an error
- Depending on system configuration the difference could cause the
system to Block the Invoice
Purchase order
- Target quantity -
- Target price -
Goods receipt
- Actual quantity -
Invoice receipt
- Actual price -

SAP ERP
Page 1-133© 2008 SAP AG
Invoice Processing
 When an invoice is saved it applies the liability from the Goods
Receipt of our Purchase Order to a Vendor
 Upon verification the:
- Purchase Order is updated
- Material Master is Updated (MAP)
- Accounting Document is created
 Once the Invoice has been posted the verification process is
completed and the payment process is initiated within Financial
Accounting

SAP ERP
Page 1-134© 2008 SAP AG
Payment to Vendor
 Can be done automatically or manually
- Post Outgoing Payment vs. Payment Program
 Elements of the Payment Transaction:
- Payment Method
- Bank from which they get paid
- Items to be Paid
- Calculate Payment Amount
- Print Payment Medium
 Process will create a financial accounting document to record the
transaction

SAP ERP
Page 1-135© 2008 SAP AG
Goods Receipt / Invoice Receipt
Reconciliation Account
Purchase requisition
Purchase order
Materials Management (MM)
and Financial Accounting (FI)
via automatic account
assignment
Goods receipt
No impact on
Dr Cr
Inventory
$100
Dr Cr
GR / IR
$100

SAP ERP
Page 1-136© 2008 SAP AG
Goods Receipt / Invoice Receipt
Reconciliation Account
Amount owed is
assigned and transferred to
vendor account payable
Invoice receipt
Dr Cr
Vendor A/P
$100
Dr Cr
GR / IR
$100

SAP ERP
Page 1-137© 2008 SAP AG
Vendor Payment
Amount owed is paid to
vendor and account payable
is reduced
Bank
Dr Cr
Vendor A/P
$100
Dr Cr
Bank
$100

SAP ERP
Page 1-138© 2008 SAP AG
FI – MM Integration Point
Invoice
Receipt
Payment
Program
Goods
Receipt
AP
(Vendor)
Dr Cr
GR / IR
$100
Bank
Dr Cr
Inventory
$100 $100 $100
Dr CrDr Cr
$100$100

SAP ERP
Page 1-139© 2008 SAP AG

© 2008 SAP AG
Production Planning & Execution
(PP)
Version 1.0
Bret Wagner
Stefan Weidner
Product
SAP ERP 6.0
Global Bike Inc.
Level
Beginner
Focus
Production Planning
Production Execution

SAP ERP
Page 1-141© 2008 SAP AG
Production Planning
 SAP Divides Production into multiple processes
- Production Planning
- Manufacturing Execution
• Discrete Manufacturing
• Repetitive Manufacturing
• KANBAN
- Production – Process Industries
• Integrated planning tool for batch-orientated process manufacturing
• Design primarily for chemical, pharmaceutical, food and beverage
industries along with batch-oriented electronics

SAP ERP
Page 1-142© 2008 SAP AG
Structure
 Client
 Company Code
 Plants
 Storage Locations
 Work Center Locations

SAP ERP
Page 1-143© 2008 SAP AG
PP Master Data
 Materials
 Bill of Materials (BOM)
 Routings
 Work Centers
 Product Groups

SAP ERP
Page 1-144© 2008 SAP AG
Material Master Record

SAP ERP
Page 1-145© 2008 SAP AG
Bill of Materials (BOM)
 List of components that make up a product or assembly
 Frame
 Pedal
 Break Kit
 Front Wheel
- Front Rim
- Front Tire
- Front Tube
 Rear Wheel
- Rear Rim
- Rear Tire
- Rear Tube
- Gear
 Saddle
- Post
- Seat
- Clip
 Handle Bar
- Bell
- Clasp
- Handle

SAP ERP
Page 1-146© 2008 SAP AG
 Single-Level
Single-Level
Finished Bike
Front WheelFrame
Rear WheelPedal Kit
SaddleBrake Kit
Handle Bars

SAP ERP
Page 1-147© 2008 SAP AG
 Single-Level vs. Multi-Level
Single-Level
Finished Bike
Front
Wheel
Rear
Wheel
Rear
Rim
Multi-Level BOM
Frame Pedal Brake
Handle
Bars
Saddle
Rear
Tire
Tube
Gear
Front
Rim
Front
Tire
Tube
Single-Level
Bell
Clasp
Handle
Bar
Bell
Clasp
Handle
Bar
Single-LevelSingle-Level Single-Level

SAP ERP
Page 1-148© 2008 SAP AG
 Variant Bill of Material (BOM)
- Several products with a large proportion of identical parts.
Single-Level
Finished Bike
Front WheelGraphite Frame
Rear WheelPedal Kit
SaddleBrake Kit
Handle Bars
Single-Level
Finished Bike
Front WheelTubular Frame
Rear WheelPedal Kit
SaddleBrake Kit
Handle Bars

SAP ERP
Page 1-149© 2008 SAP AG
BOM – Item Categories
 Item Category
- Stock Item
- Non-stock Item
- Variable Material – Sheet of steel
- Intra Item – Phantom material – process industry
- Class Item – place holder
- Document Item
- Text Item

SAP ERP
Page 1-150© 2008 SAP AG
Routings
 Routings enable you to plan the production of materials (products).
 Routings are used as a template for production orders and run
schedules
 Routing are also used as a basis for product costing.
 Series of sequential steps (operations) that must be carried out to
produce a given product
 Routings contain:
- What, Where, When, How

SAP ERP
Page 1-151© 2008 SAP AG
Routings
 Routing – Operation 10
- Explains the steps involved in this operation
 BOM – Front Wheel, Rear Wheel and Frame
- Outlines the components that will be consumed in the routing
 Work Center – 00WC1
- Identifies were the operations will take place and identifies the business
transaction to be carried

SAP ERP
Page 1-152© 2008 SAP AG
Routings
 Routing for Finished Bike
Operation
Work Center
Plant
Control Key
Description
Time and Unit of Measure
Activity Type

SAP ERP
Page 1-153© 2008 SAP AG
Routing and BOM
Routing
Material Master – Finished Bike
BOM
Oper. 10
Oper. 20
Oper. 30
Front Wheel
Rear Wheel
Frame
Saddle
Handle Bars
Pedals
Component assignment in routing
Time
Op.
10
Op.
20
Op.
30
Front
Wheel
Rear
Wheel
Frame
Handle
Bars
Saddle
Products arrive at the
beginning of the operation
to which they are assigned
Oper. 40
Oper. 50
Pedals

SAP ERP
Page 1-154© 2008 SAP AG
Work Center
 A location within a plant where value-added work (operations or activities)
are performed
- Work Centers can represent
• People or Groups of People
– Johnny Storm, Day Shift 1
• Machines or Groups of Machines
– Ink Mixer, Ink Injection Machine
• Assembly Lines
– Pen Assembly Line 2
 Work center used to define capacities
- Labor
- Machine
- Output
- Emissions
 Capacities used in
- Capacity requirements planning (CRP)
 Detailed scheduling
 Costing

SAP ERP
Page 1-155© 2008 SAP AG
Work Center
 Work centers capture and use the following Resource Related data
- Basic Data
• Person Responsible, Location of Work Center
- Scheduling Information
• Queues and Move Times (interoperation), Formula Keys
- Costing Data
• Cost Center, Activity Types
- Personnel Data
• People, Positions, Qualifications
- Capacity Planning
• Available Capacity, Formulas, Operating Time
- Default Data
• Control Key, Standard Text Key

SAP ERP
Page 1-156© 2008 SAP AG
Product Group
 Aggregate planning that group together materials or other product
groups (Product Families)
 Multi- or Single- Level Product Groups
- The lowest level must always consist of materials
Bikes
TouringMountain
24 Speed18 Speed 18 Speed 24 Speed
Red 24T Blue 24TRed 24M Blue 24M

SAP ERP
Page 1-157© 2008 SAP AG
Material Planning
 SOP provides a method for Sales Planning, Production Planning,
Feasibility
Sales, Production, Inventory
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
January
February
M
arch
April
M
ay
June
July
AugustSeptem
ber
O
ctoberN
ovem
berD
ecem
ber
Units
Sales
Production
Inventory

SAP ERP
Page 1-158© 2008 SAP AG
Demand
Management
Forecasting
Sales & Operations
Planning
SIS CO/PA
MPS
MRP
Manufacturing
Execution
Order
Settlement
Procurement
Process
Strategic Planning
Detailed Planning
Manufacturing Execution

SAP ERP
Page 1-159© 2008 SAP AG
 Players in the Game
- Strategic Planning
• CEO, COO, CIO,
CFO, Controller,
Marketing
Director
- Detailed Planning
• Line Managers,
Production
Scheduler, MRP
Controller,
Capacity
Planners
- Execution
• Line Workers,
Shop Floor
Supervisors
Demand
Management
Forecasting
Sales & Operations
Planning
SIS CO/PA
MPS
MRP
Manufacturing
Execution
Order
Settlement
Procurement
Process
Strategic
Planning
Detailed
Planning
Manufacturing
Execution

SAP ERP
Page 1-160© 2008 SAP AG
Forecasting
 Forecasting is the foundation
of a reliable SOP
 Accurate forecasts are
essential in the manufacturing
sector
 Overstocked & understocked
warehouses result in the same
thing: a loss in profits.
 Forecasts are ALWAYS
WRONG

SAP ERP
Page 1-161© 2008 SAP AG
Forecasting
 Forecasting Models
- Trend
- Seasonal
- Trend and Seasonal
- Constant
 Selecting a Model
- Automatically
- Manually

SAP ERP
Page 1-162© 2008 SAP AG
Planning Levels
Bikes
55%
Touring
45%
Mountain
70%
24 Speed
30%
18 Speed
40%
18 Speed
60%
24 Speed
50%
Red 24T
50%
Blue 24T
40%
Red 24M
60%
Blue 24M
Planning at
Product
Group Level
Planning at Material Level

SAP ERP
Page 1-163© 2008 SAP AG
Sales and Operations Planning (SOP)
 Information Origination
- Sales
- Marketing
- Manufacturing
- Accounting
- Human Resources
- Purchasing
 Intra-firm Collaboration
- Institutional Common
Sense

SAP ERP
Page 1-164© 2008 SAP AG
Sales and Operations Planning (SOP)
 Flexible forecasting and
planning tool
 Usually consists of three
steps:
- Sales Plan
- Production Plan
- Rough Cut Capacity Plan
 Planned at an aggregate
level in time buckets

SAP ERP
Page 1-165© 2008 SAP AG
Demand Management
 Link between Strategic Planning (SOP) & Detailed Planning
(MPS/MRP)
 The results of Demand Mgmt is called the Demand Program, it is
generated from our independent requirements - PIR and CIR
Bikes
55%
Touring
45%
Mountain
70%
24 Speed
30%
18 Speed
40%
18 Speed
60%
24 Speed
50%
Red 24T
50%
Blue 24T
40%
Red 24M
60%
Blue 24M
Disaggregation
Product Groups
Material

SAP ERP
Page 1-166© 2008 SAP AG
Demand Management
Planned
Independent
Requirements
Customer
Independent
Requirements
SalesForecast
Demand
Program
MPS / MRP

SAP ERP
Page 1-167© 2008 SAP AG
Transfer from High Level to Detailed Planning
Bikes
55%
Touring
45%
Mountain
70%
24 Speed
30%
18 Speed
40%
18 Speed
60%
24 Speed
50%
Red 24T
50%
Blue 24T
40%
Red 24M
60%
Blue 24M
Demand
Planning
Data
Planning at
Material Level
Disaggregation
Planned Independent Requirements
At Material and Plant Level
Transfer
Operative
Planning
Data
Planning at
Group Level

SAP ERP
Page 1-168© 2008 SAP AG
Planning Strategies
 Planning strategies represent the business procedures for
- The planning of production quantities
- Dates
 Wide range of strategies
 Multiple types of planning strategies based upon environment
- Make-To-Stock (MTS)
- Make-To-order (MTO)
• Driven by sales orders
- Configurable materials
• Mass customization of one
- Assembly orders

SAP ERP
Page 1-169© 2008 SAP AG
Planning Strategy for Make-to-Stock
 Planning takes place using Independent Requirements
- Sales are covered by make-to-stock inventory
 Strategies
- 10 – Net Requirements Planning
- 11 – Gross Requirements Planning
- 30 – Production by Lot Size
- 40 – Planning with Final Assembly

SAP ERP
Page 1-170© 2008 SAP AG
Planning Strategy for Make-to-Order
 Planning takes place using Customer Orders
- Sales are covered by make-to-order production
 Strategies
- 20 – Make to Order Production
- 50 – Planning without Final Assembly
- 60 – Planning with Planning Material

SAP ERP
Page 1-171© 2008 SAP AG
Master Production Scheduling (MPS)
 MPS allows a company to distinguish planning methods between
materials that have a strong influence on profit or use critical
resources and those that do not
Bike Set
FG-0010-00 GlovesHelmet
SaddleFrame Etc.Handle Bars
MPS run MPS Items
Non-MPS Items

SAP ERP
Page 1-172© 2008 SAP AG
Material Requirement Planning (MRP)
 In MRP, the system calculates the net requirements while
considering available warehouse stock and scheduled receipts
from purchasing and production
 During MRP, all levels of the bill of material are planned
 The output of MRP is a detailed production and/or purchasing plan
 Detailed planning level
- Primary Functions
- Monitor inventory stocks
- Determine material needs
• Quantity
• Timing
- Generate purchase or production orders

SAP ERP
Page 1-173© 2008 SAP AG
Demand-Independent vs. Dependent
 Independent Demand – Original source of the demand.
 Dependent Demand – Source of demand resides at another level.
MPS
Bike Set
Planned Order
MPS
FG-0010-00
MRP
Helmet
Planned Order Purchase Order
MRP
Brake Kit
Purchase Order
Dep Dep
Dep
Indep
Single-Level
Multi-Level

SAP ERP
Page 1-174© 2008 SAP AG
Material Requirement Planning (MRP)
 MRP is used to ensure the availability of materials based on the
need generated by MPS or the Demand Program
- 5 Logical Steps
• Net Requirements Calculation
• Lot Size Calculation
• Procurement Type
• Scheduling
• BOM Explosion

SAP ERP
Page 1-175© 2008 SAP AG
Net Requirements
Procurement
Proposal
Firmed Receipts
Firmed Orders
or Purchase
Requisitions
Requirements –
Planned Ind. Req.,
Reservations
Sales Orders,
Etc.
Stock
Safety Stock
Shortage

SAP ERP
Page 1-176© 2008 SAP AG
Lot sizing
 Static
- Based on fixed values in the Material Master
 Periodic
- Groups net requirements together from multiple periods
 Optimum
- Calculates the optimum lot size for a several periods of net
requirements

SAP ERP
Page 1-177© 2008 SAP AG
Procurement Type
 External Procurement
- Purchase Requisition
- Purchase Order
- Schedule Line
 Internal Procurement
- Planned Order
- Production Order
- Process Order

SAP ERP
Page 1-178© 2008 SAP AG
Multi-Level Scheduling
Time
Finished Product
Assembly 1
Semi-Finished Good
Raw Material
Component
Requirements
DatePlanned Order
Purchase Requisition

SAP ERP
Page 1-179© 2008 SAP AG
MRP vs. Consumption-Based
 Whether or not a material is planned using MRP or Consumption
Based is determined by the MRP Type on the MRP1 screen of the
Material Master
MRP
VB – Reorder-Point
Consumption Based
VV – Forecast Based
RP – Replenishment
PD – MRP
VSD – Seasonal MRP

SAP ERP
Page 1-181© 2008 SAP AG
Output of MRP
MRP
Planned Order
Convert to
In-House
Production
Production
Orders
Process
Orders
Purchase
Requisitions
Purchase
Orders
Schedule
Lines
External
Procurement

SAP ERP
Page 1-182© 2008 SAP AG
Orders, orders, orders
 Planned Order (planning)
- A request created in the planning run for a material in the future
(converts to either a production or purchase order)
 Production Order (execution)
- A request or instruction internally to produce a specific product at a
specific time
 Purchase Order (execution)
- A request or instruction to a vendor for a material or service at a
specific time

SAP ERP
Page 1-183© 2008 SAP AG
Manufacturing Execution Process
Schedule
and Release
Shop Floor
Documents
Goods
Receipt
Order
Settlement
Goods
Issue
Production
Proposal
(Planning/Other)
Completion
Confirmation
Capacity
Planning

SAP ERP
Page 1-184© 2008 SAP AG
Production Order
 Production orders are used to control production operations and
associated costs
- Production Orders define the following
• Material produced
• Quantity
• Location
• Time line
• Work involved
• Resources used
• How to costs are settled

SAP ERP
Page 1-186© 2008 SAP AG
Schedule
 Calculates the production dates and capacity requirements for all
operations within an order
- Determines a Routing
• Operation specific time lines
• Material Consumption Points
- Material Master
• Scheduling Margin Key (Floats)
- Work Center
• Formulas
• Standard Inter-operation Times

SAP ERP
Page 1-187© 2008 SAP AG
Release
 Two release processes
- Header Level
• Entire order and all operations are released for processing, order is given a
REL status
- Operation Level
• Individual operations within an order are released, not until the last
operation is released does the order obtains a REL status until then it is in a
PREL status
 Automatic vs. Manual

SAP ERP
Page 1-188© 2008 SAP AG
Availability Check
 Automatic check to determine whether the component, production
resource tools, or capacities in an order are available
- Can be automatic or manually executed
- Determines availability on the required date
 Generates an availability log
- Displays results of the check
- Missing parts list
- Reservations that could not be verified

SAP ERP
Page 1-189© 2008 SAP AG
Schedule & Release
 The time between scheduling and releasing an order is used for
company checks and any preparation needed for the processing of
the order
 Once an order has been released it is ready for execution, we can
at this time
- Print shop floor documents
- Execute goods movements
- Accept confirmations against the order

SAP ERP
Page 1-190© 2008 SAP AG
Shop Floor Documents
 Shop Floor Documents are printed upon release of the Production
Order, examples would be:
- Operation-based Lists
• Time Tickets, Confirmation Slips
- Component-based Lists
• Material Withdrawal Slips, Pull List (consumption list)
- PRT Lists
• Overview of PRT’s used and in which operations
- Multi-Purpose Lists
• Operation Control Ticket, Object Overview

SAP ERP
Page 1-191© 2008 SAP AG
Material Withdrawal
 When a production order is created it references a BOM to
determine the necessary components to produce the material, it
then places a reservation on each of the components
 Upon release of the order (or operation) you can withdraw the
reserved materials from inventory
- Reservation is updated
- Inventory is updated
- Costs are assigned to the order as actual costs

SAP ERP
Page 1-192© 2008 SAP AG
Confirmations
 Confirmations are used to monitor and track the progression of an
order through its production cycle
- Confirmation can be done at the operation or order level
 Exact confirmation shortly after completion of an operation is
essential for realistic production planning and control
 Data that needs confirmation include
- Quantities – yield, scrap, rework
- Activity data – setup time, machine time
- Dates – setup, processing, teardown started or finished
- Personnel data – employee who carried out the operation, number of
employee involved in the operation
- Work center
- Goods movements – planned and unplanned
- Variance reasons
- PRT usage

SAP ERP
Page 1-194© 2008 SAP AG
Goods Receipt
 Acceptance of the confirmed quantity of output from the production
order into stock
- Effects of the Goods Receipt
• Updates stock quantity
• Updates stock value
• Price stored for future valuation changes
• Production order is updated
- Three documents are created
• Material document
• Accounting document
• Controlling document

SAP ERP
Page 1-195© 2008 SAP AG
Order Settlement
 Consists of settling the actual costs incurred in the order to one or
more receiver cost objects
- Receivers could include: a material, a cost center, an internal order, a
sales order, a project, a network, a fixed asset
 Parameters for Order Settlement
- Settlement Profile
• Specifics the receivers, distributions rules and method
- Settlement Structure
• Determines how the debit cost elements are assigned to the settlement
cost elements
 Settlement Rule
- Automatically assigned on creation of order, the parameters are used
to define this rule
• Has one or more distribution rules assigned to it
• Distribution rules defines: cost receiver, settlement share, settlement type

SAP ERP
Page 1-196© 2008 SAP AG
Order Settlement
 Settling a Production Order to Stock
- Debt posting is made to the Production Order with the value of the
material
- Difference between the debt posting and credit posting is posted to a
price difference account
Material Prod. Order Price Diff.
100 2080
**Material Price determine by the quantity produced times the Standard Price in the Material
Master.

SAP ERP
Page 1-197© 2008 SAP AG
Order Settlement
 Costs analyzed
- Primary
• Materials
• External Processing
- Secondary
• Production, Material, and Administrative Overhead
• Labor
 Cost Analysis Reporting
- Calculate and analyze planned costs, target costs, and actual costs of
the production order.
- Calculate and analyze variances

© 2008 SAP AG
Version 1.0
Bret Wagner
Stefan Weidner
Product
SAP ERP 6.0
Global Bike Inc.
Level
Beginner
Focus
Financial Accounting

SAP ERP
Page 1-201© 2008 SAP AG
Goal of FI
 Financial accounting is designed to collect the transactional data
that provides a foundation for preparing the standard portfolio of
reports
 In general, these reports are primarily, but not exclusively, directed
at external parties
 Standard reports include:
- Balance Sheet
- Income Statement
- Statement of Cash Flows

SAP ERP
Page 1-202© 2008 SAP AG
Target Audience
 Internal
- Executives
- Senior Management
- Administrative Staff
- Employees
 External
- Legal Authorities
- Banks
- Auditors
- Shareholders
- Insurance
- Taxing Authorities
- Media
- Financial Analysts

SAP ERP
Page 1-203© 2008 SAP AG
Organizational Objects
 These represent the legal and/or organizational views of an
enterprise
 They form a framework that supports the activities of a business in
the manner desired by management
 Permit the accurate and organized collection of business
information
 Support the development and presentation of relevant information
in order to enable and support business decisions
 Organizational Objects:
- Company Code
- Chart of Accounts

SAP ERP
Page 1-204© 2008 SAP AG
Company Code
 Represents an independent legal accounting unit
 Balanced set of books, as required by law, are prepared at this
level
 A client may have more than one company code
- United States
- United Kingdom
- South America
- Canada
- Germany
Liabilities &
Owners Equity
Assets

SAP ERP
Page 1-205© 2008 SAP AG
Chart of Accounts
 A classification scheme consisting of a group of general ledger
(G/L) accounts.
 A chart of accounts provides a framework for the recording of
values to ensure an orderly rendering of accounting data.
 The G/L accounts it contains are used by one or more company
codes.

SAP ERP
Page 1-206© 2008 SAP AG
General Ledger (G/L) Accounts
 The unique combination of Company Code and Chart of Account
creates a data storage area called a General Ledger
 The General Ledger contains a listing of the transactions effecting
each account in the Chart of Accounts and the respective account
balance
 It is utilized in the preparation of financial accounting statements

SAP ERP
Page 1-208© 2008 SAP AG
G/L Account Summary
Account number 100100 Bank Account
Company code 00A1
Period Debit Credit DC bal. Balance
C/f bal. 750,000.00
Period 1 5,250.00 3,540.00 1,710.00 751,710.00
Period 2 25,000.00 15,000.00 10,000.00 761,710.00

SAP ERP
Page 1-209© 2008 SAP AG
Balance Sheet
 Presentation of an organization’s Assets, Liabilities, and Equity at
a point in time
 Assets: What the company owns
 Liabilities: What the company owes
 Equity: The difference between Assets and Liabilities
 Assets = Liabilities + Equity

SAP ERP
Page 1-210© 2008 SAP AG
Balance Sheet – Sample
Assets
Cash 1,000
Accounts Receivable 3,000
Equipment 500
Total Assets 4,500
Liabilities
Accounts Payable 750
Taxes Payable 250
Total Liabilities 1,250
Equity
Common Stock 2,000
Retained Earnings 250
Total Equity 2,250
Total Liabilities
and Equity 4,500

SAP ERP
Page 1-211© 2008 SAP AG
Income Statement
 Presentation of an organization’s Revenues and Expenses for a
given period of time (e.g., monthly, quarterly, or yearly)
 Revenues, in a simple sense, are inflows of cash as a result of
selling activities or the disposal of company assets
 Expenses, in a simple sense, are outflows of cash or the creation
of liabilities to support company operations
 Revenues - Expenses = Net Income

SAP ERP
Page 1-212© 2008 SAP AG
Income Statement – Sample
Revenue
Sales 11,000
Deductions 750
Total Revenue 10,250
Operating Expenses
Cost of Goods Sold 4,500
Operating Expenses 3,750
Total Expenses 8,250
Net Income Before Taxes 2,000
Taxes 750
Net Income 1,250

SAP ERP
Page 1-213© 2008 SAP AG
Statement of Cash Flows
 Considers the associated changes, both inflows and outflows, that have
occurred in cash – arguably the most important of all assets – over a given
period of time (e.g., monthly, quarterly, or annually)

SAP ERP
Page 1-214© 2008 SAP AG
Customer and Vendor Accounts
 Customer and Vendor account balances are maintained in FI through fully
integrated accounts receivable and accounts payable sub-modules
 Financial postings for Customers and Vendors are made directly to their
respective individual accounts and accompanied by a concurrent automatic
posting to the General Ledger

SAP ERP
Page 1-215© 2008 SAP AG
Customer Accounts
 Accounts Receivable Sub-Module
- Information with respect to Customers who purchase the enterprise’s goods and
services such as sales and payments made
- Substantive and important integration between Sales and Distribution (SD) and
FI
- Billings in SD generate FI journal entries for sales activity
Accounts Receivable
(General Ledger)
950
300
Customer 142
150
Customer 123
400
Customer 135
100
Customer 189

SAP ERP
Page 1-216© 2008 SAP AG
Vendor Accounts
 Accounts Payable Sub-Module
- Information with respect to Vendors from whom the enterprise purchases goods
and services such as purchases and payments made
- Substantive and important integration between Materials Management (MM)
and FI
- Purchase and goods receipt activities in MM generate FI journal entries
Accounts Payable
(General Ledger)
850
250
Vendor 100435
200
Vendor 100234
100
Vendor 100621
300
Vendor 100846

SAP ERP
Page 1-217© 2008 SAP AG
Accountants and Audit Trails
 Audit trails allow an auditor to begin with an account balance on a financial
statement and trace through the accounting records to the transactions
that support the account balance
 Audit trails enable an auditor to trace individual transactions to the effected
account balance(s) on a financial statement

SAP ERP
Page 1-218© 2008 SAP AG
SAP Document Principle
 Each business transaction impacting FI writes data to the SAP database
creating a uniquely numbered electronic document
 The document number can be used to recall the transaction at a later date
 It contains, for example, such critical and necessary information as:
- Responsible person
- Date and time of the transaction
- Commercial content
 Once written to the SAP database, a financial document (one impacting the
financial position of the company) can not be deleted from the database
 It can be changed to some degree
 The SAP document principle provides a solid and important framework for
a strong internal control system – a requirement of law for companies that
operate in the United States

SAP ERP
Page 1-219© 2008 SAP AG
SAP Document Principle
Period 1
Doc. no. DT Doc.date Currency Amount
1500000013 KZ 01/05/04 USD 1,800.00 -
1500000014 KZ 01/06/04 USD 990.00 -
100000012 SA 01/08/04 USD 750.00 -
1400000342 DZ 01/14/04 USD 5,250.00 -

SAP ERP
Page 1-220© 2008 SAP AG
SAP FI Module
 Fully integrated with other SAP modules including, but not limited to:
- Sales and Distribution (SD)
- Materials Management (MM)
- Production Planning and Execution (PP)
- Managerial Accounting (CO)

SAP ERP
Page 1-221© 2008 SAP AG
Summary
 Purpose
 SAP FI Organizational Objects
 Financial Statements
 Customer/Vendor Accounts
 Audit Trails
 Document Principle
 Integration

© 2008 SAP AG
Controlling (CO)
Version 1.0
Bret Wagner
Stefan Weidner
Product
SAP ERP 6.0
Global Bike Inc.
Level
Beginner
Focus
Controlling

SAP ERP
Page 1-225© 2008 SAP AG
Goal of CO
 Managerial accounting – termed controlling – is designed to collect
the transactional data that provides a foundation for preparing
internal reports that support decision-making within the enterprise
 These reports are exclusively for use within the enterprise and
include:
- Cost center performance
- Profit center performance
- Budgets analyses

SAP ERP
Page 1-226© 2008 SAP AG
Target Audience
 Executives
 Senior Management
 Department Managers
 Controllers
 Cost Accountants

SAP ERP
Page 1-227© 2008 SAP AG
Organizational Objects
 These represent the legal and/or organizational views of an
enterprise
 They form a framework that supports the activities of a business in
the manner desired by management
 Permit the accurate and organized collection of business
information
 Support the development and presentation of relevant information
in order to enable and support business decisions
 Organizational Objects:
- Company Code - Cost Center
- Chart of Accounts - Internal Order
- Controlling Area - Profit Center

SAP ERP
Page 1-228© 2008 SAP AG
Company Code
 Represents an independent legal accounting unit
 Balanced set of books, as required by law, are prepared at this
level
 A client may have more than one company code
- United States
- United Kingdom
- South America
- Canada
- Germany
Liabilities &
Owners Equity
Assets

SAP ERP
Page 1-229© 2008 SAP AG
Chart of Accounts & Controlling Area
 Chart of Accounts
- A complete listing of the accounts that exist in the General Ledger for
a company
- Since a given enterprise (e.g., General Motors) can consist of several
separate legal entities (e.g., Cadillac, Chevrolet), separate company
codes can be created for each entity while each uses the same chart
of accounts so that consolidated statements can be prepared.
 Controlling Area
- A self-contained, organizational element for which the management of
revenues and expenses can be performed
- A controlling area may include one or more company codes; therefore,
an enterprise can perform management accounting analyses and
reports across several companies
- A way to identify and track where revenues and costs are incurred for
evaluation purposes

SAP ERP
Page 1-230© 2008 SAP AG
Profit Center & Cost Center
 Profit Center
- Responsible for revenue generation and cost containment
- Evaluated on profit or return on investment
- Enterprises are commonly divided into profit centers based on
• Region
• Function
• Product
 Cost Center
- Responsible for cost containment, not responsible for revenue
generation
• One or more value-added activities are performed within each cost center
• Unit that is distinguished, for example, by area of responsibility, location, or
type of activity
• Copy center
• Security department
• Maintenance department

SAP ERP
Page 1-231© 2008 SAP AG
Internal Order
 Temporary cost center responsible for cost containment, not
responsible for revenue generation
 It is used to plan, collect, and monitor the costs associated with a
distinct short-term event, activity, or project
- Company picnic
- Trade show
- Recruiting campaign

SAP ERP
Page 1-232© 2008 SAP AG
Revenue Elements
 A one-to-one linkage (mapping) between General Ledger revenue
accounts and CO revenue elements is established to permit the
transfer of FI revenue information to CO
 Posting in FI that impact revenue accounts lead to an posting in
CO to a revenue element
 In other words, revenue account = revenue element – just different
words depending on whether FI object or CO object

SAP ERP
Page 1-233© 2008 SAP AG
Cost Elements
 A one-to-one linkage (mapping) between General Ledger expense
accounts and CO cost elements is established to permit the transfer of FI
expense information to CO
 Postings in FI that impact cost accounts lead to an posting in CO to a cost
element
 In other words, expense account = cost element – just different words
depending on whether FI object or CO object
 Primary Cost Element
- Originate in the General Ledger within FI and are automatically transferred to
CO when an FI transaction is recorded in the General Ledger
 Secondary Cost Element
- Used exclusively in CO for allocations and settlements between and amongst
cost centers

SAP ERP
Page 1-234© 2008 SAP AG
Primary and Secondary Cost Elements
Financial
Accounting
(FI)
General Ledger Accounts
Revenue
Accounts
Balance
Sheet
Income
Statement
Expense
Accounts
Managerial
Accounting
(CO)
Aggregate Cost Elements
Primary Cost
Elements
Secondary Cost
Elements

SAP ERP
Page 1-235© 2008 SAP AG
Posting Primary Cost Element
Primary Cost
Element
Debit Credit
1,500
Cost
Center
A
Debit Credit
1,500
Supplies Expense Cash
Managerial Accounting (CO)

SAP ERP
Page 1-236© 2008 SAP AG
Posting Primary Cost Element
(FI) Transaction
Document
Amount
G/L Account #
Cost Center
1900012432
(CO) Transaction
Document
Cost Center
Cost Element
20000657
1,5001,500
Cash
Debit Credit
Supplies Expense
Debit Credit
Cost Center
1,500

SAP ERP
Page 1-237© 2008 SAP AG
Posting Secondary Cost Element
Secondary Cost
Element
Debit Credit
1,500
Debit Credit
1,500
Supplies Expense Cash
CC 2
CC 3
Cost
Center
A

SAP ERP
Page 1-238© 2008 SAP AG
Statistical Key Figures
 Provide the foundation for accurate and effective cost allocations
between cost objects
 Utilized to support internal cost allocations involving allocations,
assessments, and distributions
 Examples: number of employees, square footage, minutes of
computer usage
Copy
Center
Activity
(20 Hours)
10 Hours
6 Hours
4 Hours
Executive Offices
Maintenance
Department
Information Services
Department

SAP ERP
Page 1-239© 2008 SAP AG
Posting Secondary Cost Element
Debit Credit
1,500
Rent Expense
Debit Credit
2,500
Supplies Expense
Debit Credit
2,000
Labor Expense
1,500
2,500
2,000
1,800
3,000
1,200
Primary Cost Element
Sec. Cost Elem
ent
Sec. Cost Element
Sec. Cost Element
Copy
Center
Executive Offices
Information Services
Maintenance
Department

SAP ERP
Page 1-240© 2008 SAP AG
Types of Allocation
 Distributions – primary cost elements
 Assessments – combination of primary and/or secondary cost elements
 Distribution
- Method for periodically allocating primary cost elements
- Primary cost elements maintain their identities in both the sending and receiving
objects
- Sender and receiver cost centers are fully documented in a unique Controlling
(CO) document
 Assessment
- A method of allocating both primary and secondary cost elements
- Primary and/or secondary cost elements are grouped together and transferred
to receiver cost centers through use of a secondary cost element
- Sender and receiver cost centers are fully documented in a unique Controlling
(CO) document

SAP ERP
Page 1-241© 2008 SAP AG
Distributions
A010 – 600
sq ft
A005 – 400
sq ftD010 – 550
sq ft
D005 – 900
sq ft
S010 – 100
sq ft
S005 – 200
sq ft
A020 – 100
sq ft
A015 – 150
sq ft
Sending
cost center
Primary cost
element
maintains its
identity
Receiving
cost centers
A010 – Administration
Rent Expense
$1,500
Distribution

SAP ERP
Page 1-242© 2008 SAP AG
Distributions
A015
$75A020
$50
S005 –
$100
S010 – $50
A010 –
$300
D005 –
$450
D010 –
$275
A005 –
$200
A010 – Administration
Rent Expense
$1,500
Distribution
Sending
cost center
Primary cost
element
maintains its
identity
Receiving
cost centers

SAP ERP
Page 1-243© 2008 SAP AG
Assessments
A020 – 0%
A005 – 15%
A010 – 5%
A015 – 10%
S005 – 30%S010 – 10%
D005 – 20%
D010 – 10%
A020 – IT
Software Expense
$4,200
A020 – IT
Supplies Expense
$500
Assessment
Sending
cost center Primary and
secondary
cost elements
Receiving
cost center

SAP ERP
Page 1-244© 2008 SAP AG
Assessments
S010 – $470
D010 – $470
A005 – $705
A010 – $235
A015 – $470
A020 –$0
S005 – $1,410
D005 – $940
A020 – IT
Software Expense
$4,200
A020 – IT
Supplies Expense
$500
Sending
cost center
Primary and
secondary
cost elements
Receiving
cost center
Assessment

SAP ERP
Page 1-245© 2008 SAP AG
SAP CO Module
 Fully integrated with other SAP modules including, but not limited to:
- Financial Accounting (FI)
- Materials Management (MM)
- Sales and Distribution (SD)
- Production Planning and Execution (PP)

SAP ERP
Page 1-246© 2008 SAP AG
Summary
 Purpose
 SAP CO Organizational Objects
 Revenue Elements
 Cost Elements
 Statistical Key Figures
 Allocations
 Integration

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