Introduction to SAP
September 30, 2003
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SAP Overview - Agenda
1. SAP R/3 System Overview– SAP R/3 and Modules– SAP Organization Structure– SAP Master Data– SAP Security
2. SAP R/3 Module Overview and Master Data– Sales and Distribution– Materials Management and – Finance & Controlling
3. SAP R/3 System Benefits– System Integration – Data Consistency– Business Processes
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Presentation Objectives
Provide an introduction to the SAP R/3 system
Introduce and define SAP R/3 terms
Explain the system’s functionality
Explain the purpose and function of master data
Introduce SAP R/3’s approach to business processes
SAP R/3 System Overview
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• Systems, Applications and Products in Data
Processing
• German software company, founded in 1972
• Has been the market leader in ERP (Enterprise
Resource Planning) software, technology and product
development
• R/3 indicates Real Time – 3 Tier Architecture.
SAP R/3 Overview: SAP R/3
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• The R/3 system was designed
for use in open, or client/server
environments.
• R/3 works with a common
database. This means
information entered into the
system by one part of the
organization is immediately
available to all other parts of the
organization.
SAP R/3 Overview: SAP R/3
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SAP R/3 Overview: SAP R/3 Application Modules
Payroll Travel Expense Accounting Benefits Recruitment Personnel Administration
Workforce Planning Training Administration Organization Mgmt. Personnel Administration Time Management
Funds Management Resource Management Quality Control Time Management
Technical Asset Mgmt. Investment Control Traditional Asset Acct. Investment Mgmt.
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
Sales Support Inquiries Quotations Orders
Shipping Invoicing Sales Information
General Ledger Accounts Receivable Accounts Payable Cash Management Financial Controlling
Financial Assets Management
Consolidation Foreign Currencies &
Taxation
Result of the ICOE’s Industry specific functionality
Automates Business Processes Supports all modules
Cost Element Accounting Cost Center Accounting Activity Based Cost Accounting Activities and Services Costing Order and Project Accounting
Quality Planning Quality Inspection Quality Control Quality Documentation Quality Information
R/3R/3
PP
Production
Planning
MM
Materials
Mgmt.
SD
Sales &
Distribution
PM
Plant
MaintenanceHR
Human
Resources
IS
Industry
Solutions
WF
Workflow
PS
Project
System
QM
Quality
Mgmt.
CO
Controlling
AM
Fixed Assets
Mgmt.
FI
Financial
Accounting
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•The Multi’s• Multi-Company• Multi-Language• Multi-Currency
SAP R/3 Overview: SAP R/3 Application Modules
R/3R/3PP
Produc
tion
Planni
ng
MM
Material
s Mgmt.
SD
Sales
&
Distrib
ution
PM
Plant
Maintena
nce
HR
Human
Resour
ces
IS
Industr
y
Solutio
ns
WF
Workflo
w
PS
Project
System
QM
Quality
Mgmt.
CO
Controlli
ngAM
Fixed
Assets
Mgmt.
FI
Financi
al
Accoun
ting
• 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
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SAP R/3 Overview:System Wide Features
• SAP Organization Structure
• Master Data
• Security
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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.
SAP R/3 Overview: SAP Organizational Structure
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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.
Plant 1
Company A
Plant 2 Plant 3
Controlling Area B
Chart of Accounts
Client
Controlling Area A
Company B Company C
Sloc A Sloc ASloc A Sloc B
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SAP R/3 Overview: SAP Organizational Structure
Chart of Accounts
• Consists of an organized list of
all General Ledger accounts for
an organization
• Can be specific to a single Com
pany Code or used across multi
ple Company Codes
• Can be used for one or multiple
Controlling Areas
• Can be maintained in different l
anguages
Plant 1
Company A
Plant 2 Plant 3
Controlling Area B
Chart of Accounts
Client
Controlling Area A
Company B Company C
Sloc A Sloc ASloc A Sloc B
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SAP R/3 Overview: SAP Organizational Structure
Controlling Area
• An organizational unit within a
corporation in which the internal
management of costs and profits
can be performed
Plant 1
Company A
Plant 2 Plant 3
Controlling Area B
Chart of Accounts
Client
Controlling Area A
Company B Company C
Sloc A Sloc ASloc A Sloc B
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SAP R/3 Overview: SAP Organizational Structure
Company Code
• The identification number of an
independent accounting unit
that can generate its own
financial statement.
• It is a legal requirement that a
group that operates in several
countries must establish a
separate company code unit for
each country.Plant 1
Company A
Plant 2 Plant 3
Controlling Area B
Chart of Accounts
Client
Controlling Area A
Company B Company C
Sloc A Sloc ASloc A Sloc B
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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.
Plant 1
Company A
Plant 2 Plant 3
Controlling Area B
Chart of Accounts
Client
Controlling Area A
Company B Company C
Sloc A Sloc ASloc A Sloc B
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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 war
ehouse or storeroom
Plant 1
Company A
Plant 2 Plant 3
Controlling Area B
Chart of Accounts
Client
Controlling Area A
Company B Company C
Sloc A Sloc ASloc A Sloc B
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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.
• SAP’s functional modules share and use the various master data records across multiple areas and processes.
MasterData
MM
PP
SD
FI/CO
QM
WM
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Purchasing:•Material masters•Vendor master•Info Records•Source Lists
Sales and Distribution:•Material masters•Customer Masters•Customer Material lists•Customer Price records
Finance and Controlling:•Material masters•G/L Accounts•Cost Centers•Profit Centers
Inventory Management•Material masters•Plants•Storage locations
SAP R/3 Overview: Master Data - Types of Master data
Customer Master
?
Purchasing
Vendor
RFQ
Quotation
Vendor Master
Chart of Accounts
B
Chart of Accounts
A
Company Codes
Client
Currency CAD
Line itemDisplay X..
CC 0003
Currency USD
Line itemDisplay X..
CC 0001
G/L Account BANK
Bal sheet acct X
Account group FIN...
G/L Account Master
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SAP R/3 Overview: Master Data - Material Master
Invoice Verification
Inventory Management
Sales Order
Processing
Purchasing
SAP R/3
Material Master Record
Central repositoryof material data for all areas within logistics:Finished ProductsSemi-finished productsRaw materialsConsumablesMarketing Materials
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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…
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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.
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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.
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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.
SAP R/3Security
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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.
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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.
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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.
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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.
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An Overview Typical Business Cycle
Controlling – Internal Reporting
Cost Element Accounting
* Delivery – if materials are sold
Pro
fit
Cen
ter
Acc
ou
nt i
ng
Co
st Cen
ter Acco
un
ting
Sales Processing
BillingDelivery*Sales Order
Interface
Financial Accounting – Legal Reporting
FI Postings
FI – General Ledger
FI – Account Payable FI – Account Receivable
Customer Invoice
Delivery of Goods / Services
Payment to Vendor
Receipt of Goods / Services
Vendor Invoice
Receipt of Payment
USER COMPANYVENDOR CUSTOMER
Module Overview: Sales and Distribution
(SD)
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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
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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)
CustomerOrder
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Module Overview: SDSD Process
• 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.
Delivery BillingCustomer Payment
Sales Order Processing
Planning, Reporting and Analysis
Quotes
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Module Overview: SDSD Process
• 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.
Delivery BillingCustomer Payment
Sales Order Processing
Planning, Reporting and Analysis
Quotes
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Sales LogisticsSales Logistics
SDSD
FIFI
DeliveryDelivery BillingBillingSales Order Processing
Sales Order ProcessingQuotesQuotes
Planning, Reporting and Analysis
G/L COS / Inventory
G/L COS / Inventory
AR Invoice /
GL Revenue
AR Invoice /
GL Revenue
Customer Payment
Customer Payment
Integrated Business Process Overview
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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.
0
10
20
30
40
50
60
70
80
90
1stQtr
2ndQtr
3rdQtr
4thQtr
East
West
North
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Module Overview: SDOrganization Structure
Sales Org A
Company A Company B
Dist Channel 1 Dist Channel 2
Division a1
Sales Org B Sales Org C
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
Sales Organization Logical selling unit
Geographical or other logical
subdivision of Company
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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
Module Overview: Materials Management (MM)
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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
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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.
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Module Overview: MMPurchasing
• 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.
Requirement for Goods / Services
Purchase
Order
Goods
Receipt
Invoice
Verification
Vendor
Payment
Planning, Reporting and Analysis
Purchase
Requisition
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Purchasing
MM
FI
Requirement for Goods /
Services
Requirement for Goods /
Services
Purchase
Order
Purchase
Order
Goods
Receipt
Goods
Receipt
Planning, Reporting and Analysis
G/L Inventory / GRIR
G/L Inventory / GRIR
G/L GRIR/ Expense AP
Invoice
G/L GRIR/ Expense AP
Invoice
Vendor
Payment
Vendor
Payment
Invoice
Verification
Invoice
Verification
Integrated Business Process Overview
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Module Overview: MMPurchasing Organization Structure
Purch Org A
Company A Company B
Purch Group 1
Purch Group 2
Purch Org B Purch Org C
Plant 1000 Plant 2000 Plant 3000
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
Purchasing Group
• Individual buyer per Plant
• Group of buyers per Plant
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Module Overview: MMInventory Management
• Materials are managed on
both a quantity and value
basis.
• Work is managed at the plant
and storage location levels.
• Inventory management is used
for performing physical
inventories and inventory
counts within the SAP system.
Plant
Building 2Building 1
Storage locations
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Module Overview: MMMaster Data
• Materials Management Master
Data Elements are comprised
of:– Material masters– Vendor master– Info Records
Module Overview: Financial Accounting
and Controlling(FI/CO)
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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
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Module Overview: FI/COFinancial Accounting
FI
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.
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Module Overview: FI/COFinancial Accounting
Financial Accounting (FI)
• SAP R/3 Financial Accounting
applications in-scope include:– General Ledger Accounting– Accounts Payable– Accounts Receivable
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SAP R/3 Overview: SAP R/3 Application Modules
Controlling (CO)
• The CO application module
represents the company’s flow
of cost and revenue
• CO is a management
instrument for organizational
decisions
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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.
CO
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Module Overview: FI/COControlling
Controlling (CO)
• SAP R/3 Controlling
applications in-scope include:– Budgeting– Cost centers / Elements– Internal Order Accounting– Profit center Accounting
CO
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Module Overview: FI/COMaster Data
• FI/CO Master Data Elements
include– G/L Accounts– Cost Centers– Profit Centers
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Module Overview: FI/COOrganization Structure
Profit Center Hierarchy
Company A
Cost Center A
Controlling Area
Chart of Accounts
Client
Controlling Area
Company B Company C
Manufacturing
Profit Center A
Profit Center B
Profit Center A1
Cost Center Hierarchy
FI
CO
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Module Overview: FI/COOrganization Structure
Cost Center The smallest area of cost responsibility withi
n a company’s overall organizational structur
e
Must be assigned to a standard hierarchy str
ucture
May define alternative hierarchy structures f
or roll-up analysis
Cost Centers may capture the following type
s of postings for internal allocation purposes:
Transfer postings
Postings from distribution
Postings from internal cost allocations
Represent lowest hierarchical level in cost c
enter accounting
Profit Center Calculates net profit at organization level
A business unit within a company which m
onitors both costs and revenue and which
behaves as if it is an independent unit oper
ating in the marketplace
All objects with profit related data must be
assigned to a profit center, including cost c
enters, internal orders, sales order line ite
ms, projects, assets, etc.
Must be assigned to a standard hierarchy
structure
May define alternative hierarchy structures
for profitability roll-up analysis
Represents lowest hierarchical level in prof
it center accounting
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Module Overview: FI/COFI/CO Processing and Reporting
Accounts Payable
Accounts Receivable
Cost Center Accounting
Internal OrderAccounting
Profit CenterAccounting
General Ledger
Financial Statements
TransactionProcessing (FI)
Financial Reporting (FI)
Management Reporting (CO)
SD
MM
SAP R/3System Benefits
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SAP R/3 System Benefits
•Integrated
•Enterprise-Wide•Best Business Practices
•Multi-Currency
•Multi-Lingual
•Secure Information
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SAP R/3 System Benefits:SAP and Integration
The value of integration:
• Integrated systems enable simplified business processes, standard data
definition, and a common business language
• Simplified business processes enhance productivity to allow focus on value
added activities
• Integrated database allows data to be entered only once and all related
information to be updated automatically
• Integrated applications instill confidence in information and eliminates need
for redundant analysis and reconciliation
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PurchaseOrder
GoodsReceipt
ProductDelivery
MM, FI,CO, PP
MM, FI,CO, QM, WM
MM, FI, PPCO, QM, WM
MM, SD,FI, CO, WM
Manufacture
SAP R/3 System Benefits:SAP and Business Processes