01 SAP Overview

Copyright IBM Corporation 2003
ERP / SAP Overview

ERP / SAP Overview | September 2003 Slide 2
Enterprise Resource Planning
ERP Overview
... synchronization of Company functions...
Manufacturing
Purchase
Sales
Finance
and extended to the complete value chain...
Tier II Component
Supplier
Vehicle OEM
Tier I Component
Manufacturer
Administrative
registration
Processes monitoring &
feedback
Decision support
and analysis
... delivering administrative and decision support with...
What is an ERP solution...?
. Integrated across the primary and support processes
Marketing
Manufacturing
Materials
Distribution
Finance
Engineering
Sales
Human Resources
Planning
and
Execution
The ERP application
An integrated suite of business applications, which..
- Closely links, monitors, and controls primary enterprise resources like manpower,
machine, material, methods, market and money
- Enables corporates to readily change their processes to adapt to the ever changing
business scenario
- Provides expertise in industry specific business processes

Entails
- Parameterization / Configuration
- Designing & Customization
- Testing and Implementation
- Training

Why clients buy ERP?
Corporate Initiatives
- Strategic initiatives
A requisite capability in a competitive global business
- Operational initiative
A foundation for performance and cost improvement
via integration
- Organizational initiative
To initiate a major organizational change within the company
Technology
- IT is making the transition from a supporting operational entity to becoming a strategic
competitive tool.
BECAUSE OTHERS ARE BUYING IT!!!
Recent business trends favoring ERP growth
Business Process Reengineering ( BPR )
Most large companies are attempting to cut in-house development costs, improve
customer service, and speed products to market by reorganizing their existing business
processes

Software Pricing
Licensing and pricing of mainframe based packaged applications are tied to the size of
mainframe system on which the applications run, but now customers are now
demanding user-based licensing options and major corporate applications like SAP
provide this instead of the conventional platform-based pricing technique
Recent business trends favoring ERP growth
Globalization
As businesses are becoming more global in scope, people are demanding packaged
corporate applications that are available in a variety of languages with support for
multiple currencies

Integration
As more and more companies are going for BPR, there is increase in demand for
integrated solution e.g.. different applications sharing a common database and thus
enabling data definitions and business rules to be applied across an entire organization
with the facility of doing modifications at one location only
Business process benefits clients expect from an ERP
project
Global process/ Product management
Integrated Supply Chain Management
Leverage purchasing and vendor management
Order cycle time/ customer service improvement
Inventory reductions
Reduced information systems costs on an ongoing basis
Improved business management through worldwide integration and information
Logistics and Distribution Sales & Customer Service
Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer
Logistics
Major ERP vendors
SAP R/3
Peoplesoft
Oracle
Baan
JD Edwards
What results can be expected from an ERP culture?
Reduced working capital requirements
Improved customer service
Improved direct labour productivity
Reduced purchase costs
Reduced obsolescence
Reduced overtime
Having the figures to make decisions
Having accountability throughout the organization
Improved quality of life
ERP
SAP R/3 Overview
Systems Applications & Products in Data Processing
SAP AG At a Glance
Founded in Germany in 1972
Market Leader in Industrial Enterprise Application (IEA)
About 56% market share in the ERP market
Worldwide presence in over 50 countries
18,000+ employees
Trained consultants doubled since 1996 (40,000)
About 20,000 companies in 120 countries
Around 64,500 installations of SAP
Strength lies in its high degree of integration, mainly for large,
global corporate enterprises
Significant presence in Global Fortune 500 companies

SAP R/1 , R/2
The R/1 system
Developed for ICI Chemical
Released 1972
Focused on Sales & Distribution and Materials Management
Discontinued after release of R/2
R/2
Basis System
The R/2 system
Reorganized as leading mainframe software for large multinational
corporations
No sales effort planned reactive only
4,300 copies worldwide in 1993
Mainframe-based to replace user legacy software;
co-existence and migration strategy underway for R/2 and R/3
SAP R/3 : A comprehensive business solution

Sales &
Distribution
SD
MM
PP
QM
PM
HR
FI
CO
TR
PS
WF
IS
Materials
Mgmt.
Product
Planning
Quality
Mgmt.
Plant Mainte-
nance
Human
Resources
Financial
Accounting
Controlling
Treasury
Project
System
Workflow
Industry
Solutions
R/3

Client/Server
ABAP/4

SAP R/3 : 3 Tier Architecture
Those SAP R/3 software components that
specialize in the management , storage and
retrieval of data form the Database Layer
The Database Layer
specialize in processing business
applications form the Application Layer.
The Application Layer
specialize in interacting with end-users
form the Presentation Layer.
The Presentation Layer
Database servers:
Specialized systems
with fast and large
hard drives.
Application servers:
Specialized systems
multiple CPUs and
vast amounts of RAM.
Presentation servers:
Systems capable of
providing a graphical
interface.
Presentation Layer
components
Application Layer
components
Database Layer
components
reside in:
reside in:
reside in:
The Database Layer
components are installed on
high-end database server.
The Application Layer
components are installed
across one or more high-
end servers.
Presentation Layer components are installed across many PCs.
SAP R/3 Overview

Sales &
Distribution
SD
MM
PP
QM
PM
HR
FI
CO
TR
PS
WF
IS
Materials
Mgmt.
Product
Planning
Quality
Mgmt.
Plant Mainte-
nance
Human
Resources
Financial
Accounting
Controlling
Treasury
Project
System
Workflow
Industry
Solutions
R/3

Client/Server
ABAP/4

Integration
S
U
P
P
L
I
E
R
C
U
S
T
O
M
E
R
S A P R / 3
Procurement Production Distribution
Finance and Accounting
MM PP SD
FI CO
All business processes throughout the supply chain are
executed in one system sharing all information
Workflow
SD: Sales and Distribution
SAP
R/3
SD SD SD
Sales & Distribution . . . . . . . .
SD Overview
SD
Inquiry
Quotation
Goods Issue
Sales Order
Delivery to Customer
Invoicing
Pricing
Materials Planning
Purchasing
Production
Goods Receipt
Customer Stock
Picking
Packing
Transportation
Process Chain: Sales Distribution
- Create pick list
- Create trans-
portation
work list
- Create loading
work list
- Check credit
- Check product availability
- Determine pricing
- Estimate delivery schedule
- Determine conditions of
sale
Inbound Logistics
from Materials
Management
Outbound Logistics
to Customer
Sales Order & Distribution
Process
Support Customer Sales
(Customer Info Analysis)
- Optional -
Process Customer
Inquires
- Optional -
Provide Customer
Quotations
- Optional -
Support Customer
Agreements
- Optional -
Receive Payment
FI
Create Invoice
FI/CO/PA
Issue Goods
(Ship Product)

FI
MM
Create Delivery Note
Create Sales Order

FI/CO/PA
MM
PP
(Activities)
(Documents)
Sales/Distribution
Chain
Order Entry

PP
MM
FI FI
Credit Management
Dynamic Availability Check
Cash Forecast
? ?
OK
Delivery/Shipment Processing

MM
WM
MM
Picking
Packing
Transportation
Ship to party: C100
Item Material Qty
.
.
.
.
Delivery
Note
10 6301 10
20 6412 10
30 1507 25
Picking
List
Credit Management
Static Availability Check
FI
Picking/Packing
Picking
Request
Picking
Confirmation
Confirm Picking
Request
Goods Issue
Delivery
Sales Order
Print Picking List
Picking with Picking
Confirmation
Picking without Picking
Confirmation
Invoicing
FI
CO
PCA
Single Invoices
Collective Invoices
Invoice Lists
Credit/Debit Notes
EDI
Profit Center Accounting/Profitability Analysis
Accounts Receivable/General Ledger
Cash Forecast
FI
CO
PA
MM Overview
SAP
R/3
MM
Materials Management . .
MM Overview
Material requirement
planning
External procurement
Purchasing
Internal procurement
Production
Invoice
verification

Goods
receipt
Inventory
management
Goods
issue
Transfer
posting
Warehouse
management
Internal and external accounting Sales and distribution
Master data
Material
Batch
Vendor
Customer
G/L
Storage bins
...

MM
Material - Central Master Record for Logistic
123
Inventory
Quality
Sales Information
Production Information
Desc:---------------------
Product - 123
456
Inventory
Purchasing
Desc:---------------------
Raw Material - 456
Data in the Vendor Master
General Data
Address
Phone and Fax
Number
Control Data
Purchasing Data
Terms of Payment
Contact Person
Minimum Order Value
Account Data
Payment Terms
Payment Method
Accounting Clerk
Maintenance Level
Client Purchase Organization Company Code
Mandatory maintenance at the
Purchasing Organization Level
Optional Maintenance at the
Plant Level, the Vendor
Sub-Range Level or a
combination of the two
External Procurement Environment
Requirement
Determination
Info Record
Price History
Purchasing Data
Quota
Arrangement
Source
Determination
Vendor
Selection
Purchase
Order
Source List
Invoice
Receipt

RFQ

Quotation

Purchase
Requisition

Outline
Agreement

Goods Receipt
Goods Movement
Ad hoc.
Inventory Inventory
Transfer
Posting
Goods
Issue
Goods
Issue
Consumption Samples Sales Order
Goods
Receipt
Delivery Production
Invoice Verification
Vendor
invoice
Vendor 3

FI
CO
Blocked Invoice
Tolerance Check?
Release of
Blocked Invoice
e.g...
Orders / Projects /Cost centers
G/L accounts / Accounts payable
Vendor Vendor
invoice invoice
Delivery Invoice
Preliminary Posting
Automatic Price Update
Payment
OK !
Invoice
Verification
PP Overview
SAP
R/3
PP
Production Planning . .
Production Planning Cycle
Sales and Operations Planning
Master Production Scheduling
Demand Management
MRP
MRP List
Production Order Cycle or
Purchase Order Cycle
Master Data

Material Master
Bill of Materials
Work Centers
Routings
PRT
Capacity Planning
Plant Maintenance
Sales & Distribution
Materials Management
Costing
PP
Production : Process Chain
Production Chain
Outbound Logistics to Materials
Management or Sales Chain
Inbound Logistics from
Procurement or Production Chain
Manufacturing
Process
Determine Production Requirements
via MRP Output or Manually)
Create production order
(via conversion of planned order
to production order or manually)
Check material availability
(Automatic)
Release Production Order
Print shop floor papers
(actual workorders)
Withdraw materials from
inventory (automatic/manual)
Produce Goods
Confirm production of
goods is completed
Transfer Produced Goods to Inventory

FI
Settle Production Order

FI
CO
Archive/Delete Order
MM
Production Planning
1. Production Planning Functionality
2. Master Data
3. Sales and Operations Planning &
Demand Management
4. MRP
5. Production Order & Capacity Planning
Material Requirements Planning
3. Qrt 4. Qrt
Demands
Stochastic

Deterministic Planning
Demands
Bill of
Material
Explosion
Quantity:
12.000
Capacity Planning
Lot Sizing Procedures
Net Change
MRP - Planning Procedures
Planning
Procedures
Deterministic
MRP
Consumption-Based
Planning
Forecast-Based
Planning
Reorder Point
Planning
Automatic
Reorder Point
Manual
Reorder Point
Production Control
Planned Orders
Release Production Order

FI
CO
Open Production Order
Goods Issue
Costs
MM
QM Overview
SAP
R/3
QM
Quality Management . .
QM Overview

Sales &
Distribution
SD
MM
PP
QM
PM
HR
FI
CO
AM
PS
WF
IS
Materials
Mgmt.
Product
Planning
Quality
Mgmt.
Plant Mainte-
nance
Human
Resources
Financial
Accounting
Controlling
Fixed Assets
Mgmt.
Project
System
Workflow
Industry
Solutions
R/3

The QM application module is a
quality control and information
system supporting quality
planning, inspection, and control
for manufacturing and
procurement
QM
QM in Logistics
History-dependent intensity of quality inspections
Goods receipt
Goods issue
Production
Inspection during production
Defects recording in QM
Control charts
Quality management in SD (certifies quality)
QM
PM Overview
SAP
R/3
PM
Plant Maintenance . .
Plant Maintenance - Overview
Create
Work
Orders
Notifications
Planned
Work Orders
Schedule
WOs
Parts/Supplies
Labor
Preventive/Predictive
Maint. WOs
Master Data
Close and
Settle WO
Reporting
Special
Tools
Pre-defined
work steps
Emergencies
External
Services
Material
Requisitions
Shop
Papers
PM
FI Overview
SAP
R/3
Fi
Finance . .
Components of FI
FI
FI-GL
FI-AR
FI-AP
FI-SL
FI-LC
FI-AA
General Ledger
Accounts Receivable
Accounts Payable
Asset Accounting
Special Ledger
Legal Consolidation
Corporate Structure
Financial
Management
Area
Financial
Management
Area
Financial
Management
Area
Controlling
Area
Controlling
Area
Controlling
Area
Controlling
Area
Work
Place/Job
Material
Product
Plant Cost Centers
Company Code (Company)
Corp. Group Level
Legal Entity
Controlling Level
Management Units
The Elements of Financial Accounting
Finance Information System
Executive Information System
G/L Information System
Foreign Exchange
Management
Business
Analysis
Cash Management
and Forecast
Multiledger
Bank Accounts
General Ledger
Payables
Extended General Ledger
Consolidation
Accounts
Payable
Invoice
Verification
Accounts
Receivable
Credit
Management
The Components of FI
Configuration

Organizational Structures
Company Codes
Business Area
Organization of Accounting
Ledger/Sub-ledger
Chart of Accounts
Credit Control
Setting Credit Limits
Master Records
G/L Accounts
Customers
Vendors
Banks
Chart of Depreciation
Depreciation Areas
Assets
Extended General Ledger
Group Company
Number Ranges
Functionality

Documents/Transactions Fiscal Year
Posting Adjustments
Payment Terms Balance Sheets/Income Statements
Foreign Currency Closings
Taxes On-Line Display
Special G/L Transactions Interest Calculation
Planning Correspondence
Payment Program Fixed Assets
Reporting Analysis
Legal Consolidations

Modules

General Ledger Special Ledger
Accounts Payable Legal Consolidations
Accounts Receivable Credit Management
Asset Accounting Cash Management and Forecast
Treasury

FI
CO Overview
SAP
R/3
CO
Controlling. .
Components of CO
CO Configuration
Organization Structures
Master Data
Planning Setup
Criteria and Values
Valuation
CO Modules
Cost Center Accounting
Order and Project Acctg.
Transaction-Based
Postings
Periodic Allocations
Profit Center Acctg.
Product Costing
Activity-Based Costing
Product Costing
Budgeting
Profitability Analysis
Business Planning
& Control
Functionality
Settlement
Internal Orders
Open Item Management
Profitability Analysis
Overhead Management
Planning
Transaction-Based
Posting
Periodic Allocations
Monitoring Actual
Activities vs. Planned
CO
CO
The Elements of Managerial Accounting
Overhead Cost
Controlling
Profitability
Analysis
Overhead Cost
Controlling
Cost
Centers
Report
Structure:
Market
Segment
Region
Division
Cost of Sales
Cost of Period
PA
PCA
Report
Structure:
Profit
Center
GL
Accounts
Controlling
Integration Within FI/CO
Financial Accounting
Asset
Accounting
Asset
Accounting
Asset
Accounting
Investment
Controlling
Plant
Maintenance
Gen. Ledger
Accounting
Accounts
Receivable
Accounts
Payable
Cash
Management
Overhead Cost
Controlling
Make to
Order Prod.
Cost Center
Controlling
Actual
Costing
Static
Standard
Costing
Product &
Production
Controlling
Mass
Production
Continuous
Flow Prod.
Batch
Production
Cost of Sales
Accounting
Period
Accounting
Flexible
Standard
Costing
Order
Controlling
Project
Controlling
Management Accounting
Sales &
Profitability
Controlling
Chart of Accounts
FI CO
Central
Documents
Central
Line Items
Central
Totals
Account
Revenue
Integration
PP
MM
FI
CO
SD
FI
Which modules are involved?
Planned
Requirement
MRP
Requirement
on component
level
Purchase
Order
Goods
Receipt
Invoice
Verification
Accounts
Payable
Planned
Order
Production
Order
Production
completed
Order
Settlement
Customer
Order
Shipping
Invoicing
Account
Receivable
SAP R/3 : Components
ABAP
Programs
Configuration
Organization Structure
Key Data Elements
Functionality Configurations
Application
Master Data
Transaction Data
What is Customization ?
Customization
the adaptation of application software to customer-
specific needs is accomplished in two ways :
Coding
Programming customer-specific code that replaces
or complements components of the application
Configuration
Rendering the application appropriate to a specific
customer by specifying data on which the
application operates
Organizational Structures in R/3
Cost Accounting
External Logistics
Accounting
Internal Logistics
(MRP/Production)
Inventory Management
Organizational Units
Client
Controlling Areas
Company Codes
Plants
Sales
Organizations
Purchasing
Organizations
Valuation Areas
Storage Locations/Batches/Special Stocks
Organizational Structure in SAP R/3
Human Resources Controlling
Client
Company
Code
Purchasing
Organization
Personnel
Area
Production Planning
Sales and Distribution Materials Management
Financial Accounting
Sales
Area
Controlling
Area
Plant
ABAP Programming

SAP R/3 applications are written in the ABAP programming language, and run within the application layer of the R/3
System.
ABAP programs communicate with the database management system of the central relational database (RDBMS), and
with the graphical user interface (SAPgui) at presentation level.

Why we need ABAP Developments?
SAP Solution
SAP R/3 scope
SAP Solution

SAP R/3 scope
Specific company
requirements
SAP Solution

SAP R/3 scope
Specific company
requirements
New Functionality
Development
SAP Solution

SAP R/3 scope
Specific company
requirements
Non SAP
applications

New Functionality
Development
Types of ABAP Developments
Reports

Interfaces

Conversions

Enhancements

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ERP / SAP Overview

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