bmsolutionscope v1604 en us rework process

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EHP4 for SAP ERP6.0

June 2010

English

SAP Best Practices for Building Materials (U.S.)

SAP AGDietmar-Hopp-Allee 1669190 Walldorf Germany

Solution Scope



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SAP Best Practices SAP Best Practices for Building Materials: Solution Scope

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Contents

SAP Best Practices for Building Material – Solution Scope ............................................................ ..... .5

1 Purpose .............................................................................................................................................5

2 Functional Scope – Supported Business Processes or Scenarios ............................... ..... ..... ............5

2.1 Time-to-Market.......................................................................................................................... .5

2.2 Demand and Supply Planning ............................................................................................ .........7

2.3 Operational Procurement......................................................................................................... . 10

2.4 Manufacturing and Scheduling Execution .................................................................................. 15

2.5 Warehouse Management.......................................................................................................... 23

2.6 Sales Order Management..................................................................................................... .... 23

2.7 Complaint / Claim Management................................................................................................ 30

2.8 Enterprise Asset Management.................................................................................................. 30

2.9 Quality Management................................................................................................................. 342.10 Analytics .................................................................................................................. ..... ..... ..... 35

2.11 Financials ................................................................................................................................ 35

2.12 Corporate Services .................................................................................................... ............. 55

3 Functional Scope – Functions .......................................................................................................... 62

3.1 Financials .................................................................................................................................. 63

3.2 Analytics ............................................................................................................... ..... .............. . 66

3.3 Human Capital Management................................................................................................... .. 67

3.4 Procurement and Logistics Execution ................................................................... ..... .............. . 68

3.5 Product Manufacturing ....................................................................................................... ....... 72

3.6 Sales and Service ...................................................................................................... .............. . 73

3.7 Corporate Services .................................................................................................. ..... ..... ....... 77

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SAP Best Practices for Building Material – SolutionScope

1 PurposeThis solution scope provides an overview of the processes and functions covered by theSAP Best Practices Building Materials for U.S. It describes the functions and explains their business purposes.

In the section Functional Scope – Supported Business Processes or Scenarios, you find a scenario-based view of the functions. In the section Functional Scope – Functions, you find a view arrangedaccording to groups of functions and based on the relevant SAP Solution Map.

The solution scope does not provide technical explanations of how to use the functions. For

details on this topic, see the Business Process Documentation.

2 Functional Scope – Supported BusinessProcesses or Scenarios

2.1 Time-to-Market

2.1.1 Internal Order R&D Planning

Purpose

Various internal projects consume resources and incur costs or expenses. The purpose of these projectsis the future development of products. The product lines are determinable for such projects. The costs of these projects need to be tracked for various purposes such as cost control, return on investmentcalculations, tax reporting, and so on.

This process makes use of SAP’s internal order functionality to track costs and status. For every projectundertaken, an internal order is created using the R&D order type (Y100). Cost planning is carried out onthis order. When the project is approved, the order is released. Costs incurred for the project can then beposted on the order. Periodically, the costs collected on the order are settled to the assigned R&D cost

center or to CO-PA (if CO-PA is activated). When the project is complete, and fully settled, the order isthen closed by setting the appropriate status.

Process Flow

• R&D internal order

• Set planner profile

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• Plan costs for R&D internal order

• Settle planned costs for R&D internal order

• Confirm correct settlement

• Reporting

Key Points

• For every project an internal order is created

• Cost planning is carried out on this order

The planned costs can also be settled to the assigned R&D cost center or to CO-PA

2.1.2 Internal Order R&D Actual

Purpose


This process makes use of SAP’s internal order functionality to track costs and status. For every projectundertaken, an internal order is created using the R&D order type (Y100). Cost planning is carried out onthis order. When the project is approved, the order is released. Costs incurred for the project can then beposted on the order. Periodically, the costs collected on the order are settled to the assigned R&D costcenter or to CO-PA (if CO-PA is activated). When the project is complete, and fully settled, the order isthen closed by setting the appropriate status.

Process Flow• Create R&D internal order

• Consumable purchasing

• Post goods issues to R&D internal order

• Settle internal order

Key Points

• Transparent view of outstanding orders, shipments, and inventory

• Automated efficient processing

2.1.3 Internal Product Development (with PS)

In this scenario, the company wants to design a new product requested by the internal marketingdepartment in the form of a product specification. The internal design department sets up a designproposal for the new product.

This scenario also introduces the merging of document management in SAP ERP and also SAP EasyDocument Management.

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The company uses the project management function to collect all costs and documents for productdevelopment. The project provides a central structure for cost collection and documentation management.

The new material master and material BOM are created in the back-end system. Later, the productionscheduling department creates routing as a basis for production and calculation of the product.

To check the price level specified from the marketing department for the new product, the production

scheduling department calculates material costs using the BOM and routing. Since the estimated priceexceeds the specified price limit, a component of the new product BOM is exchanged for a less expensivecomponent using change management. The design department issues an engineering change master tocollect and document all changes according the specification document.

Following a second costing run (cost estimate), the price meets the budget. Now the development statusof the new product can be fixed by assigning a revision level.

At the end of the scenario, the internal design department records the activities it executed during theproject, and finally closes the project.

The manufacturer creates a production BOM (by copying the engineering BOM (usage type 2) to theproduction BOM (usage type 1).

• Document Management (Easy Document Management)

o Assign a document (KPR) to the material masters of the finished product

• Project Management

o Create a project based on a template

• Product Data Management with ECM

o Create a change number for the design project

o Display the BOM of the new product

o Redisplay the BOM (effects of change number)

o BOM status management

o Assign revision level to the material master of the new product

• Product Cost Controlling

o Material cost estimate for the new product before and after BOM changes (effects of

change on price is shown)

o Material calculation

• Project Closing

o Record development (engineering) activities

2.2 Demand and Supply Planning

2.2.1 Logistics Planning

The purpose of logistics planning is to make sure that future demand can be satisfied by your company’savailable resources and to point out situations where demand cannot be met in time or in the desiredquantities.

This process sometimes is called Sales and Operations Planning . The process takes place in a simulativemode and at an aggregated (product group) level. Once a feasible production plan is found that satisfies

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demand it can be used as the basis for operational production planning (MRP and Detailed CapacityScheduling).

The Best Practice scenarios in this section cover the following planning workflow:

• Planning/forecasting of future demand

• Aggregated production planning including capacity check, to check at product group level if

demand can be satisfied (using the SOP functionality)

• Transfer of results to Long Term Planning (using the LTP module) to enable simulation of material requirements, based on the production plans

• Planning takes place in separate (simulative) planning versions within LTP

• Review and adjustments of planned requirements as needed

• Once the simulated requirements are accepted, the demand (independent requirements) is thentransferred to active demand management for detailed MRP and Production Planning /Scheduling in the active version.

2.2.2 Revenue Planning

Purpose

A manufacturer of many product groups runs an SAP system in one sales organization. The organizationhas one central Controlling department that calculates and plans the sales quantities and the revenues.

Process Flow

• Revenue planning on basis of historical data

• Cost calculation

• Transfer to SOP

Key Point

• Integration to Sales, Financials, Controlling, and Production

• Use of automated functionality for planning

• Data could be planned in Spreadsheet

2.2.3 SOP through Long Term Planning Transfer toLIS/PIS/Capacity

Purpose

Businesses typically have an annual planning exercise known as Annual Operating Planning (AOP). Inthis planning all aspects of the business are planned, namely: revenue, production, direct procurement,and indirect procurement, capacity, and product/overhead costs.

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The AOP planning is also sometimes referred to as the Annual budget. The plan is prepared for the nextfiscal year and data collection for the plan / budget starts in the last quarter of the current fiscal year.

The AOP exercise begins with forecasting the sales quantities and revenue for the coming fiscal year.

The sales mangers review and adjust the sales quantities based on their information and judgment. Therevised sales quantity plans are loaded into CO-PA. The sales quantities are again reviewed, adjusted

manually if necessary and then valuated. This results in valuated sales revenue and cost of sales for theplanned sales quantities.

The current business process description deals with the process steps starting from this point of the AOPprocess.

The accepted sales quantities are then transferred to Sales and Operations Planning (SOP). In SOPrough cut capacity planning of the budget sales quantities occurs to verify whether the goods to be soldcan run through the company’s bottleneck resources that are needed to produce these goods.

After the production plan has been roughly proven feasible by SOP, it is transferred to a planningscenario in Long Term Planning module (LTP) by creating planned independent requirements (PIR),which reflect the production plan generated by SOP.

Based on these PIRs, Materials requirements planning (MRP) is run in a simulated mode to create andreview planned requirements for all the materials (components, raw materials) and all resources requiredto execute the production plan created in SOP. Simulation of MRP also allows review of capacities of theplants. Capacity leveling can then be carried out to smooth out the bottlenecks in the capacities.

After having run MRP as described above, the prerequisites are given to carry out one of the keyobjectives of the logistics part of AOP: to calculate the total utilization of the activity types assigned to themanufacturing work centers that are allocated by the production plan. The utilization is based on theconsumption of activity types being defined in the routings of the (semi finished and finished) productsbeing derived from the production plan.

The aggregated utilization of the work center’s activity types is the basis for the budgeting process of themanufacturing cost centers.

Process Flow• Create sales plan and transfer to SOP (Sales and Operations Planning)

• Rough matching of budgeted sales quantities and production resources in SOP

• Create planning scenario in Long Term Planning to simulate production planning for thebudgeted sales quantities

• Based on simulated production and operative production data (bills of material, routings),workcenter capacity and material requirements are calculated

• Use material requirements for AOP – purchase material price planning

• Use work centers capacity in AOP – general cost center planning

Key Points

• Forecasting the sales quantities and revenue

• Sales mangers review and adjust the sales quantities

• Sales quantity plans are loaded into CO-PA are then transferred to Sales and OperationsPlanning

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• Rough matching of budgeted sales quantities and production resources in SOP

• Creating planned independent requirements

• Based on PIRs, Materials Requirements Planning is simulated to create and review plannedrequirements for materials and resources

• Calculating the total utilization of the activity types assigned to the manufacturing work centersneeded to produce the budgeted sales quantities

2.3 Operational Procurement

2.3.1 Sales of Nonstock Item with Order Specific Procurement

In this scenario a customer orders a material that is currently not in stock. The material is thereforeprocured from an external supplier. Example:

Customer 100003 orders 100 PC of material H14 at the sales organization 1000.

The material is not in stock and must be procured through an external supplier.

When you create the sales order, a purchase requisition is generated. In the next step, the purchaserequisition is converted into a purchase order for the supplier 300000.

The goods receipt is created on a customer’s special stock for the customer 100003. The delivery and theinvoice follow from here. Finally the invoice verification for the goods receipt is created.

For the customer 100003 credit management is activated.

2.3.2 Quotation for Procurement

The request for quotation (RFQ) process starts with a request for material from vendors. The RFQ

process includes a price comparison for the selection of the best source. The buyer evaluates the vendor responses to determine the best source of supply. The accepted quotation is converted into a purchaseorder and a rejection letter is sent to the vendors whose quotations were rejected.

Material-specific information including vendor pricing and lead-time from the quotation are captured withinERP master data records.

2.3.3 Consumable Purchasing

This scenario deals with purchase order creation activities during the procurement process. Furthermoreit describes the additional process steps of a purchase order approval, goods receipt of consumables,approval of service entry sheets and invoice receipts by line item. The process also covers the relatedprocessing of outgoing payments and period-end plant and period-end closing.

Consumable items (goods or services) are entered without material number but rather a short textdescription as the main identifiable characteristic. The purchase order is subject to approval based onpredefined parameters prior to being issued to a vendor.

For consumable goods, there is no inventory in the system. By posting a goods receipt the value of thegoods is expensed to a cost center or another cost element.

When the invoices are received from the vendor, they are entered with reference to a purchase order anditem, providing a three way match of purchase order value, goods receipt value, and invoice value. If there are any variances between invoice and purchase order value, the invoice is blocked and forwarded

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to the Buyer for approval. Checks to vendors are generated based on the net term condition reflected onthe invoice, derived from the vendor master. Variances due to deviations from standard price arecollected in the purchasing cost center and allocated to product line level based on a predefinedpercentage.

Procurement of a consumable service follows the same general process. The difference is that theconsumable service is not posted by means of a goods receipt, but with a service entry sheet. The invoice

follows the same rules in both cases.

2.3.4 Procurement without QM

The purchasing process may start with a request for quotation by which a purchasing organizationemployee requests a quotation for the supply of materials from a vendor. The RFQ process includes offer comparisons to select the best source. The buyer evaluates the responses from the vendor anddetermines the best source of supply. The agreed material cost is captured on the material master andforms part of inventory valuation, based upon a released standard cost. To work with Quotations, run theBusiness Process Documentation Quotation for Procurement (128).

Material-specific information including vendor pricing and lead-time from the quotation is captured withinSAP master data records, namely info records, and can be linked to transactional requisitions andpurchase orders via an SAP lookup called a source list. Info records and source lists can have one or more vendors associated with the material; however, one vendor is designated as the primary source for the material.

A purchase requisition is either generated via the material requirements planning process or manually bya requestor. A buyer validates the accuracy of the purchase requisition and converts the purchaserequisition into a purchase order. The purchase order is subject to approval, based on a predefinedamount prior to being issued to a vendor.

Goods are shipped from the vendor and received to the purchase order referenced on the document fromthe vendor. Inventory is received into a location based on fixed parameters proposed from the materialmaster that can be changed at the time of the transactional data capture that is purchase order creationor goods receipt.

The invoice is received from the vendor. Invoices are entered with reference to a purchase order anditem, providing a three way match, purchase order value, goods receipt value, and invoice value. If thereare any variances between invoice and purchase order value, the invoice is blocked and forwarded to thebuyer for approval. Checks to vendors are generated based on the net term condition reflected on theinvoice, defaulted from the vendor master. Variances due to deviations from standard price are collectedin the purchasing cost center and allocated to product line level based on a predefined percentage asdetermined by the business.

2.3.5 Procurement Contract

The process to create a contract begins with the need to secure a large number of supplies as well asreducing procurement costs. The creation of a contract can start if the following issues have been

clarified:• Number/amount of material or services

• Validity start / validity end

• Payment terms

• Quantity of each contract material/service,

• Price of each position in the contract

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• Location to where the goods/services are delivered.

A contract is signed by a purchasing manager or a buyer.

After the creation of a contract, purchase requisitions and purchase orders can be performed with relationto the contract.

2.3.6 Stock Transfer with DeliveryThe stock transfer process begins with a requirement to transfer material from one plant to another withinthe same company code. This request, in form of a stock transfer requisition, may be created in theprocuring plant automatically by MRP or manually by a buyer.

Nevertheless, the process also works without MRP. In that case the buyer creates the stock transportorder directly.

There are no master data requirements beyond the material master to support the stock transfer process.The material master must exist in both the procuring (receiving) plant and the providing (issuing) plant.Stock transfer purchase orders are not subject to approval like other purchase orders.

A buyer validates the accuracy of the stock transfer purchase requisition and convert it into a stocktransfer purchase order. Or, without MRP, the buyer creates the stock transfer purchase order directly.

A warehouse clerk at the issuing plant monitors the materials due to be shipped and creates deliveries asnecessary. Once a delivery is created, a pick list is generated for the materials. A warehouse clerkgathers the materials and confirms the picked quantities. Once the delivery is complete, the deliveryquantities are issued, appropriate documentation is generated, and the shipment is sent, ending theprocess for the issuing plant.

Goods are received at the receiving plant referencing the delivery number on the shipping documents.Inventory is received into a location based on fixed parameters proposed from the material master whichcan be changed at time of transactional data capture that is, Purchase Order creation or goods receipt.

A stock transfer process is designed from plant A to plant B, but works as well in the opposite direction.

2.3.7 Stock Transfer without DeliveryThis configuration guide provides the information you need to set up the configuration of this buildingblock manually.

If you do not want to configure manually and prefer an automated installation process using BC Sets andother tools, refer to the installation guide of this building block.

2.3.8 Return to Vendor

The return to vendor process begins with a requirement to return an item to a vendor. The initial activity isto request a Returns Material Authorization (RMA) from the vendor. This is a manual step and the RMAnumber is entered into a text field in the return purchase order. The buyer then creates a return purchase

order in the system. The return purchase order is similar to a standard purchase order except for thereturn flag which sets up the return delivery to enable shipment of the items back to the vendor.

The return purchase order confirmation goes to the vendor and the return Delivery is sent to the shippingdepartment where the items are picked and shipped back along with a delivery note. When the shippingdepartment creates the delivery the items are relieved from inventory. A credit memo is generated whichrelieves the liability to the vendor.

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2.3.9 Subcontracting

The MM Subcontracting process involves sending raw components to a vendor for specific manufacturingprocesses and receiving the value-added finished material back into inventory.

A Subcontract Purchase Requisition is either generated via the Material Requirements Planning processor manually by a requestor. A Buyer validates the accuracy of the Purchase Requisition and converts it

into a Purchase Order. The purchase order is subject to approval based on predefined parameters prior to being issued to a vendor.

The consumption of sent components is recorded upon receipt of the value-added finished material. Thevendor sends the invoice for the services provided which is paid during the normal payment cycle.

A customer orders goods from the specified vendor (3000XX) as a subcontractor based on a specificProduction Plan as Make to Stock process, or based on a Material Requirements Planning Scenario(MRP-Scenario).

On goods delivery,

The scenario focuses on the following activities:

• Create purchase order based on a scheduled purchase requisition created by last MRP-run.

• Optional: Create purchase order manually.

• Approve purchase order (if needed)

• Create Outbound Delivery document.

• Post goods issue for delivery and shipping to subcontractor.

On goods receipt, the scenario focuses on the following activities:

• Goods receipt based on purchase order delivered by subcontractor.

• Posting of component reservations and consumption of component quantities as provision of

material.

• Invoice receipt by line item

• Invoice verification and validation of tax expenses.

Process of outgoing payment.

2.3.10 Procurement and Consumption of Consigned Inventory

In consignment processing, the vendor provides materials and stores them on your premises. The vendor remains the legal owner of the material until you withdraw materials from the consignment stores. Onlythen the vendor requires payment. The invoice is due at set periods of time, for example, monthly. In

addition, you can also arrange with the vendor that you take over ownership of the remainingconsignment material after a certain period of time.

The daily MRP run creates purchase requisitions with item category ‘K’ for parts that are to be procuredon a consignment basis.

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2.3.11 Purchased Material Price Planning

Purpose

Standard costs for purchased materials need to be periodically reviewed and updated, if necessary, tomatch the current market conditions and negotiated prices.

The process begins with transferring the quantities of materials required from long term planning anddownloading the latest purchase prices. The material requirements valuated with the latest purchaseprices are reviewed by the buyers to compare with the current standards.

The buyers update the spreadsheet with the prices that they determine should be the new standard. Theupdated prices are then uploaded as the new planned prices. These planned prices are used by theproduct costing run to valuate the semifinished and finished goods to come up with the standard cost of goods sold for the final products.

Process Flow

• Transfer long term planning scenario to purchase information system

• Download purchased materials for budget purchase price update

• Review data and negotiate with vendors

• Change materials planned price1 (material master)

Key Points

• Transferring the quantities of materials required from long term planning

• Downloading the latest purchase prices

• Material requirements valuated with the latest purchase prices

• Planned prices used by product costing run to valuate the goods to come up with the standardcost

• Standard costs are used as the new planned prices

2.3.12 Procurement of Cement(Without QM)

PurposeThis purchasing process starts when a purchase requisition is either generated via the MaterialRequirements Planning (MRP) process or manually by a requestor. A Purchaser validates the accuracy of the purchase requisition and converts the purchase requisition into a purchase order. The purchase order is subject to approval based on a predefined amount prior to being issued to a vendor.

Goods are shipped from the vendor, and the goods receipt is done with reference to the purchase order.

The invoice is received from the vendor. Invoices are entered with reference to a purchase order.

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Process Flow

This scenario includes the following steps:

Display and assign purchase requisitions

Convert assigned requisitions to purchase orders / Create purchase order manually

Change purchase order

Approve purchase order

Print purchase order

Receive goods from vendor

2.3.13 Invoice receipt by line item Internal Procurement: Cross-Company Stock Transfer

This section describes the stock transfer between two plants with different company codes. The processuses a Purchase Order with a Supplying Plant as a Vendor. In the Purchase Order, you can fix the Priceand Conditions for the vendor (Supplying Plant).

The materials required are located in the stock available at the supplying plant. The stock quantity for material RAW20(R20) in the supplying plant (production PLANT1(1000)) and storage location (1030) iscreated by a simple MM posting (transaction MB1C, movement type 501 or 561).

2.4 Manufacturing and Scheduling Execution

2.4.1 Batch Management

If materials are handled in batches it might be necessary to change batch master data or to find outwhere a batch was used, for example, to perform a batch recall or report to government.

2.4.2 Serial Number Management

This component helps to identify and differentiate between individual items of material. This componenttherefore ideally supplements the material master record, which may contain all data for describing andmanaging a piece of material, but which does not enable you to differentiate between individual items of that material.

You can use serial numbers when working with the following business procedures and objects:

Production Orders

Inventory Management and Physical Inventory

Sales and Distribution

Plant Maintenance and Service Processing

2.4.3 Make-to-Stock Production – Discrete Industry

The scenario Make-to-Stock (MTS) Production focuses on:

• Sales-order-independent production using MTS (Make-to-stock) production / production order processing.

• Planned independent requirements

• Production triggered by a production plan

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• Make-to-stock production - Two-level-production for subassembly and finished part

• Use of production versions

• Optional enhancement: Serial number for finish product

• Optional enhancement: External processing

• Optional enhancement: Batch management processing

• References to different procurement scenarios for raw materials

The product manufactured anonymously and delivered to the warehouse is a Finished Good MTS.

2.4.4 Make-to-Order Production with Variant Configuration

The MTO - Sales Order Processing with Variant Configuration scenario demonstrates sales order processing with materials with preselected characteristic values (material variants) and components thatare produced according to sales quantities planned for these variants. If the sales order configuration isnot available as a material variant, then customer service can configure the material on the order bychoosing the required characteristic values. A sales order cost estimate is created on saving the order,which is subsequently used to valuate the cost of goods sold.

The process is triggered when an order for a configurable material is received from the customer. Thecustomer order is recognized in the MRP run resulting in planned order for production of the material. If insufficient warehouse stock is available, purchase requisitions are created for the raw materials required.

When the production order is created, target costs are calculated for the order lot size (preliminarycosting). During the production process, costs incurred are updated on the order, which enables you tokeep track of and compare target costs and actual costs at any time.

Period-end-closing activities are applied to the order. This includes Work In Progress calculation andvariance calculation. After this, Work in Progress is settled to financial accounting and productionvariances are settled to management and financial accounting. Production variances are settled toprofitability analysis with the sales order as one of the characteristics.

2.4.5 Make-to-Order Production w/o Variant Configuration

This scenario describes the entire process sequence for a standard sales process (Make-to-Order) with acustomer. The business process encompasses all steps from the customer quotation to the clearing of acustomer account after payment is received.

Quotation processing is the first stage of the production process. The scenario starts with an incomingrequest for quotation. A quotation is then created in the SAP system in response to the customer's RFQ.The customer requests a change to the quotation and a follow-on quotation is created. Finally, thecustomer accepts the second quotation and a referenced sales order is created. An order confirmation issent to the customer and production process is started. Now, the customer requests a technical change.Sales order and bill of material are therefore recalculated. The process ends with the delivery and thebilling of the produced goods.

The process can be enhanced individually by executing optional steps, like serial number creation,subcontracting, QM in production, credit management, and plant- and company closing.

2.4.6 Repetitive Manufacturing

Repetitive Manufacturing is commonly used when a production process meets the following criteria: Thesame or similar products are produced over a lengthy period of time. The products produced are notmanufactured in individually defined lots. Instead, total quantity is produced over a certain period at acertain rate per part-period. The products produced always follow the same sequence through themachines and work centers in production. Routings tend to be simple and do not vary much.

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2.4.7 Production Subcontracting (External Processing)

During the Manufacturing process when a Planned Order for Production is converted to a ProductionOrder, the system will check to see if there are any routing/work-center operations that require externalprocessing. External processing means that you have individual Production steps (operations or suboperations) that are performed outside of your company by a vendor. This type of processing isparticularly important for subcontracting. It can also provide a company with a feasible alternative to in-house processing, if capacity bottlenecks occur.

When a Production Order is scheduled, external operations need to be taken into account. The durationof an external operation is calculated either by using the planned delivery time or using the standardvalues. The system automatically creates a Purchase Requisition for the operation or suboperation thatrequires external processing. The Production scheduler should inform the buyer they need to check theworkload for Requisitions that require external processing.

When data is maintained for an external activity, a cost element is specified. The cost element determineshow the external activity is to be valuated. A decision needs to be made as to whether an operation or suboperation is processed externally via its control key. In the control key it is determined whether externally processed operations are scheduled on the basis of their standard values or the planneddelivery time. This information is needed to settle externally processed operations and suboperations thathave been marked as relevant for costing in their control keys

Purchasing should not convert the Purchase Requisition until the external processing is required. Thereason for this is that any quantity changes on the Production Order automatically update the Requisition.

Once the Purchase Order is created it is printed and sent to the vendor. The Purchase Order informs thevendor which service is required.

In the SAP standard, the output of the subcontracting order via printer / EDI is performed by thepurchasing department. Since the production process for the finished product is ongoing (not stockrelevant), a material provision by the warehouse manager via delivery note or goods movement is notpossible in the standard system.

If it is necessary to have a delivery note in addition to the subcontracting order, the Buyer / Planner /Scheduler creates a manual shipping document. The planner provides the shipping department withinformation on what components need to be gathered for the external processing and ships the

components to the vendor.

Another alternative (not part of this scenario) is that you can customize an additional output type with aspecial output form only for operations within the operation control key for external processing inproduction orders. In the output form, designed as delivery note for the external processed operation, it isuseful to put the number of the purchase order and the production order.

When the vendor has completed the external processing the material is shipped back. The warehouseclerk receives the externally processed goods back into the warehouse. The vendor service is reflectedon the Production Order via an operation confirmation. The Purchase Order and the Production Order show the quantity received.

2.4.8 Rework Processing (Stock-Manufactured Material)

This process focuses on rework activities and material postings after production execution for the originalmaterial (including goods receipt of the product), with an additional rework production order.

In real business case issues with the produced material are dealt with after it has been posted intoinventory. For realization of this process there are several possibilities:

After execution of a material transfer posting from the original product onto a dedicated rework material, anew production order is raised. The rework material is then used as a component, the product again is theoriginal material. Material valuation of the rework material should reflect the finished product value minusrework costs. Costs are collected within the new production order and settled into controlling as

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production variances. Additionally the financial posting triggered from the material transfer posting coversthe average rework costs.

Since material transfer posting is not always accepted, it is not part of this scenario.

In this scenario the rework process of stock manufactured material is realized with creating a newproduction order, using the material that has to be reworked as input and getting the same material again

as output. Costs are collected within the new production order and settled into controlling as productionvariances. Input component and product have the same material number.

2.4.9 Rework Processing (Work-in-Process)

This scenario focuses on a rework process within production. All required rework activities are related tothe parent production order. For this reason errors are recognized and corrections initiated such asinsertion of a rework operation within the same production order. The additional rework operation isconfirmed and settled within the original production order, causing production variances within controllingand price differences for the dedicated product.

2.4.10 Repetitive Manufacturing of Cement

Purpose

Repetitive Manufacturing is commonly used when a production process meets the following criteria:

The same or similar products are produced over a lengthy period of time.

The products produced are not manufactured in individually defined lots. Instead, a total quantity isproduced over a certain period at a certain rate per part-period.

The products produced always follow the same sequence through the machines and work centers inproduction.

Routings tend to be simple and do not vary much.

Process FlowThis scenario includes the following steps:

Creating Planned Independent Requirements and Material Requirements Planning

Repetitive Manufacturing of Portland Cement – loose

Repetitive Manufacturing of Portland Cement - 50 lb

Key Points

Creating Planned Independent Requirements and Material Requirements Planning

Planned independent requirements are used to perform demand management functions. Aplanned independent requirement contains one planned quantity and one date, or a number of planned

independent requirements schedule lines, that is, one planned quantity split over time according to dates.

The daily MRP run generates planned orders for the material that is to be produced.

Repetitive Manufacturing of Portland Cement – loose

Planning Table for Production

Procurement of Stock for Production

Range of Coverage Overview

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Procurement of Stock Material

Material Staging for Production

Repetitive Manufacturing Backflush for Production

Repetitive Manufacturing of Portland Cement - 50 lb

Planning Table for ProductionProcurement of Stock for Production

Repetitive Manufacturing Backflush for Production

2.4.11 Coal Mining

Purpose

Various types of coal mining methods exist depending on the physical nature of the coal seams. Althoughthe mining processes vary considerably, they all lead to the extraction of coal that needs crushing,conveying, and washing before it can be shipped to the customers.

This scenario represents the processes at a surface mine and focuses on the steps within the SAP ERP

system as oppose to those steps executed with the aid of mine technical systems used for the MinePlanning and Scheduling. Process Orders are created – these Orders contain or link to all productionrelated data within SAP ERP. The scenario shows how data is captured, displayed changed, and how aconfirmation leads to receipt of the production into stock or the movement of materials from one processstep to the other.

Mining Specialists systems take care of the Geological modeling, Reserve estimations, MinePlanning, and Scheduling. The output of these systems feed into SAP for downstream production trackingand costing. In addition, the actual production activities (for reporting against the planned data mentionedbefore) are captured into SAP through a PI sheet.

SAP takes care of the business processes related to the production like Maintenance andMaterials required for the production as well as the production quantities itself.


The first step in SAP ERP is to create the process order. The process order will represent aspecific time period, to allow accurate recording of actual production. In many cases, an externalproduction planning system will be used to define and plan for the different requirements of mining fromdifferent areas. The external system will have created planned orders (a.k.a. production targets) thatspecify the quantity, date, production version, and grade. Once the process order is created, dragline or blasting and hauling details can be recorded.

In this scenario, the PI (Process Instruction) sheet will be used to manually record productionachievement. The PI sheet is a user friendly method of allowing production operators to enter data in acustomized fashion. In many cases, shop floor systems or data historians are used to collect the data atthe shop floor level and the data aggregated for automatic posting into SAP.

In the first step of the process, ore is blasted and hauled to the crusher. Via the PI sheet, thequantities of consumables as well as resource operating hours are entered by the operator to be issuedagainst the order. The shift operator in the Operators Control Room captures the production parameterslike loads delivered, delivery times, truck number, fueling quantities, engine hours, etc using a ProcessInstruction sheet. The usage of other resources, such as excavators etc are also entered on the PI sheet,and appropriate documents posted to update the logistics, financial and plant maintenance information inthe background.

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The second process order represents the Crushing and Washing processes, where hauled ore ispassed through a Crusher to reduce the coal lump size. Again a PI sheet is used to record the productiondata for a particular time period. In this case, a batch is also created for the process order, which allowsquality characteristics (assays) to be recorded in the system. This batch represents the specific crushedore quantity and quality for the time period specified by the process order.

In the PI sheet, the operator then selects the stockpile (or stockpiles) onto which that day’s

production is transferred. A batch-to-batch movement is performed to move the daily batch quantity intothe stockpile batch, and the batch characteristics of the stockpile batch are appropriately adjusted basedon a weighted average calculation.

Key Points

Production Order for Load & Haul and Crushing process at the Mine

Production planning & execution for time bucket, for example, shift, day, week

Detailed Production confirmation for individual trucks

Basis for KPI reporting on plan / actual comparison, from a logistics & cost perspective

Integration to PM measurement documents for trucks

User friendly data entry for production confirmation in PI Sheet

Process instructions are the basis for later re-use in automation of this Mine production confirmation fromdispatch system via SAP xMII.

2.4.12 Coal Blending

Purpose

In this scenario coal from various mines and/or different local stockpiles are blended together to create anew batch to meet customer specifications. The same process could also be used for blending other types of commodities. A process order is used as the mechanism to perform the blending. Although there

are other shorter ways, this will allow the cost of blending to be determined (not demonstrated in thescenario).

The PI Sheet is set up in a way that it can be used for simulation & final planning of the blend that ishanded over to the operators as well as for the confirmation of the blending operations to capture actualsin quantity and quality.

Process Flow


A process order is created for the blending operations

A PI (Process Instruction) sheet is used to manually record the blending activities. The PI sheetprovides a user friendly interface that allows production operators to enter data in a customized manner.The same data could be updated automatically. Many companies use Process Control Systems (PCS)and SCADA (Supervisory Control And Data Acquisition) systems linked to weighbridges and similar equipment to collect data for mining operations. These are then summarized via middleware andinterfaced to SAP ERP for automatic posting.

The quality characteristics (assays) of the stockpile are recorded using batch characteristics. For each stockpile that is to be blended the batch characteristics are retrieved and a weighted averagecalculation used to determine the quality of the resulting batch. The PI sheet allows different stockpilesand quantities to be evaluated until an appropriate blended batch is achieved. When the blend planner

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has finished determining the quantities of the different stockpiles to be blended they can save the PIsheet, print it out and give it to the operator to perform the blend.

When this process is confirmed as being completed, the PI sheet is electronically signed and theappropriate transactions are posted in the background. These include posting goods issue quantities fromeach source batch, posting a goods receipt quantity for the resulting batch and updating the batchcharacteristics to reflect the blended quality.

As per the last step in the process, the results of the blending process can be viewed to confirmpostings.

Key Points

Process Order for Blending

Blend at loading onto Vessel, but also basis for other blending operations

Blending with simulation & planning to meet specifications

Stockpile management with qualities using batch characteristics

User friendly data entry for blending operations confirmation in PI Sheet

2.4.13 Copper Mining

Purpose

This scenario covers the mining and processing of copper ore. Two main operational processes arerepresented namely the process of mining coarse ore for crusher feed and the subsequent crushing tofine ore. The further production processes of concentrate and cathode are the subject of scenario x53.

A few invaluable scenarios can follow from the configuration of the first scenario, namely the use of standard costing approaches, metal valuation using batch characteristics


A process order is used to capture data for the Run of Mine (ROM) ore mining process. TheLoading and Hauling processes steps are included in this order. It is shown that the creation of the order also creates a Process Instruction sheet based on the Production Recipe.

A PI (process instruction) sheet allows the operator to manually confirm details of the processincluding production quantities, truck hours, and fuel consumption. The same data could be updatedautomatically but is not demonstrated in this scenario. The Confirmation of the Process Order will, amongothers, automatically issue the product to stock and post measuring documents to the mining equipmenthistory.

The coarse ore is delivered to a crusher to be crushed into fine ore. Again a process order isused to manage the crushing process and represents a specific time period (shift, daily, weekly, monthly).

It is assumed that the fine ore from the crushing process is assayed and the percentage copper updated as a batch characteristic on the batch representing the process order. Using the copper percentage the value of the stockpile based on copper content is shown to be calculated. Thisfunctionality could be used at any point in process and is shown here to demonstrate the use of batchcharacteristics for the calculation of stockpile cost based on metallurgical composition.

Again a PI sheet is used to manually record production achievement. The production batch of fine ore is immediately transferred to an existing stockpile where the quality characteristics are updatedbased on a weighted average calculation.

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Upon confirmation of the production order it is also shown that the raw material, in this instanceCoarse Ore, is consumed to produce the Fine Ore.

Some Add-on Scenarios

Some additional scenarios illustrate the costing, with a focus on product cost based on the metalcontent. This process applicable at month end to set new values for the next month (period).

It shows technically the concept of split valuated materials with proportional units of measure inSAP and how to valuate material on an overall level as well as on their metal content. Example for themetal valuated in this example is the copper content in fine ore

Key Points

Production Order for copper Ore Load & Haul and Crushing process at on Open Cast Mine

Detailed Production confirmation for individual trucks

Basis for KPI reporting on plan / actual comparison, from a logistics & cost perspective

Integration to PM measurement documents for trucks

User friendly data entry for production confirmation in PI Sheet

Process instructions are the basis for later re-use in automation of this Mine productionconfirmation from dispatch system via SAP xMII

Valuation of material – on material level

Valuation of material – based on copper content via batch specific Units of Measure

2.4.14 Copper Concentrate & Cathode Protection

Purpose

A handling unit represents a physical object in the SAP system. It consists of a load carrier, one or more

packed products and an unlimited quantity of packaging materials. Each handling unit has a uniqueidentification number, which is typically printed as a barcode on a material tag. You can specify thematerial and the quantity that is to be packed in certain packaging, that is, in one handling unit. Theserequirements are reproduced in a packing instruction. This packing instruction can be used to createhandling units automatically.

Handling units can be created at the end of production (packing of finished goods) or at a later stage after creating outbound deliveries. This depends on the packing process in your company.In this scenario, youexecute packing and goods receipt posting at the end of a production order. The stock is posted directlyinto storage and is available for picking.

Process Flow


Creation and release of production order for handling unit (HU) production

HU packaging in production order

Goods receipt for produced HU

Monitoring of HU

Confirming production of HU

HU handling with WM or HU handling without WM

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Key Points

Automatic packaging according to packing instructions

Track movements of groups of individual materials by tracking the handling units that containthem

Full integration into the logistic chain

Possibility to use HUM with or without Warehouse Management

2.5 Warehouse Management

2.5.1 Lean Warehouse Management

Lean Warehouse Management is used to have a picking document in the shipping process.

A picking document is printed when a delivery is created for a storage location which is assigned to a

warehouse. This is done automatically. There is no need for a user to deal with transport orders from thewarehouse management.

2.5.2 Physical Inventory / Inventory Count and Adjustment

This scenario covers the periodic process making necessary adjustments to stock on hand after aphysical count.

The process begins with the generation of the inventory count sheets. Furthermore, materials can beblocked here for posting during the physical inventory. Once the inventory sheets are printed out, theactual physical inventory count occurs for the given materials. Next, the count is entered in the systemand then any discrepancies against the system quantities are reviewed. The inventory may be recounteduntil final counts are accepted and inventory differences are posted.

2.5.3 Shipping and Receiving with Warehouse Management

Warehouse Management is used for storage of the raw materials, as well as for storing finished goods.Pallets are stored in the central storage area with storage bin management. Internal transfer orders areused for putaway, internal transfers, and removal from storage. Warehouse management is integratedwith inbound logistics, production, and outbound logistics. This scenario delivers an example of howwarehouse management can be used. It does not offer all warehouse management processes for complete WM implementation (inventory counting is not part of this scenario).

2.6 Sales Order Management

2.6.1 Sales Processing using Third Party (w. ShippingNotification)

In third-party order processing, your company does not deliver the items requested by a customer.Instead, you pass the order along to a third-party vendor who then ships the goods directly to thecustomer and bills you. The standard sales order automatically creates a purchase requisition for thematerials to be delivered by the third-party vendor.

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In this scenario, the vendor sends a shipping notification. After that a statistical goods receipt is posted.The incoming invoice from the vendor updates the billing quantity, so that the customer-billing documentcan only be created after entering the invoice from the vendor.

2.6.2 Credit Management

A credit limit check can be carried out when sales documents are created or changed. The check is

carried out by the system within one credit control area. If you change quantities or values in a document,the check is repeated. A credit control area consists of one or more company codes. A sales documentbelongs to one credit control area depending on the allocation of the sales organization to a companycode. The SAP System checks the credit limit that was granted to the customer in this credit control area.The credit control areas and the credit limit of a customer are defined in financial accounting and enteredin the customer master record. During the check, the SAP System totals the receivables, the open items,and the net value of the sales order for every item of a sales document. The open items take into accountobligations bound by contract that are not recorded for accounting purposes but involve expenses throughdiverse business transactions. After that, it compares the total with the credit limit. If the limit is exceeded,the system responds in the way defined by you in the configuration menu.

We are using automatic credit control in this solution. During the automatic credit control, you canconfigure a system reaction ('A' warning, 'B' error, 'C' like A, + value by which the credit limit is exceeded.and ‘D’ - like B, + value by which the credit limit is exceeded) when the credit limit is exceeded, we havechosen to use option ‘C’ (warning + value by which the credit limit is exceeded).

The system provides a transaction to list all sales documents that have been blocked for delivery, withinformation about what has caused the block. The customer’s current credit situation is manuallyreviewed by the credit department, and when the sales order is approved, the delivery block is removedfrom the sales order. You can jump directly from the list to an individual document.

2.6.3 Sales Order Processing: Sale from Stock

This scenario describes the entire process sequence for a standard sales process (sale from stock) with acustomer. The business process encompasses all steps from creating an order to the clearing of acustomer account after payment is received.

The process starts with the creation of a customer's standard sales order. Depending on the customer

and the material, various special events take place during the order entry, such as customer/materialpricing, insertion of applicable discounts, checking the availability of the materials, and checking thecustomer‘s credit history.

It is checked whether enough material exists in the required storage location. If not, a stock movementtakes place. Then, the picking slips are generated to the warehouse clerks to stage the product for shipment to the customer.

Once picked, the physically shipped quantity has to be registered in the system to ensure that there areno differences between the sales order and the delivery document. In the case of actual differences, thiscan also be documented and ensures correct postings.

After the completion of picking, the warehouse clerk has to systematically relieve the inventory. This relief of inventory is the actual recording of the physical quantity that is being shipped to the customer. Theseresults in the recording of the cost of goods sold in financial accounting.

Once the inventory has been relieved, the delivery can be invoiced and the revenue together with the costof goods sold is recorded in management accounting. This step signifies the end of the businesstransaction in Sales and Distribution.

2.6.4 Free of Charge Delivery

This scenario describes the process of providing goods to a customer at no cost. A unique sales order type is created that is non-billing relevant. The order is confirmed based on the availability of goods. Adelivery is then created; the goods are subsequently picked, confirmed, and delivered to the customer.

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2.6.5 Sales Quotation

This scenario describes the process for a standard sales quotation. The process starts when a request for quotation (RFQ) is received from a customer. In response to the customer’s RFQ, a quotation is createdin the SAP system. After that the customer can either accept the quotation or reject it.

2.6.6 Sales Order Processing for Prospect

In this scenario, you process sales order documents without first looking up the customer’s information.

A dummy customer is used when your sales order processors need to investigate an order without firstlooking up the customer’s account number. The sales order can be saved but remains incomplete until avalid customer account number has been entered in the sales order. This function is particularly useful for companies that take phone orders. For example, a customer calls and requests pricing and informationon a catalog item. The order processor can build the entire order without needing the customer’s accountnumber until the end. Once the customer’s account number has been entered, all of the customer-specificinformation is transferred from the customer master and other customer-specific records.

2.6.7 Sales Processing Using Third Party (Without ShippingNotification)

In third-party order processing, your company does not deliver the items requested by a customer.Instead, you pass the order along to a third-party vendor who then ships the goods directly to thecustomer and bills you. The standard sales order automatically creates a purchase requisition for thematerials to be delivered by the third-party vendor.

The incoming invoice from the vendor updates the billing quantity, so that the customer-billing documentcan only be created after entering the invoice from the vendor.

2.6.8 Debit Memo Processing

The Debit Memo process is used for applying a debit to a customer account once a determination hasbeen made that a customer has been undercharged as a result of a pricing or sales tax rate error. AnInvoice Increase Request is then created with the amount to be debited, and placed on a billing block for review. It must then be released to become billing-relevant, and to appear on the billing due list. Periodicbilling process creates a debit memo to be sent to the customer, and posts an accounting document.

2.6.9 Foreign Trade Export Processing

With markets becoming increasingly global and business structures more complex, the need for accuracyin handling the foreign trade needs of a business is gaining rapidly in importance. SAP’s ForeignTrade/Customs application (FT) provides the tools that you need to compete effectively in today’s fast-paced market. It is designed to help you meet the rapidly changing foreign trade requirements of your business.

This scenario describes the steps involved in receiving customs forms and how the system performsincompleteness checks to make sure that all essential information is in the system.

The document explains how easy reporting is with Intrastat and Extrastat, once you have maintained thenecessary settings and master data.

2.6.10 Customer Consignment Processing

This scenario describes how finished products and trading goods are handled within a consignmentprocess. The products shipped to the customer are still owned by the company until they are sold by thecustomer to a third party. The materials, which are stored in the customer’s store or warehouse, are

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posted in a stock (consignment stock) that is assigned to the corresponding customer. This allows thecustomer’s current stock to be viewed at any time.

2.6.11 Returnables Processing

Standard pallets belong to the manufacturer and are handled either as returnable goods or as packagingmaterial. This scenario shows the shipment of standard pallets and their returns.

This scenario uses the pallet L001 with material type LEIH, which is handled as returnable material.

2.6.12 Sales Order Processing with Customer Down Payment

In business, especially in a make-to-order environment, customers will often be required to pay someamount in advance before delivery of goods. This process is used to create requests for down payment,record the receipt of the down payment, create a final invoice after the deduction of the down paymentreceived and a receipt of the final amount due on the invoice.

The process makes use of the billing plan functionality. The integrated process allows for a proper document flow to be maintained between the sales and financial transactions.

2.6.13 Credit Memo ProcessingThe Credit Memo process is used to apply a credit to a customer account once you have determined thata customer has been overcharged as a result of a pricing or sales tax rate error. An Invoice CorrectionRequest is then created with the amount to be credited, and placed on a billing block for review. It mustthen be released to become billing relevant, and appear on the billing due list. The periodic billing processcreates a credit memo to be sent to the customer, and posts an accounting document.

2.6.14 Sales Order Processing with Collective Billing

This scenario describes how to use the standard sales processing (sale from stock) for mass-processing.

The process starts with the creation of some standard sales orders.

In periodical intervals, all sales orders due to deliver, and with availability of the material, are selected anddeliveries are created. For optimization of shipping costs all sales orders, which are delivered to the samecustomer, are packed into one delivery document. For lean-WM-storage locations WM-transport ordersand picking documents for picking are automatically created.

The materials are picked and the actual amount of picking is noted in the delivery. The goods receipts arebooked and delivery notes are created. In the background the goods usage is booked to accounting. Thematerials can leave the company.

In periodical intervals all deliveries are selected for billing. For cost-optimization all deliveries due toinvoice to the same customer are packed into one invoice-document. In the background the revenue isposted to accounting.

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2.6.15 Sales with Scheduling Agreements

This scenario deals with scheduling agreement processing, which is largely used in the discreteindustries. A Scheduling agreement is a document in sales area, for a supplier to control a streamlineddemand from the customer. This document cannot only identify the basic information for delivery (for example, material, quantity, price), but can also identify the detail delivery dates. A Scheduling agreementcan also be used to synchronize the change of demand between the customer and the supplier.

This scenario is designed for being used with material F231-1 explicitly as finished product, or H20 / H21as trading products. However, it does not require specific settings for the materials. Therefore it ispossible to run this scenario with any other finished product or trading material.

The Sales with Scheduling Agreements (231) scenario works close together with the Purchasing with JIT Delivery Schedules (230) scenario. The receiving company uses a self-billing-scenario and transfers theinvoice information via EDI to the selling company. In the selling company this information reducesautomatically the outstanding open items.

The Self-Billing/ ERS process only works with the ERS customer 100020 and the ERS vendor 300020.

2.6.16 Sales & Distribution of Concrete

Purpose

In the concrete scenario special software for the truck dispatching is required. Like the control system of the mixing plant it is linked by interfaces.

Process Flow


Credit Management Check for Sales Order

Sales Quotation (optional)Sales Order Entry

Credit Management Review

Deliver the Sales Order by creating an Individual Delivery

Picking

Post Goods Issue

Billing

Key Points

Orders are created immediately after the order inflow. Immediate availability is assumed on allinput components and the credit limit is checked. The prices will be found depending on existing contracts

The confirmation of components is based on actual consumption amounts. This means, that thebackflush will be done using the ‘Post-with-correction’-button in the transaction-transaction

The outbound delivery will be created with reference to the order. Actual delivered quantities andother delivery relevant information will be transmitted via an interface from an external scale. Thisinformation will be fed into the outbound delivery. The connection of the scale is simulated by a simplereport

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Goods issues will be posted and the weighed quantities will be invoiced. It is possible to createthe outbound deliveries automatically. goods issues, and, the creation of invoices can be executed by acollective billing run

A contract is an agreement that your customer would order a certain quantity of a product fromyou during a specified period. The contract contains basic quantity and price information but no scheduleof specific delivery dates and quantities. The customer fulfills a contract by placing sales orders against it.

These sales orders are known as release orders (or call-offs). You can specify in the contract which other partners in addition to the sold-to party are authorized to release against the contract. When you create arelease order, you refer to the relevant contract, and the system automatically updates the releasedquantities in the contract. Otherwise, processing a release order is just like processing a standard salesorder. The creation of a sales order with reference to a contract can be shown with the optional sectionSales order creation with reference to contract in this scenario.

During order entry, you can record information about the customer and the products or servicesin the document. You also perform various checks, such as the credit limit check. The credit check can beshown with the optional section Sales order creation with credit limit check in this scenario. Theinformation entered in the sales order is transferred to subsequent documents, which are used to further process the business transaction. The delivery document is the basis for the shipping activities. Whenshipping has been completed, the delivered goods and/or the services rendered are invoiced during thebilling process. The billing data is then forwarded automatically to Financial Accounting and Profitability

Analysis.

2.6.17 Sales & Distribution of Cement (With Shipment &Transportation)

Purpose

In the packaged cement scenario the goods are kept in readiness in sacks. The orders are createdimmediately after the order inflow. Immediate availability is assumed on all input components and thecredit limit is checked. Conditions are maintained per customer and per building site, if this is necessary.The master data of materials contains standard prices for consumers and customers.

In the production execution the production type of repetitive manufacturing is used. The production isinitiated when the stock falls short of the safety stock.

The outbound delivery will be created with reference to the order. Picking is not done via a warehousemanagement system but only by entering the picked amount into the delivery. The delivery papers arecreated after picking.

Goods issues will be posted and the weighed quantities will be invoiced. It is possible to create theoutbound deliveries automatically, goods issues, and the creation of invoices can be executed by acollective billing run.

Process Flow


Credit Management Check for Sales Order

Sales Quotation (optional)

Create Sales Order

Change of Ship-to Party to see Effects in Pricing

Create Sales Order

Check Sales Order Status

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Delivering the Sales Order by Creating an Individual Delivery

Picking

Post Goods Issue

Billing

Transportation

2.6.18 Advanced Shipping Notification via EDI Outbound

This process describes advanced shipment notice (ASN) processing where data is transferred to thecustomer via EDI. It gives an instruction on how this scenario is processed from a business point of view.It also provides a step-by-step operational guide, which users can follow to work through the scenario in areal system.

2.6.19 You create a delivery document, and then an EDI file isgenerated automatically. Yard Management for OutboundDeliveries

A yard can be a physically enclosed area outside the warehouse where trucks and vehicles areprocessed, stored, or available for pickup by an external carrier. The yard may also be virtual wheretrucks and vehicles are only visible for planning.

In this scenario, we will show a vehicle being checked into the yard, moved within the yard, scheduled toa dock, loaded with an outbound delivery, and checked out of the yard. These processes will beaccomplished using a combination of the new Yard Management transaction, the Yard Monitor, andMobile Yard transactions.

2.6.20 Cross-Company Sales Order Processing*

This scenario shows how sales are processed across company codes.

A customer orders goods from their vendor’s sales organization. The vendor has a production /warehouse plant that belongs to a different company code. The goods are produced / contained here anddelivered from the production/warehouse plant directly to the customer.

Focus:

• Delivering plant belongs to a different company code

• Direct delivery from delivering plant to customer

• Customer invoice and intercompany billing document

• Internal transfer prices

Customer 100009 sends a purchase order to their vendor’s sales organization. A standard order iscreated here with the production/warehouse plant from a different company code as a delivering plant.

The goods are delivered from the production/warehouse plant directly to the customer.

The delivery is billed twice: once to create the customer invoice and again to carry out intercompanybilling.

The customer pays their invoice by transferring the amount to the bank account. A manual accountstatement is posted, and the open item on the customer’s account is cleared.

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2.7 Complaint / Claim Management

2.7.1 Returns and Complaints

This scenario describes sales order returns processing. The process starts a return sales order withreference to the original invoice for the goods. An RMA document is printed, and forwarded to the

customer to be attached to the incoming goods. The goods are shipped back, a return delivery is createdwith reference to the RMA, and the material is received into return stock. The return stock location is setto be non-MRP relevant. The goods are inspected, resulting in a disposition to either return them to stock,or scrap. A credit memo is created from the billing run, and posted to the customers account.

2.7.2 Batch Recall

In this scenario, a defect batch is identified and must be recalled from customers and prospects who havereceived the batch.

A program is executed to identify all customers who received a defect batch. The user then chooses theaddresses of the appropriate contact persons, and the system prints a standard letter to each customer toinform them of the recall. The subsequent activities for each customer are stored in the system. Returndeliveries are also entered and documented, if necessary.

To ensure that you contact all customers affected by a defect batch, you must identify if subsequentbatches are affected by the defect batch. For this purpose, you can use the standard system functionBatch where-used list that is described in detail in the standard SAP ERP documentation. This scenariorecalls a batch from a finished product or wholesale product. Therefore you can simply find all customerswho received these products. However, a vendor could report that a raw, semifinished, trading, or other material used in your production, does not meet quality standards. In this case, you must determine whichfinished or trading materials were produced with these defect batches.

2.8 Enterprise Asset Management

2.8.1 Overhaul ManagementThis scenario describes a typical Overhaul Maintenance (OM) process. During overhaul maintenance, allthe main systems of the industry would be shut down and the maintenance would be executed accordingto a predefined project schedule.

Overhaul maintenance is a large scale maintenance project involving allocation of budget to differentproject tasks. Various resource requirements need to be identified, scheduled, and monitored for all OMactivities during the period.

The spare part procurement would be done in advance in material management to avoid materialshortages during the maintenance activities.

An OM project is created with Work Breakdown Structure (WBS) elements, required networks, and

network activities. Maintenance Orders created due to various pending malfunctions are linked to theWBS Elements or Network Activities. These malfunctions are fixed during the overhaul period. Themaintenance order collects the costs of the maintenance activities and settles it to the work breakdownstructure of project (WBS).

The scenario involves a maintenance employee, and a project leader who together complete the wholeprocess for overhaul maintenance.

Process Flow

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• Created a project

• Edit WBS Cost Planning and distribute WBS budget

• Network Scheduling

• Creating a Maintenance Order and Assign to WBS/Network

Key Points

• The Budget planner can plan and distribute budget data to the overhaul maintenance projectnetwork/activities

• The maintenance planner will create a maintenance order according to the maintenancerequirements and assign it to the corresponding network/activities

2.8.2 Refurbishment Management

Purpose

The refurbishment of - high value - faulty repairable spares is of considerable economic importance for

the companies and is a core process in Maintenance Processing. It is much more cost-effective than abrand new purchase.

In this scenario, the spare part would have different valuation types to represent different values. Since itis also a high value spare part or critical part, this spare part would be managed with serial number.

In this scenario, a spare part would be procured and installed in the function location as an equipment.Serial numbers can also be assigned to the procured material. These repairable spare parts can beidentified with different valuation types like New (C1), Repaired (C2), and Damaged (C3) withcorresponding cost assignments.

When there is a malfunction of the installed equipment, it would be dismantled from the functional locationand a spare part / equipment can be withdrawn and installed at the functional location. The defectiveequipment would be returned as damaged item to the warehouse (Valuation type C3). The stock in thewarehouse would be automatically updated (Valuation types) and with corresponding cost.

The maintenance planner would create a refurbishment order. These defective repairable spare(Valuation class C3) would be withdrawn from the warehouse and would be repaired. When therefurbishment is finished, the equipment would be returned to warehouse as repaired material (Valuationtype C2) and the cost would be updated accordingly in the material master. After the settlement of therefurbishment order, the maintenance expense would be settled to the specific material, then the movingaverage price of this spare would be updated in the material master. So the moving average price of thisspare would vary during the different phases of refurbishment.

Process Flow

• Creation of Maintenance Order

• Removing Defective Equipment

• Returning Defective material to warehouse

• Goods Issue for Maintenance Order

• Activate Equipment

• Creating the Refurbishment Order for the Defective material

• Goods Issue for Refurbishment Order

• Order Confirmation

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• Goods Received for Refurbishment Order

• Settling the Refurbishment Order

Key Points

• A high value spare part or critical part, will be managed with serial number. It will help to manage

each piece of this spare part

• Refurbishment process will help to reduce the spare parts inventory cost.

2.8.3 Work Clearance Management

This scenario describes the whole process of Work Clearance Management (WCM) for the BuildingMaterials industry. It can be used to implement WCM functionality also in building materials companies.Necessary maintenance work on technical objects, such as inspections, preventive maintenance or repairs, can only be executed once all the measures to ensure a safe working environment have beenimplemented. These safety measures can include, for example, lockout/tagout, fire protection and

radiation protection. The design of the scenario is based on SAP WCM enhancement model, and fullyintegrated with the work order process.

The maintenance planner can create work approval from a maintenance order, and then the referenceinformation in the maintenance order can be copied into work approval automatically.

The WCM process is fully integrated with the work order process. Once the maintenance planner determines to activate the WCM process to ensure maintenance staff’s safety, all approvals must begiven before execution of actual maintenance.

The operational processing of lockout/tagout is described using theoperational cycle. This processconsists of orderly tagging and subsequent untagging of technical objects, so that work and tests ontechnical objects can be performed safely. The operational cycle is divided into the following operationalphases:

• Tagging phase

• Temporary untagging phase

• Untagging phase

There are individual status of operational phases that are predefined in the system.

Different staff roles will be involved in the process, such as maintenance employee, and WCM planner,they are authorized to create/change specific WCM objects respectively.

In this scenario, we designed the process based on a power generation data model; however it also canalso be applied for power distribution & transmission.

Process Flow

• Creating Maintenance Order with WCM Requirement

• Creating Work Approval (WAP)

• Creating Work Clearance Application (WCA)

• Creating additional application Hot Work

• Creating Operational Work Clearance Document (WCD)

• Performing Permit Approval process

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• Performing operational cycle of lockout/tagout

• WCM objects for a planned maintenance order are generated from

• a maintenance plan by program RIWCO016

Key Points

• A component with which the safety measures during maintenance work at technical objects canbe controlled and monitored

• The WCM process is fully integrated with the work order process

• All permit in WCM objects must be issued before execution of actual maintenance

• A protection that ensures that a technical object that is managed as an item in an OperationalWCD can only be orderly tagged or untagged from certain Operational WCDs

2.8.4 Operational Maintenance

The scenario Operational Maintenance describes the use of the SAP ERP plant maintenancemanagement (module PM) within a chemical company.

In a chemical company, plant maintenance is not a self-sustaining function. It is one of the most importantsupport functions as it ensures asset availability and takes care of legal requirements concerning assets.

Process Flow

The following processes are provided to support the plant maintenance scenario:

• Technical system structure

• Operational maintenance

Key Points

• Technical system management

• Breakdown maintenance

• Operational maintenance activities

• Maintenance budgeting and cost controlling (in combination with business scenario 932)

2.8.5 Preventive Maintenance

This scenario describes the use of SAP Plant Maintenance management (module PM) within a chemicalcompany.

In a chemical company, preventive maintenance is not a self-sustaining function. It is one of the mostimportant support functions as it ensures asset availability and takes care of the legal requirementsconcerning assets.

Process Flow

This building block deals with the process of preventive maintenance.

Key Points

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• Technical system management

• Maintenance strategies (general scheduling rules)

• Task list

• Maintenance plan

• Maintenance scheduling functions

• Deadline monitoring of scheduled tasks and generating work orders automatically

• Maintenance budgeting and cost controlling (in combination with the business scenarioInvestment Management in PM (932)

2.9 Quality Management

2.9.1 Quality Management for Procurement with vendor

EvaluationThis scenario deals with quality inspection activities during the procurement process.

A customer orders goods from specified vendor 300001. On goods receipt, an inspection lot is generatedaccording to the defined material specification. A usage decision is then made as to whether to accept or reject the material, based on the inspection result (in this scenario, the rejection is made). Subsequentprocesses such as quality notification and vendor evaluation then follow.

The scenario focuses on the following activities:

• Goods Receipt based on Purchase Order

• Inspection Defects Recording

• Usage Decision after inspection

• Quality Notification creation and completion

• Goods return to vendor and return delivery creation

• Vendor Evaluation process

2.9.2 Stock Handling: Scrap and Blocked Stock

This scenario is triggered by the following different processes:

• Returns from Customer

• Rework from production

• Other logistic processes and reasons

• Devalue material to another material number and then rework the devaluated material

2.9.3 Sales Returns for Quality Management

This scenario describes sales order returns processing with quality management inspection lots. Thecreation of the return sales order references the original billing document for the goods. The goods areshipped back and a return delivery is created with reference to the sales order. After quality inspection the

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goods are returned to stock, scrapped, or returned to the vendor. A credit memo is created from the billingrun, and posted to the customer’s account.

2.10 Analytics

2.10.1 Reporting with SAP Business Explorer

The SAP Business Explorer Analyzer is the analysis and reporting tool of the SAP Business Explorer thatis embedded in Microsoft Excel. Using the SAP NetWeaver Business Client you have the possibility toshow lists with the SAP Business Explorer Analyzer.

2.10.2 Quarterly Plan – Sales Quantity Forecast with CO-PA

Purpose

A manufacturer of many product groups runs an SAP system in one sales organization. The organizationhas one central Controlling department that calculates and plans the sales quantities and the revenues.

Process Flow

• Sales quantity planning on basis of actual data

• Transfer to SOP

2.11 Financials

2.11.1 General Ledger

Purpose

The central task of G/L accounting is to provide a comprehensive picture of external accounting andaccounts. Recording all business transactions (primary postings as well as settlements from internalaccounting) in a software system that is fully integrated with all the other operational areas of a companyensures that the accounting data is always complete and accurate.

The SAP FI General Ledger Accountant has the following features:

• Free choice of level: corporate group or company

• Automatic and simultaneous posting of all subledger items in the appropriate General Ledger Accountant accounts (reconciliation accounts)

• Simultaneous updating of General Ledger Accountant and cost accounting areas

• Real-time evaluation of and reporting on current accounting data, in the form of account displays,

financial statements with different financial statement versions and additional analyses.The General Ledger Accountant serves as a complete record of all business transactions. It is thecentralized, up-to-date reference for the rendering of accounts. Actual individual transactions can bechecked at any time in real-time processing by displaying the original documents, line items, andtransaction figures at various levels such as:

• Account information

• Journals

• Totals/transaction figures

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• Balance sheet/profit and loss evaluations

Process Flow

• Posting General Ledger Account Documents

• Displaying the Document Journal

• Displaying G/L Balances (List)

• Carrying Out Recurring Entries

• Account Maintenance: Automatic and Manual Clearing

Key Points

• Provides a comprehensive picture of external accounting and accounts

• Records all business transactions in a software system that is fully integrated

• Ensures that the accounting data is always complete and accurate

• Automatic and simultaneous posting of all subledger items in the appropriate general ledger accounts (reconciliation accounts)

• Simultaneous updating of general ledger and cost accounting areas

• Real-time evaluation of and reporting on current accounting data

• Financial statements with different versions and additional analyses

• Actual individual transactions can be checked at any time in real-time processing

2.11.2 Accounts Receivable

Purpose

This component deals with posting accounting data for customers in Accounts Receivable. From there,the data is sorted by customer and made available to other areas such as the Sales and Distributionsystem. When posting data in Accounts Receivable, the system creates a document and passes the dataentered to the general ledger. General ledger (Profit and Loss) accounts and customer accounts are thenupdated according to the transaction concerned (receivable, down payment, credit memo, and so on)customer payment activities. All business transactions are posted to and managed by means of accountsand for this a customer master records are created. One time Customers are used for avoiding buildingup of huge master data volume.

Business Process Accounts Receivable focuses on the following activities:• Post down payment request

• Post down payment manually

• Post customer invoice

• Post a credit note with invoice reference

• Posting Payments Using the Payment Program

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• Posting Manual Payment

• Automatic Clearing of open items in customer accounts

• Manual Clearing of open items in customer accounts

• Manual Bank Statement Processing

• Reprocessing an Account Statement

• Dunning

• Account Balance Interest Calculation

• One-Time-Accounts Postings

• Setting a Credit Limit

• Credit Control Reporting

General Business Processes: In this document, you can find some transactions that cover the followinggeneral business processes

• Displaying an accounting document.

• Displaying and Changing Line Items

• Displaying Balances

• Reversing a Document

• Reversing a Document – Individual Reversal

• Reversing a Document – Mass Reversal

Process Flow

• Post down payment request/ manually

• Posting customer invoice and

• Post a credit note with invoice reference

• Posting payments using the payment program

• Posting manual payment

• Automatic clearing of open items in customer accounts

• Manual clearing of open items in customer accounts

• Manual bank statement processing

• Reprocessing an account statement

• Dunning

• Account balance interest calculation

• One-Time-Accounts postings

• Setting a credit limit and credit control reporting

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Key Points

• When posting data in Accounts Receivable, the system creates a document and passes the datato the general ledger

• Profit, Loss and customer accounts are updated according to the transaction concerned customer payment activities

• All business transactions are posted to accounts

• All business transactions are managed by means of accounts and for this customer master records are created

• One time Customers are used for avoiding building up of huge master data volume

2.11.3 Accounts Payable

Purpose

This scenario deals with posting accounting data for vendors in Accounts Payable. From there, the data is

sorted by vendor and made available to other areas such as the purchasing system. When posting datain Accounts Payable, the system creates a document and passes the data entered to the general ledger.General ledger accounts and vendor accounts are then updated according to the transaction concerned(payable, down payment, credit memo, and so on) vendor payment activities. All business transactionsare posted to and managed by means of accounts and for this a vendor master records are created.

• Business Process Accounts Payable focuses on the following activities:

• Down payment request / clearing

• Post down payments using the payment program

• Post vendor invoice

• Enter vendor credit memo

• Review and Release Blocked Invoices

• Select invoices to be Paid

• Review and block invoices for payment as needed

• Post payment using the payment programCreation of payment media using Payment Media Workbench (Alternative 1)Creation of payment media using Classical Payment Medium program( Alternative 2)

• Manual payment

• Manual bank statement processing

• Display of posted documents

Process Flow

• Post Accounts Payable Documents

• Manual and automatic clearing of open items

• Post down payments using the payment program

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• Post manual and automatic outgoing payments.

Key Points

• When posting data in Accounts Receivable, the system creates a document and passes the data

to the general ledger

• Profit, Loss and customer accounts are updated according to the transaction concerned customer payment activities

• All business transactions are posted to accounts

• All business transactions are managed by means of accounts and for this customer master records are created

• One time Customers are used for avoiding building up of huge master data volume

2.11.4 Period End Closing Financial Accounting

PurposeClosing operations are periodic tasks and can be subdivided in FI as follows:

• Day-end closing

• Month-end closing

• Year-end closing

The closing operations component helps preparing and carrying out the activities required for day-end,month-end, and year-end closing. For this purpose, the system provides a series of standard reports thatcan be used to generate evaluations and analyses directly from all of the posted account balance. Thesystem helps carrying out the following:

• Creating the balance sheets and P&L statements

• Document the posting data

No additional postings are required for day-end closing.

Using the following evaluations for day-end closing and for documenting the posting data is possible:

• Compact-Document journal

• Evaluation of the documents that have not been posted

To carry out the closing operations in G/L accounting, it is necessary to carry out the closing operations inthe subledger accounting areas you are using. These include:

• Accounts receivable and accounts payable accounting

• Inventory accounting

• Asset accounting

Year-end closing is split into two phases:

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• At the beginning of the new fiscal year, you open new posting periods and carry forward thebalances from the previous year

• You then prepare and create the financial statements and document the business transactionsusing the balance audit trail

The SAP system offers a range of reports, which can carry forward balances into the new fiscal year.During this process, the profit and loss accounts are carried forward to one or more retained earningsaccounts. The balances of the balance sheet accounts are simply carried forward into the new fiscal year.It is not necessary to create special opening financial statements.

Any postings done in the old fiscal year automatically adjust the relevant carry-forward balance. Closingthe old fiscal year and carrying out the closing postings before opening the new fiscal year is notnecessary.

As with month-end closing, you can create all the external reports required, document the posting data,and carry out the internal evaluations.

Process Flow• day-end closing

• month-end closing

• year-end closing

Key Points

• Updating Exchange Rates

• Gaps in Document Number Assignment

• Invoice Numbers Allocated Twice

• Displaying the compact document journal

2.11.5 Cash Management

Purpose

Cash Management in SAP ERP Financials provides three basic functions:

• Quickly and reliably transfers all cash-relevant information from internal and external sources intothe cash management system (inbound data)

• Performs analysis and reporting of current and future cash flows to help you make cash

management decisions (analysis and decision)

• Communicates with banks and other business partners based on the results of the decisionprocess (outbound data)

The cash position overview provides information on the current financial state of the bank accounts. It isthe starting point for cash concentration in which the balances from various bank accounts areconcentrated in one target account, taking minimum balances and payment optimization intoconsideration.

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Process Flow

• Cash Management Status Analysis

• Cash Concentration

Key Points

• Posting of a vendor invoice in local and foreign currency.

• Posting of a customer invoice in local currency (from a sales order).

• Posting of planning items and memo records.

• Execution of the report showing cash position and the liquidity forecast.

• After posting a manual bank statement, the flow between the planning levels is demonstrated.

• Automatically archiving memo records

• The cash concentration function identifies the relevant amount and transfers them from one

account to another.

• Period End Closing Activities

o Cash Position & Liquidity Forecast

2.11.6 Cost of Sales Accounting

Purpose

Cost of sales accounting compares the sales revenue for an accounting period with the manufacturingcosts of the activity. The expenses are allocated to the commercial functional areas (manufacturing, salesand distribution, administration, and so on). Expenses and revenues that cannot be assigned to thefunctional areas are reported in further profit and loss items, sorted according to expense and revenue

type.

With this type of grouping, cost of sales accounting identifies where costs originate in a company. Ittherefore portrays the commercial purpose of the expense.

Process Flow

• Functional area in chart of accounts

• Functional area in posting key

• Cost center categories

•

Line item reporting (Cost object reassignment)• Balance Sheets and P&L Statements

• Cost of Sales Accounting – P&L Statements.

Key Points

• Compares the sales revenue for an accounting period with the manufacturing costs of the activity

• Cost of sales accounting identifies where costs originate in a company

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• Cost of sales accounting portrays the commercial purpose of the expense

• The expenses are allocated to the commercial functional areas (manufacturing, sales anddistribution, administration, and so on).

• Expenses/revenues that cannot be assigned to functional areas are reported in further profit andloss items


Reposting of unassigned Functional area

2.11.7 Asset Accounting

Purpose

The functions for Tangible Asset Handling enable illustration and documentation of the development of fixed assets for accounting purposes.

Asset accounting is a subsidiary ledger of the general ledger and is used to manage and document indetail fixed asset transactions. In general ledger accounting, it is possible to update depreciation andchanges to asset balance sheet values in asset accounting. It is also possible also make various account

assignments to cost accounting for these transactions.

As a result of the integration in SAP ERP, Asset Accounting (FI-AA) transfers data directly to and fromother SAP ECC components, for example posting from the Material Management (MM) componentdirectly to FI-AA. When purchasing an asset or produce an asset in-house, directly posting the invoicereceipt or goods receipt is possible, or the withdrawal from the warehouse to assets in the Asset

Accounting component. At the same time, you can pass on depreciation and interest directly to theFinancial Accounting (FI) and Cost Accounting (CO) components. From the Plant Maintenance (PM)component, maintenance activities that require capitalization to assets are available.

To handle tangible assets, the business functions of the following system components are accessible:

Component Functions

Financial Accounting (FI) Integration with the general ledger and other subsidiary ledgers

Asset Accounting (FI- AA)

Valuation of fixed assets and settlement of assets under construction

Cost Accounting (CO) Posting cost-accounting depreciation

Process Flow

• Acquisition from purchase with vendor

• Acquisition with Automatic Offsetting Entry

• Retirement with revenue

• Asset Sale without customer

• Post-Capitalization

• Write-Ups

• Settlement Assets Under Construction

• Down Payment Request for Assets under Construction

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• Depreciation Posting Run

• Posting Acquisition and Production Costs Values

• Depreciation Simulation/Primary Cost Planning

Key Points

• Entire lifetime of the asset from purchase order or the initial acquisition (possibly managed as anasset under construction) through its retirement

• Calculate values for depreciation and interest

• Depreciation forecast

2.11.8 Asset Acquisition through Direct Capitalization

Purpose

To purchase asset investments that do not have an asset under construction (AuC) phase, it is necessaryto capitalize the asset directly in Asset Accounting. The need for a new asset is requested and approvedby the cost center manager, purchased through the purchasing department, and the costs associatedwith the purchase order are capitalized when the Vendor invoice is processed.

Process Flow

• Create quote for make-to-stock item

• Convert quote to order

• Pick and ship items

• Invoice customer

• Receive payment

Key Points

• Purchasing an asset investment that does not have an asset under construction phase throughcapitalizing the asset directly

• The need for a new asset is requested and approved by the cost center manager

• Asset purchased through the purchasing department

• The costs associated with the purchase order are capitalized when the vendor invoice isprocessed


o Order Settlement (Asset Under Construction)

o Depreciation Simulation /Run

o Posting Acquisition and Product Cost Values

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o Open and Close FI Period Asset

o Recalculating Values

o Fiscal Year Change

o Account Reconciliation

o Year-end closing Asset Accounting

2.11.9 Asset Acquisition for Constructed Assets

Purpose

Assets under construction (AUC) are a special form of tangible assets. They are displayed as a separatebalance sheet item and therefore require a separate account determination and their own asset classes.During the construction phase of an asset, all actual postings are assigned to the AUC. Once the asset iscompleted, a transfer is made to the final fixed asset.

The recommendation of using Investment orders to capture the costs of AUC assets during the period

and month-end processing will ‘settle’ the costs from the Investment order to the AUC. This is done sothat budget information can be entered for the AUC and tracking of the actual-to-budget can beperformed. Once the AUC is completed, the final asset is created in the appropriate asset class, and theInvestment order is set to ‘complete’ so that the next settlement will transfer the AUC asset value to thecompleted asset.

Process Flow

• Create Investment order with asset under construction

• Create Budget for asset

• Release Investment order

• Post invoice to Investment order

• Monitor order

• Asset under Construction settlement

• Complete order

Key Points

• Transparent view of an asset for acquisition

• Automated efficient processing

2.11.10 Activate Document Splitting

Purpose

Document splitting enables a complex display of documents. It ensures that you can draw up completefinancial statements for the selected dimensions at any time.

Using the document splitting procedure, you can also create a segmented display of a (partial) balancesheet, according to a legal requirement (for example, IAS), or according to areas of responsibility.

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The Segment field is a standard field in the totals table for New General Ledger Accounting(FAGLFLEXT) New FI drilldown reporting functions let you create segment financial statements.Document splitting is only relevant for the general ledger; it does not need to be visible from within thesub ledgers.

Process Flow

The following functions are provided to support this building block:

• Passive split: During clearing (during a payment, for example), the account assignments of theitems to clear are inherited to the clearing line item[s] (such as payables line item[s]).

• Active (rule-based) split: The system splits documents on the basis of (delivered or custom)document splitting rules. Document splitting rules can be configured.

• Clearing lines or zero balance formation: the system creates clearing lines automatically to obtaina split. You can control this process with the zero balance indicator .

Key Points

• Extensibility and flexibility – to add new fields, you can create management reports,

supplementary balance sheets, and profit–and–loss statement for industry–specific andenterprise–specific purposes.

• Increased data quality – the results of the document split are visible in the document itself. Thiseliminates the need for additional check steps in alternative lists, and improves data quality.

• Accelerated closing – The elimination of additional periodic splitting programs significantlyspeeds up the closing process.

2.11.11 Segment Reporting

Purpose

The purpose of segment reporting is to make the profit and risk situation of individual enterprise areas(segments) transparent.

Process Flow

• Posting G/L Account Documents with different segments

• Allocation of un-allocable segment at the period end

• Balance Sheets and P&L Statements

• Cost of Sales Accounting – P&L Statements

• Receivables and Payables by segment.

Key Points

• In accordance with IAS/IFRS, segment reporting is required for product-related enterprise areas.

• Making the profit and risk situation of individual enterprise areas transparent.

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2.11.12 General Cost Center Planning

Purpose

During the annual budgeting process, the managers of nonoperational cost centers such as sales,marketing, administrative, research and development, and so on, plan the costs for various costtypes/elements for their respective cost centers. The usual starting point for development of these plansis the actual data for the current/previous year.

In this process, the previous year’s actual expenses for these cost centers are copied into an AOP(annual operative planning) budget version in cost center accounting. As an alternative the previousyear’s budget data can also be used as a starting point for the exercise. The data in this version isdownloaded into spreadsheets by each cost element and cost center. The respective cost center managers review and update the budget values according to their requirements and plans. Then theseplans are uploaded back into SAP. The plans in SAP are reviewed and finalized.

The planned depreciation on fixed assets is transferred separately to the cost center plan version. Thesystem calculates the planned depreciation on assets by cost center based on the asset values posted on

the cost centers. In the case of cost centers having machinery, the depreciation is planned based on costcenter and activity type.

Process Flow

• Copy previous year’s actuals or budget as a basis for planning

• Transfer planned depreciation from assets

• Download cost elements to spreadsheet for income/expense budget

• Update budget values for income and expense excluding operations

•

Upload cost elements for income and expense excluding operations• Plan accrual costs, statistical key figures, assessments

• Confirm non-operating cost center budget

• Copy AOP version to actual version 0 and lock both versions for planning

Key Points

• Copying the previous year’s actual expenses for the cost centers into an AOP budget version

• Changing copied data

• Depreciation transferred separately into AOP

• Downloading data to spreadsheets by each cost element and cost center

• Uploading the adjusted data into SAP

• The cost center planning in SAP is reviewed and finalized (accrued costs, statistical key figures,assessments)

• Activating the planned data of the AOP version

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2.11.13 Manufacturing Cost Center Planning

Purpose

During the annual budgeting process, the managers of manufacturing cost centers plan the costs for various cost types/elements for their respective cost centers. The usual starting point for development of

these plans is the actual data for the current/previous year.

In this process, the previous year’s actual expenses for these cost centers are copied into an AOP(annual operative planning) budget version in cost center accounting. As an alternative the previousyear’s budget data can also be used as a starting point for the exercise. The data in this version isdownloaded into spreadsheets by each cost element and cost center. The respective cost center managers review and update the budget values according to their requirements and plans. Then theseplans are uploaded back into the system. The plans in the system are reviewed and finalized.

The planned depreciation on fixed assets is transferred separately to the cost center plan version. Thesystem calculates the planned depreciation on assets by cost center based on the asset values posted onthe cost centers. In the case of cost centers having machinery, the depreciation is planned based on costcenter and activity type.

The resource requirements in the form of planned activity quantities are transferred from Sales and

Operations planning to the cost centers as planned activity consumption. Plan reconciliation between theSOP activity requirements and manually planned requirements on the operational cost centers is carriedout. Once the activity quantities and budget amounts are finalized, planned activity prices are calculatedin the system.

Process Flow

• Download of cost center budget into spreadsheets, revision by cost center managers, upload of revised data

• Transfer of planned activity requirements from production (SOP)

•

Manual completion of planned data• Calculation of planned activity prices (input for AOP Standard Cost Calculation)

Key Points

• Copying the previous year’s actual expenses for the cost centers into an AOP budget version

• Changing copied data

• Depreciation transferred separately into AOP

• Downloading data to spreadsheets by each cost element and cost center

• Uploading the adjusted data into SAP

• The cost center planning in SAP is reviewed and finalized (accrued costs, statistical key figures,assessments)

• Activating the planned data of the AOP version

2.11.14 Standard Cost Calculation

Purpose

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Annually, the standard costs for products are updated as part of the annual operations planning (AOP).This is necessary to reflect the changes in the prices of purchased parts, change in labor and overheadcosts and change in bills of materials and operations needed to manufacture the semifinished andfinished goods.

Once the planned prices for purchased parts are updated and planned activity prices are calculated, acosting run is done to calculate the new standard planned prices of the materials. The calculated

standards are checked. The responsible persons are asked to make necessary corrections, for examplein master data. Once the calculations are considered to be correct, the prices are updated as futureplanned costs in the respective material master records.

When the current year is closed, the marked cost estimates are released. This results in a revaluation of existing inventory to the new standard prices.

Process Flow

• Create and execute costing run

• Analyze proposed standard prices

• Repeat annual operating plan scenarios

• Edit cost run and execute

• AOP – revenue cost of sales transfer

• Create frozen costing run / Execute costing run

• Mark as future planned price

• Release standard cost estimate and revalue stock at start of new fiscal year

Key Points

• Standard costs for products are updated as part of the annual operations planning

• Costing run is done to calculate the new standard planned prices of the materials

• Responsible persons are asked to make necessary corrections

• Prices are updated as future planned costs in material master records

• Once the current year is closed, the marked cost estimates are released

• Revaluation of existing inventory to the new standard prices


o Costing Run

2.11.15 Internal Order for Marketing and Other Overhead Planning

Purpose


This process makes use of SAP’s internal order functionality to track costs and status.

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In case of marketing projects an internal order is created by using the marketing order type. Marketingorders are created as statistical orders. This means that costs are posted to the assigned cost center andadditionally as statistical costs to the internal order. The order does not need settlement since the realcosts are assigned to the cost center.

In case of other overhead projects internal orders can be created by using the overhead order type. In thiscase a responsible cost center is assigned. The internal orders are to be settled to this cost center.

Process Flow

• Creation of internal orders

• Cost element planning on internal orders

• Settlement of internal orders (planned costs)

Key Points

• After creating the internal order, you set a planner profile and plan costs at cost element level.Revenues can also be planned if the order is with revenues.

• It is also possible to assign budgets to an internal order. Budgets are lump sums that are notbroken down in cost elements.

• After checking the settlement rules, you execute the settlement of planned costs to the receivers.

• You can use standard reports to confirm correct settlement and the budgets assigned to theorders.

• The planned and actual costs of these projects can be tracked for various purposes such as costcontrol, return on investment calculations, tax reporting, and so on.

2.11.16 Period End Closing General Plant

Purpose

The Plant/Central closing process is done to make sure that all financial postings are made to representthe plant activity for the period. Daily activity in the plant is posting various financial documents into thegeneral ledger and cost-controlling module. This process ensures that all activity in the plant is showncorrectly, and that no financial postings are missing. Some data (total stock value, total stock, valuationclass, price control indicator, and price unit) are managed by period. For these values, and goodsmovements, to be posted to the correct period, the period must be set whenever a new period starts.Management reporting needs to receive plant information with reference to variances, WIP, and scrap to

allow for the correct reporting of these figures. The production/process orders that are no longer activeneed to be flagged asclosed so that future postings will not be allowed. This process ends by flowing intothe Central Closing process that finishes the financial reporting of the company.

Period end closing “general” Plant covers the closing for product cost controlling by period and productcost controlling by order. The procedures for Product Cost by Order are the same regardless of whether amanufacturer uses process orders or production orders

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Process Flow

• Run assessment cycle for quality costs

• Ensure goods movements and production transactions are complete

• Open new MM period

• Period-end closing for production orders (overheads, WIP calculation, variances calculation,settlement of production orders)

• Close completed production orders

• Data collection for summarization hierarchy (reporting)

• Run actual assessment of all cost center costs to profitability analysis (COPA)

• Run profitability report

Key Points

• Run assessment cycle for quality costs

• Ensure goods movements and production transactions are complete

• Open new MM period

• Period-end closing for production orders (overheads, WIP calculation, variances calculation,settlement of production orders)

• Close completed production orders

• Data collection for summarization hierarchy (reporting)

• Run actual assessment of all cost center costs to profitability analysis (COPA)

• Run profitability report

2.11.17 Inventory Valuation for Year End Closing

Purpose

This component encircles the process of inventory valuation – balance sheet valuation at the end of theyear. This provides users with an example process description that they can use as a template for their own valuation processes.

The business process documentations include the following process steps:

• Stock valuation, using lowest value principle for raw materials, packaging materials and tradinggoods.

• Additional devaluations by movement rate

• Inventory costing for finished and semifinished products, in accordance with the lowest possiblevalue principle

• Stock value reporting in the form of a comparison analysis

• Manual stock value adjustment posting in the Financial Accounting component

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These Business Process Documentations can be used by all companies that are running an SAP ERPsystem that integrates the Materials Management (MM), Production Planning (PP), Financial Accounting(FI), and Controlling (CO) components.

The inventory cost estimate calculates tax-based or commercial prices for semifinished and finishedproducts. After the inventory is costed, the costing results are transferred to the material master as tax-based and commercial prices.

Inventory valuation is carried out in accordance with local legislation (such as the German CommercialCode), including settings for the overhead structure, valuation variant, and stock valuation withdevaluation on the basis of movement rate.

Process Flow

• Stock valuation, using lowest value principle for raw materials, packaging materials and tradinggoods.

• Additional devaluations by movement rate.

• Inventory costing for finished and semifinished products, in accordance with the lowest possible

value principle.

• Stock value reporting in the form of a comparison analysis.

• Manual stock value adjustment posting in the Financial Accounting component.

Key Points

• Stock valuation for raw materials, packaging materials and trading goods on base of lowestpossible value

• Inventory valuation for semifinished and finished materials on base of local requirements for valuation approaches

• Stock value adjustment

2.11.18 Overhead Cost Controlling Actual

Purpose

This part describes the transaction-based actual postings that are used in Overhead Cost Controlling.

For an explanation of the activities that are performed at the end of the period, refer to thePeriod-End Closing section.

Process Flow• Actual posting for a cost center

o For primary costs the related cost center is posted

o Cost center update with the correct values

o Posting of statistical key figures

• Periodic and year end activities

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o Comparison between the actual and the planned costs for the cost center

o Allocation of primary and secondary costs using an assessment cost element

o Posting of accruals for payroll fringe costs on a monthly basis

o Maintaining the controlling version

o Lock period

Key Points

• Process a G/L document for various purposes

• Necessary steps for preparation of periodic and year end activities

2.11.19 Internal Order for Marketing and Other Overhead Actual

Purpose


This process makes use of SAP’s internal order functionality to track costs and status.

In case of marketing projects an internal order is created by using the marketing order type. Marketingorders are created as statistical orders. This means that costs are posted to the assigned cost center andadditionally as statistical costs to the internal order. The order does not need settlement since the realcosts are assigned to the cost center.

In case of other overhead projects internal orders can be created by using the overhead order type. In thiscase a responsible cost center is assigned. The internal orders are to be settled to this cost center.

Process Flow

• Create internal order

• Post general ledger account

• Check settlement rule

• Check settlement

• Check actual budget

Key Points

• This process makes use of SAP’s internal order functionality to track costs and status.

• It gives a transparent view of an internal order

• It allows automated efficient processing

2.11.20 Reference and Simulation Costing

Purpose

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Reference and Simulation Costing is a tool for planning costs and setting prices, with which you manuallyenter the costing items in spreadsheet form in a unit cost estimate.

With this component, you can create base planning objects. A base planning object is a reference objectof Product Cost Planning, which you create in Reference and Simulation Costing to plan costs for a newproduct or service and simulate changes to existing cost estimates. If you plan a new product for whichthere is no master data in the SAP ERP, you can perform initial planning and cost projections by creating

a Base Planning Object using Reference and Simulation Costing. Using this method, you manually planthe costs for an item.

When the first material master data is created in the SAP ERP, you can use the Material Cost Estimatewithout Quantity Structure to manually plan the cost of goods manufactured and the cost of goods sold for the product. You can use the base object cost estimate as a reference for this. Two methods are availablefor material cost estimate planning without quantity structure, multilevel unit costing and single-level unitcosting. Multilevel unit costing enables you to plan cost at the assembly level without requiring productionbills of material.

Process Flow

•Create and cost Base Planning Object

• Analyze Results

• Change Base Planning Object

• Report from Information System

Key Points

• Reference and Simulation Costing

• Base Planning Object

o After creation and costing, the base planning object can be monitored and analyzed.

• Reporting from Information System

o Monitoring the base planning object

2.11.21 Sales: Period End Closing Operations

This scenario describes the collection of periodic activities in Sales & Distribution such as day endingactivities or legal requirements like Intrastat and Extrastat reporting.

2.11.1 Period–End Closing Activities

This building block provides the means and sequence of period–end closing steps for period–end closingon a daily, monthly, and yearly basis.

SAP Best Practices covers all different kinds of scenarios with a broad variable implementation approach.It should be possible to select all required steps depending on the selected solution scope.

1.1.1 Cost Planning

Purpose

This scenario describes the Cost Planning for Mining Materials. The Cost Planning includes the planningin cost center accounting and product cost.

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Mining of ore is a cost intensive process. Operating costs in mining consist of the amortization of thecapital costs of the equipment and mine establishment, and the operating cost itself. As an example,costs for a truck are planned in detail. This includes for example, planning of Labor to operate, Fuel,Lubricants, supplies like tires. Overhead costs from canteen, HR cost centers etc. will be allocated basedon defined cost drivers like headcount, no. of PCs. Costs will be aggregated to planned costs for thefleet / hauling cost center. Costs are planned for the period of typically a month for the cost centers,equipment, and finally the standard costs for a ROM produced at the mine.

Process Flow


Cost Element planning

Internal Activity planning

Planning Statistical Key Figures

Cost planning using a Template

Overhead allocation using a Costing Sheet

Overhead allocation using a Template

Cost Estimates

2.11.2 Investment Management in PM

The scenario Investment Management describes the use of the SAP ERP functionalities of investmentmanagement (module IM) within a chemical company.

It provides functions to support the planning, investment, and financing processes.

Process Flow

This building block deals with the following processes:

• Capital investments, such as the acquisition of fixed assets as the result of internal production or purchasing

• Investments in research and development

• Projects that can be primarily considered as overheads, for example, continuing education of employees or establishing new markets

• Maintenance programs

Key Points

• Program structure

• WBS elements

• Planning and budgeting

• Reporting

• Fiscal year changing

• Fully integrated process of Financials, Asset Accounting, Controlling, and Plant Maintenance

The term “investment,” therefore, is not only limited to the investments you capitalize on for bookkeepingor tax purposes. An investment in this context can be any measure that initially causes costs and that

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may only generate revenue or provide other benefits after a certain time period has elapsed (for example,plant maintenance).

2.11.3 ACTUAL COSTING/MATERIAL

Purpose

This scenario describes the process of calculating the actual cost of materials and separating thedifferences between standard cost and actual cost into cost of sales and stock value using material ledger settlement function.

Process Flow


Creating Costing Run

Determining Material Prices

Consumption Revaluation

Closing Postings

Confirming Costing Result

CO-PA Periodic Revaluation

Marking Material Price

Releasing Material Price

Key Points

Each month after period shift, release a new standard price for current period if necessary.Execute the period-end closing operations for previous period at standard cost for each plant.

Create a new actual costing run with all plants included.

Execute the actual costing run and determine the single-level price and then the multi-level price.The price differences are rolled up to higher materials and allocated to consumption and inventory.

The function of consumption revaluation distributes price differences that belong to consumptioninto actual consumed items.

The closing posting posts price differences to consumption and inventory accounts andrevaluates the beginning inventory of the new period using the valid valuation price.

Confirm the actual costing result of each material then update the price in the material master.

Transfer the actual cost component split to CO-PA.

2.12 Corporate Services

2.12.1 Travel Management

The purpose of this process is to provide fully integrated management of all incurred travel expenses –from the planning/approval stage right through to the point at which the travel expenses are posted toFinancial Accounting and allocated on a cause basis in Cost Accounting.

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2.12.2 EH&S Industrial Hygiene and Safety

This scenario deals with management of hygiene-related and safety-related information and measures,performance of risk assessments, creation of standard operating procedures (SOPs) and drawing up ahazardous substances register.

The basis of the industrial hygiene and safety scenario is the definition of workplaces and a workplace

hierarchy in the company. Hygiene and safety have a large impact on employees (concentration of chemical agents in the air, noise, bright light, posture stress) and related safety measures with respect tothe workplaces. The impacts are summarized and evaluated in a risk assessment. Ratings allow you torank the impacts according to seriousness.

When processing or handling hazardous substances, it may be legally required or at least advisable topost standard operating procedures, containing, among other information, emergency first aid measures,and disposal recommendations. The necessary substance-specific data is maintained in the EH&Sspecification database, and using the workplace hierarchy that was defined, SOPs can be assigned to theindividual workplaces. The creation of the SOPs is similar to the creation of Material Safety Data Sheets,with defined steps to release a SOP and management of historical and current versions.

Process Flow

The following processes are provided to support theEH&S Industrial Hygiene and Safety scenario:

• Defining work areas

• Maintaining IHS data

• Integration of storage locations for hazardous substance register

• Maintaining exposure profiles

• Generating substance register

• Defining safety measures

• Creating and displaying SOPs

2.12.3 EH&S Waste ManagementThe Waste Management module within EH&S is used to execute a variety of different waste disposalprocesses. The function modules are used to integrate standard functions of SAP solutions in wastedisposal processes. The more deeply integrated the processes are, the more standard functions of theSAP solutions are used to include commercial and logistic requirements.

The following basic waste disposal business processes are available:

• Legally compliant disposal processing

• Legally compliant disposal processing using internal quantities

• Legally compliant and commercial disposal processing

• Legally compliant, commercial, and logistic disposal processing

The processes can be configured and run using the standard functionalities of EH&S WasteManagement. Additional function modules are available to execute other waste disposal processes, butare not part of the standard system.

This document focuses on the legally compliant disposal processing and waste processing tasks, whichare executed by the environmental department.

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2.12.4 Master Data Generation Descriptions and Reporting

2.12.5 Master Data Generation Descriptions

The SAP Best Practices Building Material covers various descriptions on how to create master data.

These descriptions are:

• Create Accounts and Account Groups

• Create Assets

• Segments and Profit Center Maintenance

• Functional Areas Maintenance

• Create Cost Center and Cost Center Group

• Maintain Cost Center Hierarchy

• Create Cost Element and Cost Element Group

• Create Cost Collector

• Maintain Assessment Cycles

• Create Standard Cost for Individual Material

• Create Activity Type / Groups

• Create Internal Order

• Maintain Vendor Evaluation

• Create Vendor Master

• Create Purchasing Info Record

• Create Source List

•

Create Purchasing Contract• Create Customer Master

• Create Sales Price Condition

• Maintain Capacity

• Create Work Center

• Maintain Work Center Hierarchy

• Create Resources for Process Industry

• Create Product Group

• Create Raw (ROH) Material

• Create Semifinished Good (HALB) Material

• Create Trading Good (HAWA) Material

• Create Finished Good (FERT) Material (non configurable)

• Create Finished Good (FERT) Material (configurable)

• Create Configurable Material Variant

• Create Engineering Change Number

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• Create Production Version

• Maintain Material Plant Extension

• Maintain Material Storage Location Extension

• Create Serial/Equipment Number

• Maintain Material Sales Organization Extension

• Create New Bill of Material

• Maintain Bill of Material - Configurable Material Link

• Create Routing

• Create Reference Operation Set

• Maintain Material Scheduling via Routing

• Create Master Recipe

• Attach Material Variants Routing to Parent Material Routing

• Create Configuration Profile

• Create Variant Classification

• Load BOM Dependencies

• Create Standard Work Breakdown Structure (WBS)

• Create Standard Network

• Maintain Network Parameters for Sales Order

• Create Output Conditions SD

• Create Tax Conditions SD

• Create Material determination info record

• Create Free Good determination info record

• Maintain Catalogs – Create Code Groups and Codes

• Maintain Catalogs – Create Selected Sets and Selected Set Codes

• Create Master Inspection Characteristic

• Maintain Material Specification

• Create Batch Classification

• Maintain Material Master Extensions

• Create Employee

• Create Sales Representative

• Create Task List

• Create Service Master

• Create Service Product

• Create Warranty

• Create Service (DIEN) Material

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2.12.6 SAP ERP Reporting

In SAP ERP various reports can be used to monitor and control your company processes. SAP BestPractices focuses on the following reports:

General Ledger • Recurring Entry Documents

• G/L Account Statements

• Financial Statement

• Financial Statement: Actual/Actual Comparison

• Compact Document Journal

• Line Item Journal

• Recurring Entry Documents

• EC Sales List

• Advance Return for Tax Sales/Purchases

• Chart of Accounts

Fixed Asset

• Fixed Asset Reporting by Cost Center

• Fixed Asset Reporting by Asset Class

• Asset Balances

• Asset Transactions

• Asset Acquisitions

• Asset Retirements

Cost Element Accounting

• Controlling Documents: Actual Costs

• Internal Orders: Master Data Report

Cost Center Accounting

• Cost Centers: Actual/Plan/Variance

• Range: Cost Centers

• Range: Cost Elements

•

Cost Centers: Planning Overview• Range: Actual/Budget Commitments

• Cost Centers: Activity Prices

Internal Orders

• Orders: Actual Line Items

• Orders: Commitment Line Items

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• List: Orders

• Orders: Actual/Plan Variance

• Order: Planning Overview

• List: Budget/Actual/Commitments

Product Costing

• Multilevel BOM: Value / Amount / Status

• Cost Component

• Itemization

• Cost Elements

• Analyze/Compare Material Cost Estimates

• Analyze Product Cost Collector

• Analyze Product Order

Profitability Analysis

• Execute Report

Information System

• Costs/Revenues/Expenditures/Receipts

• Actual Costs/Revenues

General Logistic

• MRP List

• List Display of Purchase Requisitions

• Stock Overview

• Outbound delivery monitor

Sales and Distribution

• List of Sales Orders

• Sales Order Selection

• Analyze Sales Orders

• Actual Cost Line Items for Sales Documents

• List Billing Documents

• Release Billing Documents for Accounting

•

Incomplete SD Documents• SD Documents blocked for Delivery

• SD Incomplete Documents

• Purchase Requisition per Account Assignment

• Purchase Orders by Account Assignment

• Quotation List

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• Expiring Quotations

• Expired Quotations

• Completed Quotations

• Credit Overview

• Customers With Missing Credit Data

• Credit Memos

• License: Assigned documents

• Check of Customer Master Regarding Legal Control

• Backorders

• Sales Support Monitor

• Returns

Materials Management and Procurement

• General Analyses: Purchase Orders, Contracts, and Scheduling Agreements, Quotation

• List of Notifications

• Analysis of Purchase Order Values

• Purchase Order by Material

• Purchase Order by Vendor

• Purchase Order by Document Number

• Purchasing Group Analysis

• Release Purchasing Documents

• Assign and Process Purchase Requisitions

• Stock Requirement List

• SC Stock Monitoring for Vendor

• Vendor Analysis

• Mass Activation of Planned Changes for Vendor

• Material Document List

• Display Warehouse Stocks of Material

• Accounting Documents for Material

• Material Documents with Reason for Movement

• Batch Analysis

• Availability Overview

• Plant Analysis

• Material Analysis

• Consignment and Pipeline Settlement

• Collective Conversion

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Service

• Service Notifications

• Service and Maintenance Orders

• Equipment list

• Cost Analysis

• Scheduling Overview

Production

• Production Order Information System

• Missing Parts Info System

• Capacity Planning

• Long-Term Capacity Planning

• Long-Term Planning: MRP List

• Change Plan

• Evaluation of Product Group Planning

• Selection: Plan/Actual/Variance

• Costs/Revenues/Expenditures/Receipts

• Actual/Plan/Variance Absolute/ Variance %

• Order Progress Report

• Display Production Order Confirmation

3 Functional Scope – FunctionsSAP Best Practices are the easiest way to set up a business solution that provides unlimited scalability,best-of-breed functionality, complete integration, and easy collaboration for every business. With SAPBest Practices you can reap business benefits quickly and eliminate as much risk as possible. It providesyou with the combined benefits of a powerful solution and proven business expertise that stems fromcollaborative efforts between SAP and its partners.

SAP Best Practices Building Material (U.S.) quickly turns your SAP software into a live system thathandles all your specific business requirements. Preconfigured business scenarios help you rapidlyrealize business benefits without extensive configuration. Use it to evaluate your specific businesssolution. And use it to implement this solution so that you can realize all its benefits faster, with less effort,and less expensively than ever before.

SAP Best Practices can be used by midsized enterprises that need rapid implementation or by largecompanies that need to create a corporate template for their subsidiaries. It can be easily applied toexisting customer solutions.

SAP Best Practices are built in a way that customers can easily use them. Three different componentsare included:

o Detailed, step-by-step implementation procedure including automated activities.

o Extensive reusable documentation that you can use for self-study, evaluation, and for project

team and user training.

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o Complete preconfiguration settings that give you everything you need to run integrated key

processes out of the box with reduced installation effort. The configuration is fully documentedincluding preconfigured business processes, training material, and user roles. It is built using thelatest technology, so you can adapt it quickly and easily.

3.1 Financials

3.1.1 Financial Accounting

The Financial Accounting component supports the valuation and reporting of your inventory according todifferent regulations.

The Material Ledger component enables you to carry inventory values in two additionalcurrencies/valuations. Therefore, all goods movements in the Material Ledger are performed in up tothree currencies or valuations. Currency amounts are translated into foreign currencies at historicalexchange rates at the time of posting.

Actual Costing supports the determination of actual costs (compared to standard costs) for externallyprocured materials and materials produced in-house. This can be used to valuate material inventories,such as raw materials as well as semifinished and finished products, accordingly.

The following business goals and objectives can be achieved through the implementation of theseprocesses:

• A reduction in operating costs and an increase in efficiency.

• A reduction in administration, and an improvement in the business processes

3.1.1.1 General Ledger

This function provides a comprehensive picture for external accounting and accounts. It records allbusiness transactions (primary postings as well as settlements from internal accounting) in a software

system that is fully integrated with all the other operational areas of a company. This ensures that theaccounting data is always complete and accurate.

3.1.1.2 Accounts Receivable

Records and manages customer accounting data via the Accounts Receivable (AR) component. Thefunction connects AR directly to the G/L using a special reconciliation account.

3.1.1.3 Accounts Payable

Records and manages vendor accounting data via the Accounts Payable (AP) component. The function

connects AP directly to the G/L using a special reconciliation account.

3.1.1.4 Fixed Assets Accounting

Maintains and analyzes fixed assets according to generally accepted rules in the company's country.Delivers country templates with the system.

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3.1.1.5 Inventory Accounting

Supports the valuation and reporting of inventory according to different regulations. Carries inventoryvalues in two additional currencies/valuations via the Ledger component. Performs all goods movementsin the Material Ledger in up to three currencies or valuations. Translates currency amounts into foreigncurrencies at historical exchange rates at the time of posting. Supports the determination of actual costs(compared to standard costs) for externally procured materials and materials produced in-house via

Actual Costing. Valuates material inventories, such as raw materials as well as semifinished and finishedproducts, accordingly.

3.1.1.6 Tax Accounting

Supports the calculation and reporting of taxes on sales and purchases and withholding tax.

3.1.1.7 Financial Statements

As part of the period or year-end closing, individual companies create financial statements according to

country-specific regulations.

3.1.2 Management Accounting

The Management accounting component provides valuation and recording of financial data as the basisfor all cost- and revenue-related reporting.

The following business goals and objectives can be achieved through the implementation of theseprocesses:

• An increase in revenue

o Maximization of profitability by customer

• A reduction in operating costs and an increase in efficiency

o A reduction in the cost-of-goods-sold (COGS)

o An improvement in inventory visibility

3.1.2.1 Cost Center and Internal Order Accounting

Records costs incurred during the company operations by assigning them to cost centers (assigned tomanagers or organizational units). Plans, records, and then analyzes costs against the plan. Uses internalorders to plan, collect, and settle the costs of internal jobs and tasks. Monitors internal orders throughouttheir entire lifecycle using the SAP system, from initial creation, through the planning and posting of all theactual costs, to the final settlement and archiving.

3.1.2.2 Project Accounting

Monitors precise planning of the detailed activities involved in both large scale projects, such as building afactory, and small scale projects, such as organizing a trade fair. Helps the project manager ensure thatthe project is executed efficiently, on time, and within budget - which he or she achieves by ensuring thatthe required resources and funds are available as and when needed.

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3.1.2.3 Product Cost Accounting

Helps a company know the costs incurred by its products to successfully manage the product portfolio.Calculates cost of goods manufactured (COGM) or cost of goods sold (COGS) broken down by each stepof the production process. Uses cost information gathered about the product automatically in other SAPapplications.

3.1.2.4 Profitability Accounting

Records costs and revenues by market segment to calculate the contribution margin for each marketsegment. Market segments can be products and product groups, customers and customer groups,orders, or any combination of these or strategic business units, such as sales organizations or businessareas.

3.1.2.5 Transfer Pricing

Manages transfer prices, which support organizations that divide tasks among different organizationalunits by valuating the goods and services exchanged between these units. Aids particularly largecorporations that are divided into a number of independently operating divisions or companies that

exchange large quantities of goods and services with one another. Lets transfer prices be used for controlling corporate units as the division of labor between internationally operating units increases,value-added chains become more complex and responsibilities become more decentralized. Valuates theexchange of goods and services using transfer prices, to significantly influence the actual success of corporate divisions or profit centers. Helps today's accounting systems provide decision support thatrepresents operational results from different points of views and using different currencies.

3.1.2.6 Actual Costing/Material Ledger

Process of calculating the actual cost of materials and separating the differences between standard costand actual cost into cost of sales and stock value using material ledger settlement function.

Each month after period shift, release a new standard price for current period if necessary. Execute theperiod-end closing operations for previous period at standard cost for each plant.

Create a new actual costing run with all plants included.

Execute the actual costing run and determine the single-level price and then the multi-level price. Theprice differences are rolled up to higher materials and allocated to consumption and inventory.

The function of consumption revaluation distributes price differences that belong to consumption intoactual consumed items.

The closing posting posts price differences to consumption and inventory accounts and revaluates thebeginning inventory of the new period using the valid valuation price.

Actual Costing/Material Ledger Building Block is delivered with two Documents only withoutBest Practices Technical Data.

Before you start installing Actual Costing/Material Ledger Configuration Guide, you mustinstall all the Baseline building blocks. You may either install the Building Material IndustryBuilding Blocks before or after you work through this Configuration Guide.

No Goods Movement should be entered in the period you activate the Material Ledger, that isthe Material Ledger has to be activated at the start of a period.

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3.1.2.7 Activity Based Costing (ABC)

The operating cost allocation is based on ABC template allocation techniques. A template is similar inconcept to a bill of material. It is a kind of bill of activity types. In comparison to a bill of material, thestandard values of the components for cost absorption can be calculated by using formulas in thetemplate. These formulas reflect the appropriate cost drivers. Evaluating cost driver quantities is animportant factor for successful ABC implementations. This evaluation requires lots of detailed informationfrom the operational systems.

3.2 Analytics

SAP™ ERP is a complete, integrated solution for analytics and business intelligence, including strategicenterprise management and financial, operational, and workforce analytics. It enables companies toclearly understand profit drivers of their business, tightly link strategic plans to operational performance,and support a single analytical platform for their enterprise.

Key functions include the following:

Financial analytics enable you to define financial targets, develop a realistic business plan, andmonitor costs and revenue during execution.

Operational analytics enable you to compile detailed operations reports and support informedoperational decision making.

Workforce analytics support human capital management policy development and decisionmaking.

3.2.1 Operations Analytics

SAP ERP provides operational analytics that facilitate the compilation of detailed operations reports and

support informed operational decision making - giving management and employees the information theyneed to increase insight into business processes. In addition sales planning can allow organizations togenerate a complete picture of the entire supply chain, including the impact of sales on operations.

3.2.1.1 Sales Planning

Sales Planning is a planning application for translating company targets into concrete, concertedmarketing, sales, and service strategies. This application is based on a reconciled top-down and bottom-up sales planning process helping to increase visibility resulting in improved decision-making andprofitability.

3.2.1.2 Procurement Analytics

This function

• Monitors purchasing operations (for example, how many goods have been received for purchaseorders for the last month) using various standard analyses and reports.

• Facilitates the detailed analysis of the purchasing activities and procurement processes takingplace within your enterprise (for example, ranking your suppliers according to purchasing values).

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3.2.1.3 Inventory and Warehouse Management Analytics

Inventory controlling provides different standard analyses and reports display actual stock situationaccording to quantity-based and value-based criteria. Other reports are available for monitoringcharacteristics on a periodic basis.

3.2.1.4 Manufacturing Analytics

Provides various standard analyses and reports to visualize production-related information.

3.2.1.5 Sales Analytics

Enables salespeople to quickly and easily understand the actual status and overall effectiveness of thesales organization. Helps obtain the data necessary to proactively address trends and measure successand revenue shortfalls.

3.2.1.6 Customer Service AnalyticsProvides organizations with a comprehensive view of key figures of all service-related scenarios.

3.2.2 End-User Service Delivery: SAP Roles

SAP ERP End-User Service Delivery enables the delivery of ERP services together with business contentto the entire organization and beyond at low costs. It gives the users multiple options to access ERPservices depending on their situation, their preferences, and the business context. By standardizing andautomating business processes, companies can implement efficient shared service strategies, establishservice excellence and foster innovation and growth.

SAP Best Practices provides several predefined roles to be used in the SAP NetWeaver Business Client

(NMBC) to ensure an efficient system access for users. These can be used out of the box or otherwise beeasily adapted to company-specific needs.

3.3 Human Capital ManagementTo meet the demands of today's knowledge-based economy, companies must maximize the potential andproductivity of their employees. Maximizing the investment in the organization’s human capital is crucialto business success. SAP Best Practices delivers pre-configuration for selected areas of the workforceprocess management: Employee Administration and Time & Attendance Management.

3.3.1 Employee Administration

SAP offers advanced features for Employee Administration, such as Maintenance or Employee StatusChange.

3.3.2 Time and Attendance

SAP optimizes processes for planning, managing, and evaluating the working times and activities of internal employees via the Time Management capabilities.

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3.4 Procurement and Logistics Execution

With SAP ERP Operations, you can manage end-to-end logistics for complete business cycles. Thesolution enables a wide range of activities, from self-service requisitioning to flexible payment processing,including management of material flows.

3.4.1 ProcurementProcurement – SAP ERP supports not only traditional processes such as requisitioning, purchase order management, and invoice verification, but also catalog-based self-service requisitioning for MRO materialand services. Catalog integration has been expanded to maintenance operations and projectmanagement.

3.4.1.1 Requisitioning

A purchase request is a request or instruction to purchasing to procure a certain quantity of a material or a service so that it is available at a certain point in time.

Manual creation of Shopping Carts

Empowers employees to create and manage their own requisitions for products or services. It relieves

your purchasing department of this administrative burden while making the procurement process bothfaster and more responsive. Providing catalogs of the most frequently ordered materials ensures thatemployees can easily manage their own purchase orders in accordance with your organization's rules.

When employees have filled their shopping cart, they can either place an order straight away or hold it for subsequent completion. Users can check the status of their shopping at any time in a graphical view.

Approval

When a shopping cart is released for ordering, the system checks whether approval is necessary. If oneor more managers need to approve the shopping cart for example, because it exceeds a certain value thesystem automatically submits it to the respective inbox(es).

3.4.1.2 Purchase Request Processing

The purchasing department works with the purchasing request, decides on whether the requirement of products can be covered from stock or needs to be procured externally considering optimization issues.

Source of Supply Assignment

Conversion of Demands to Purchase Orders

The requirements that have been created and released for procurement (for example, demands for spareparts coming from plant maintenance, demands for raw materials determined in a planning run, or requests for office supplies entered by an employee) are transferred to purchasing as purchase

requisitions. They are presented to the buyer in worklists that support him or her in converting therequisitions into purchase orders. Release procedures are available to control critical procurementprocesses.

3.4.1.3 Purchase Order Processing

When a purchase order has been created a number of checks and validations make sure that the rightcontract, discount, price, and so on, is referenced correctly. Purchase Order Processing also deals withthe communication of the purchase order to the supplier.

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When a purchase order has been created a number of checks and validations make sure that the rightcontract, discount, price, and so on, is referenced correctly.

3.4.1.4 Receiving

Receiving deals with the actual shipping of goods or performing of services by a supplier, the recording of the goods receipt or service entry in the system and with the follow-on activities that correspond to these,such as returns handling.

Goods Receipt

The confirmation of the quantity received is created centrally and forms the basis of the information flowto the planning and purchasing departments. These departments can consider the new stock or requirement situation and see the receipt in the order history. If the receipt is relevant for warehousemanagement, the receipt confirmation is linked to physical inbound processing. The receipt confirmationautomatically triggers the material valuation and creation of documents for accounting. Documents for controlling are also created if necessary.

Returns handling

Should the delivered goods turn out to be faulty or damaged, you can return either the entire or partialquantity to the supplier. In the case of an existing confirmation, you can return either parts of single itemsor all items to the vendor.

3.4.2 Inventory and Warehouse Management

Processes in the area of Inventory Management address the recording and tracking of materials on aquantity and value basis. This includes planning, entry, and documentation of stock movements such asgoods receipts, goods issues, physical stock transfers, and transfer postings as well as the performance

of physical inventory (stocktaking). Warehouse Management Processes cover warehouse-internalmovements and storage of materials.

3.4.2.1 Warehousing and Storage

Processes warehouse-internal movements and storage of materials.

Inventory Management

Manages the stocks of a company in quantities and values. It is integrated with supply chain accountingand is responsible for:

•Goods receipts and goods issues

• Managing different stock categories (available, blocked stock, in quality assurance, and so on)

• Special stocks (including consignment stock, project stock, and so on).

Enables a summarized visibility of stocks in the supply chain.

Production Supply

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The material supply of storage bins in production can be handled with SAP Warehouse Management.Picking for work orders is supported by advanced strategies and combined with handling unitmanagement. It is possible to pack for a specific work order.

Storage and Stock Management

Serial Numbers Batch Management: This includes the handling of batches and batch determination for delivery

picking, for production supply, or in internal warehouse processes.

3.4.2.2 Physical Inventory

Manages physical inventory for your organization's own stocks or for special stocks in your warehouse.

Planning Phase of Physical Inventory

The physical inventory process can plan which material has to be counted at which storage location on

which date. Stocks can be blocked for goods movements before the beginning of counting, measuring,and weighing.

Counting Phase of Physical Inventory

After the counting results have been entered, you can monitor the differences and trigger a recount if necessary. If you post quantity differences for your locations, an update of the material valuation andfinancial accounting is triggered automatically.

Monitoring of the Physical Inventory Activities

Detailed functions for monitoring the completeness of the physical inventory, the status of open and

completed physical inventory activities, and the results of historical physical inventory activities areavailable. You can monitor the activities on material or location level.

3.4.3 Inbound and Outbound Logistics

The Inbound process comprises all the steps of an external procurement process that occur when thegoods are received; the outbound part covers the necessary activities for preparation and shipping of goods to their destination.

3.4.3.1 Inbound Processing

Goods Receipt

Is a follow-on activity to a purchase order. It forms the basis for updating the financials andinventory records and can trigger warehouse management and quality management processes.

With the warehouse management system, you can control the goods receipt and goods issue processesat a physical level. Goods receipts are possible from purchase order, inbound deliveries (advancedshipping notice), stock transport orders, or from production orders. Goods receipt begins the putawayprocess, which is supported by different advanced strategies.

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Determination of External Demands

Determines the data describing a demand for a material that is procured externally. This data includes thequantity that is required, the release-to-supplier date of the demand, the goods receipt date for thedelivery, and the location to which the material has to be shipped.

Shipping Notification

Comes from the vendor and contains the exact materials, quantities, and the delivery date with referenceto a purchase order. This document becomes the Inbound Delivery in the receipt process.

3.4.3.2 Outbound Processing

Goods Issue

The outbound delivery forms the basis for goods issue posting. The data required for goods issue postingis copied from the outbound delivery into the goods issue document. When you post goods issue for anoutbound delivery, the following functions are carried out on the basis of the goods issue document:

Warehouse stock is reduced by the delivery quantity. Value changes are posted to the balance sheet account in inventory accounting.

Requirements are reduced by the delivery quantity.

The serial number status is updated.

The goods issue posting is automatically recorded in the document flow.

Stock determination is executed for the vendor's consignment stock.

A worklist for the proof of delivery is generated.

After goods issue is posted for an outbound delivery, the scope for changing the delivery documentbecomes limited. This prevents discrepancies between the goods issue document and the outbounddelivery.

Delivery Processing & Distribution

Controls the actual fulfillment of sales orders and purchase orders as well as stock transport orders. Theexecution of logistics tasks is handled here. With delivery processing, the goods are shipped and relevantdocuments are printed out. The sales requirements can be distributed to alternative locations. Thedelivery might be shipped to the customer directly from the fulfilling locations (more than one delivery), or consolidation may occur at one location before one complete shipment is transported to the endcustomer.

3.4.3.3 Shipment & Transportation

Transportation is an essential element in the logistics chain. Effective transportation planning andprocessing ensure that shipments are dispatched without delay and arrive on schedule. Transportationcosts play an essential role in the calculation of the price of a product. It is important to keep thesetransportation costs to a minimum so that the price of a product remains competitive. Efficienttransportation planning and processing helps to keep these costs down.

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3.5 Product Manufacturing

With SAP ERP Operations, you can manage engineering and design, create relevant product data, andplan and execute your manufacturing operations. The solution enables connectivity to shop-floor systems,adherence to quality requirements, and compliance with relevant regulations and standards.

3.5.1 Production Planning

SAP ERP uses MRP techniques to create un-constraint production plans in form of production orders or planned orders.

3.5.2 Manufacturing Execution

Supports the process of capturing actual production information from the shop floor to support productioncontrol and costing processes.

Make-to-Order

Supports customer-order-specific planning and production and is industry-specific. Supports assemblyprocesses for (non-) configurable products in a repetitive manufacturing environment or the production of (non-) configured products with production orders. For both processes, the visibility of the customer order is key. This is achieved by using dynamic alerts and order pegging structures during planning andexecution.

Repetitive Manufacturing

Is a rate-based, lean production control system. Based on production and assembly lines, the task timesare used for scheduling. An optimizer and heuristics are available for model mix planning and linebalancing. Continuous input and output are considered during scheduling. The production runs withoutany orders for run schedule quantities and production versions. Backflush of labor and material atreporting points support the lean execution process.

Process Manufacturing

Supports the plant as a multiprocess facility. Resource and recipe management forms the basis for planning and sequencing batches or production lots. The solver schedules the process order sequence toavoid costs such as cleanout or changeover. This can be achieved with production campaigns, blockplanning, or detailed scheduling with a focus on critical resources. Process orders are used for scheduling, execution, and costing. Process management coordinates the data exchange between theSAP execution system and connected process control systems. These processes can be documentedand evaluated. The seamless integration with quality management ensures process control and stability.

Batch Management

Batch management fulfills the requirements for managing and tracking batches or production lots acrossthe whole production process. In various industry sectors, particularly the process industry, you have towork with homogeneous partial quantities of a material or product throughout the entire quantity and valuechain. In the SAP system, a batch is the quantity or partial quantity of a particular material or product thatis manufactured according to the same recipe. There are various reasons for this:

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Legal requirements, for example, guidelines on good manufacturing practice (GMP), or regulations on hazardous materials.

Defect tracing, recall activities, and recourse requirement.

The requirement for differentiated quantity-based and value-based inventory management, for example, through heterogeneous yield/result quantities or unequal constituents in production.

Usability differences and the monitoring thereof in materials planning, sales and distribution, andproduction.

Production or technical requirements, for example, material quantity calculations on the basis of different batch specifications.

3.5.2.1 Document Management

SAP Easy Document Management

Enables you to use document management as a virtual drive in the Microsoft® Explorer (for example,

using drag & drop to check documents in and out). You can also check documents in and out directlyfrom all office applications, search for documents and add them to a worklist, maintain classification data,and create objects links.

3.6 Sales and ServiceThe Sales & Service area addresses the customer focusing processes like selling products and servicesand providing aftermarket services. It enables sales organizations to manage the sales cycle, sales, andservice orders and the subsequent activities.

3.6.1 Sales Order ManagementProvides capabilities that companies can use to create inquiries and quotations, acquire and enter orders,configure products, determine pricing, check product availability, track and manage, and bill orders.

3.6.1.1 Account Processing

Enables companies to provide a detailed view on customers and prospects. Captures, monitors, andtracks information such as master data, and an overview of critical relationships.

3.6.1.2 Quotation Processing

Allows you to create and process orders, including pricing and scheduling order for fulfillment. SAP ERPsupports many process variants, for example:

• Ship-to-order

• Make-to-order

• Returnables (pallets)

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• Batch processing

• Serial number processing

• Third-party delivery processing

• Complaint handling

• Returns

3.6.1.3 Sales Order Processing

The order management capabilities allow sales reps to easily configure, price, and create sales orders for customers. In addition, order management provides the ability to perform product determination andsubstitution, explode structured products in a business transaction to carry out pricing, availability checks,transferring those requirements to production or purchasing for either the header product or for thecomponents of the product, and to perform incompleteness checks.

3.6.1.4 Contract ProcessingQuantity Contracts

Monitors agreements that a customer orders a specific quantity of releasable products during a specifiedperiod. The following functions are covered:

• Creating a basic agreement (quantity contract)

• Creating a purchase requisition

• Assigning requisition and creating purchase order

• Approval of purchase orders

• Contract monitoring

• Goods receipt

• Invoice receipt by line item

• Outgoing payment

3.6.1.5 Billing

Is the final processing stage of a business transaction in sales and distribution. Information on billing isavailable at each stage of order processing and delivery processing.

Billing documents such as invoices, credit, or debit memos, can be created based on order informationonly or based on order and delivery information, where, for example, the quantity to be invoiced is derived

from the delivery note.

During billing processing, you create, change, and delete billing documents such as invoices, creditmemos, and debit memos. Flexible calculation of rebates is integrated.

Integration with financial accounting consists of forwarding billing data in invoices, credit, and debitmemos to financial accounting. The system posts offsetting entries to the appropriate accounts (with thehelp of account assignment ) and makes sure that FI can recognize all billing documents belonging to one

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business transaction (for example, a credit memo to an invoice). Integration with controlling consists of assigning costs and revenues to the appropriate subledgers.

3.6.1.6 Returnable Packaging Management

Returnable packaging consists of materials that are stored at the customer location but which remain theproperty of the seller. The customer is only required to pay for the returnable packaging if it is not returnedby a specified time.

3.6.1.7 Consignment

Consignment goods are goods that are stored at the customer location but which are owned by your company. Customers store the consignment goods at their own warehouses. The customer is not obligedto pay for these goods until they remove them from consignment stock. Otherwise, the customer canreturn consignment goods that are not required.

3.6.1.8 Service Contract ManagementCreate and manage service contracts with related billing plans, price agreements and conditions. Servicecontracts can be referenced in subsequent service processes. Service plans enable contractualpreventive maintenance strategies based on time and/or performance.

3.6.1.9 Customer Service and Support

Manage incoming service and support requests and identify customers with their respective installedbase. Based on this information relevant warranties and service contracts are identified. Tasks to resolvethe service issues can be planned with the necessary labor and service parts resources.

Returns Processing determines, tracks, and credits returns of products within a service, including thefeatures warranty check, return reason recognitions, and quantity checks.

Billing documents such as invoices, credit, or debit memos, can be created based on services renderedand/or resources consumed.

3.6.1.10 Warranty & Claims Management

Warranty Claim Processing fulfils the needs of both manufacturers, importers, or vendors of complexproducts and their suppliers. Warranty Claim Processing offers a solution that can deal with a largenumber of warranty claims and, as far as possible, automatically. Only those claims that produce negativeresults in the automatic checks are included in manual processing.

Product and Warranty Registration: You can create warranties and assign technical objects to thosewarranties.

3.6.2 Professional-Service Delivery

Provides a comprehensive set of capabilities designed for selling, planning, delivering, and billing project-based services. Projects have to be created, structured, and staffed with the appropriate resources,complex services are delivered and the associated projects have to be executed within a given timeframe,with a satisfying quality and according to contractual agreements. Changes in project timelines, scope,

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and staffing have to be handled. An integrated project controlling is the bracket for many other scenarios.Engagement Management processes accompany service delivery: contracts have to be set up accordingto customer agreements, times and expenses are recorded and are priced and billed to the customer invarious ways.

3.6.2.1 Quotation ProcessingWith this business process, you can assure your business partners that you will deliver a certain productconfiguration and quantity of products at a specific time and price. During sales order processing, thesales employee can make use of a variety of sales functions and special quotation functions.

3.6.2.2 Sales Order Processing

This business process makes it possible for you to deliver a specific product configuration and quantity, or to provide a service at a specific time. During sales order processing, a sales organization accepts thesales order and is responsible for fulfilling the sales order

3.6.2.3 Project ExecutionExecuting a project based on the project plan including creation of documents, simulation of alternativeproject structures and analytics.

3.6.2.4 Time and Attendance

Optimizes processes for planning, managing, and evaluating the working times and activities of internaland external employees via the Time Management capabilities of SAP ERP HCM. Provides intuitive,user-oriented interfaces that support centralized or decentralized time management.

3.6.2.5 Managing Employee Time and AttendanceOptimizes processes for planning, managing, and evaluating the working times and activities of internaland external employees via Time Management in SAP ERP.

3.6.2.6 Project Accounting

Monitors precise planning of the detailed activities involved in both large scale projects, such as building afactory, and small scale projects, such as organizing a trade fair. Helps the project manager ensure thatthe project is executed efficiently, on time, and within budget - which he or she achieves by ensuring thatthe required resources and funds are available as and when needed.

3.6.2.7 Resource-Related Billing

Times and all kind of expenses (for example, travel expenses, 3rd party expenses) can be billed to acustomer using several rules. It is possible to filter times and expenses and/or to reject or postpone billingitems.

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3.6.2.8 Billing

Is the final processing stage of a business transaction in sales and distribution. Information on billing isavailable at each stage of order processing and delivery processing.

Billing documents such as invoices, credit, or debit memos, can be created based on order informationonly or based on order and delivery information, where, for example, the quantity to be invoiced is derived

from the delivery note.

During billing processing, you create, change, and delete billing documents such as invoices, creditmemos, and debit memos.

Integration with financial accounting consists of forwarding billing data in invoices, credit, and debitmemos to financial accounting. The system posts offsetting entries to the appropriate accounts (with thehelp of account assignment) and makes sure that FI can recognize all billing documents belonging to onebusiness transaction (for example, a credit memo to an invoice). Integration with controlling consists of assigning costs and revenues to the appropriate subledgers.

3.7 Corporate Services

SAP ERP Corporate Services supports and streamlines the administrative processes that are standard tomost businesses -- those business-critical support processes that you must execute with maximumefficiency and control.

You can tailor SAP ERP Corporate Services to meet your requirements for transparency and control, aswell as reduced financial and environmental risk, in the following areas:

Travel management -- SAP ERP Corporate Services helps you reduce costs, streamline traveladministration processes, monitor compliance with travel policies, and manage changes incompensation and pricing models from suppliers, global distribution systems, and travelagencies.

Quality management -- SAP ERP Corporate Services enables a unified approach to total qualitymanagement, delivering efficiencies that result from fewer product returns, and improved assetutilization.

3.7.1 Project Accounting

Monitors precise planning of the detailed activities involved in projects. Helps the project manager ensurethat the project is executed efficiently, on time, and within budget.

Integrated Planning and Tracking

Detailed integration brings SAP ERP Financials capabilities to the project world, including budgeting, costplanning and actual costs confirmations and commitments from various sources.

Settle Financial Data

Transfers costs and revenues to ERP Financial Accounting (FI), Asset Accounting (AA), Profitability andSales Analysis (CO-PA), and Controlling (CO)

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3.7.2 Travel Management

Travel management provides fully integrated management of all incurred travel expenses – from theplanning/approval stage right through to the point at which the travel expenses are posted to Financial

Accounting and allocated on a cause basis in Cost Accounting.

3.7.3 Quality Management

Quality management is the comprehensive solution that supports the company throughout the productlifecycle and along the supply chain. It offers a wide range of functions and collaborative services, whichare fully integrated into SAP ERP, for assuring and managing the quality of products. It also focuses onprevention and continuous process improvement through collaboration and sustained quality control.

3.7.3.1 Quality Engineering

Inspection Planning

Identifies the inspection characteristics (tests) and inspection methods (procedures) and assigns it to

various inspection operations of an inspections plan or material specification. SAP ERP offers advancedtools for inspection planning and the management of standard operation procedures. This includes theplanning of multiple specifications for one inspection characteristic dependent on defined criteria, such ascountry, customer, or legal tolerances.

Supplier Management

Ensures that the products of the supplier will be fit for use with minimal corrective action and inspection.SAP ERP supports:

• Definition of requirements for product and program quality

• Evaluation, selection, certification, and rating of suppliers

• Joint quality planning

• Communication with supplier during contract execution

• Proof of conformance to requirements

• Quality improvement program

3.7.3.2 Quality Assurance / Control

Quality Inspection

Measures, examines, tests, and gages one or more characteristics of a product or service and comparesthe results with specified requirements to determine whether conformity is achieved for eachcharacteristic. Includes inspection lots of various origins. Provides results recording and defects recording(also Web-enabled). Includes usage decision and release of the stock from being in quality inspection.Follow-up actions include batch classification and quality scoring.

Batch Management and Traceability

Required if products may vary in quality or if they originate from different production runs. SAP ERP canprovide identification, classification, and inventory management for different batches of a material.

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Bottom-up as well as top-down analyses are offered to show into which final products a batch of rawmaterial has flown or which batches of raw materials have flown into a final product. It might even benecessary to show the lifecycle of individual items. In this case, traceability is achieved via serialnumbers. Moreover, process data can be stored in an order record and in an optical archive (electronicbatch record).

3.7.3.3 Plant MaintenancePlant Maintenance solution supports all maintenance activities that are performed in a company. It offersthe following maintenance functionalities:

• Operational Maintenance

• Preventive Maintenance

• Overhaul Maintenance

• Refurbishment Management

• WorkClearance management

3.7.3.4 Environment, Health, and Safety (EHS)

EHS component supports the companies in the area of industrial safety, health, environmentalprotection, and compliances. SAP EH&S offers support for tasks in industrial hygiene and safety andenvironmental protection, hazardous substance, and dangerous goods management and wastemanagement.