Introduction to SAP

1
Introduction to SAP

• September 30, 2003

2
SAP Overview - Agenda

• SAP R/3 System Overview
• SAP R/3 and Modules
• SAP Organization Structure
• SAP Master Data
• SAP Security
• SAP R/3 Module Overview and Master Data
• Sales and Distribution
• Materials Management and
• Finance Controlling
• SAP R/3 System Benefits
• System Integration Data Consistency
• Business Processes

3
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

4
SAP R/3 System Overview
5
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.

6
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.

7
SAP R/3 Overview SAP R/3 Application Modules

• MRP
• Purchasing
• Goods Movement
• Invoice Verification
• Inventory Management
• Vendor Evaluation
• Purchasing Information

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

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

8
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

• 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

• The Multis
• Multi-Company
• Multi-Language
• Multi-Currency

9
SAP R/3 OverviewSystem Wide Features

• SAP Organization Structure
• Master Data
• Security

10
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.

11
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.
• Some data is managed at the client level because
  every one in the corporate group of companies
  will want to refer to exactly the same
  information.

Client
Chart of Accounts
Controlling Area A
Controlling Area B
Company B
Company C
Company A
Plant 1
Plant 2
Plant 3
Sloc A
Sloc A
Sloc A
Sloc B
12
SAP R/3 Overview SAP Organizational Structure
Client

• 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

Chart of Accounts
Controlling Area A
Controlling Area B
Company C
Company A
Company B
Plant 1
Plant 3
Plant 2
Sloc A
Sloc A
Sloc B
Sloc A
13
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 B
Company C
Company A
Plant 1
Plant 2
Plant 3
Sloc A
Sloc A
Sloc A
Sloc B
14
SAP R/3 Overview SAP Organizational Structure
Client

• 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.

Chart of Accounts
Controlling Area A
Controlling Area B
Company C
Company A
Company B
Plant 1
Plant 3
Plant 2
Sloc A
Sloc A
Sloc A
Sloc B
15
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
  distribution center
• A plant can be production site or a group of
  storage locations that share materials.

Client
Chart of Accounts
Controlling Area A
Controlling Area B
Company C
Company A
Company B
Plant 1
Plant 2
Plant 3
Sloc A
Sloc A
Sloc B
Sloc A
16
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.
• May be a warehouse, storeroom, or a specific
  location within a warehouse or storeroom

Client
Chart of Accounts
Controlling Area A
Controlling Area B
Company C
Company A
Company B
Plant 1
Plant 2
Plant 3
Sloc A
Sloc A
Sloc A
Sloc B
17
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.

Master Data
MM PP SD
FI/CO QM WM
18
SAP R/3 Overview Master Data - Types of Master
data

• Sales and Distribution
• Material masters
• Customer Masters
• Customer Material lists
• Customer Price records

Customer Master

• Purchasing
• Material masters
• Vendor master
• Info Records
• Source Lists

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

• Inventory Management
• Material masters
• Plants
• Storage locations

Vendor Master
19
SAP R/3 Overview Master Data - Material Master
Material Master Record
Sales Order Processing

• Central repository
• of material data for
• all areas within logistics
• Finished Products
• Semi-finished products
• Raw materials
• Consumables
• Marketing Materials

20
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

21
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.

22
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.

23
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.

24
SAP R/3Security
25
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.

26
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.

27
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.

28
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.

29
An Overview Typical Business Cycle
USER COMPANY
VENDOR
CUSTOMER
Controlling Internal Reporting
Sales Processing
Billing
Delivery
Sales Order
Interface
Profit Center Accounting
Cost Center Accounting
Financial Accounting Legal Reporting
FI General Ledger
FI Postings
FI Account Payable
FI Account Receivable
Receipt of Payment
Payment to Vendor
Cost Element Accounting
Delivery if materials are sold
30
Module Overview Sales and Distribution(SD)
31
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

32
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)

33
Module Overview SDSD Process
Delivery
Billing
Customer Payment
Sales Order Processing
Quotes
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 the order, receipt,
  and invoice.

34
Module Overview SDSD Process
Delivery
Billing
Customer Payment
Sales Order Processing
Quotes
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.

35
Integrated Business Process Overview
Sales Logistics
FI
G/L COS / Inventory
AR Invoice / GL Revenue
Customer Payment
SD
Billing
Sales Order Processing
Quotes
Delivery
Planning, Reporting and Analysis
36
Module Overview SDSales Information System

• Standard analyses
• 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.

37
Module Overview SDOrganization Structure
Company B
Company A
Sales Org C
Sales Org A
Sales Org B
Dist Channel 1
Dist Channel 2

• Sales Organization
• Logical selling unit
• Geographical or other logical subdivision of
  Company

Division a1
Division a2
Division a3
Division b1
Division a2
Plant 1000
Plant 2000
Plant 3000

• ? Distribution Channel
• Usually the sales channels (i.e., Wholesale,
  Retail, Direct Sale, Merchandising, Mail Order,
  etc.)

• Division
• Combination of similar products
• Often used to define Product Line

38
Module Overview SDMaster 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

39
Module Overview Materials Management (MM)
40
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

41
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.

42
Module Overview MMPurchasing
Requirement for Goods / Services
Purchase Order
Goods Receipt
Invoice Verification
Vendor Payment
Purchase Requisition
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 the order, receipt,
  and invoice.

43
Integrated Business Process Overview
Purchasing
FI
G/L Inventory / GRIR
G/L GRIR/ Expense AP Invoice
Vendor Payment
MM
Requirement for Goods / Services
Purchase Order
Goods Receipt
Invoice Verification
Planning, Reporting and Analysis
44
Module Overview MMPurchasing Organization
Structure
Company B
Company A
Purch Org C
Purch Org A
Purch Org B
Purch Group 2
Purch Group 1
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 2000
Plant 3000
Plant 1000

• Purchasing Group
• Individual buyer per Plant
• Group of buyers per Plant

45
Module Overview MMInventory Management
Plant

• 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.

Storage locations
Building 2
Building 1
46
Module Overview MMMaster Data

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

47
Module Overview Financial Accounting and
Controlling(FI/CO)
48
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

49
Module Overview FI/COFinancial 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.

50
Module Overview FI/COFinancial Accounting

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

51
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

52
Module Overview FI/COControlling

• 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.

53
Module Overview FI/COControlling

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

54
Module Overview FI/COMaster Data

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

55
Module Overview FI/COOrganization Structure
Client
Chart of Accounts
FI
Controlling Area
Controlling Area
Company A
Company B
Company C
Profit Center Hierarchy
Cost Center Hierarchy
CO
Cost Center A
Profit Center A
Profit Center B
Manufacturing
Profit Center A1
56
Module Overview FI/COOrganization Structure

• Profit Center
• Calculates net profit at organization level
• A business unit within a company which monitors
  both costs and revenue and which behaves as if it
  is an independent unit operating in the
  marketplace
• All objects with profit related data must be
  assigned to a profit center, including cost
  centers, internal orders, sales order line items,
  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

• Cost Center
• The smallest area of cost responsibility within a
  companys overall organizational structure
• 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 purposes
• Transfer postings
• Postings from distribution
• Postings from internal cost allocations
• Represent lowest hierarchical level in cost
  center accounting

57
Module Overview FI/COFI/CO Processing and
Reporting
Transaction Processing (FI)
Financial Reporting (FI)
Management Reporting (CO)
General Ledger Financial Statements
Accounts Payable Accounts Receivable
Cost Center Accounting Internal
Order Accounting Profit Center Accounting
MM
SD
58
SAP R/3System Benefits
59
SAP R/3 System Benefits
60
SAP R/3 System BenefitsSAP 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

61
SAP R/3 System BenefitsSAP and Business
Processes
Purchase Order
Goods Receipt
Product Delivery
Manufacture
MM, FI, CO, PP
MM, FI, CO, QM, WM
MM, FI, PP CO, QM, WM
MM, SD, FI, CO, WM