Download - 1Beta Report

Beta Reportof

SAP Blue Print Progress&

ImplementationSAP Business All-in-OneManufacturing Solution

For EMI Transmissions Ltd. (EMI)11th Febuary 2011

Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

ContentsAs-Is Process Document: MATERIALS MANAGEMENT -------------3

As-Is Process Document: SALES & DISTRIBUTION-------------------16

As-Is Process Document: FINANCIAL ACCOUNTING-----------------36

As-Is Process Document: PRODUCTION PLANNING-----------------73

To-Be Process Document: SALES & DISTRIBUTION-----------------88

To-Be Process Document: FINANCIAL ACCOUNTING -------------139

To-Be Process Document: MATERIALS MANAGEMENT-------------211

To-Be Process Document: PRODUCTION PLANNING---------------263


As-Is Process DocumentMATERIALS MANAGEMENT

PREFACE

Purpose of this DocumentThe purpose of this document is to record the business process requirements of EMI Transmission Ltd. and outline the requirement


mapping in SAP.

Intended AudienceThe intended audience for the Materials Management AS-IS Document are the employees of IIL and other people authorized by IIL who are in any way related to Business Processes involved in Materials Management.

Abbreviations and AcronymsThe following abbreviations and acronyms have been used in this document:

Abbreviation/Acronym

Description

SO Sales OrderPR Purchase RequisitionPO Purchase OrderGRN Goods ReceiptGoods Issue Issue of goods to ProductionProduction Manufacturing of MaterialsPayment Vendor Payment


Contents

1. ORGANIZATION STRUCTURE2. MATERIAL MASTER DATA3. VENDOR MASTER DATA4. DOMESTIC PROCUREMENT PROCESS5. IMPORT PROCUREMENT PROCESS6. INVENTORY MANAGEMENT7. SUB-CONTRACTING PROCESS8. EXCISE MM

Description –

The expectations are that the Organisation Structure for Materials Management Module ensures that the system is easy to use and operate and accurately generate relevant reports. Purchasing Organization:

1 The Purchasing Organization is responsible for procuring materials or services and for negotiating general conditions with vendors.


It shall support all companies for following activities .2 Purchase of raw/packing & engg. Materials for own manufacturing

and subcontracting .3 Purchase is at corporate office only.

Plant:The Manufacturing Facility or a Location that Stocks, Manages, and Valuates Inventory. A plant is a place where either material is produced or goods and services are provided.

The plant is an operating area or branch within a company. The plant is embedded in the organizational structure as follows:

1 The plant is assigned to a single company code. A company code EMI has only one plant.

2 Several storage locations in which material stocks are managed can belong to a plant.

3 A plant has its own material master data. The plant plays an important role in the following areas:

Material valuation: When the valuation level is plant, the material prices are defined for each plant. Each plant can have its own account determination.

Inventory Management: The material stocks are managed within a plant (goods receipt and issue).

MRP: Material requirements are planned for each Project. Each project has its own MRP data.

Production - Manufacturing of FG Materials.

Existing Structure

Company Code:# Company Location Company

Code1 EMI Transmission Ltd. Thane

Manufacturing Plants:# Plants Location Plant Code


1EMI Transmission Ltd

Nasik

Storage Locations:

1. Raw material2. Forging 3. Stainless Steel4. Aluminium5. Nuts & Bolts

Purchasing Organizations:Sr. No. Purchasing Purchasing Organization 1 Purchasing from HO only Central Purchase

Purchasing Groups:Purchasing Group Description Telephone No. Fax No.Raw Matl Ms.Rajesh Doshi Raw Matl Mr.Dube Consumables

Mr.P P Shah

Consumables

Mr.Mayur


2.Material Master Data

DescriptionMaster records that have information for various transactions and activities in relation to materials are termed as the Material master. The Material Master should contain data relevant for various functions. The information in Material Master Record should include Purchasing, Sales, Accounting, MRP, QM & Storage data for the material. It should also consider the various organizational levels for which the data is maintained.

Existing Process

Currently Materials are mainly grouped into

1. Raw Materials

2. Consumable Materials

3. Capital Materials

4. Packing Materials

5. Subcontractring Materials.

6. Finished Materials.

There are no coding system for EMI for any Material Type.


3. Vendor Master DataDescriptionVendors are the business partners who will be supporting the supply of material or services. All the vendors who supply the material / services will be maintained in the system. Business transactions are posted to various accounts and managed using the specifications in vendor masters. The master record would have to control how business transactions are recorded and processed by the system and monitor or schedule payments to vendors.

Existing Process -

Vendors are defined centrally at group level and they are classified as

1. Raw Material Vendors

2. Packing Materials Vendors

3. Import Material Vendors

4. Subcontracting Material Vendors.

5. Consumable Material Vendors.


4. Raw Material Procurement ProcessDescriptionVarious activities for purchasing processes are as follows:1. Material Requirement prepared by Plant Peoples (Indent) and send to HO (Thane).2. HO people prepare Purchse Order as per Indent,Finalise Vendor & then send PO to Vendor.3. Vendor sends Material as per PO to Plant (Nasik).4. Store People at Plant receives Goods with GRN Slip.5. Also store peoples issue material as per requirement for production.

Approval procedure for Purchase Order.Prepared & checked by User and then authorised by Mr Shah.

Existing ProcessProcurement of Raw Material and Packing Material:Materials Requirement Generation: Depends on Sales Order plan material planning will be generated by Purchase Department. Based on this, monthly and then weekly plan will be generated. The plan will be sent to Factory and other department. Based on the Stock availability and BOM, factory and purchase manager will prepare the requirement.For sales orders other than planning, separate Indent will be prepared by the factory depends on the stock availability.Along with these two, some manual purchase requisitions also generating.

Purchase Order: Prepare Purchase Order with Material, destination, Qty, Rate and packing specifications, billing address, our tax details, purity, and info terms as per required specifications.Po will be approved by Purchase Manager.Approved PO will be sent by FAX, Mail, and courier to Vendor.

Material Inward: Security will enter data into the Gate Entry Register, once documents are found OK. In some cases, sample will be checked before Gate Entry also. Sample Material will be sent to QC dept for approval. Stores will verify documents and physical quantity.GP entry will be created.Transport copy will sent to excise department, and if the material is excisable, excise entries will be created. If there is any shortages or rejection, that will be intimated to purchase Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

department by issuing a shortage slip from store. Excise Credit will be taken for complete material. Credit memo will be prepared for the amount excluding Cenvat. Shortage material will be issued to production.In Certain cases, for non excisable material, material is received against Challan also.Check the Excise Invoice and Enter the Excise Details, take the Modvat to RG 23 A II or C II. Factory will send the GP along with transporter copy, weight slip and Bill to HO.

Bill passing and Payment at HO: Maintain in Manual GP Register, Security for all documents and stamping and mentioning GP No., Invoice amount and GP date on bill for passing purpose.Approval of bills by purchase manager. After approval will be sent back to his assistant. Accounts will feed the bills in the manual ledger and will send it to Head for final approval. In case of technical and imports, purchase officer will approve and send it to MD/ Chairman.Payment to vendor

Packing procurement:1. Requirement from Factory . 2. Identifying & short listing potential vendors.3. Placing orders.4. Follow up & confirmation of deliveries. 5. Receiving GP's from Factory.6. Excise entry in RG23C part-II7. Approval of bills by Purchase Manager.8. Posting of bills in purchase Ledger manually.9. Payment to Vendor.

Cash Purchases are there against bill without material code like hardware, consumables, spares, and Office supplies.


5. Imported Procurement Process

DescriptionVarious requirements for purchasing processes are as follows:Seamlessly integrated procurement activities right through the various stages (PR, PO, etc)Improve visibility of the purchase activities across organizationIncrease level of automation Approval procedure within the system for Purchase OrderTracking of open & closed purchasing documents System to allow creation of various purchasing document with reference to preceding documents.

Existing Process1. First of all settled the rates with party 2. PO for Indent/Proforma Invoice for opening the L/C.3. Prepare the documents for opening the L/C, and send to bank4. Taking copy of L/C from bank and sent to supplier5. PO for shipment of material 6. PO for documents with Bank7. Send the acceptance of documents to bank and take the original

documents 8. Send the documents to CHA for clearance of material & CHA will

give the duty amount9. Issue the letter to bank for issuance of duty draft and sent to CHA10. After clearance of material contact

to transporter for lifting the material and inform to factory11. Contact CHA for sending the original

documents. After receiving the documents submit Excise copy to factory, R.B.I. copy to bank.

12. Gate entry at Factory. Quality Inspection and preparation of GP.

13. Excise Entries in Registers manually.

14. Enter the GP in GP Register and give the invoice to Finance for passing the bill.


15. Inventory ManagementDescription: Inventory management covers goods receipt, goods issue, material return, transfer posting and physical inventory.

Goods receipt / reservation / issue1 Goods to be received with reference to Purchase Order.2 Need to capture delivery details (LR No., delivery note, quantity,

etc).3 Over/Under delivery tolerance shall be complied with.4 Goods issue (to cost centre).

Transfer posting (storage to storage, from one stock type to another)1 Transfer of material from one stock type to another like quality

inspection stock to unrestricted stock etc.2 Transfer of material from one storage to another storage location.

Physical Inventory1 Carry out physical inventory of warehouse stocks for bal sheet

purposes.2 Provision to adjust stocks based on physical counting.

Existing Process: Goods Receipt against Purchase Order: Once Material is received at factory Security will enter into Gate Entry Register, documents will be verified and quality inspection will be carried out.Unloading at Stores and Physical stock will be verified.GP will be prepared with details consists of Gate Entry No., Truck No., Vendor Bill No., and its date. Here Total Qty only received.Transport Copy will be sent to Excise Department.Stock register entry after authorized from Store.Batch No's are not maintained

Goods Issue for process orderProduction department will send the issue slip after confirming the availability of stock. Store will issue to production. Entry in stock register.


Physical InventoryDuring Financial year end, the stock will be verified and the balance will be issued to production with the permission from works manager.


7.Sub-contracting process

DescriptionEMI gets some of its production process done through subcontracting. In subcontracting process they will provide raw material to subcontractor to manufacture semifinished/intermediate product or to do some value addition service. This process should take care of consumption of raw material and conversion charges.

Existing Process1. Requirements from Planning Department to Purchase Dept.

2. Purchase dept will raise the PO for required Semi finished Materials.

3. Sending the raw material to subcontractor.

4. Subcontractor will receive the Material and will process the materials .

5. After processing, Subcontractor will send the materials along with the Job work charges bill and GP to Plant.

6. At Plant Store receives material and Maintain GP Register.

7. After entry in system, payment to vendor.

8. Raw material lying with subcontractor can be tracked as special stock and is also included in inventory.


8. Excise MMDescriptionThe requirements relating to excise duties are as follows:Cenvat credit for purchases (Domestic & Imports) of Input material, Capital goods, etc.RG23A, RG23C registers to be maintained.

Existing ProcessAn excise invoice accompanies each delivery that a vendor makes. This document is required as proof of excise duty that the vendor has paid, so that it can then offset against the excise duty that is levied on outputs. Excise credit of raw materials (CENVAT) is taken in register RG23A. Excise credit of Capital Goods is taken in RG23C. Credit of RG23A & RG23C is used for paying excise duty on finished goods despatches. In case of insufficient balance in these registers then the duty is deposited in PLA to pay the difference. The process is same for all the businesses. In case of capital goods & consumables the CENVAT credit is taken 50% in the year of receipt & balance in the subsequent year.

Purchase of Raw Materials / Packing MaterialsPurchase orders are sent to the vendors. With the delivery of goods, the vendor also sends an excise invoice. This excise invoice covers the various excise duties like BED,Ecess on BED & SHEcess applicable to the materials. The company maintains the input & output Material Master Data separately to claim the CENVAT credit against the raw and packing material for which it has paid excise duties. At the time of receipt of raw materials RG23A register gets updated. This credit is utilized against the excise duty payable on dispatch of finished goods. The CENVAT credit for all materials is availed only if the material is consumed for manufacturing dutiable finished goods.

Currently all the Excise entries are done manually only from Excise Dept.


As-Is Process DocumentSales and Distribution

.

Abbreviations and Acronyms


The following abbreviations and acronyms have been used in this document:


Description

SO Sales OrderPrd Ord Production OrderPO Purchase OrderIP Inspection PlanMM Material ManagementQM Quality ManagementSD Sales and DistributionIL Inspection LotMIC Master Inspection CharacteristicPP Production and planningGR Goods ReceiptTCode Transaction Code


Contents

Table of Contents

1. ORGANIZATIONAL STRUCTURE2. CUSTOMER MASTER DATA3. MATERIAL MASTER DATA4. PRE SALES PROCESS5. SALES AND DELIVERY PROCESS6. INTER PLANT/BRANCH STOCK TRANSFERS7. PRICING8. EXCISE IN MM AND SD9. CREDIT/DEBIT NOTE PROCESS


1: Organizational StructureDescriptionThe expectations are that the Organisation Structure for Sales & Distribution Module ensures that the system is easy to use and operate, is scalable to future changes Organisation and can timely and accurately generate relevant reports.

Organization structure of Sales & Distribution (SD) module should provide flexibility in operations and detailed scope of analysis. The SD organization structure should synchronize with the organization structure of other modules like financial accounting (FI), Controlling (CO) Materials Management (MM) and Production Planning (PP). It should be scalable to take care of future company expansion and developments. The Enterprise structure represents the legal and organizational structure of the company. It can be structured from the point of view of accounting, materials management and sales & distribution. These structures are combined to integrate different departments of an organization. The organizational structures form a framework in which all business transactions can be processed.

Sales OrganizationAll business transactions in Sales and Distribution have to be processed financially within a sales organization. A sales organization can obtain its material from more than one plant. The business transactions in sales and distribution module are always processed within one particular sales organization.

Distribution ChannelThe distribution channel represents the channel through which saleable materials or services reach customers. Typical distribution channels include wholesale, retail and direct sales.

Division


Creating a Division is a way of grouping Materials, Products or Services. If a company has large and varied product range it makes sense to assign each of the products to a particular division. The system uses divisions to determine the sales areas and the business areas for a Material, Product or services.

Sales Area

SD is organized according to sales organization, distribution channel and division. A combination of these three organizational units forms the sales area.

A sales organization can be subdivided into several distribution chains, which determine the responsibility for a distribution channel.

Several divisions can be assigned to a sales organization, which is responsible for the materials or services provided.


Existing Process

Organizational Structure: EMI has got its HO at Mumbai and 1 plant in Nasik.

THANENASHIK

Special considerationNoneExceptionNoneDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

G.M Purchase

E.D Production

Sr. V.P Finance

AGM Tender

DGM Tender

AGM Mktg

AGM Engg

DGM A/C & Finance

G.M Production

V.P Marketing Import Export

MD

2. Customer Master Data

DescriptionCustomer Master Data should ensure that all the necessary details about the customer are captured in such a way that it facilitates smooth transactions.

Partner Function

A customer has four major partner functions, as described below:

1. Sold-to Party is the one who places the sales order

2. Ship-to Party is the one to whom the goods are shipped

3. Bill-to Party is the one to whom the invoices are billed

4. Payer is the one who settles the invoice

In general, the above-mentioned partner functions refer to only one customer. In case the ship-to party or the bill-to party or the payer is different from the sold-to party, a separate master record needs to be created and assigned to that sold-to party.

In case we have multiple partner functions for sold to party, system will prompt to choose the required ship-to party or bill-to party or payer from the available list.

Account Group

We need to make the account groups for all required partner function like sold to, ship to. If we create the customer master with sold to party account group, the system creates the account group for ship to, bill to & pay to by default. In case we want to create only for ship to, bill to or pay to partner function, then we need to select the respective account group at the time of customer master creation.


Account group determines the creation of the customer master record. It determines the structure of the customer master record input fields (field status). With the field status, one can define a field as suppressed / display / optional / mandatory field, based on which a customer master record is maintained.

Existing Fields in customer master:

Customer NumberName1StreetCityPostal CodeDistrictCountry RegionTelephone 1Mobile PhoneFax NoE.MailCONTACT PERSON First NmaeCONTACT PERSONCurrencyIncoterms (part 1)ECC NoExciseReg No.Excise RangeExcise Division No.Excise commitionnarateExcise Indicator CustomerCST No.LST No.PAN

Customer Groups:

According to the product preference and buying behaviour of customers, EMI has divided its customers in to the following category:


1. Domestic Customer2. Export Customer3. Deemed Customer

Special considerationCustomer coding to be focusedExceptionNone


3.Material Master Data

DescriptionMaster records that have information for various transactions and activities in relation to materials are termed as the Material master. The Material Master should contain data relevant for various functions. The information in Material Master Record should include Purchasing, Sales, Accounting, MRP, QM, Controlling, Work scheduling & Storage data for the material. It should also consider the various organizational levels for which the data is maintained.

Existing ProcessCurrently Materials are mainly grouped into

1. Finished Products

2. Raw Material

3. Semi Finished

4. Consumable

5. Subcontracting

6. Packaging

Type of finished Material group:

1. HARDWARE FITTINGS (PGCIL) – PANTHER ACSR2. HARDWARE FITTINGS (MSETCL) – PANTHER ACSR3. HARDWARE FITTINGS (HVPNL) – PANTHER ACSR4. HARDWARE FITTINGS (PGCIL) – ZEBRA ACSR5. HARDWARE FITTINGS (MSETCL) – ZEBRA ACSR6. HARDWARE FITTINGS (HVPNL) – ZEBRA ACSR7. HARDWARE FITTINGS (HVPNL) – SINGLE MOOSE ACSR8. HARDWARE FITTINGS (PGCIL) – TWIN MOOSE ACSR9. HARDWARE FITTINGS (PGCIL) – TWIN LAPWING ACSR10. HARDWARE FITTINGS (PGCIL) – QUAD MOOSE ACSR11. HARDWARE FITTINGS (PGCIL) – TRIPPLE SNOWBIRD ACSR12. HARDWARE FITTINGS (PGCIL) – QUAD BERSIMIS ACSR13. HARDWARE FITTINGS (PGCIL) – HEXA LAPWING ACSR


14. ACCESSORIES – PANTHER ACSR15. ACCESSORIES – ZEBRA ACSR16. ACCESSORIES – MOOSE ACSR17. ACCESSORIES – LAPWING ACSR18. ACCESSORIES – SNOWBIRD ACSR19. ACCESSORIES – QUAD BERSINIS ACSR20. ACCESSORIES (PGCIL) – 7/3.15 E/W21. ACCESSORIES (MSETCL) - 7/3.15 E/W22. ACCESSORIES (HVPNL) - 7/3.15 E/W23. ACCESSORIES (PGCIL) – 7/3.66 E/W24. ACCESSORIES (MSETCL) – 7/3.66 E/W25. ACCESSORIES (HVPNL) – 7/3.66 E/W26. ACCESSORIES (PGCIL) – 7/4.5 E/W27. ACCESSORIES (PGCIL) – 7/2.50 E/W28. HARDWARE FITTINGS (UPTO 330KV – LOW TENSILE) – NON

STANDARD29. HARDWARE FITTINGS (400KV & ABOVR – HIGH TENSILE) –

NON STANDARD30. ACCESSORIES FOR CONDUCTOR – NON STANDARD31. ACCESSORIES FOR EARTHWIRE – NON STANDARD32. HARDWARE FITTINGS – RELIANCE33. COMPONENTS

Special considerationMaterial Coding to be focused

ExceptionThere is no centralised coding of material.


4.Pre Sales ProcessDescriptionThe expectations from the Pre sales processing cycle are enumerated below:

Creation of Inquiry in the system as per the customer requirement

Creation of Quotation on the basis of inquiry Automatic/Manual pricing with change option in the

quotation Negotiation and revised quotation Works Order closure Inquiry & quotation tracking

All these activities have to be done taking into consideration all the statutory taxes and duties that need to be captured at various stages. The above activities need to be carried out in such a way that the customer requirements are fully met apart from the organisational requirements.

The inquiry may come through mail, phone or fax about product, Prices, terms of delivery, description of the product and so forth.

In case of repeat inquiry, it will have the old reference order number/ previous inquiry number details. The reference order/inquiry needs to refer in the system for the information. In case the old inquiry is the reference number then it can be updated with the change in requirement or you can create new Inquiry. In case old sales order is the reference then it can be used for information, coping from sales order to inquiry is not possible.

Existing Process

At present, EMI following manual process to map the pre sales activity in the system, the records are maintained manually.Special considerationNoneDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

ExceptionNone


5.Sales and delivery Process

DescriptionThe customer order fulfilment for the desired quantity, quality, with the required cost and within stipulated time frame is the prime objective of sales order process. The most important aspect is efficient and effective use of the resource for customer order fulfilment. All the sales related activities have to be done taking into consideration all the statutory taxes and duties that need to be captured at various stages. The sales activities need to be carried out in such a way that the customer requirements are fully met apart from the organisational requirements.


Existing flow

The current sales process at EMI for sale:

HO FACTORY

Various checks are considered in EMImentioned below


Payment Collection

Send Material to Customer along with Excise Invoice

Receive Dispatch Advice

Works Order

Receive PO from Customer

Send Quotation to Customer

Customer Identification

Dispatch Advice to factory

EMI considers various Documentation and checks after Works Order is created

Works orderAll client details/Project details/Terms & condition

Receipt of DocumentsBOQ PV formulaBank GuaranteeDrawings/Technical SpecificationAnd all other related documents as per requirement

Issuance of Works OrderPreparation of Bar ChartPreparation of GuaranteesPreparation -Submission-Approval of Drawings & Test reportsConsideration of Sample development and testingConsideration of Amendments if anyInspection

Types of sales: FACTORY SALE EXPORT SALE DEEMED EXPORT SALE MERCHANT EXPORT SALE SALES RETURN WARRANTY SALE SUPPLEMENTRY REQUEST TESTING/SERVICE SALE

Special ConsiderationsDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

NoneExceptionNone


6.Inter Plant/Branch Stock TransfersDescriptionThe stock transfer order happens when the company wants to move the stock from one factory to another factory or factory to depot or one depot to another depot to fulfill the business requirement.Stock transfer is an integrated activity where no unplanned goods issue will be there. Total visibility of stocks across the organization includes stocks in transit. Total accounting of material will be at every stage right from supplying plant to receiving plant.

Existing ProcessEMI has got 1 manufacturing plant so no STO process carried out.In future STO may be applicable

Special ConsiderationsNoneExceptionNone


7. PricingDescriptionRequirement of pricing is to pick up the right price for a given material at the time of sales transaction. The other statutory requirements like Excise and Sales tax should be automatically calculated by the system to minimize the error while posting those values in the respective GL accounts.Pricing should provide the scope of discount applicability for a customer / combination of customer and material / material on case-to-case basis.Pricing should provide flexibility of changing the price and getting it approved before finalization of deals with the customer.Centralized control mechanism is required to ensure maximum realization to the company.

The basic components for calculation of price are as followsBasic Price Discount/ material / Customer/ Group/cash etc Packing & ForwardingExcise Duty VAT / CSTFreight Insurance


Existing ProcessFollowing are the various price component used in EMI

Component NoteMaterial Cost Add Ons Discount Basic Value PV Adjustment Price After PV formula Note:Based on formula BED Cess S.Cess Price +Excise Freight Price +Excise+Freight VAT Note:VAT on Price +Excise+Freight CST Note:CST on Price +Excise Total

Special ConsiderationsNoneExceptionPV Adjustment is based on pre defined formula


8.Excise in MM and SDDescriptionThe requirements relating to excise duties are as follows:Cenvat credit for purchases (Domestic & Imports) of Input material, Capital goods, etc.Cenvat debit for Sales (Domestic & Exports).RG23A, RG23C, RG1 registers to be maintained.

Existing ProcessAn excise invoice accompanies each delivery that a vendor makes. This document is required as proof of excise duty that the vendor has paid, so that it can then offset against the excise duty that is levied on outputs. Excise credit of raw materials (CENVAT) is taken in register RG23A. Excise credit of Capital Goods is taken in RG23C. Credit of RG23A & RG23C is used for paying excise duty on finished goods despatches. In case of insufficient balance in these registers then the duty is deposited in PLA to pay the difference. The process is same for all the businesses.

1. Spare Parts for Machinery has to be considered as capital goods procurement.

2. Samples to customers are with excise invoice.

Special considerationNone

ExceptionNone


9.Credit/Debit Note Process

Description

There are several unusual, unexpected and unplanned business scenarios, which result in the creation of liabilities on the third party or on the Organization itself. Such scenarios will be handled using debit and credit notes.

The reasons for credit or debit note are Rate difference, Quantity difference, Quality issue, and Goods return, Cash discount, Commission, Freight & other.

Existing FlowIn EMI, credit notes are issued against the Rate difference case and return of material etc.

Special considerationNone

ExceptionNone


As-Is Process DocumentFINANCIAL ACCOUNTING

Version 1.0


PREFACE

Purpose of this DocumentThe purpose of this document is to record the business process requirements of EMI

Transmission (India) Ltd. (henceforth referred to as EMI) and outline the requirement

mapping in SAP.

Intended AudienceThe intended audience for the Financial Accounting Business Blueprint are the

employees of EMI and other people authorized by EMI who are in any way related to

Business Processes involved in Financial Accounting.



Description

CO ControllingMM Material ManagementFI Financial AccountingPO Purchase OrderSD Sales and DistributionDELPHI Delphi ComputechTDS Tax Deducted at SourceAUC Asset under ConstructionAA Asset AccountingGL General LedgerAR Accounts ReceivableAP Accounts PayableVAT Value Added TaxJV Journal EntryDr. DebitCr. CreditEMI EMI Industries Ltd.T-Code Transaction CodeGR Goods Receipt.


Contents

1: ORGANIZATION STRUCTURE 2: MASTER DATA 3: GENERAL LEDGER ACCOUNTING 4: ACCOUNTS RECEIVABLE ACCOUNTING 5: ACCOUNTS PAYABLE ACCOUNTING 6: ASSET ACCOUNTING 7: BANK ACCOUNTING


1. Organization StructureDescriptionThe Organization structure represents the legal and organizational structure of the

company. It can be structured from the point of view of accounting, materials

management and sales & distribution. These structures are combined to integrate

different departments of an organization. The organizational structures form a

framework in which all business transactions can be processed.

EMI is in the business of manufacturing Pesticides and EMI products through one

legal entity EMI India Ltd.

Following are the additional Future business scenario

Planning one more production plant at Nasik

Existing FlowThe existing ERP system design is not on the basis of Organisational Units.

Business RequirementsThe Organization Structure / Units are used to structure business functions and to

enable reporting with seamless interface.

The organizational needs of Financial Accounting are to report for external and

statutory purposes.

The organizational units of Controlling are used to satisfy internal reporting

requirements. They enable reporting performance within the organization and can be

used to generate multi-dimensional analysis.


2. Master Data & Variants

DescriptionThe Master Data ensures that all the necessary details about all the business

transactions are captured in such a way that it facilitates smooth transactions

avoiding data redundancy and ensures proper reporting.

Special Considerations-None-

Exception-None-

Existing FlowThe Master Data that are incorporated in existing ERP are:

1. General Ledger Master – This contains the data relevant to the GL Accounts.

2. Customer Master – Customer Master contains the data required to do

business with your Customers

3. Vendor Master – The vendor master record contains all the data you require

to do business with your vendors

4. Asset Master – The Asset Master record contains all data required to carry

out transactions related to Fixed Assets

5. Bank Master – The Bank Master contains all the data relevant to the Bank

Accounts required to carry out the banking transactions.

The functions in the master records are Create, Change, Display, Block/unblock and

Delete. Deletion however can be done only if there are no values posted for that

master.

1. General Ledger Master MaintenanceCodification of General Ledger Accounts: EMI has no numeric coding structure.


Business Requirement:The best practice in the industry as suggested by SAP should be followed for

codification of General Ledger Accounts.

There should be a procedure to ensure that the GL master is complete for all the

details.

Setting of Master data should be able to done by key users

Account Groups: EMI is following a policy of maintaining Account Groups and same group is used for Balance Sheet and Profit & Loss preparation purpose.

Account Groups Maintained in the existing system is:

chart of accounts

Acct Group Name

EMI SCPL CAPITALEMI LIFD LOAN FUNDS

EMI CLPRCURRENT LIABILITIES AND PROVISION

EMI FAST FIXED ASSETSEMI INST INVESTEMENTS

EMI CASTCURRENT ASSTS LOANS AND ADVANCES

EMI SALE SALESEMI PURS MATERIAL CONSUMEDEMI DINC DIRECT INCOMEEMI DEXP DIRECT EXPENSESEMI IDIN INDIRECT INCOMEEMI IDXP INDIRECT EXPENSESEMI APPS APPROPRIATION PROVISIONS

Business RequirementThe best practice in the industry as suggested by SAP should be followed for

Grouping of General Ledger Accounts.

Fiscal year:The fiscal year of the company is from April to March.

Business requirement:


The same fiscal year shall be used in SAP for reporting purposes. Additional periods

are required at the year-end for year-end activities (Total 4 Special Periods).

Periods LockPeriod locking facility is available in the existing system.

Business Requirement:Period locking facility should be made available in SAP, where month wise locking of

transactions is possible.

Document types and number rangesA key that is used to classify accounting documents and distinguish between

business transactions to be posted. The document type is entered in the document

header and applies to the whole document. Functions of Document Type are:

Differentiating between business transactions.

Determines which account types that particular document can be posted to.

Assigning document numbers.

Company is using Different document codes for all the transactions. The following are the existing document codes used

BankP Bank Payment VoucherBankR Bank Recipt VoucherBSaleBillBSaleBillTaxBStockSendCashP Cash PaymentCashR Cash ReciptCN Credit NoteCNDCNRDN Debit NoteDNDDNR


FPPurchaseFProvSBillFSaleBillFStockSendIBankPIBankRIBSaleBillIBSaleBillTaxICashPICashRICNICNDICNRIDNIDNDIDNR

IFPPurchaseIFProvSBillIFSaleBillIPartyTranISaleReturnJVPartyTranPCashPPCashRSaleReturnStockReceivedStockTrReturn


Different document types should be used for different type of transactions. The

number range should be followed sequentially and the user should not have option

to change that.

Separate document type for Contra Entries (Cash & Bank) should be createdDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

1. Vendor Master Maintenance

Vendors are the business partners who will be supporting the supply of material or

services. All the vendors who supply the material / services will be maintained in the

system. Business transactions are posted to various accounts and managed using

the specifications in vendor masters. The master record would have to control how

business transactions are recorded and processed by the system and monitor or

schedule payments to vendors.

Existing Process

Codification of Vendor Accounts: EMI has no numeric coding structure.

Vendors are defined centrally at group level and they are classified as

EMRM Sundry cred-RawmaterialsEMIM Sundry cred-Import materialsEMCM Sundry cred-Conversion MaterialEMPM Sundry cred-Packing MaterialsEMCB Sundry cred.-Consumable materialsEMPG Sundry cred.-Capital MaterilasEMSM Sundry creditors--Service MaterialsEMON One-time vend.(Ext.no.assgnmt)

Special Considerations

ExceptionNone

Business requirement:Separate numbering series should be followed for Vendors.

The authorization to create master records should be given to selected personnel

only.

The number range should be followed sequentially.

There should be a procedure to ensure that the Vendor master is complete. By

making some fields in the master records Compulsory OR Optional OR Suppress

functions in field status variants.


2. Customer Master MaintenanceCustomer Master Data should ensure that all the necessary details about the customer are captured in such a way that it facilitates smooth transactions.

Partner Function

A customer has four major partner functions, as described below:

5. Sold-to Party is the one who places the sales order

6. Ship-to Party is the one to whom the goods are shipped

7. Bill-to Party is the one to whom the invoices are billed

8. Payer is the one who settles the invoice

In general, the above-mentioned partner functions refer to only one customer. In

case the ship-to party or the bill-to party or the payer is different from the sold-to

party, a separate master record needs to be created and assigned to that sold-to

party.

In case we have multiple partner functions for sold to party, system will prompt to

choose the required ship-to party or bill-to party or payer from the available list.

Account Group

We need to make the account groups for all required partner function like sold to,

ship to. If we create the customer master with sold to party account group, the

system creates the account group for ship to, bill to & pay to by default. In case we

want to create only for ship to, bill to or pay to partner function, then we need to

select the respective account group at the time of customer master creation.

Account group determines the creation of the customer master record. It determines

the structure of the customer master record input fields (field status). With the field

status, one can define a field as suppressed / display / optional / mandatory field,

based on which a customer master record is maintained.


Existing flowFor a new customer, a new code is created with the following details:

Name, Detail address & with contact details, Customer type Payment terms Delivery type/Grace days Sales tax details Credit limit

Customer Groups:

According to the product preference and buying behaviour of customers, EMI has divided its customers in to the following category:

Z001 Domestic Sold-to partyZ002 Domesti Ship to partyZ003 Domesti PayerZ004 Domestic Bill-to partyZ005 Export Customer

Z006One-time cust.(ext.no.assgnmt)

Technical and Bulk customers can be further divided in to two categories:

a. Industrialb. Government

Household customers can be further divided in to three categories:

a. Industrialb. Governmentc. Dealer/Distributor

Special considerationThe present system at EMI, doesn’t allow the user to create multiple ship to party for a payer. The account group has to be selected manually while doing the sales transactions.

ExceptionNone


3. House Bank Master DataSimple Master Data for banks is maintained – G/L number and Bank Name.

EMI India Ltd.is Maintaining following: -

SCB

Citi Bank

Dena

Baroda

Hdfc

Union bank

Lakshmi Vilas

Greater Bombay co-op bank

Bank Reco. Are done manually & bank charges & additional debit credit entries in

bank statement are made in financial book through general vouchers.

Business Requirement:

All the bank relevant details should be maintained in the masters

4. Asset Master Maintenance

EMI India Ltd. is Maintaining G/L accounts for each category of assets e.g. all

vehicles goes to Vehicle G/L account all machinery goes to Plant & Machinery G/L

account.

For Depreciation – EMI India Ltd. calculate depreciation in excel sheet and manually

put single depreciation entry for entire depreciation for that year.

Whenever Asset is sold or disposed off, accounts department manually calculate the

depreciation for that asset from the date of acquisition till the date of sale/disposal

and following entry is made for sale:Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Accumulated Depreciation account ………DRCustomer Account ………………………………….DR To Asset Account To Profit/loss on sale of Assets (Dr/Cr according to profit/loss)

And following entry is made on disposal Accumulated Depreciation account ………DR

To Asset Account To Profit/loss on sale of Assets (Dr/Cr according to profit/loss)

Business Requirement

All asset transactions shall be maintained in SAP system. System should

automatically calculate and post the depreciation.

There should be a procedure to ensure that the Asset master is complete.

Authorisation to created new asset should be given to designated personnel only.


3.General Ledger Accounting

DescriptionThe General Ledger forms the backbone of all the financial systems. It will provide a

comprehensive picture of the transactions and accounts. It would capture all

business transactions through seamless integration with other operational areas of

the company to ensure that accounting data is always complete and accurate.

The processes in General Ledger are:

1. Generation of accounting documents either automatically or manually

2. Generation of periodic reports at various hierarchical levels.

3. Capture of all transactions in GL

4. Posting of sub ledgers to GL

5. Reconciliation and finalization of accounts

6. Cash Transactions

7. Payroll Entries

8. Loan Transactions and Deposits

9. Foreign Currency Valuation

10.VAT

11.Sales Tax

12. Inventory Valuation

Special ConsiderationsNone

ExceptionNone


Existing FlowJournal VouchersSeparate Journal Vouchers are entered in the system for Journal Entries, Salaries

Entries, Recurring entries, Branch Expenses and Prepaid Expenses.

Journal Vouchers are entered in the system for correction of errors also.


There should be an option to edit the document.

A facility should be given to view, line item wise details of GL and Sub-Ledger

Accounts.

Already created documents should not be allowed to alter for value.

For recurring entries, there should be a provision to recall the same and post them.

Pre paid expenses should be posted to relevant Periods.


4. Accounts Receivable AccountingDescription

The Accounts Receivable application component records and administers accounting data of all customers. It is also an integral part of sales management.

All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange). The system contains a range of tools that you can use to monitor open items, such as account analyses, alarm reports, due date lists, and a flexible dunning program. The correspondence linked to these tools can be individually formulated to suit your requirements. This is also the case for payment notices, balance confirmations, account statements, and interest calculations. Incoming payments can be assigned to due receivables using user-friendly screen functions.

The payment program can automatically carry out direct debiting and down payments.

There are a range of tools available for documenting the transactions that occur in Accounts Receivable, including balance lists, journals, balance audit trails, and other standard reports. When drawing up financial statements, the items in foreign currency are revalued, customers who are also vendors are listed, and the balances on the accounts are sorted by remaining life.

Accounts receivable is not only one of the branches of accounting that forms the basis of adequate and orderly accounting. It also provides the data required for effective credit management, (as a result of its close integration with the Sales and Distribution component), as well as important information for the optimization of liquidity planning, (through its link to Cash Management).

The processes in this component are:1. Generation of accounting document for receivables based on an invoice, or

debit memo or credit memo.

2. Receipts of advances / deposits / bank guarantees.

3. Monitoring of outstanding in customer accounts.

4. Accounting of the receipt against the appropriate outstanding.

5. Exports (including deemed exports)


6. Receipts of export incentives

7. Other income, for example, interest on deposits

8. Customer / Vendor cross clearing transactions


ExceptionNone

1. Credit/Debit Note Process

There are several unusual, unexpected and unplanned business scenarios, which

result in the creation of liabilities on the third party or on the Organization itself. Such

scenarios will be handled using debit and credit notes.

The reasons for credit or debit note are Rate difference, Quantity difference, Quality

issue, and Goods return, Cash discount, Commission, Freight & other.

Existing FlowIn EMI, credit notes are issued against the difference with related to various schemes. The settlement will be done quarterly or yearly basis.

Credit Note Approval: As per the scheme, the annual or quarterly settlement of accounts with distributor will be done. The settled credit notes will go to the accounts department for audit purpose. If any deviation in schemes which are released through GMs or DGMs are referred to the MD for final approval.

Special considerationNoneExceptionNone

2. Interest on Arrears and Deposits

Existing FlowInterest calculation is happening outside the ERP system, which is very tedious and time consuming activity as the interest rates changes from time to time and the interest rates on deposits differs on the nature of deposit.

Business requirement:Setting payment terms for the customers should be possible in such a way that giving cash discounts for the early payments and interest charging on Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

the delayed payments.

System should calculate the interest on the basis of the rate applicable for that period

System should be able to apply different interest rates on different deposits.

3. Reminders

Existing FlowReminder letters are not being sent to the parties as the functionality is not available in the existing ERP system.

Business requirement:System should be able to send the reminder letters to the customers to speed up the collection process.

4. Customer balance confirmation letters

Existing FlowAs a part of year end closing activities EMI is sending balance conformation lattes to the customers but this is happening outside the ERP system.Business requirement:

System should be able to send the balance conformation letters to the customers to cope up with the business requirements.


5. Accounts Payable AccountingDescriptionThe Accounts Payable application component records and administers accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. The system automatically makes postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning.Payables are paid with the payment program. The payment program supports all standard payment methods (such as checks and transfers) in printed form as well as in electronic form (data medium exchange on disk and electronic data interchange). This program also covers country-specific payment methods. If necessary, dunning notices can be created for outstanding receivables (for example, to receive payment for a credit memo). The dunning program supports this function. Postings made in Accounts Payable are simultaneously recorded in the General Ledger where different G/L accounts are updated based on the transaction involved (payables and down payments, for example). The system contains due date forecasts and other standard reports that you can use to help you monitor open items.You can design balance confirmations, account statements, and other forms of reports to suit your requirements in business correspondence with vendors. There are balance lists, journals, balance audit trails and other internal evaluations available for documenting transactions in Accounts Payable. The processes for Accounts Payable are:

1. Payments for purchases done for material, equipments and other items

against purchase order and GRN for local and import procurement.

2. Payments for services

3. Payments for excise and / or other statutory requirements.

4. Payments made in advance to suppliers and tracking the same through a

separate control account.

5. Payments made after IV but before due date and availing cash discounts.

6. Vendor – Customer cross adjustments.

7. Partial payments, with or without discounts


ExceptionDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

None


6. Asset Accounting

DescriptionThe scenarios for Asset Accounting are:

1. Acquisition of an Asset.

2. Asset Additions

3. Retirement with or without Revenue

4. Depreciation Calculation

5. Asset Under Construction

6. Asset Transfers


ExceptionNone

Existing FlowThe company is using spreadsheets to maintain asset registers. The depreciation

calculations are done based on the capitalization/ retirements maintained as per

these registers only.

Asset Acquisition

Requisition is raised by the concerned department in case of Regular operations

and by the MD for new projects.

Requisition will be passed on to Material Department.

Material Department will obtain quotations from the various vendors and based

on the best-quoted prices and terms they will raise the purchase order.


Material procured based on the purchase order

IGP will be prepared on receipt of such material by stores Department in the

case of factory purchases.

In case of labour charges, Concerned department will verify and give work

completion certificate

Bill is received by the Materials department, and verifies the same if found it

correct then forwards it to Accounts Department else sending it back to party for

rectification.

Accounts Department will verify it with the purchase order and if found correct

then they will pass an entry for the asset which as below:

Respective Asset A/c Dr To Vendor A/C

Capital Asset under Construction:

The Assets, which are under constructions and where the period of construction

is extended to more than one accounting year, then it is treated as Capital Work

in Progress.

Depreciation will not be charged on the CWIP

In case the construction activity completes in the same accounting year, the

asset is fully capitalized and depreciation is charged on that asset.

Retirement of AssetsSale of Assets to customers

The Maintenance department reviews the usage, working condition and technical

competence of the machines at regular intervals.

The recommendations of maintenance department to sell an asset should be

approved by HOD of maintenance and GM.

The recommendation is finalized when MD finally approves it.Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

The Asset is delivered to customer on the scheduled date and commercial

Department raises the invoice.

As soon as the commercial department posts the invoice in System, the following

entry is passed.

Customer A/c …………………Dr

To Asset A/c (At sale Value)

A copy of invoice along with other documents is forwarded to Accounts

Department.

The accounting of these transactions like profit/loss on sale is done once in a

month generally at month end on asset to asset.

Profit/Loss = sale value- (Acquisition value – Accumulated Depreciation as on

date).

Scrapping of assets

Obsolete Assets are written off as per the Advice from Maintenance department.

The following entry will be passed in the accounts at year end

Fixed Assets Written Off A/c ……… Dr

To Respective Asset A/c (WDV value as on 01st April, of current financial year)

Depreciation CalculationDepreciation is calculated under 2 types/ areas for the below purposes:

1. As per Companies Act

2. As per Income Tax Act

The Depreciation method followed is SLM for Book for Depreciation and WDV

for IT Depreciation .


The rates of depreciation vary from type to type for the purposes as mentioned

above.

Depreciation is posted only once in a year.

For interim reporting and for arriving at profit/loss on sale, the calculation is done

on need base, but posting is done only at the year-end.

The calculation of depreciation is done from the date of capitalization till the

year-end. Similarly for sale of assets, depreciation is calculated from Date of

capitalization (in case of assets acquired during the year) till the date of sale, in

case of existing assets, it is calculated from start of year till date of sale.

Depreciation as per Income tax Act

The depreciation is calculated on WDV method using block of assets concept as

per the act.

In case the asset acquired is put to use for less than 180 days, the depreciation

is calculated and posted @50% of normal rate.

In case of sale, the sale value of the asset is reduced from the WDV value of the

block of asset.

The following block of assets are used for depreciation calculation under Income

tax act

1. Plant and Machinery –electrical installations2. Buildings Let out3. Buildings4. Plant and Machinery- others5. Furniture and fixtures6. Office Equipment7. Computers8. Vehicles

Business requirement:Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Asset Accounting will have to record and manage the Fixed Assets and the

accounting data relating to all Fixed Assets. It will also need to be closely integrated

with the procurement and General Ledger system. Any transaction pertaining to

Assets would have to automatically be reflected in the Asset Values as well as the

general ledger.


7. Bank AccountingDescriptionBank Accounting record and manage the accounting data relating to all banking

transactions and management of Check Lots.

The functions involved here are:1. Bank Receipts

2. Outgoing Payments

3. Bank Reconciliation

4. Check Maintenance

5. Maintaining Foreign Exchange rates

6. LC Payments


ExceptionNoneExisting FlowIncoming PaymentsPayments Received In Cheque /DDReceipt of DD’s /Cheque’s at the branches and the head office.Collection reports preparation and the segregation of instruments into local and outstation.Bank wise deposit slips preparation.Updating bank registers and sending the information to EDP department to enter the details in ERP system.All the local cheques would be given credit on the same day and the outstation cheques would be given credit on realization till that time those would be maintained in Cheques in hand register.Periodically cheque realization reports would be prepared and send to the EDP department for customer account updating.In the case of DD’s payable at Mumbai from the south India branches credit would be given to the respective branches.

Business Requirement:1. While accounting any receipts against outstanding the system

should able to generate a list of open items for that party. 2. In case one customer is created as vendor, there should be a

provision to adjust the balance of vendor against customer.

Payments Received In RTGS/CashDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Cashier receives the money

Prepares Manual cash Voucher and a receipt in 1+1 manner. Original receipt is

given to customer and the duplicate is book copy. The manual cash voucher is

sent to Accounts Controllers for his approval and signature.

Enters in Manual Cash Register and the same be updated in the system

thereafter.

Sale of Scrap for CashDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Stores raise the invoice and send a copy of the said invoice to Accounts

Department for their record.

Cashier in Accounts Department will collect the cash based on the invoice.

Accounts Department to check and verify the amount received with the contents

of the invoice

Cashier to issue cash receipt for the amount received from the scrap buyer.

Prepare a voucher and obtain Accounts Controller’s signature as a token of

authorization to record the transaction in the system.

Cash Payments

The concerned department will forward the bills to accounts for payments.

The accounts controller checks the nature of expenditure and gives his approval

and passes on to cashier.

Manual Vouchers are prepared by Cashier and attach supporting like Invoice;

duly approved IGPs pertaining to miscellaneous items, Approval to make Cash

Payment.

Payment will be made.

Before Close of Day, all the cash vouchers are required to be entered in the

system.

No separate petty cash account is maintained.

The respective IGP’s are closed by mentioning the cash voucher number on it.

In case of Freight Paid for collection of materials the PO will be verified and if

freight paid on behalf of vendors, a Debit note on vendors is raised.


Payments through Cheque/DD/Transfers for vendorsCheque


1. Request is received from various departments like purchase, import, accounts, branches & factory, on paper/on phone/On e mail with the details - cheque issued in favour of, amount of cheque and Date of cheque.

2. Check the credit balance of party3. Cheques issued with carbon copy retain & also marked the a/c

head /party on carbon copy of cheques for accounting purpose. 4. Cheque sent to Authorised Signatory & cheque book sent to EDP

dept. For accounting purpose.DD

1. Request Received from Import dep’t., accounts dep’t on paper /mail with the details -DD issued in favour of, Amount (Rs.) etc.

2. Letter for bank, 3. Passing payment voucher by debiting related head of a/c.4. Authorised Signatory for Signature & Letter Sent to bank.5. Voucher sent for EDP dep’t.

Bank Transfers

1. Request from factory & Instruction of M.D. on phone/ e-mail2. Cheque issued for transfer. or letter for bank,3. Passing bank payment voucher4. Cheque /letter for signature &sent to bank, voucher sent to EDP

dep’t.

Payment of FLC/ILC

1. Request from the imports department over phone/e-mail/on paper with the details like-Due date of FLC/ILC, Amount in foreign currency, whether foreign exchange contract booked or not , fund position in bank

2. Instruction to banker for payment. 3. Bank voucher prepared Dr. Party a/c lying in respective factories. 4. Voucher to EDP dep’t.

In case of shortage of fund at the due date

1. EMI go In for Buyers Credit& paid to FLC amount on due date.2. Create a loan a/c in books name as Bank-buyers credit a/c.3. pass the JV voucher in respective factories in which material are

used- 4. JV voucher to EDP for entry into ERP system.

Party a/c – DrBank Buyers Credit a/c - Cr


At the time of payment to bank

EMI passes two voucher:- 1. Bank payment in HO Respective Factory …………DR To Bank A/c CR

2. JV voucher in factoryBank Buyers Credit A/c – ……….DrInterest on Buyers Credit A/c –DrExchange rate Difference A/c –Dr

To Head Office A/c - Cr

Advance Payments to Vendors

The department requiring an Advance payment shall give a requisition (pre-

printed format available) duly signed by the HOD to Accounts controller for

processing the payment, along with the bills and supporting documents like

Purchase Order etc., in few cases.

Accounts controller to verify and forward the same to Accounts Department for

Payment

Verification of supporting documents and Recording the data in System.

Prepare Payment Voucher. And same payment details will be mentioned in the

Purchase Order/Supporting document.

Prepare cheques and forward the same to Authorized signatories along with all

supporting to obtain their signatures

Accounts Department retains the original payment voucher and sends the

duplicate payment voucher along with the cheque to Commercial Department/

Concerned Department to enable them to send the same to the concerned

vendor.

Commercial department forwards the cheque and duplicate copy of payment

voucher to the Vendor/supplier.


Business requirement

There should be a provision to link the advance payments with the purchase order.

Advance payments to employees

The concerned employee to their department heads should submit an

application.

The Head of Department along with his recommendations forwards the same to

Executive Director/ Finance Director/Managing Director for their approval.

Based on the recommendations given by the Head of department, Directors give

their approval. The application is forwarded to the Accounts department from

Directors along with the details of Amount approved, Repayment terms.

A cheque/cash is prepared for the approved amount in the name of employee .

A payment is posted in the System for the amount paid.

The amount is shown under current assets in the Balance Sheet.


Other Payments

The department/person requiring the payment shall give a requisition duly signed

by the HOD to Accounts Controller for his authorization and approval.

Accounts Controller to forward the same to Accounts Department

Verification of supporting documents and Recording the data in System,

Prepare cheques and forward the same to Authorised signatories along with all

supporting to obtain their signatures

Arrange to make the payment


Business requirementPayments to be made annually

This Category includes All the payments pertaining to Renewals which are to be

made annually on the due dates like Building Tax/ Renewal of Drug License,

Annual Maintenance contract charges etc.,

The Date of Payment will be informed by Concerned Department. Or by referring

to due date schedule maintained by Accounts Department.

These payments are made by cheque/DD

Payment and approval procedure is same as in case of statutory and other utility

payments.

Professional Tax

Arrive at the professional tax liability at the end of every month, based on the Pay

Statement.

Prepare a payment voucher and cheque

Record the details in System

Forward it to Accounts Controller for authorization of the transaction

Obtain signature of Authorised signatories

Pay the cheque along with the monthly challan, duly signed by the Accounts

Controller by due date.


The following professional tax entry shall be generated automatically.

Professional Tax Account Dr To Professional Tax Payable Account


TDS Payments:

TDS Payable account is credited when the party is paid or invoice is accounted,

whichever is earlier.

These are accounted through Debit notes, Payment vouchers and some times JV

while making TDS payment.

At the month end segregate the TDS amount deducted during the month into

various classifications. These include TDS under the categories of payments

made towards professional charges, contracts, Rent, Interest, Commission and

salary.

Separate the payments made to corporate and Non-Corporate entities

accordingly the required Challan needs to be chosen for remitting the amount to

government.

Separate GL Accounts are maintained for TDS on Salaries, Professionals, and

rent, Contractors and Interest, Commission.

A cheque is prepared for the amount equal to total tax liability and is remitted to

the government along with Challans.

The Certificates for TDS are generated once in a year manually, in duplicate, to

send one set to the concerned vendor/employee etc, and the second set remains

as Office copy in Company’s records.


1) Tds should be deducted on invoice booking/payment whichever is earlier.

2) A detailed report should be provided to know the TDS liability under each head at any given date. TDS certificates and returns should be generated from the system.

3) Some of the customers deduct TDS on conversion charges, EMI India Ltd.wants a report from which customers what TDS certificates are recoverable and received A/c


Advance Tax Payments:The due dates for payment of Advance tax are 15th of June, September, December and March of every year. The tax liability is calculated based on current operating results and future budgeted sales. In case of future expenditure, it is calculated as a percentage on sales. This calculation is arrived, basing on the existing ratio between expenditure and sales.These calculations are done manually by the Accounts Department and forward the same to Accounts controller for verification. It is finalized only after approval of Finance Director.

A cheque along with necessary Challans are prepared and forwarded to Accounts Controller for his Approval. The approved Challans along with the cheque are submitted to Income Tax Department on or before the due date.

Business requirement:The Advance tax computations shall be done by SAP automatically and a report shall be generated.

Excise PaymentsThe Accounts department review the balance available in RG-23 & PLA and total liability for the month. They also specify the amount to be paid through TR-6 Challans for PLA.

Accounts Department to prepare the relevant vouchers and cheque and forward the same for Accounts Controllers authorization.

The cheque is forwarded to Authorised Signatories for their signatureAccounts department deposit the cheque on or before 5th of every month.

Provident Fund RemittanceAdmin to calculate the PF contribution deducted from the employees at the end of the month and prepare PF statement giving the details of Employee and

Employer’s contribution for remitting the PF amount.Admin to forward the aforementioned PF Statement to Accounts Department for processing the payment

Accounts to verify the statements/Challans and prepare a payment voucher and cheque to forward it to Accounts Controller for his authorization.

Cheque will be forwarded to Authorised signatories for their signatures


Cheque will be submitted to the concerned authorities along with the duly completed Challan to ensure that the payment is realized on or before 15th of every month.


The Provident fund payment should be generated in Administration Department and the following entry shall be generated automatically.

Provident fund payable Account Dr To Bank Account

The monthly return for provident fund shall be generated in HR Module.

Payroll

Payroll is to be prepared by Administration department.Accounts Department to provide the income tax/Salary Advance/Veh Advance deduction details to Administration department.Admin takes in to account all the deductions like Provident Fund, Professional Tax, LIC premium, Canteen amount, income tax/Salary Advance/Veh Advance deduction in applicable cases, while processing the payrollThereafter, the pay statement will be sent to Accounts Department for checking and payment after due corrections if any.Accounts Department to verify the contents of the pay-statement and forward it to Accounts Controller for his authorisation, if ACCOUNTS DEPARTMENT is satisfied with the contents of the statement. Otherwise, rectify the errors and forward it to Accounts Controller.

In case of payments to Contract labourers supplied by a vendor, administration department forwards the bill for labour charges to Accounts Department. Accounts Department verifies this and calculates the TDS on contractor and for Commission. After following the above procedure, the cheque is prepared and accounts are updated

Business requirements:1) All payments made to employees towards salary, over time allowances, Bonus, final settlements; Arrears, etc should be posted automatically. 2) In Case of contract Labour on verification of bill by the admin department. It should be posted to accounts and generate voucher in the finance and statutory and other deductions to be taken care while booking the transaction.


Bank Reconciliation statement

Bank Reconciliation- DENA Bank

Required information in the form of Bank Statement, Bank book of company, PNB Bank cheque entry Register, Bank Deposit Slip would be collected from the Bank and the EDP departments.Matching the cheque number, cheque amount with bank statement and bank book.Marking the date on bank statement of bank book and contra date on the Bank Statement.Unmarked entry of both the Statements would be taken Separately and placed in the Excel work book in Reconciliation Form. Tracing out the unmarked deposit and withdrawals like Party name, a/c no., details of bank charges charged by bank and Transfer From location.Passing Bank payment voucher of all the bank charges like, ILC/ FLC issue, Cheque return Voucher, cheque return charge, payment of car loan payment of ILC/FLC, Limit renewal fee.After Authorisation all the vouchers would be sending to EDP department for posting in ERP system.Reversal voucher - bank payment voucher made for unmarked debits and credits or some time direct duplicate entry deleted from Resister or undeposit slip voucher directly deleted from the system.

Bank Reconciliation- hdfc Bank

Required information like Bank Statement, Soft file of cheque collection data, Bank book of company, SCB Bank cheque entry Register, Bank Deposit Slip with deposit date would be collected from the bank and EDP department. Exporting the bank Book in Excel format & soft file cheque collection data in Excel, Match the Ch.no. & ch amount with V-lookup and trace out the unmatched entry.2 .for Manually Match the withdrawal cheque no. & cheque amount with bank statement & bank book, Marked the date on bank statement of bank book& contra date on the Bank Statement. Unmarked entry of both statements taken separately and placed in the Excel work book in Reconciliation Form. Trace out the unmarked deposit& withdrawals like Party name, a/c no., details of bank charges charged by bank, Trf. From locationDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Preparing Bank payment voucher of all the bank charges like , ILC/ FLC issue, Cheque return Voucher , cheque return charge, payment of ILC/FLC, monthly interest Limit renewal fee.After Authorisation all the voucher to EDP Reversal voucher - Bank Receipt/bank payment voucher made or some time Direct duplicate entry deleted from Resister or undeposit slip voucher direct deleted from system.

Bill Discounting

Sale invoice is raised on customers for the amount of Principle to principle sales made to them.A number of invoices for a selected period are grouped as Hundis. The due date for payment should be same for all the invoices in a Hundi.The due date of Hundi is informed to customer in writing along with the details of invoices.The invoices are sent to bank for discounting.Bank after checking the documents and required conditions gives debit to the company’s bank account.The bank cheques for discounting are credited to the bank account accordingly.Bank intimates the company in an Advice about the charges and the amount debited to company’s account.The accounting of bank charges is done based on this advice.The amount debited to company’s bank account is treated as Bill Discounted amount and the following journal entry is passed in company’s books

Bank Account DrTo Bill Discounted Account

The bill discounted is shown under Liabilities in the Balance Sheet.Customer on due date makes payment to company.The following entries are made

Bill Discounting A/c ………Dr To Customer Account

If the payment is not made on due date, bank will charge additional charges towards interest for bill discounting. The same is intimated by bank through advice. The accounting is done based on this advice.Separate GL accounts are used for bill discounting charges and regular bank charges.

Bank GuaranteeThe request for bank guarantees comes from Vendors or sometime from Government Authorities.


For this purpose, the intimation to accounts Department comes from Commercial Department. The details such as amount of guarantee, the period for which the guarantee required are mentioned in the intimation. Based on this request, Accounts arranges for Bank Guarantee.

The required documents are submitted to the bank after taking approval of General Manager- commercial.Bank after verifying the required documents issues bank guarantee after keeping some portion of Guarantee amount as margin. The following entry is made in the books

Deposit-Margin money account ………..DrTo Bank account

Deposit margin money account is shown under fixed Deposits on assets side in Balance sheet.The bank charges are charged directly to the company’s bank account and an advice is sent to the company. The bank charges are accounted based on this advice. The bank guarantee is delivered to vendors/customs authorities.

Once the obligations are fulfilled, the bank guarantee document is returned to the Company. As soon as this document is submitted to bank, bank will reverse the margin money and gives a credit to company’s bank account for this amount along with the interest.

No accounting is done for bank guarantee given except for bank charges incurred and Margin money in this regard.

Interest calculationsCompany is maintaining CC accounts.These banks charges interest periodically on the balance amount due by the company on a monthly and quarterly basis.The rate of interest is fixed.The interest is charged to company bank account with intimation to company.For calculation of interest, company is maintaining the data in spreadsheets. The interest charges are checked in these sheets before making postings in to company books.No provisions are made for these amounts in company books

Business requirementThe system should able to calculate the interest automatically on the balance of loan amount.

Foreign Exchange Valuation


At period end outstanding bills of Customers and vendors are revaluated on the basis of Exchange rate at that time.

We are also maintaining Foreign exchange account with banks.

Business requirementSAP should able to calculate Exchange Loss/Gain at Year-end and post automatically for Customers, Vendors and Bank Accounts maintained in Foreign Exchange.

There is no reversal of entries made on Cut – off date on Cut off date + 1 day.


As-Is Process Document

PRODUCTION PLANNINGVersion 1.0


PREFACE

Purpose of this Document

The purpose of this document is to record the business process requirements of EMI

Transmission Limited. (henceforth referred to as EMI) and outline the

requirement mapping in SAP.

Intended Audience

The intended audience for the Production Planning AS-IS Document are the

employees of EMI and other people authorized by EMI who are in any way

related to Business Processes involved in Production Planning.


The following abbreviations and acronyms have been used in this document:

Abbreviation/Acronym DescriptionSO Sales OrderPrdOrd Production OrderMR Material RequestDelphi Delphi Computech Pvt. LimitedEMI EMI transmission LimitedPO Purchase OrderPR Purchase RequisitionPlOrd Planned OrderMM Material ManagementFI FinancialsSD Sales and DistributionCr CreditDr DebitPP Production and planningMRP Material Requirement PlanningPPC Production Planning and ControlBOM Bill of MaterialMTS Make to StockMTO Make to OrderGR Goods ReceiptTCode Transaction Code


Contents

1 ORGANIZATION STRUCTURE RELEVANT TO PP2 PP MASTER DATA3 MATERIAL REQUIREMENT PLANNING4 ORDER PLANNING AND SCHEDULING5 SHOP FLOOR CONTROL6 PRODUCTION COSTING7 INVENTORY MANAGEMENT


Organization Structure relevant to PPDescription

The Organization structure represents the legal and organizational structure of the

company. It can be structured from the point of view of accounting, materials management,

controlling, production and sales & distribution. These structures are combined to integrate

different departments of an organization. The organizational structures form a framework in

which all business transactions can be processed.

EMI is in the business of manufacturing Insulator Hardware, Conductor Accessories and

Connector. Currently it operates its manufacturing operations from one manufacturing

plant based at Nashik in Maharashtra.EMI

Presently Production planning activities are not integrated with other functions like the

procurement, accounting, sales etc in the system. Most of the Production planning activities

are managed separately.

Manufacturing Plants:

No Plants Location

1 EMI Transmission Limited. Nashik

Special consideration

None

Gaps

The entire Enterprise structure is not existing in current system

Expectation


To ensure that the entire Enterprise structure is created in new system and all processes to

be integrated.

Existing flow

The existing system has used based on Organizational Units. It is a decentralized system

where under the company EMI Transmission Limited, Plant Nashik having 3 storage

locations (Raw Material, General, Assembly) has been assigned.


PP Master DataDescription

A) Bill of Materials

The standard BOM for all Finished Product are prepared by Engineering and send to

customer for approval. Once customer approved BOM will be shared by other

departments Like Purchase, Production. All items in BOM have unique Reference

Number except Assemblies.


None

Gaps

The BOM created by Engineering does not contain reference to existing item codes,

which results in duplication of RM item codes.

Engineering Department creates BOM only for finished products.

Every department (Purchase, Stores, PPC, Production) maintains there own BOMs in MS

Excel for their own usage. Maintaining the same becomes a major headache for

each department.

Semi finished Materials BOMs are not maintained.

Once Engineering issues the ECN, every one has to update the BOM in their MS Excel

file to maintain the consistency.

Expectation

The BOM should be maintained in centralized system and the same should be used by

all departments i,e. Planning, Production, Purchasing and Costing.

Existing flowDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Engineering department creates BOM for finished product based on marketing inputs.

All BOM contains only Item Descriptions and reference number but does not contain

the existing item codes. Engineering send BOM to Customer for verification. Once

Engineering department received the verified BOM it will issue to other departments

like (Purchase, Production and PPC).The Purchase department also creates BOM in MS

Excel to carry out RM planning. However, due to the misunderstanding with item

descriptions Purchase department may create new Item code for the same existing

code and this leads to duplication of Item codes in system for the same material.

B) Work Center

There are number of work centers (machines) used for the manufacturing process.

Special purpose machine are there in assembly line to perform their respective

operations. One product passes through entire production line of respective product.


All work center runs for two shifts of 12 hours each daily. The demand fluctuations are

covered by over time.

Gaps

Complete Production Management is manual activity handled outside existing system.

Factory Calendar, shift sequences are not maintained in system

Expectation

To use ERP system to manage entire production process

Existing flow

The entire work center related data is maintained in spreadsheets and planning at work

centers is carried out manually.

C) Routing


The standard SOP (Standard Operating Procedure) is there for the production control.

The product wise inspection characteristic, materials, machines, different time elements

(setup, machine, labor) are maintain. Sequence of operations is standard but the

selection of the machines /production line for the operation carried out depends on the

availability of the machine/production line.

Sequence of operation for individual production lines are maintain in spreadsheets with

all details like setup time ,machine time, labor time. These details are not used in

production planning, Production Execution and product costing due to lack of system

integration.


all details like setup time ,machine time, labor time. These details are not used in

production planning, Production Execution and product costing due to lack of system

integration.


None

Gaps

Routing and/or Manufacturing sequences are not maintained in System

Expectation

All the operation details should be maintained in the system.

Production process should be standard for all products.

Cost of each activity should be included in product cost.

Existing flow


all details like setup time ,machine time, labor time but These details are not used in

production planning, Production Execution and product costing.


Material Requirement PlanningDescription

Demand creation

A) Master Plan

Annual Demand Plan is made by the Marketing Department at Head Office. Plant get on

every 25th of the month with first month fixed plan (divided in weeks) and three months

tentative plan.

B) Production Plan

Based on the Demand plan, Plant PPC department creates daily production plan. The first

week production plan is based on the tentative plan sent by Marketing on 25th of the month.

Schedule for other weeks is based on the revised confirm plan received on 5th of the month.

C) Raw Material planning

The short term Raw Materials is planned based on confirmed monthly plan. The long lead-

time items (especially imported) are planned based on the three-month tentative rolling

plan. The Purchase department carries out the planning of Raw Material based on the BOM

maintained in MS Excel by the Purchase Department.

The Purchase department follows up with the vendors for rescheduling of the receipt date

based on the weekly/monthly production plan and daily PPC meeting.

Apart from these, the RM stores also generate Material Requisition (MR) based on the

Material Shortages report for the production plan. Currently there is no link of MR with

Purchase Order. Hence, the users find it difficult to track the status of their requirements.


First week of Production is planned based on the tentative monthly plan and production for

other weeks is planned based on the confirm plan received on 5th of every month.

Gaps


Entire Planning is being done outside the system.

Purchase Department plans for RM based on PPC plan using the BOMs maintained in MS

Excel.

The tracking and impact of revision to PPC plan is also done manually by each department.

Expectation

Entire Planning and Controlling activities should be carried out in the new ERP system.

The PPC Plan should be created based on Demand plan prepared by Sales & Marketing.

The RM should be planned using MRP based on PPC plan in an integrated manner.

Existing flow


Order Planning and SchedulingDescription

As per the monthly plan (created by Head Office), they create the total demand for the

month and then they split it in to the daily production demand.

As per the monthly plan, the kits are reserved. As per the standard cycle time to

manufacture the batch for the product, the scheduling for the total quantity for the month

happens.


None

Gaps

No Job order is created for initiating production

All issues to production is done on daily Material Requisition slip prepared manually by

shop floor in-charge

There is no tracking of WIP inventory

Expectation

To follow Job order based system for initiating daily production.

All issues to production to be done against the daily production order using system

generated issue slip.

System to provide for tracking of RM to WIP to FG inventory

Existing flow

Every day evening PPC intimates Shop floor in-charge and Stores for the material to be

produced on next day. The Shop floor in-charge makes manual MRs and sends it to Stores.

Store person issues the material and ensures that the required RMs &/or Assemblies are

kept at Shop floor to enable production to start the production activities in daily morning.


Shop floor controlDescription

The batch wise production starts with the SOP (Standard Operation Procedure). The SOP

contains all the instructions to carry out the operations. They maintain the Log Sheet with all

actual parameter for In-process inspection and PDI (pre delivery inspection).Batch number

and Serial number is also maintain for transformer and final assembly respectively to control

the shop floor activity.


None

Gaps

No Job order is created for initiating production.

All issues to production is done on daily Material Requisition slip prepared manually by

shop floor in-charge.

There is no tracking of WIP inventory

The operation time for individual operations are not tracked in the system.

Expectation

To follow Job order based system for initiating daily production.

All issues to production to be done against the daily production order using system

generated issue slip.

System to provide for tracking of RM to WIP to FG inventory

System to provide for visibility of operations for each Job/Production order.

Existing flow

Store send the daily stock status repot to PPC, based on it PPC plan for next day production.

Next day plan is verbally communicated to production line In-charge. The shop floor In-

charger give MR to store based on the BOM they have in Excel sheet. Against MR store issue

the all raw/semi finished material from store to production line. Store issue the entire day

quantity or issue the partial quantity based on their stock status.


Production COSTING

Description

In today’s scenario, as Job/Production orders are not created it is not possible for them to

carryout Order wise product costing.

Today Material accounts for 95% of cost whereas Operation cost + Overhead cost accounts

for 5% of total product cost.


None

Gaps

Product Costing done outside existing ERP system

Expectation

Product Costing to be part of new ERP system

Existing flow

Currently Raw Material and Assembly consumption is derived based on the Opening

Inventory + Issues – Closing Inventory (arrived through Physical Inventory counting).

The Material Cost for Product is arrived based on BOM maintained in MS Excel, RM prices

calculated on Moving Average basis outside ERP.

The Operation Cost is arrived based on actual expenses incurred taken from Finance module

and apportioning the same to individual products along with Overhead cost.


Inventory ManagementDescription

Goods Issue to Production

Production department sends the Material Requisition (MR) prepared manually using MS

Excel to the Stores to issue the requested materials. The consumption of Raw/Semi

finished/Packaging material for finished product wise are maintained in the system.


None

Gaps

In-process/return materials are not maintained in the existing system.

WIP is not tracked in the new system

Expectation

All processes to be handled the ERP system

WIP to be tracked in the new system

Existing flow

Material Issued against MR to production shop floor.


To-Be Process DocumentSALES & DISTRIBUTION

Version 1.0


PREFACEPurpose of this Document

The purpose of this document is to record the business process requirements of EMI

Transmission Ltd. (henceforth referred to as EMI) and outline the requirement

mapping in SAP.

Intended AudienceThe intended audience for the Sales & Distribution Business Blueprint are the


Business Processes involved in Sales & Distribution.



Description

SO Sales OrderPrdOrd Production OrderPO Purchase OrderIP Inspection PlanMM Material ManagementQM Quality ManagementSD Sales and DistributionIL Inspection LotMIC Master Inspection CharacteristicPP Production and planningGR Goods ReceiptTCode Transaction Code


Contents

Contents

1. ORGANIZATIONAL STRUCTURE1.1 Sales Organization1.2 Distribution Channel1.3 Division1.4 Sales Office1.5 Sales Group1.6 Shipping Point

2. MASTER DATA2.1 Expectation2.2 Description2.3 Changes to Existing Processes2.4 Solution in SAP2.6 Gaps2.7 Workaround Solutions2.8 Integration Requirements2.9 Reporting Requirements2.10 Authorization Requirements2.11 Migration Requirements

3. PRICING3.1 Expectation3.2 Description3.3 Special Considerations3.4 Changes in Existing Processes3.5 Solution in SAP3.6 Gaps3.7 Workaround Solutions3.8 Integration Requirements3.9 Reporting Requirements3.10 Authorization Requirements3.11 Migration Requirements

4. PRE-SALES PROCESS5.1 Expectation5.2 Description5.3 Special Consideration5.4 Changes to Existing Process5.5 Solution in SAP5.6 Gaps5.7 Workaround Solutions5.8 Integration requirements5.9 Reporting Requirements5.10 Authorization Requirements5.11 Migration Requirements


5. SALES ORDER PROCESS6.1 Expectation6.2 Solution in SAP6.3 Special consideration6.4 Gaps6.5 Workaround Solution6.6 Integration Requirements6.7 Reporting Requirements6.8 Authorization Requirements6.9 Migration Requirements

6. FACTORY SALE PROCESS8.1 Expectation8.2 Changes to Existing Processes8.3 Solution in SAP8.4 Gaps8.5 Workaround Solutions8.6 Integration Requirements8.7 Reporting Requirements8.8 Authorization Requirements8.9 Migration Requirements8.10 Sales Document required

10. SAMPLE SALE10.1 Expectation10.2 Changes to Existing Processes10.3 Solution in SAP10.4 Gaps10.5 Workaround Solutions10.6 Integration Requirements10.7 Reporting Requirements10.8 Authorization Requirements10.9 Migration Requirements10.10 Sales Document required

11. EXPORT SALE11.1 Expectation11.2 Changes to Existing Processes11.3 Solution in SAP11.4 Gaps11.5 Workaround Solutions11.6 Integration Requirement11.7 Authorization Requirement11.8 Migration Requirement11.9 Sales Document Required

13. DEEMED EXPORT13.1 Expectation13.2 Changes to Existing Processes13.3 Solution in SAP


13.4 Gaps13.5 Work around solution13.6 Integration Requirement13.7 Authorization Requirement13.8 Migration Requirement13.9 Sales Document Required

14. SALE RETURN14.1 Expectation14.2 Description14.3 Special Considerations14.4 Solution in SAP14.5 Gaps14.6 Workaround Solutions14.7 Integration Requirement14.8 Reporting Requirement14.9 Authorization Requirement14.10 Sales Document Required

15. CREDIT / DEBIT NOTE PROCESS15.1 Expectation15.2 Description15.3 Special Considerations15.4 Changes to Existing Processes15.5 Solution in SAP15.6 Gaps15.7 Solution in SAP15.8 Integration Requirement15.9 Reporting Requirement15.10 Authorization Requirement15.11 Migration Requirement15.12 Sales Document Required

16. SALES DOCUMENT16.1 Expectation8.2 Description


Organizational Structure

1.1 Sales Organization1.1.1 Definition and MeaningA “sales organization” in SAP is an organizational unit in logistics that structures the company according to its sales requirements. A sales organization is responsible for selling materials and services.1.1.2 Definitions at EMI (India) Ltd.

Sales Organizations:

Sr. No.

Sales Organization Code(max 4 char)

Sales Organization Description(max 20 char)

1 1000 EMI Sales Organisation

1.1.3 Codification LogicIt is better to use numeric codes, even though SAP permits alphanumeric codes.It is better to fill up all digits.It is better not to start a code with a “0”.The first digit is company code. The next digit is serial no. followed by "0"'.

1.2 Distribution Channel1.2.1 Definition and MeaningA “distribution channel” in SAP is a channel through which saleable materials or services reach customers.1.2.2 Definitions at EMI (India) Ltd.Sr. No.

Distribution Channel Code(max 4 char)

Distribution Channel Description (max 20 char)

1 10 Direct2 20 In-Direct 3 30 Stock Transfers

1.2.3 Codification LogicIt is better to use numeric codes, even though SAP permits alphanumeric codes.It is better to fill up all digits.It is better not to start a code with a “0”.It is serial wise.

1.3 DivisionDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

1.3.1 Definition and MeaningA “division” in SAP is an organizational unit based on responsibility for sales or profits from saleable materials or services.

1.3.2 Definitions at EMI (India) Ltd.

Sr. No.

Division Code(max 4 char)

Division Description (max 20 char)

1 10 INSULATOR HARDWARE 2 20 CONDUCTOR ACCESSORIES3 30 CLAMPS & CONNECTORS4 40 SPARES5 50 SERVICES6 60 SCRAP7 70 MISCELLANEOUS

1.3.3 Codification LogicIt is better to use numeric codes, even though SAP permits alphanumeric codes.It is better to fill up all digits.It is better not to start a code with a “0”.The division code is a two-digit code.

1.4 Sales Office1.4.1 Definition and MeaningA “sales office” in SAP is an organizational unit in a geographical area of a sales organization.A sales office establishes contact between the firm and the regional market.1.4.2 Definitions at EMI (India) Ltd.Sr. No.

Sales Office (up to 4 characters long)) Description (up to 20 characters long)

1 1000 EMI plant

1.4.3 Codification LogicIt is better to use numeric codes, even though alphanumeric codes are permitted. With numeric codes, ranges can be selected.It is better to fill up all digits.It is better not to start a code with a “0”.The code is same as that of plant.

1.5 Sales Group1.5.1 Definition and MeaningA “sales group” in SAP is an organizational unit that performs and is responsible for sales transactions.


1.5.2 Definitions at EMI (India) Ltd.

Sales Group (up to 3 characters long)) Description (up to 20 characters long)000 NA

1.5.3 Codification LogicIt is better to use numeric codes, even though alphanumeric codes are permitted.With numeric codes, ranges can be selected.It is better to fill up all digits.It is better not to start a code with a “0”.The code is the serial number.

1.6 Shipping Point1.6.1 Definition and MeaningA “shipping point” in SAP is an organizational unit in Logistics that performs shipping processing.The shipping point is the part of the company responsible for the type of shipping, the necessary shipping materials and the means of transport.

1.6.2 Definitions at EMI (India) Ltd.Sr. No.

ShippingPoint Name (up to 30 characters long)

1 1000 EMI Shipping Point

1.6.3 Codification LogicIt is better to use numeric codes, even though SAP permits alphanumeric codes.It is better to fill up all digits.It is better not to start a code with a “0”.The shipping point codes are same as that of plant codes.


1. Master Data

2.1 ExpectationCustomer Master Data should ensure that all the necessary details about the

customer are captured in such a way that it facilitates smooth transactions.

2.2 DescriptionEMI is having wide base of customers across. Presently in EMI the customers are

grouped in the following categories:

CUTOMER GROUP: (NAME OF UTILITIES)10 -DOMESTIC20 – EXPORT30 – DEEMED40- -MERCHANT

CUTOMER GROUP 1: (NAME OF UTILITIES)10 – PGCL20 – HVPNL30 – MSETCL

The data related to all customers is managed at EMI Corporate office. It contains

details like

Customer Number Name1 Street City Postal Code District Country Region Telephone 1 Mobile Phone Fax No E.Mail CONTACT PERSON First

Nmae CONTACT PERSON Currency


Incoterms (part 1) ECC No ExciseReg No. Excise Range Excise Division No. Excise commitionnarate Excise Indicator

Customer CST No. LST No. PAN

2.3 Changes to Existing Processes

Customer master record will be maintained centrally in SAP, which will consist of

details related to a customer from the accounting and sales point of view.

2.4 Solution in SAP

In Sales and Distribution, products are sold to business partners (e.g. customer,

sales partner, and agent). Data about the products and business partners is the

basis for sales processing. Sales processing with SAP require that the master data

should be maintained in the system.

Customer groups (OVS9) will be defined in the system as per the requirement. The

customer group will be assigned to the customer in the customer master (in the sales

area data and sales screen). The system copies this specification at header and item

level in sales document. The customer group facilitates reporting.

In addition to Sales and Distribution, other departments of the company such as

accounts or materials management access the master data. The customer master

data is stored in a specific structure in order to allow access from these different

views.

Partner FunctionIn SAP, a customer has four major partner functions, as described below:


Sold-to Party is the one who places the sales order

Ship-to Party is the one to whom the goods are shipped

Bill-to Party is the one to whom the invoices are billed

Payer is the one who settles the invoice

N0. Partner Function Coding1 Sold to Party SP2 Ship to Party SH3 Bill to Party BP4 Payer PY

Account Group

We need to make the account groups for all required partner function like sold to,

ship to. If we create the customer master with sold to party account group, the

system creates the account group for ship to, bill to & pay to by default. tion.

Account group determines the creation of the customer master record. It determines

the structure of the customer master record input fields (field status). With the field

status, one can define a field as suppressed / display / optional / mandatory field,

based on which a customer master record is maintained.

One can define number ranges as per the requirement and assign it to an account

group.

Following business partner account groups will be used.

N0. Account Group Coding

From To

1 Domestic Sold to party

Z001 100000 999999

2 STO ZSTO 1000 99993 Export Customer Z002 20000 99999


The number range assignment for all the business partners will be internal and generated by the system.

Customer Master Data

Customer master data is organized in the following views:

General Data

Company Code Data

Sales Area Data

CIN Data

General Data

It provides general information such as customer name, address, communication

data, bank details etc. of a customer with a particular company code or sales area.


General data includes:Address: Name, Address, Time Zone, Telephone, Fax, Email

Control Data: Vendor No., Transportation zone, Tax information, Jurisdiction code

Payment Transaction: Bank details, Card details.

Marketing: Customer classification, Industry, FI Year Variant, Legal status

Unloading Points: Unloading points details, Customer Calender

Export Data

Contact Person: Name, Department, Function, Contact details

Company Code Data

Company Code data consist of financial accounting data such as reconciliation

account number, previous account number, terms of payment and insurance (in case

of Exports).

Company code data includes:

Account management information regarding Payment Transactions such as:

Account management: Reconciliation account number, Interest Calculation Procedure

Payment Transaction: Terms of payment, Credit memo payment terms, Payment history record, Payment method, House Bank

Correspondence: Dunning data, Correspondence data

Insurance: Export Insurance Data

Sales Area Data

Sales area is a combination of Sales Organization, distribution channel and division.

This data is only relevant to Sales and Distribution. It provides sales area related


data such as sales district, sales office, sales group, customer group, customer

pricing procedure, delivery priority, shipping condition, delivering plant, inco terms,

account assignment group, tax classification etc for a customer for a sales area.

Sales area data for a customer varies for different sales areas.

Sales area data includes:

Sales: Sales District/Group/Office, Customer Group, Currency, Order probability, Exchange rate type, Customer pricing procedure.

Shipping - Delivering plant, Shipping Conditions, Delivery Priority, Partial delivery allowed, under delivery and over delivery tolerance

Billing Documents: Rebate, Pricing Determination, Inco terms, Cr control area, Account assignment group

Partner functions - Sold-to party, Ship-to party, Bill-to party, Payer

To edit sales area data for a customer master record, one must specify the customer number and sales area to access the sales area data. One can only process sales and distribution transactions, for example, a sales order, after entering the sales and distribution data for a customer.CIN DataIt provides sales tax and excise related data such as ECC No., Excise Registration No., LST No., CST No., and PAN No. etc for a customer.

CIN data includes:

Excise Duty (ECC No., Excise Reg. No., Excise Range, Excise Division)

Sales Tax (CST No., LST No.)


Withholding Tax (PAN No.)

Blocking a customer masterA customer master record can be blocked for selected sales area or all sales areas. It can be blocked for sales order, delivery or billing. A customer master record can be blocked for selected company code or all company codes.Marking a customer master for deletion

A customer master record can be marked for deletion for sales & distribution related data. Displaying changes for a customer master / several customer masters

History of changes for a customer / several customers can be displayed. Changing account group of a customer

Account group for a customer master record can be changed and related data can be displayed.

2.6 Gaps--------2.7 Workaround Solutions--------2.8 Integration RequirementsThe SD and FI modules are strongly integrated for maintaining the customer master

data. Customer master data in SAP is also maintained at the company code level

and the details like Reconciliation account, Interest calculation on the overdue

amounts, Payment terms are to be maintained at this level. By having the

reconciliation account in the Customer Master Record is for the Payer only, the

posting for a customer to the required G/L accounts can be achieved.

2.9 Reporting RequirementsList of Customers: Customer list will be provided.

Customer Details: VC/2 Sales summary for customer or XD03 Display customer


VC/2: Sales Summary for Customer range, gives the details for the selected customer, the statistic for sales document like Quotation, order, Invoice and Credit information, back order.

Use Dynamic Variant in VC/2; search can be given for all the elements of customer master data.

VA45: List of contracts for the customer

MCTA: Customer analysis on given criteria

2.10 Authorization RequirementsCustomer master owner, who is responsible for maintaining the Customer master

record, will be given the required authorizations.

2.11 Migration Requirements

The Customer master data template will be released for collection of the data as per

the project plan.

For data upload, batch data communication (BDC) / Legacy system for Migration

workbench (LSMW) will be made before go live.


2. Pricing

3.1 Expectation

Requirement of pricing is to pick up the right price for a given material at the time of sales transaction. The other statutory requirements like Excise and Sales tax should be automatically calculated by the system to minimize the error while posting those values in the respective GL accounts.Pricing should provide the scope of discount applicability for a customer / combination of customer and material / material on case-to-case basis.Pricing should provide flexibility of changing the price and getting it approved before finalization of deals with the customer.Centralized control mechanism is required to ensure maximum realization to the company.

3.2 DescriptionThe basic components for calculation of price are as follows

Basic Price

MRP

Assessable Value/Sale Price

Discount material / Customer/ Group/cash etc

Excise Duty

VAT / CST/LST

Freight

3.3 Special Considerations


Base Price of a material should be picked up from the condition record while carrying

out a sales transaction based on the available valid combination. Other calculation

such as excise, sales tax and VAT should be derived automatically based on the

selection.

3.4 Changes in Existing Processes

Base price will have both option automatically & manual entry

Calculation of excise, sales tax and surcharges will be automatically done by the

system.

Freight should be calculated on basis of 2 conditions

On the basis of Weight

On actual basis

3.5 Solution in SAP

The basic price is material specific; it will be maintained in the condition master.

Accordingly the price condition master (VK11) will be updated. The condition

masters are maintained in the condition type and condition types are placed in the

pricing procedure. The pricing procedure is assigned to the concern sales area as

per the requirement.

The domestic and export sales need to have the separate pricing, as the structure

for pricing change due to change in the duties and taxes. The basic Price will be

maintained in required currency. While creations of sales order basic price will be

copied from the condition master, the same is manually changeable in the sales

order. For e.g. the standard basic price is maintained at Rs.100 in the condition

master, but the sales order need to be made at the rate Rs.110, we need to have the

option of manual change. The manual change option will be provided.

Pricing Procedure:Pricing in SAP is handled through Pricing Procedure. For each sales order, a pricing procedure is determined based on the following parameters:Sales Area (Sales Org., Distribution Channel, and Division)


Customer pricing procedure (From Customer master)Document pricing procedure (From Sales Document type)The pricing procedure contains a series of Condition Types. Pricing procedure Designed for EMI:

YEMIDO - DOMESTIC PRICING

YEMIEX - EXPORT PRICING

YEMIDE - DEEMED PRICING

YEMIWR - WARRANTY PRICING

YEMITE - TESTING PRICING

YEMIDC - DEBIT/CREDIT PRICINGCondition type:

Condition types represent Price elements in SAP system. Price elements will be:

Condition Type DescriptionZPR0 Material CostZADO Add OnsZDIS DiscountZPVA PV AdjustmentZBED BEDZECS CessZHSC S.CessZFRE FreightJIVP VATJIVC CST

Value of a condition type can be determined by the following methods:

-From condition records,

-By keying value manually, or

-Manually overwriting the value determined from condition record


Condition Table

Condition tables are used to define price dependencies. Combinations of fields for

which condition records can be created are defined in condition table.

Access Sequence

Access sequence is specified in condition type. The access sequence is a search

strategy, which the SAP system uses to search for condition records valid for a

condition type.

3.6 GapsNil

3.7 Workaround SolutionsNil

3.8 Integration RequirementsWith FI Module: Through pricing procedure, the values of condition types are posted

to the respective GL accounts in FI. Integration between SD and FI happens by

assigning the account keys in the pricing procedure for account determination like for

ERL for sales revenue, ERS for sales deductions & ERF for freight revenue etc.

Tax code is maintained in FI module based on which the percentage tax, surcharge

and additional surcharge are picked up and hence integration between SD and FI is

required.

Reporting RequirementsVK12 – Change Condition Record

VK13 – Display Condition Record

3.10 Authorization RequirementsThe authorisation will be given to the specific person for creation of condition record

on the basis of material group and customer group.

Table 8: Authorization for Prices and Taxes


Activity Authorized Persons

Display of Pricing Condition Records

Creation and maintenance of Pricing

Condition records

3.11 Migration Requirements

Following Condition records to be entered in the system as per prevailing values.

Basic Price

MRP

Discount material / Customer/ Group/cash etc

Excise Duty

Sale Tax / VAT

Freight


3. Pre-Sales Process

5.1 ExpectationThe expectations from the Pre sales processing cycle are enumerated below

Creation of Inquiry in the system as per the customer requirement

Creation of Quotation on the basis of inquiry

Automatic pricing with change option in the quotation

Inquiry & quotation tracking

5.2 DescriptionThe inquiry may come through mail, phone or fax about product, Prices, terms of

delivery, description of the product and so forth.

In case of repeat inquiry, it will have the old reference order number/ previous inquiry

number details. The reference order/inquiry needs to refer in the system for the

information.

5.3 Special ConsiderationNone

5.4 Changes to Existing ProcessAt present, EMI doesn’t have any process to map the pre sales activity in system,

the records are maintained manually.

In SAP, we will have the standard pre sales process to map the process, which

starts from the inquiry and can be tracked till the receipt of customer’s order.

5.5 Solution in SAPInquiry & Quotation Cycle

On receipt of the inquiry, it will be entered (VA11) in system with customer details,

material number and desired quantity. The standard inquiry type “IN” will be used for

the same.


The inquiry reason will be predefined in the system as per the requirement and can

be changed in case required.

In case the material is new and material master is not maintained for the same, Then

material master need to be created for the material, for processing the standard

route need to be used. Then only the inquiry can be entered in SAP with material

number.

Once the material master is made for the new material, Bill of material, routing,

costing and price condition record need to be maintained.

The quotation (VA21) can be made using the reference or without reference of

inquiry for the material; pricing will be copied into the quotation. The sales document

type “QT” will be used to create the quotation.

Pricing will be done using the pricing procedure and the manual changes will be

possible.

Change in Inquiry and Quotation

In case of rate/qty revision during negotiation, changes can be made in quotation or

new quotation can be created

Tracking System

The inquiry and quotation tracking can be obtained from the system. After creation of

inquiry, the quotation will be made with reference to the inquiry. The inquiry status

will be shown in system as closed after creation of quotation. If you make the sale

order with reference to the quotation, the quotation will be closed. Else manually also

the inquiry and quotation can be closed by giving the reason. The report can be

obtained from the system for open or incomplete inquiry and open quotation for

tracking.

5.6 GapsNil

5.7 Workaround SolutionsNil


5.8 Integration requirementsThe SD module is highly integrated with PP module; creation of the sales order is the

input for the MRP, production order. The other activity like bill of material, routing and

MRP call for integration with PP module.

The integration with MM module at pre sales level is restricted to the material master

5.9 Reporting RequirementsList of Inquiry (VA15) for: Document Type, Customer, Material, Period, and

Executive.

List of quotation (VA25) for: Document Type, Customer, Material, Period, and

Executive.

5.10 Authorization RequirementsThe concern person will be given the authorisation for pre sales activity.

5.11 Migration RequirementsCustomer master, material master data, conditions master, sample master to be

created in the system

All open Inquiries & quotations will be created manually in SAP.

Sales Document required

Inquiry Document “ZIIN”

Quotation Document “ZIQT”


4. Sales Order Process

6.1 Expectation

The customer order fulfilment for the desired quantity, quality, with the required cost

and within stipulated time frame is the prime objective of sales order process. The

most important aspect is efficient and effective use of the resource for customer

order fulfilment. The expectations from sales order processing cycle are enumerated

below

Make to Order Scenario

Sales Order

The sales order (VA01) will be created for the material using the standard sales

order type.

Following are document type created:

ZAOR – EMI SALES ORDER

ZATE – EMI TESTING ORDER

ZAWR – EMI WARRANTY ORDER

ZSUP – SUPPLEMENTARY INVOICE REQUEST

ZACR – CREDIT MEMO REQUEST

ZADR – DEBIT MEMO REQUEST

ZAQT - QUOTATION

ZARE – RETURN ORDER

ZSAM – SAMPLE SALE

ZINQ – EMI Enquiry

ZQUT – EMI QUOTATION

At the time of creation of sales order, following information shall be captured


Sold to / Ship to / Bill to / Pay to

Material & Qty

Requested delivery date by the customer

Plant & Shipping point for the material

In case the ship to party need to be changed at delivery level, first make the change

in the sales order it will copy into delivery document.

6.2 Solution in SAPMaster Data retrieval

From customer master the sold to, ship to, bill to & pay to data will be copied on

selection in respective field. Material details like description, unit etc will be copied

from the material master in the sales document. The material master will be

maintained with base unit and the conversion formula from the base unit to selling

units are possible.

Pricing

The condition record for the material basic price will be maintained in SAP. The

pricing procedure is assigned to the sales area and sales document. It will determine

the basic price and other conditions record like duties, taxes & freight. Change in the

material basic price can be done at the sales order line item level manually by going

into the line item condition tab.

Delivery

The delivery will be created (VL01N) using the delivery document type.

Delivery document type:

ZDLF Delivery


ZDLR Returns Delivery

At the time of creation of delivery, following information shall be captured

Sales Order reference number, Shipping Point & Delivery Date

Storage Location

The other data will be copied from the sales order like ship to, bill to & line item

material with ordered quantity. Picking and post goods issue activity will be done.

The picking quantity can be lesser than ordered quantity to facilitate partial delivery.

Once the picking is done & delivery is saved, delivery will appear in the due list for

post goods issue. Post goods issue (VL02n) can be done at the plant and goods will

be ready to ship or transport to the customer destination.

Billing document

Once post goods issue is done, billing document can be created in the system. To

create billing document (VF01), input the delivery order number and select the

delivery related invoice document type.

Invoice Type:

ZDIN Deemed Invoice

ZEIN Export Invoice

ZIG2 Credit Memo

ZIL2 Debit Memo

ZINV Invoice

ZIS1 Cancel. Invoice (S1)

ZIS2 Cancel of Cred Memo

ZISU Suppl Invoice

ZPF5 Pro Forma for Order

ZPF8 Pro Forma Inv f Dlv

ZPRO Invoice Prom sale

ZREI Credit for Returns

ZSAM Invoice Salmple sale


ZSTO STO INVOICE

The billing document will be generated, the bill to & pay to will be copied from the

sales order, in case of any change the same needs to be amended in the sales order

before creation of billing document.

Proforma Invoice

The proforma invoice can be created from the system, the proforma invoice can be

order related or delivery related.

To create the proforma invoice (VF01) for sales order select the proforma invoice

order related type and for delivery select the proforma invoice delivery related type

then input the sales document number, proforma invoice will be generated by the

system.

6.3 Special consideration-------

6.4 GapsNil

6.5 Workaround SolutionNil

6.6 Integration RequirementsIntegration with MM module for material master data, inventory updation after

delivery.

Integration with PP module for MRP, Bill of material, Routing & production planning

activity.

Integration with FICO module for posting of invoice and for costing of the product.

6.7 Reporting RequirementsList of sales order (VA05) for: Customer, Material, Purchase order number, Sales

Document type, Executive and period.

Balance stock against the Sales order (MMBE/MB52)


List of Billing Document (VF05): Customer, material & period,

List of the Delivery (VL06O), Incomplete Delivery (V_UC)

List of the Invoice (VF05): Customer/Payer, material & period

6.8 Authorization RequirementsThe concern person will be given the authorisation specific to the division for sales

order process activity.

6.9 Migration RequirementsFollowing data need to be maintained/created

Customer master

Customer material master if required

Material master

Condition record for pricing


5. Factory sale Process8.1 ExpectationThe provision to be made for factory sale done by EMI without missing any of the

current processes.

8.2 Changes to Existing ProcessesThe documents like Inquiry, Quotation, SO, commercial invoice & excise invoice

have to be generated through SAP.

8.3 Solution in SAPInquiry:

o The inquiry may be received from Customer either through mail, telecom or inquiry letters.

o A document type to be created for inquiries, which should be used to enter data.

Quotation:o Quotation is prepared with reference to the inquiry and consists

of specifications, price, tax, delivery and other details.o An output type would be specified to print the quotation and

send it to the customer.

Order Acceptance / Sales Order:

o Upon receipt of the Purchase Order a Sales Order is created in SAP with reference to the quotation, provided the order is technically and commercially correct.

o The Sales Order will copy all data from the quotation.o Depending upon the customer or/and material, the price and

discounts will be calculated automatically, sales tax based on Ship to Party.

o Depending on availability of stock the S.O shall be taken up for further process of Procurement and Production.

o An output of the same can be taken in the form of an OA (order acceptance).

Delivery:


o Post goods issue to be done to remove goods from stock.

Factory Invoice:o Commercial and excise invoices are printed and sent to

customer.

All these activities have to be done taking into consideration all the statutory taxes

and duties that need to be captured at various stages. The above activities need to

be carried out in such a way that the customer’s requirements are fully met apart

from the organisational requirements.

Process Flow Diagram – Factory Sale


Enquiry (VA11)

Quotation (VA21)

Order (VA01)

Delivery (VL01N)

Billing (VF01)

Excise Invoice (J1IIN)

8.4 GapsNil

8.5 Workaround SolutionsNone


delivery.

Integration with FICO module for posting of invoice and settlement.

8.7 Reporting Requirements Sales Order Status: Incomplete (V.02)

List of sales order (VA05) for: Customer, Material, Purchase order number, Sales






8.8 Authorization RequirementsThe concern persons will be given the authorisation to create sales order, delivery,

billing and excise related activities.

8.9 Migration RequirementsNIL

8.10 Sales Document required Standard Document Type


Standard Sales Order ZFAC

Standard Delivery Document ZDLF

Proforma Invoice reference to sales order ZPF5 - If required

Proforma Invoice reference to delivery ZPF8 – If required

Delivery related invoice ZINV

10. SAMPLE SALE

10.1 ExpectationThe provision to be made for the sample sale done by EMI without missing any of

the current processes followed by EMI.


The documents like SO, commercial invoice & excise invoice have to be generated

through SAP

10.3 Solution in SAP

Order Acceptance / Sales Order:o Upon receipt of the request for the sample a Sales Order is

created in SAP o An output of the same can be taken in the form of an OA (order

acceptance).o Production dept will start production based on the Sales Order if

not available in the stock.

Delivery:o Picking of sample and Post goods issue to be done to remove goods

from stock.

Excise Invoice:o Excise invoice are printed and sent to customer.

All these activities have to be done taking into consideration all the statutory taxes

and duties that need to be captured at various stages. The above activities need to


be carried out in such a way that the customer’s requirements are fully met apart

from the organisational requirements.

10.4 GapsNil

10.5 Workaround SolutionsNone


delivery.

Integration with FICO module for posting of invoice and settlement of commission.

10.7 Reporting Requirements Sales Order Status: Incomplete (V.02)

List of sales order (VA05) for: Customer, Material, Purchase order number, Sales






10.8 Authorization RequirementsThe concern persons will be given the authorisation to create sales order, delivery,

billing and excise related activities.

10.9 Migration RequirementsNIL

10.10 Sales Document required Standard Sales Order ZSAM

Standard Delivery Document ZDLF

Proforma Invoice reference to sales order ZPF5 - If required

Proforma Invoice reference to delivery ZPF8 – If required

Delivery related invoice ZINV


SAMPLE SALE FLOW CHART


Create Free Sample Sales

Order

Create Outbound Delivery

Picking Materials

Post Goods Issue

Create Billing Document

11. EXPORT SALE

11.1 Expectation

There have been export transactions at EMI with finish products in various countries.The process starts by Inquiry or directly getting in touch with customers abroad. After finalizing the terms of the sale, material and quantity, marketing will raise a dispatch advice.Material is dispatched from factory/depot and an excise invoice is generated (with 0% Excise duty) in case of export as per the state/country laws.


Creation of ARE1 is done manually in the current system. In SAP, Inquiry to ARE1 will be created through system. Letter of credit also will be maintained in the system.

11.3 Solution in SAPSales Order

Create an Export Sales order in VA01. Export sales order will be created. Order will be entered for a valid sales area. The order will contain the following details:Sold To and Ship To CustomerCustomer PO number and dateMaterial to be dispatched and quantityRequested delivery dateCurrency (from customer master)Delivering PlantTexts can be used to capture financial document details regarding document number, date, opening bank, validity etc. Shipment related text could also be entered.


Delivery

Delivery is created in VL01N with reference to order and Goods Issue posted so that order can be billed. Inventory is reduced and statuses of all relevant documents are updated. ARE1 form is prepared at the time of physical movement of the goods along with the packing list and delivery challan.

Invoice

Commercial Invoice is raised in VF01 with relevant duties and posted to accounting, which updates Accounts Receivables, and Revenue accounts.A proforma invoice must be created. This invoice is only for the reference purpose no financial documents are generated.

Excise InvoiceExcise invoice is created in J1IIN with reference to the billing invoice.ARE1 documents in J1IA101

11.4 Gaps

CIN allows tracking of Export bond as a standard feature. However, other legal / statutory documentation is not provided in standard SAP.

11.5 Workaround SolutionsPrinting of Excise Invoice, Commercial invoice & Packing List is need to be

developed by ABAP

11.6 Integration RequirementIntegration with MM module for material master data & inventory is required.


Integration with FI CO module for posting of invoice and for costing of the product is

required.

11.7 Authorization RequirementThe concern person will be given the authorisation for Export orders.

11.8 Migration RequirementNil

11.9 Sales Document Required

Standard sales order ZEXP Standard Delivery ZDLF Standard Billing ZEIN Pro forma Invoice ZPF8


Export Sale Flow Chart


13. Deemed Export

13.1 Expectation

To map Deemed export process from inquiry till ARE3 completion13.2 Changes to Existing Processes

Creation of ARE3 is done manually in the current system. In SAP, Inquiry to ARE3 will be created through system.


Sales Order

Create a deemed export sales order in VA01. Order will be entered for a valid sales area. The order will contain the following details:Sold To and Ship To CustomerCustomer PO number and dateMaterial to be dispatched and quantityRequested delivery dateDelivering PlantTexts can be used to capture financial document details

Delivery

Delivery is created in VL01N with reference to order and Goods Issue posted so that order can be billed. Inventory is reduced and statuses of all relevant documents are updated. ARE3 form is prepared at the time of physical movement of the goods along with the packing list and delivery challan.

Invoice


Commercial Invoice is raised in VF01 with relevant duties and posted to accounting, which updates Accounts Receivables, and Revenue accounts.A Proforma invoice must be created. This invoice is only for the reference purpose no financial documents are generated.

Excise InvoiceExcise invoice is created in J1IIN with reference to the billing invoice.13.4 GapsCIN allows tracking of Deemed Export bond as a standard feature. However, other legal / statutory documentation is not provided in standard SAP.

13.5 Work around solutionPrinting of Excise Invoice, Commercial invoice & Packing List is need to be

developed by ABAP

13.6 Integration RequirementIntegration with MM module for material master data & inventory is required.


required.

13.7 Authorization RequirementThe concern person will be given the authorisation for Deemed Export orders.

13.8 Migration RequirementNil


Standard sales order ZDEM


Standard Delivery ZDLF Standard Billing ZDIN Pro forma Invoice ZPF8

DEEMED EXPORT FLOW CHART

SAP AG 2004, Title of Presentation, Speaker Name / 3

Create Inquiry

Create Quotation

Capture Deemed Export License

Update ARE 3 based onCustomer Input in Part 2

Create Outbound delivery

Print ARE 3

Create Proforma Invoice

Printing Billing document

Create Billing document

Create ARE 3

Post ARE 3

Sending ARE 3 to Excise Dept

Cancel / Close ARE 3

Create Sales Order

Create Excise Invoice

Print Excise Invoice

•Update Qty/Value in License

•Part II Entry in RG23 Registers•Accounting Doc for Cenvat

•RG1 Entry


14. Sale Return

14.1 Expectation

The provision to be made so that the sales return process is mapped in SAP.

The expectations from sales return processing cycle are enumerated below:

Receiving the customer’s complaint Creation of Sales order for sales return referring to the

invoice Creation of the return delivery & post goods issue Goods receipt at the plant and inventory update Creation of Billing document for Crediting the customer

account The above activities need to be carried out in such a way that the customer’s

requirements are fully met apart from the organisational requirements.

14.2 Description

At present for sale return, customer directly sends the rejected material back to the

factory. The goods receipt is made at the plant and stock is updated. The credit note

is issued to the customer for the sales return.

14.3 Special Considerations

--------14.4 Solution in SAPReturn Sales Order

The standard sales return process will be followed for sales return. Sales document

type for sales return “RE” (VA01) will be created, after the approval of the sales

return. The Sales order will be created with reference to invoice. Selection of order

reason will be mandatory while creating return order. Order reason can be defined

freely in SAP. All the line items along with material, quantity, pricing etc. will get

copied in the return order from the invoice.

Upon saving the return order, system will display return order number.


Delivery

Separate return delivery document “LR” type (VL01n) will be maintained; the return

delivery will be created with reference to the return sales order and post goods issue

will be done.

The return stock will be inspected and it will be decided whether the stock to be

reprocessed, resold or to be scrapped.

Return goods will be received in unrestricted stock

Movement type:653

Invoice

Billing document (VF01) for the return “RE” will be created; credit memo will be

created with reference to the return delivery, on saving the credit memo number will

be displayed.

14.5 GapsSales return of materials sold before SAP implementation.14.6 Workaround SolutionsHave to create return sales order without any reference

14.7 Integration Requirement

Integration with MM module for material master data & inventory is required.


required.

14.8 Reporting Requirement

Same as sales order process

14.9 Authorization RequirementAuthorisation requirements are explained in different document.


Sales Return “ZRET”


Return Delivery Document “ZDLR” Credit for returns “ZRET

Sales Return Flow Chart


Return Order (VA01)

Return Delivery (VL01N)

Return Credit (VF01)

Excise Invoice (J1IIN)

15. Credit / Debit Note Process

15.1 ExpectationTo have provisions to take care of unplanned and unexpected business scenarios

resulting in changed liability status.

15.2 Description

There are several unusual, unexpected and unplanned business scenarios, which

result in the creation of liabilities on the third party or on the Organization itself. Such

scenarios will be handled using debit and credit notes.

Credit notes/debit note are issued in the following scenario

Adjustment due to rate / tax difference with reference to the invoice

Credit memo / debit memo without reference to invoice

The reasons for credit or debit note are Rate difference, Quantity difference, Quality

issue, and Goods return, Cash discount, Commission, Freight & other.

15.3 Special ConsiderationsNone

15.4 Changes to Existing ProcessesNone.


Credit or debit memo request

An invoice correction request (VA01) for invoice related changes would be created

using sales order type “RK”; all the line items along with material, quantity, pricing

etc. will get copied in the invoice correction request from reference invoice. System

will automatically calculate the difference and adjust credit / debit value based on the

past and present rate. Order reason will be kept mandatory to keep the track of

invoice correction. Authorization for removing billing block can be controlled for

releasing (VA02) credit / debit memo request. Upon saving the invoice correction or

credit memo or debit memo request, system will display order number.


Credit/debit memo request (VA01) without invoice reference would be created with

reason and prior approval from the concern authority. The sales order type debit

memo request “DR” or credit memo request “CR” will be used to create the memo

request.

Credit memo or Debit memo

If difference is positive then credit memo (“G2”) will be created (VF01) with reference

to invoice correction request. If difference is negative then debit memo (“L2”) will be

created with reference to invoice correction request. Upon saving the billing

document, system will display credit / debit memo number.

Adjustments related to sales will be handled using Debit and credit notes. Debit and

Credit notes will be created with reference to Debit and Credit requests. The

following figure demonstrates the process of creating Debit and Credit Notes:

Process Flow Diagram – Credit Memo Process


Process Flow Diagram – Debit Memo Process

Billing block will be created by default while saving Credit/Debit request. The Block

will have to be cleared by a person with proper authorisation before issuing a Debit

or Credit memo.

15.6 GapsNone.

15.7 Solution in SAPNone.

15.8 Integration Requirement


Since Debit and Credit notes need to be posted in the proper G/L accounts,

integration with FI is required.

15.9 Reporting RequirementList of Credit/debit notes for: Period, customer (VA05, VF05)

List of open Debit/Credit requests with Billing block status (VA05, VF05)

15.10 Authorization RequirementAuthorisation requirements are explained in different document

15.11 Migration Requirement

None


Credit memo “ZICR” or debit memo “ZIDR” request

Credit memo “ZIG2” or debit memo “ZIL2”


16. Sales Document

16.1 Expectation

SAP System should enable tracking of all sales transactions by their type, serial

number and the status. This is particularly critical for the transactions that are of

statutorily significant like billing documents

16.2 Description

Identified below are various Standard document types applicable for EMI considering

various business processes as described in the previous sections of this document:

ZAOR – EMI SALES ORDERZATE – EMI TESTING ORDERZAWR – EMI WARRANTY ORDERZSUP – SUPPLEMENTARY INVOICE REQUESTZACR – CREDIT MEMO REQUESTZADR – DEBIT MEMO REQUESTZAQT - QUOTATIONZARE – RETURN ORDERZSAM – SAMPLE SALEZAWS – Warranty Sale

Numbering System

In SAP provides10 digit numeric number range either external or internal.

Internal means the system generates the document number.

In external the document number needs to be given by the user.

Use of internal number range is widely used.

Number ranges for EMI will be as follow:


To-Be Process DocumentFINANCIAL ACCOUNTING

Version 1.0


PREFACE

Purpose of this DocumentThe purpose of this document is to record the business process requirements of EMI

Transmission (India) Ltd. (henceforth referred to EMI) and outline the requirement

mapping in SAP.

Intended AudienceThe intended audience for the Financial Accounting Business Blueprint are the


Business Processes involved in Financial Accounting.



Description

CO ControllingMM Material ManagementFI Financial AccountingPO Purchase OrderSD Sales and DistributionDELPHI Delphi computechTDS Tax Deducted at SourceAUC Asset under ConstructionAA Asset AccountingGL General LedgerAR Accounts ReceivableAP Accounts PayableVAT Value Added TaxJV Journal VoucherDr. DebitCr. CreditEMI EMI Transmission LtdT-Code Transaction CodeGR Goods Receipt.


Contents

1. ORGANIZATION STRUCTUREExisting FlowExpectationDescriptionSpecial ConsiderationsSolution in SAPGapsWorkaround SolutionsIntegration RequirementsReporting RequirementsAuthorization RequirementsMigration Requirements

2. MASTER DATA & VARIANTSExpectationSpecial ConsiderationsExceptionChanges to Existing ProcessesSolution in SAPGeneral LedgerAccount GroupsGeneral Ledger Account Master RecordsCustomer MasterVendor MasterAsset MasterBank MasterGapsWorkaround SolutionsIntegration RequirementsReporting RequirementsAuthorization RequirementsMigration Requirements

3. GENERAL LEDGER ACCOUNTINGDescriptionSpecial ConsiderationsExceptionChanges to Existing ProcessesSolution in SAPSpecial GL Indicators GapsWorkaround SolutionsIntegration RequirementsAuthorization Requirements


Migration Requirements4. ACCOUNTS RECEIVABLE ACCOUNTING

DescriptionSpecial ConsiderationsExceptionChanges in Existing ProcessesSolution in SAPWorkaround SolutionsIntegration RequirementsReporting RequirementsAuthorizations RequirementsMigration Requirements

5. ACCOUNTS PAYABLE ACCOUNTINGDescriptionSpecial ConsiderationsExceptionChanges to Existing ProcessesSolution in SAPWorkaround SolutionsIntegration RequirementsReporting RequirementsAuthorisation RequirementsMigration Requirements

6. ASSET ACCOUNTINGDescriptionSpecial ConsiderationsExceptionChanges to Existing ProcessesSolution in SAPWorkaround SolutionsIntegration RequirementsReporting RequirementsAuthorisation RequirementsMigration Requirements

7. BANK ACCOUNTINGDescriptionSpecial ConsiderationsExceptionChanges to Existing ProcessesSolution in SAPWorkaround SolutionsIntegration RequirementsReporting RequirementsAuthorisation RequirementsMigration Requirements


1. Organization StructureExisting FlowThe existing ERP system design is not on the basis of Organisational Units.

Expectation

The Organization Structure / Units are used to structure business functions and to

enable reporting with seamless interface.

The organizational needs of Financial Accounting are to report for external and

statutory purposes.

The organizational units of Controlling are used to satisfy internal reporting

requirements. They enable reporting performance within the organization and can be

used to generate multi-dimensional analysis.

DescriptionThe Organization structure represents the legal and organizational structure of the



different departments of an organization. The organizational structures form a


EMI is in the business of manufacturing Pesticides and EMI transmission products

through one legal entity Emi.

Following are the additional Future business scenarios:

Special ConsiderationsAs per the Sec.80 (I) of Income Tax Act., EMI has to maintain the records separately for the NASHIK plant .

Solution in SAPThe Organisation structure elements in hierarchical form to be created in EMI for

SAP implementation is explained below:

1. Client:It is the highest level in the SAP System hierarchy. Specifications that are made, or

data that is entered at this level are valid for all company codes and for all other


organizational structures. These specifications are therefore to be maintained only

once. This ensures that the data is consistent.

EMI will be at the Client level with a 3 digit numerical code.

2. Credit Control AreaIt is the organisational unit in which all the accounts receivable from a customer are

totalled. This credit control area can be used in several company codes, which

enables tracing the customer limits across the individual unit.

There will be one credit control area. This Credit Control Area will be used for EMI.

Credit Control Area Description

1000 EMI Credit Control Area

3. Controlling AreaThe controlling area is the central organizational unit of the Controlling (CO)

component used to carry out cost accounting. When the controlling component is

implemented, postings are forwarded from Financial Accounting to Controlling.

Normally, one controlling area could span across more than one company codes.

Hence EMI will be assigned to the same Controlling Area

Controlling Area Description

1000 EMI Transmission ltd

4. Company CodeThe company code is the central organizational unit of external accounting within the

SAP System. At least one company code has to be defined to implement the

Financial Accounting component. The business transactions relevant for Financial

Accounting are entered, saved, and evaluated at company code level. A company

code is used to represent a separate legal entity.


Company Code Description

1000 EMI Transmission ltd

Fiscal year Variant: The fiscal year of the Company Code is from 1st April to 31st

March. Hence the variant V3 will be attached to the Company Code, which is 12

posting periods April to March and 4 special periods.

5. Chart of DepreciationCharts of depreciation are used in order to manage various legal requirements for

the depreciation and valuation of assets. These charts of depreciation are usually

country-specific and are defined independently of the other organizational units. A

chart of depreciation, for example, can be used for all the company codes in a given

country.

Chart of Depreciation Description

1000 EMI Chart of Depreciation

GapsNone

Workaround SolutionsNone

Integration RequirementsIntegration with MM, SD and AA is done as follows:

FI-MM Integration The integration point between MM and FI lie at the following levels:

Purchasing Organization to Company Code Assignment

Plant to Company Code Assignment

The details of the above linking from EMI perspective can be referred to in the MM

Blueprint document.


FI-SD IntegrationThere are two points of integration between the Sales and Distribution (SD) and

Financial (FI) modules of SAP. These are:

Sales Organization is assigned to one company code

The plant through which the outbound delivery in the sales cycle is affected is also assigned to a company code.

FI-AA IntegrationAsset Accounting is integrated with Financial Accounting by the Asset Class and the

Account Determination for the Asset Class.

Reporting RequirementsFinancial Statements are to be generated separately for EMI Industries Ltd. as per

the format specified by Schedule VI of the Companies Act, 1956. And IFRS.

Authorization Requirements

The authorization requirements would be finalised during the realization phase.

Master Data & Variants

ExpectationThe Master Data should ensure that all the necessary details about all the business

transactions are captured in such a way that it facilitates smooth transactions

avoiding data redundancy and ensures proper reporting.

Special Considerations-None-

Exception-None-

Changes to Existing ProcessesThis new scheme of Chart of Accounts & GL Master data will consider the future

expansion & diversification plans for Emi. as a whole thus incorporating new GL

accounts that may not be used now but in the future.

The Chart of Accounts permits seamless interface between all the modules of SAP.

All transactions, which update financial information, are directly carried out when the


base transaction is carried out in the other modules. This will also prevent any

manual posting to such an account.

Solution in SAPGeneral LedgerChart of Accounts: The Chart of Accounts aims at providing a directory of GL

accounts that provides a framework for recording of values and ensures an orderly

rendering of accounting data. It also provides the basis for presenting financial

information for external reporting. A Chart of Accounts is assigned to every company

code. More than one company code can use the same Chart of Accounts. This chart

of accounts is the operating chart of accounts and is used for the daily postings in

this company code.

Account Groups:The account group is a summary of accounts based on criteria that effects how

master records are created. The account group also defines the set up when

creating a G/L account in the company code and chart of accounts. The Account

Group determines:

o The number interval from which the account number is selected

when a G/L account is created.

o The screen layout for creating G/L accounts in the company code-

specific area

When creating a GL account in the Chart of Accounts, an Account Group must be

specified.


Code Chart of Accounts

EMI EMI Transmission ltd

Following Account groups will be created with the defined number ranges.

UPDATED ACCOUNT GROPUS AS ON 22-12-2010

chart of accounts

Acct Group Name

From Account

To account

EMI SCPL CAPITAL 100000 109999EMI LIFD LOAN FUNDS 110000 119999

EMI CLPRCURRENT LIABILITIES AND PROVISION 120000 129999

EMI FAST FIXED ASSETS 200000 209999EMI INST INVESTEMENTS 210000 219999

EMI CASTCURRENT ASSTS LOANS AND ADVANCES 220000 229999

EMI SALE SALES 500000 509999EMI PURS MATERIAL CONSUMED 600000 609999EMI DINC DIRECT INCOME 300000 309999EMI DEXP DIRECT EXPENSES 400000 409999EMI IDIN INDIRECT INCOME 310000 319999EMI IDXP INDIRECT EXPENSES 410000 419999EMI APPS APPROPRIATION PROVISIONS 700000 709999

General Ledger Account Master Records:All transaction level data in accounting is captured within a GL account. Each GL

account is maintained as a master record, which controls the data that can be posted

into a particular type of account.

The General Ledger account master records control how business transactions are

recorded and posted to the account.

In the GL account master records, a basic distinction is made between information

contained in:

Chart of Accounts level &

Company Code specific

G/L account master data in the chart of accounts area contains information about the

G/L account that is valid for all company codes. The chart of accounts contains the

information that controls how an account functions and how a G/L account is created

in a company code.

The following information is contained in the chart of accounts area of a G/L account

master record:

The chart of accounts Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

The account number and account name (short and long text)

The indicator that specifies whether the account is a balance sheet account or

a P&L statement account.

The account group

The Chart of Accounts area also contains a marker that identifies it as a Profit and

Loss account or a Balance Sheet account. Each master data record is also assigned

to an account group in the chart of accounts. When you set up an account, the

system ensures that all account numbers are unique. At the start of a new fiscal

year, the balance of a balance sheet account is carried forward. For P&L statement

accounts, you must specify the account to which the profit or loss is carried forward

at the end of a fiscal year.

The items that are assigned at Company code level are:

o Currency

o Tax category

o Open item management

o Line Item Display

o Sort Key

o Field Status Group

The master data record also identifies whether an account is a reconciliation

account. These Reconciliation accounts group together, the value items from the

accounts of the individual sub-ledgers in General Ledger accounting. For e.g.

Accounts from Accounts Receivable are aggregated in the ‘Account Receivable’

General Ledger reconciliation account. Postings to these reconciliation accounts

cannot be made directly.

The below table describes fields in the GL account master record and their

significance:

Sr.

No.

Field Description


1 G/L Account

Number

The G/L account number identifies the G/L account in a

chart of accounts

2 Company Code The company code in which the GL account will be used.

This field will be populated in order to specify company

code specific items in the GL master.

3 G/L account group An object whose attributes determine the creation of master

records. An account group must be assigned to each

master record. It controls account number ranges and

screen layouts.

4 Account is a

balance sheet

account

Indicates that the G/L account is managed as a balance

sheet account.

5 P&L statement

account

Indicates that the G/L account is managed as a P & L

account.

6 Account currency Enter the currency in which the account is to be managed

i.e. generally the company code currency.

7 Indicator: Only

Manage Balances

in Local Currency

Allows you to maintain balances only in local currency

8 Exchange Rate

Difference Key

The system uses this key to find the accounts for gains and

losses for the valuation of foreign currency balances

9 Tax Category Determines whether the account is tax-relevant.

10 Posting without tax

allowed

Indicates that the account can still be posted to even if a

tax code has not been entered


11 Recon Account

Type

An entry in this field characterizes the G/L account as a

reconciliation account for vendors, customers or assets.

The reconciliation account ensures the integration of a sub

ledger accounts into the general ledger.

12 Indicator: Open item

management

Setting this indicator on allows display of the open and

cleared items and amounts in an account.

13 Indicator: Line Items

Display

Indicates that line item display is possible in this account.

Do not set this indicator for accounts in which the number

of postings is so great that line item display online would

not be advantageous.

14 Sort Key Specifies a basis on which line item reports of that

particular GL account would be sorted.

15 Field status group Determines the screen layout for document entry. Fields

can have the following statuses. (1) Optional entry - you

can enter data in the field. (2) Mandatory entry - you must

enter data in the field. (3) Suppressed - the field does not

appear on the screen.

16 Indicator: Posted

automatically only

This indicator means that the account can be only posted

by way of automatic system postings. No manual entry

would be possible.

Customer MasterThe Customer Master records and manages accounting data of all customers.

The AR component contains master records that control how business transactions

are recorded and posted to the account.

The master record is used not only in Accounting but also in Sales and Distribution.

Following Company code details are maintained by Finance:


o Reconciliation Account for the Customer – This Reconciliation

Account is the General ledger for the Accounts Receivable sub-

ledger.

o Payment Terms – Terms of Payment

o Vendor Code – If the Customer is also a Vendor

Vendor MasterThe AP component contains Vendor master records that control how business

transactions are recorded and posted to the account. The master record is used not

only in Accounting but also in Materials Management.

Following Company code details are maintained by Finance:

o General Details – Name, Address etc.

o Reconciliation Account for the Vendor – This Reconciliation Account

is the General ledger for the Accounts Payable sub-ledger

o Check Double Invoice – checkbox whether double Invoice check is

to enabled

o Withholding Tax Details – TDS details for the Vendor are maintained

here

o Payment Terms – Terms of Payment

o House Bank – If the Vendor is always paid through the same Bank,

then this field needs to be maintained.

o Customer Code – If the Vendor is also a Customer

o Payment Methods – The mode of payment through which the

Vendor will be paid.

Asset MasterThe Asset Accounting module contains master records that control how business

transactions are recorded and posted to the account. The Asset master record also

contains all the data you require to manage all your Fixed Assets.

Following details are maintained in the Asset Master:

General Details:


o Asset Class – The Asset Master is created within an Asset Class.

The screen layout, depreciation terms, Account Determination are

defaulted from the Asset Class

o Asset Description – The description of the Asset

o Physical Inventory Number – This is the Asset Inventory number.

The inventory number is output in the standard inventory list

o Quantity

o Include in Inventory List - This indicator ensures that the asset is

included in the standard inventory list of Asset Accounting. Assets

without this indicator are not output by the report

Time Dependent Details:

Cost Center – The Cost Center to which the Asset belongs. The SAP system uses

the cost center assignment in the asset master record to determine the cost center

affected when the following types of asset posting are made:

o Fixed asset depreciation

o Gain/loss from asset sales

Plant – You can use the plant assignment in the asset master record to perform

plant-specific analyses in Assets Accounting

Shift Factor – If the Asset is operated in multiple shifts, the depreciation is calculated

at an accelerated rate. This rate is calculated from the Shift Factor.

Depreciation Terms:

The Depreciation terms are maintained here. This includes:

o Depreciation Area – The different types of Depreciation Valuations

are maintained here

o Depreciation Key – The depreciation key determines the method of

calculation of depreciation and the rate of depreciation.

The depreciation terms are defaulted from the Asset Class of the Asset when

creating the Asset master record.


Following Asset Classes will be created with the respective depreciation rate and

number range:

S.No Asset Class Asset Class Description Depreciation Rate

(%) 1 8000010 Land (Nashik) 10.00% Land2 8000020 Land (Thane) 10.00% Land3 8000030 Nashik Building 10.00% Land4 8000040 Malad Office 10.00% Land5 8000050 Thane Office 10.00% Land6 8000060 Laboratory Construction 10.00% Land

7 8000070 Plant & Machinery 13.91%Plant &

Machinery

8 8000080 Dies 30.00%Plant &

Machinery

9 8000090 Testing Equipments 13.91%Plant &

Machinery

10 8000100 Electric Installation 13.91%Plant &

Machinery

11 8000110 Electric Motors & Spare 13.91%Plant &

Machinery

12 8000120 Electric Typewriter 13.91%Plant &

Machinery

13 8000130 Fire Fighting Equipment 13.91%Plant &

Machinery

14 8000140 Material Stores Equipment 13.91%Plant &

Machinery

15 8000150 Xerox Machine 13.91%Plant &

Machinery

16 8000160 Furniture & Fixture 18.10%Furniture &

Fixture

17 8000170 Air Conditioner & Refrigiration 18.10%Furniture &

Fixture

18 8000180 Office Equipment 18.10%Furniture &

Fixture

19 8000190 Television 18.10%Furniture &

Fixture20 8000200 Intercom 18.10% Furniture &


Fixture21 8000210 Computers 40.00% Computers22 8000220 Motor Car 25.89% Motor Car23 8000300 Assets Under Construction

These number ranges can be company code specific or across company codes. For

Emi. the number ranges will be company code specific.

Bank Master

The Bank Master contains all the data relevant to the Bank Accounts required to

carry out the banking transactions. The Master Data relevant is the House Banks

and the Account Ids.

Following details are maintained in the Bank Master:

o House Bank – All bank data is determined using this key

o Account Id – This ID together with the ID for the house bank

uniquely defines a bank account

o Description – Description

o Bank Account Number – This field contains the number under which

the account is managed at the bank

o Currency – Currency in which the Bank Account is maintained

o Country – The country in which the Bank is located

o GL Account – The GL Account of the Bank

GapsInternal numbering for GL Master Records is not possible in SAP.


Integration Requirements

Reporting Requirementso FS00 – Edit GL Master Centrally


o FSP0 – Edit GL Master in Chart of Accounts

o FSS0 – Edit GL Master in Company Code

o FD01/FD02/FD03 – Create/Change/Display Customer Master

o FK01/FK02/FK03 – Create/Change/Display Vendor Master

o AS01/AS02/AS03 – Create/Change/Display Asset Master

o AW01N – Display Asset Values

o FI12 – House Banks

Authorization RequirementsMaintenance of Master Data is recommended to be done centrally by the person

responsible for maintaining Master data. The authorization requirements would be

finalised during the realization phase.

Migration RequirementsCutover data for Master records will have to be captured as a part of data migration.

The formats for the same will be finalized during the realization phase. BDC

programs would have to be written for the same.

For migration of Asset Master, details will have to be captured at an individual Asset

level.


2.General Ledger Accounting

DescriptionThe General Ledger forms the backbone of all the financial systems. It will provide a

comprehensive picture of the transactions and accounts. It would capture all

business transactions through seamless integration with other operational areas of

the company to ensure that accounting data is always complete and accurate.

The processes in General Ledger are:

13.Generation of accounting documents either automatically or manually

14.Generation of periodic reports at various hierarchical levels.

15.Capture all transactions in GL

16.Posting of sub-ledgers to GL

17.Reconciliation and finalization of accounts

18.Cash Transactions

19.Loan Transactions and Deposits

20. Investment transactions

21.Foreign Currency Valuation

22.VAT

23.Sales Tax

24. Inventory Valuation


ExceptionNone


Changes to Existing Processeso A number of accounting transactions will be carried out by way of

automatic account assignments. For example, inventory account is

updated and a provision created in GL at the time of raising a GR in

Materials Management.

o All transactions, which update financial information, are directly

carried out when the base transaction is carried out in the other

modules. This will also prevent any manual posting to such an

account.

o Cash Journal will be used for posting cash transactions. There will

be no need of maintaining petty cash and main cash book

separately and there will be one cash journal for each location

where a separate cash balance is maintained.

o In the current system there is a facility of changing the fields in the

document after it is posted e.g. account, amount. In SAP once a

document is posted, it cannot be changed with respect to the

Account, amount, only the text and assignment fields can be

changed. If it is discovered later that the posting was incorrect the

document has to be reversed and then reposted.

o In the legacy system, there is no functionality for parking and then

posting a document. In SAP the documents will be parked first and

then posted.

o Postings in previous periods in FI can be done to the extent the

posting periods are open. However in MM, SD postings can only be

done for maximum two months that are open.

Solution in SAPGeneral Ledger Postings:Any journal entry can be posted in SAP through transaction code F-02 or FB50. The

debit and credit postings to the GL Accounts can be made using the posting keys 40

and 50 respectively. For transactions involving other types of Accounts, relevant

posting keys to be used. The system carries out consistency checks before saving


the data. When the debits equal the credits and the data is complete, document gets

posted. If errors exist, the data is not saved, and the system proposes adjustments.

Manual postings cannot be done for GL Accounts, which are reconciliation accounts,

or which are marked for posting automatically only.

In Emi., the documents will be parked first and then posted into the General Ledger.

Hence, the G/L posting transaction will encompass:

(i) Parking the Document:Document parking enables user to enter and save (park) incomplete FI documents in

the SAP system without executing extensive entry checks. Parked accounting

documents may be completed/ checked and then posted at a later date by the

supervisor

(ii) Posting the Parked Document:Parked documents can be posted either individually or via a list. To post several

parked documents via a list, the system issues a list of parked document for User to

choose from. From this list, User can then carry out any necessary post-processing

to parked documents that could not be posted due to missing information such as a

cost accounting assignment.

Loan Transactions and Deposits:Emi accepts loans from various banks and institutions and deposits from public. For

these types of transactions, sub-ledger will be created. The Banks, Institutions and

the lenders from whom deposits are accepted will be created as Vendors.

Calculation of Interest on Loan is done manually. In SAP Vendors will be created for

these so interest calculation will be automated by using the Interest Calculation

functionality and by assigning the interest calculation indicator to the Vendor master.

Flow of Journal Entries in SAP

A) At the time of taking the Loan

Dr. Bank A/c

Cr. Vendor (Loan) A/c

B) For Interest on Loan

Dr. Interest on Loan A/c


Cr. Vendor (Loan) A/c

C) For Payment of Interest

Dr. Vendor (Loan) A/c

Cr. Bank A/c

Investment Transactions:Investment transactions include the transactions pertaining to the purchase and sale

of equities, etc. Emi. requires the entries to be passed through the Broker’s A/c

through which the investments are purchased or sold. The Broker will be created as

a Vendor and also a Customer and both Accounts will be linked.

Purchase of investments will be posted through the broker’s Vendor A/c and the sale

will be posted through the broker’s Customer A/c

The entries will be:

A) For Purchase of Investments

Dr. Investment A/c

Cr. (broker) Vendor A/c.

B) For Sale of Investments

On sale of Investments, there will be a gain or loss involved. The gain or loss on sale

of investment will be calculated manually.

Dr. (broker) Customer A/c

Dr./Cr. Gain/Loss on Sale of Investment A/c

Cr. Investment A/c

C) For Interest or Dividend Received

Dr. Bank A/c

Cr. Interest Income A/c

Cr. Dividend Income A/c

Cash Transactions:


Cash transactions are handled through Cash Journal in SAP. Cash Journal is a

feature in SAP, which permits separate tracking of cash transactions in a single-

screen. This means that user can enter, display, and change cash journal

documents on one screen. Each cash journal should be assigned to one G/L

account, which represents the cash journal in the general ledger. It is however

possible, to connect multiple cash journals with one G/L account. Cash transactions

are saved separately in the cash journal and are transferred periodically (for

example, daily) to the general ledger. Business transactions will be created for

different types of cash transactions. The Cash Journal also permits generation of

daily balance statements for tallying physical cash with the books of account.

For Emi., a separate cash journal and GL account would be maintained for each

location handling cash.

Staff Advances other than salary advance will be handled through the GL Account

for Staff advance. When the details of the expenditure and/or cash are received from

the employee, the expense will be posted to the respective expense A/c and the staff

advance will have to be cleared manually.

Other functions available in Cash journal are:

o Entering, saving and posting business transactions

o Displaying follow on documents

o Printing Cash journal

o Printing receipts

o Deleting saved (but not posted) entries

o Displaying deleted entries.

Foreign Currency Valuation:At the year-end closing all the GL balances, Customer and Vendor open items in

foreign currency will be revalued at the closing rate as maintained in the exchange

rate table. The difference is posted to the related valuated Account and an offsetting

entry is posted to Exchange Rate differences A/c.

The balance of the foreign currency balance sheet account, that is, the balance of

the G/L account managed in a foreign currency, forms the basis of the valuation for

GL Accounts. For Customer and Vendor Accounts the individual open items of an


account in foreign currency form the basis of the valuation, that is, every open item

of an account in foreign currency is valuated individually.

VAT:VAT is payable on Sales and a set-off is available on VAT paid on purchases. The

difference between the two is the amount of VAT payable. For some cases, set-off is

not available, for these kind of purchases the VAT amount will not be posted

separately and will be added to the Inventory value. At the period end when VAT is

paid to the government, the balance in VAT on purchases A/c is transferred to VAT

on Sales A/c through a JV. The balance in VAT on Sales A/c is the amount payable.

Flow of journal entries in SAP:

A) For VAT on purchases at the time of Invoice Verification

Dr. GR/IR A/c.(Provisional Liability Vendor-Materials)

Dr. VAT on Purchases A/c

Cr. Vendor A/c

B) At the time of Sales, a liability is created for VAT on Sales

Dr. Customer A/c

Cr. Sales Revenue A/c

Cr. VAT Payable A/c.

C) At period end for payment of VAT

(i) Dr. VAT Payable A/c

Cr. VAT on Purchases A/c

(iii) For payment of VAT

Dr .VAT Payable A/c

Cr. Bank A/c

(iv) In case there is a refund of VAT

Dr. Bank A/c

Cr. VAT Payable A/c


The tax codes have not yet been finalised and will be finalised in the realisation

phase.

Document Types:A key that is used to classify accounting documents and distinguish between

business transactions to be posted. The document type is entered in the document

header and applies to the whole document. Functions of Document Type are:

o Differentiating between business transactions.

o Determines which account types that particular document can be

posted to.

o Assigning document numbers.

Legacy Area

Legacy Voucher Type

SAP Mod-ule

SAP Doc Type

SAP Document Type Description

Explanation as per Legacy Terminology

Accounting

Contra voucher

FI-GL SK Cash document

Accounting – Payment/Receipt voucher – G/L Accounting (for bank, cash and petty cash (cash journal))

Credit note

FI-AP KG Vendor credit memo

Accounting – Credit/debit note – Creditors – General

FI-AR DG Customer credit memo

Accounting – Credit/debit note – Debtors – General

FI-AR DV Customer interests

Accounting – Credit/debit note – Debtors – Interests

Debit note

FI-AP KG Vendor credit memo

Accounting – Credit/debit note – Creditors – General

FI-AR DG Customer credit memo

Accounting – Credit/debit note – Debtors – General

FI-AR DV Customer interests

Accounting – Credit/debit note – Debtors – Interests

Journal voucher

FI-AA AA Asset posting

Accounting – Journal voucher – Assets


(capitalization postings)FI-AA AF Depreciatio

n postingsAccounting – Journal voucher – Assets (depreciation postings)

FI-AP KA Vendor document

Accounting – Journal voucher – Creditors – General

FI-AP KP Account maintenance

Accounting – Journal voucher – Creditors – Goods receipt difference

FI-AR DA Customer document

Accounting – Journal voucher – Debtors – General

FI-BL SB G/L account posting

Accounting – Journal voucher – Bank reconciliation – Others

FI-BL ZR Bank reconciliation

Accounting – Journal voucher – Bank reconciliation – Deposits

FI-BL ZS Payment by cheque

Accounting – Journal voucher – Bank reconciliation – Payments by cheques

FI-BL ZV Payment clearing

Accounting – Journal voucher – Bank reconciliation – Clearing

FI-GL EU Euro rounding difference

Accounting – Journal voucher – Foreign exchange – Euro rounding difference

FI-GL EX External number

Accounting – Journal voucher – Foreign exchange – General

FI-GL SA G/L account document

Accounting – Journal voucher – General (main)

FI-GL SU Adjustment document

Accounting – Journal voucher – Inter company postings

FI-GL UE Data transfer

Accounting – Journal voucher – General (used for data transfer from external system)

Payment voucher

FI-AP KZ Vendor payment

Accounting – Payment/Receipt voucher – Creditors (for bank,


(Cash / bank / petty cash / bills of exchange)

cash and petty cash (cash journal))

FI-AR DZ Customer payment

Accounting – Payment/Receipt voucher – Debtors (for bank, cash, petty cash (cash journal) and bills of exchange)

FI-BL ZP Payment posting

Accounting – Payment/Receipt voucher – Automatic Payments / Receipts



Purchase voucher

FI-AP KR Vendor invoice

Accounting – Purchase voucher

Receipt voucher (Cash / bank / petty cash / bills of exchange)

FI-AP KZ Vendor payment

Accounting – Payment/Receipt voucher – Creditors (for bank, cash and petty cash (cash journal))

FI-AR DZ Customer payment

Accounting – Payment/Receipt voucher – Debtors (for bank, cash, petty cash (cash journal) and bills of exchange)

FI-BL ZP Payment posting

Accounting – Payment/Receipt voucher – Automatic Payments / Receipts



Sales voucher

FI-AR DR Customer invoice

Accounting – Sales voucher

Inventory (automatic posting to accounting)

Credit note

MM RA Subsequent credit memo settlement

Inventory – Credit/debit note – Creditors

Debit note

MM RA Subsequent credit memo settlement

Inventory – Credit/debit note – Creditors


Delivery note voucher

SD WL Goods issue/delivery

Inventory – Delivery note voucher

Physical stock voucher

MM WI Inventory document

Inventory – Physical stock voucher

Purchase voucher

MM RE Invoice - gross

Inventory – Purchase voucher

Receipt note voucher

MM WE Goods receipt

Inventory – Receipt note voucher

Sales voucher

SD RV Billing document transfer

Inventory – Sales voucher

Stock journal voucher

MM PR Price change

Inventory – Stock journal voucher – Revaluation – Manual

MM WA Goods issue

Inventory – Stock journal voucher – Issues and transfers

Document Number Ranges: A number range must be assigned to each document type in SAP. Via the document

types, you distinguish the postings according to the different business transactions,

for example customer payment, vendor credit memo, and so on. To store documents

separately according to document types, you must assign a separate number range

to each document type, for example to invoices or to credit memos. Document

number ranges can be defined as Fiscal Year Dependent or across Fiscal Years.

Posting Keys:Posting keys control the entry of line items in accounting documents. A posting key

is entered for each line item. They are defined at the client level and therefore apply

to all company codes. They determine:

o Account type of the line item

o Debit / credit posting

o Layout of entry screens

Posting keys are differentiated by customer, vendor and GL accounts. There are

also posting keys for asset and material accounts.Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Posting Key Description Debit/Credit Indicator Acciunt Type1 Invoice Debit Customer2 Reverse credit memo Debit Customer3 Expenses Debit Customer4 Other receivables Debit Customer5 Outgoing payment Debit Customer6 Payment difference Debit Customer7 Other clearing Debit Customer8 Payment clearing Debit Customer9 Special G/L debit Debit Customer

0A CH Bill.doc. Deb Debit Customer

0BCH Cancel.Cred.memoD Debit Customer

0C CH Clearing Deb Debit Customer0X CH Clearing Cred Debit Customer0Y CH Credit memo Cred Debit Customer0Z CH Cancel.BillDocDeb Debit Customer

11 Credit memo Credit Customer12 Reverse invoice Credit Customer13 Reverse charges Credit Customer14 Other payables Credit Customer15 Incoming payment Credit Customer16 Payment difference Credit Customer17 Other clearing Credit Customer18 Payment clearing Credit Customer19 Special G/L credit Credit Customer

1A CH Cancel.Bill.docDe Credit Customer1B CH Credit memo Deb Credit Customer1C CH Credit memo Deb Credit Customer1X CH Clearing Cred Credit Customer1Y CH Cancel.Cr.memo C Credit Customer1Z CH Bill.doc. Cred Credit Customer

21 Credit memo Debit Vendor22 Reverse invoice Debit Vendor24 Other receivables Debit Vendor25 Outgoing payment Debit Vendor26 Payment difference Debit Vendor27 Clearing Debit Vendor28 Payment clearing Debit Vendor29 Special G/L debit Debit Vendor31 Invoice Credit Vendor32 Reverse credit memo Credit Vendor34 Other payables Credit Vendor35 Incoming payment Credit Vendor


36 Payment difference Credit Vendor37 Other clearing Credit Vendor38 Payment clearing Credit Vendor39 Special G/L credit Credit Vendor40 Debit entry Debit G/L account50 Credit entry Credit G/L account70 Debit asset Debit Asset75 Credit asset Credit Asset80 Stock initial entry Debit G/L account81 Costs Debit G/L account83 Price difference Debit G/L account84 Consumption Debit G/L account85 Change in stock Debit G/L account86 GR/IR debit Debit G/L account89 Stock inwrd movement Debit Material90 Stock initial entry Credit G/L account91 Costs Credit G/L account93 Price difference Credit G/L account94 Consumption Credit G/L account95 Change in stock Credit G/L account96 GR/IR credit Credit G/L account99 Stock outwd movement Credit Material

Special GL Indicators:Special G/L transactions are special transactions in accounts receivable and

accounts payable that are displayed separately in the general ledger and the sub

ledger. This may be necessary for reporting or for internal reasons. For example,

down payments must not be balanced with receivables and payables for goods and

services. Consequently, they are treated as special G/L transactions in the General

Ledger (FI-GL) Accounts Payable (FI-AP) and Accounts Receivable (FI-AR)

application components.

These can be distinguished into the following categories:

Offsetting entries – entries impacting the financial statements. For example, down

payments.

Statistical postings – postings with a preset offsetting entry or a noted item. For

example, bank guarantees.

Account Type Special G/L DescriptionDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Indicator CUSTOMER A Down PaymentCUSTOMER B Nonrediscountable Bills of Ex.CUSTOMER C RE Rent depositCUSTOMER D Doubtful ReceivablesCUSTOMER E Individual Value AdjustmentCUSTOMER F Down Payment RequestCUSTOMER G Guarantees GivenCUSTOMER H Security DepositCUSTOMER I BR: Vendor OperationCUSTOMER J RE Advance Payment RequestCUSTOMER K RE AP Operating CostsCUSTOMER P Payment RequestCUSTOMER Q B/e residual riskCUSTOMER R Bill of Exchange Payt RequestCUSTOMER S Check/Bill of ExchangeCUSTOMER T Down PaymentCUSTOMER U RE AP sales-based rentCUSTOMER W Rediscountable Bills of Exch.CUSTOMER Y Post dated chequesCUSTOMER Z Interest ReceivableVENDOR A Down Payments, Current AssetsVENDOR B Down Payments, Financ'l AssetsVENDOR C Virement à échéanceVENDOR D DiscountsVENDOR F Down Payment RequestsVENDOR G Guarantee receivedVENDOR H Security depositVENDOR I Down Payments, Intang. AssetsVENDOR M Down Payments, Tangible AssetsVENDOR O Down Payments, AmortizationVENDOR P Payment requestVENDOR Q Bills of Exchange against L/CVENDOR R RVENDOR S Check/Bill of ExchangeVENDOR T TVENDOR V Down Payments, StocksVENDOR W Rediscountable Bills of Exch.VENDOR Y Post dated cheques

GapsWorkaround Solutions


None.

Integration RequirementsChart of Accounts:The operating chart of accounts is shared by Financial Accounting as well as

Controlling. The accounts in a chart of accounts can be both expense or revenue

accounts in Financial Accounting and cost or revenue elements in cost/revenue

accounting.

General Ledger Account:Automatic account determination / posting is one of the most powerful methods to

determine the correct G/L account to post to by considering the type of transactions

and other factors. This feature provides a lot of flexibility and eliminates the need to

hard code the G/L account in the source code.

FI – CO Integration:All GL-P&L accounts are maintained as cost elements in Controlling. Further these

cost elements are linked to cost centers and Profit Centers. The creation of cost

elements and revenue elements ensures that all transactions posted to those GL

Accounts in FI also have a corresponding entry in CO. For Balance sheet Accounts a

default Profit Center will be attached to the GL Account so that all transactions flow

to Profit Center and this allows to create a trial balance at a Profit Center level.

MM – FI Integration:MM and FI are integrated by way of automatic account assignments to GL accounts

for material movements types, which have an impact on financial information.

Valuation classes are entered in the material master for the purpose of providing

automatic account posting. For all movement types, internal transaction key is

assigned and GL Accounts are assigned against the valuation class for the

transaction key.

SD – FI Integration:SD account assignments depend on the condition tables & access sequences to

determine the correct G/L account. One can set up condition tables / types to use

different characteristics such as:

o Customer class


o Plant

o Material group

Through pricing procedure, the values of condition types are posted to the respective

GL accounts. Therefore integration between SD and FI happens by assigning the

account keys in the pricing procedure for account determination like for ERL for

sales revenue, ERS for sales deductions.

Reporting Requirementso FB03 – Display Accounting Document

o FS10N – Display GL Account Balances

o FBL3N – Display GL Line Items

o FBCJ – Cash Journal

Authorization RequirementsThe authorization requirements would be finalised during the realization phase.

Migration RequirementsCutover data for GL master records; balances & open line items will have to be

captured as part of data migration. The formats for the same will be finalized during

the realization phase. BDC programs would have to be written for the same.


3. Accounts Receivable Accounting

Description

The Accounts Receivable application component records and administers accounting data of all customers. It is also an integral part of sales management.

All postings in Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts are updated depending on the transaction involved (for example, receivables, down payments, and bills of exchange). The system contains a range of tools that you can use to monitor open items, such as account analyses, alarm reports, due date lists, and a flexible dunning program. The correspondence linked to these tools can be individually formulated to suit your requirements. This is also the case for payment notices, balance confirmations, account statements, and interest calculations. Incoming payments can be assigned to due receivables using user-friendly screen functions.

The payment program can automatically carry out direct debiting and down payments.

There are a range of tools available for documenting the transactions that occur in Accounts Receivable, including balance lists, journals, balance audit trails, and other standard reports. When drawing up financial statements, the items in foreign currency are re-valued, customers who are also vendors are listed, and the balances on the accounts are sorted by remaining life.

Accounts receivable is not only one of the branches of accounting that forms the basis of adequate and orderly accounting. It also provides the data required for effective credit management, (as a result of its close integration with the Sales and Distribution component), as well as important information for the optimization of liquidity planning, (through its link to Cash Management).

The processes in this component are:

9. Generation of accounting document for receivables based on an invoice, or

debit memo or credit memo.

10.Receipts of advances / deposits / bank guarantees.

11.Monitoring of outstanding in customer accounts.Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

12.Accounting of the receipt against the appropriate outstanding.

13.Exports (including deemed exports)

14.Other income, for example, interest on deposits

15.Customer / Vendor cross clearing transactions


ExceptionNoneChanges in Existing ProcessesAdvance payments from Customers will be treated differently as down payments

using special GL indicator.

Solution in SAPThe Accounts Receivable application component records and manages accounting

data of all customers.

Process Flow in SAP For Accounts Receivables through Sales (FG):o Sales order will be created in SAP based on the customer purchase

order.

o Delivery will be done in SAP by picking the material and doing a post

goods issue. An FI entry is automatically generated which debits the

finished goods change account and credits the finished goods

inventory account.

o Generation of an invoice based on the sales order and delivery

challan. This process also results in an FI document, which debits

the customer and credits revenue account.

o When the cheque is received from the customer, the same is

entered into the system along with clearing of outstanding invoice. A

deposit slip format will be defined for the same. The bank clearing

account will also be posted and the customer outstanding cleared.


Any interest on overdue received from the customer is also

accounted for here.

o Upload the bank statement. This clears all the open items in the

bank clearing account and debits the main bank account.

Flow of Journal entries in SAP:

A) At the time of Delivery challan

Dr. Cost of Goods Sold a/c

Cr. FG Inventory a/c

B) At the time of Invoice generation

Dr. Customer a/c (AR)

Cr. Revenue/Sales a/c

Cr. Sales Tax Payable a/c

C) If advance settlement is carried out

Dr. Customer – Advance a/c

Cr. Customer a/c

D) At the time of Pay-in-Slip

Dr. Bank Sub a/c

Cr. Customer a/c

E) At the time of Bank Statement Upload

Dr. Bank a/c


Cr. Bank sub a/c.

Customer Vendor Cross clearing transactionsIf you select a customer who is also a vendor when processing a clearing

transaction, such as an incoming/outgoing payment or account maintenance, the

system also selects the open vendor items automatically, provided that:

o The vendor number was entered in the customer master record and

o The Clearing with vendor indicator has been set.

The same rule applies if you select a vendor that is also a customer during a clearing

transaction.

Process Flow in SAP for Customer Advances:Advances or Down Payments received from Customers will be posted using a

Special GL indicator. This Special GL indicator posts the transactions to Customer

Advances GL A/c rather than the Customers A/c.

Entry in SAP:

A) On receipt of Down Payment

Dr. Customer Advances A/c

Cr. Bank Clearing A/c

B) For clearing Down Payment

Dr. Customer A/c

Cr. Customer Advances A/c

Process flow in SAP for Exports:o Sales order will be created in SAP based on the customer purchase

order.

o Delivery will be done in SAP by picking the material and doing a post

goods issue. An FI entry is automatically generated which debits the


finished goods change account and credits the finished goods

inventory account.

o Generation of an invoice based on the sales order and delivery

challan. This process also results in an FI document, which debits

the customer and credits revenue account.

o When the bill of exchange is received from the customer, the same

is entered into the system. This clears the outstanding and creates a

special GL line item under the customer account for bills receivable.

Any exchange rate differences between the time of invoicing and the

time of receipt of bill of exchange will be accounted for. Exchange

rates would be accounted for, based on rates maintained in the

currency master table.

o When the bill is discounted, the item is cleared from the customer

account altogether and discount charges of the bank gets accounted

in the relevant bank sub account. Any exchange rate differences

would also be accounted here.

o Upload the bank statement. This clears all the open items in the

bank clearing account and debits the main bank account.


A) At the time of Delivery challan

Dr. Cost of Goods Sold a/c


B) At the time of Invoice generationDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Dr. Customer a/c (AR)

Cr. Revenue/Sales a/c

Process Flow in SAP for Sales ReturnsIn cases where the customer returns goods, the same will be handled in the SAP as

follows:

o When the goods are returned by the customer the same are

checked for its condition as to whether they are re-saleable or not. If

yes, a return Sales order is prepared, return delivery is taken and

material quantity is the FI records are updated.

o A credit note is raised in the name of customer for the value of sales

quantity returned & simultaneously reversing the Sales revenue a/c.

o Where the material is partly damaged & can be processed again, it

is taken back into FG stocks as a separate return type. This material

can further be issued to process order, packing order or any other

re-work job necessary to make the goods re-saleable.


A) At the time of GR for re-saleable material

Dr. FG inventory a/c

Cr. Cost of Goods Sold a/c

B) At the time of raising the Credit note.

Dr. Revenue / Expense a/c

Dr. Sales Tax Payable (if less than 6 months)

Cr. Customer a/c


C) For scrap of material

Dr. Loss on scrapped material a/c


D) Upon issue of returned material to process / packing order (through return type

material issue)

Dr. Material consumption a/c

Cr. Material Inventory a/c

Process Flow & Journal entries in SAP for Credit Notes (other than sales returns):This could arise in the case of price difference, tax difference

A) The respective department raises the document for issuing a credit note after

appropriate checks & authorizations.

Dr. Revenue/Expenses a/c

Dr. Sales Tax Payable (if applicable)

Cr. Customer (CN) a/c

B) At the time of payment

In case where it is adjusted against receivables it will be cleared through automatic

or manual clearing process.

In case where payment is made


Dr. Customer a/c

Cr. Bank a/c

Integration RequirementsThe Accounts Receivable module is closely integrated with the Sales and

Distribution module of SAP as well as the Banking sub-module in Finance. Since the

individual applications (general ledger and sub ledgers) all exchange data, individual

business transactions only have to be entered once. The Accounts Receivable

component is not merely a basis for correct accounting procedures. Due to the close

integration with Sales and Distribution, it provides data for effective credit

management.

Accounting data is posted for customers in Accounts Receivable. From there, the

data is sorted by customer and made available to other components, for example

Sales and Distribution. When you post data in Accounts Receivable, the system

creates a document and passes the data entered to the general ledger. General

ledger accounts are then updated according to the transaction concerned

(receivable, down payment, bill of exchange, and so on).

Reporting Requirementso FD10N – Display Customer Balances

o FBL5N – Display Customer Line Items

o S_ALR_87012168 - Due Date Analysis for Open Items

o S_ALR_87012175 - Open Items - Customer Due Date Forecast

Authorizations RequirementsThe authorization requirements would be finalised during the realization phase.

Migration Requirements


Cutover data for customer masters, balances & open line items will have to be

captured as part of data migration. The formats for the same will be finalized during

the realization phase. BDC programs would have to be written for the same.


4 Accounts Payable Accounting

Description

The Accounts Payable application component records and administers accounting data for all vendors. It is also an integral part of the purchasing system: Deliveries and invoices are managed according to vendors. The system automatically makes postings in response to the operative transactions. In the same way, the system supplies the Cash Management application component with figures from invoices in order to optimize liquidity planning.

Payables are paid with the payment program. The payment program supports all standard payment methods (such as cheques and transfers) in printed form as well as in electronic form (data medium exchange on disk and electronic data interchange). This program also covers country-specific payment methods.

If necessary, dunning notices can be created for outstanding receivables (for example, to receive payment for a credit memo). The dunning program supports this function.

Postings made in Accounts Payable are simultaneously recorded in the General Ledger where different G/L accounts are updated based on the transaction involved (payables and down payments, for example). The system contains due date forecasts and other standard reports that you can use to help you to monitor open items.

You can design balance confirmations, account statements, and other forms of reports to suit your requirements in business correspondence with vendors. There are balance lists, journals, balance audit trails and other internal evaluations available for documenting transactions in Accounts Payable.

The processes for Accounts Payable are:

8. Payments for purchases done for material, equipments and other items

against purchase order and GRN for local and import procurement.

9. Payments for services

10.Payments for excise and / or other statutory requirements.


11.Payments made in advance to suppliers and tracking the same through a

separate control account.

12.Payments made after invoice but before due date and availing cash

discounts.

13.Vendor – Customer cross adjustments.

14.Partial payments, with or without discounts


ExceptionNone

Changes to Existing ProcessesAdvance Payment to Vendors will be treated as down payments made using a

special GL indicator.

Solution in SAPThe accounts payable application component records and manages accounting data

of all vendors.

Framework of the Accounts Payable Process is as follows:

o Process of AP will start from invoice verification / advance payment.

o Payment of advance to the vendor.

o Invoice verification will be done against the GRN and PO number by

finance.

o TDS is deducted if applicable

o Once the invoice is verified it will be available for payment in finance.

o If any advance is out standing against the vendor system will prompt

while doing the verification.

o Adjusting of advances paid against open invoices.


o Payments can be made by cheque, Bill of Exchange or by adjusting

credit notes issued to supplier.

o Part payments can be made if required.

o Once the payment is processed the bank account will get credited

and vendor account will get debited.

o TDS is calculated and deducted if applicable and if not deducted

already while Invoice Verification.

The processes in Accounts Payable are: o Component wise display of PO terms during IV. For example, Basic

rate, ED, Sales Tax, Freight etc.

o Down payments to vendors and clearing of the same.

o Generation of accounting document for payables based on vendor

invoice.

o Debit notes / Recoveries for online rejections.

o Scheduling payables to vendors based on payment terms and funds

position.

o Payment of money to the vendor (with reasons for deductions, if the

invoice amount and payment amount do not match).

o Accounting of the payment against the appropriate outstanding.


A) At the time of GR / Service entry sheet update inventory.


Dr. Inventory (with restricted inventory type) a/c

Dr. Expenses A/c (for expense related purchases)

Cr. GR/IR a/c

B) At the time of QC check if the material is found as per the ordered quality there

will be a system entry, which will reverse Restricted Inventory type to Un-Restricted

Inventory type.

C) Invoice Verification is done by Finance dept after receipt of Invoice from Vendor.

Invoice is entered with reference to the PO and GRN. Liability to the Vendor is

created at this point of time. At the time of Invoice verification the system will prompt

the user if any advance payment exists. In case of Service related PO, TDS is also

deducted if the Vendor is liable to TDS. Invoice verification will pass the following

entry:

Dr. GR/IR a/c

Cr. Vendor (AP) A/c

Cr. TDS Payable A/c

At the time of making payment there are 2 options:

a) Automatic payment run –

This clears all the open items against the I.V & will list down all the cleared items

after which automatic cheque printing will be done by the system. Finally, the FI

postings will also be done by the system automatically.

b) Manual payment run –

Here, the user will have to manually select the parties to whom payment has to be

made. TDS will also be deducted if not already deducted at the time of Invoice

Verification. This transaction will be executed using SAP transaction code F-53 or F-

58. The transaction F-53 will be used when the user wants to post the payment

transaction but does not want to print cheque.


In SAP there is a feature to record the cheque number for the payment document in

case of manual check preparation. The user will attach the cheque number to the

payment document through FCH5.

The transaction F-58 will be used when the user wants to post the payment

transaction and also prints checks for the vendor.

The entry passed will be:

Dr. Vendor a/c

Cr. Bank Clearing a/c

Cr. TDS Payable

At the time of upload of the bank statement, the following entry will clear the bank

sub account. Entry will be as follows:

Dr. Bank Clearing a/c

Cr. Bank a/c

Process Flow for Non GRN based PurchasesThis process is related to passing of invoices in finance module where material

management department is not involved. Invoices that will be routed through FI

include Auditor’s remuneration, insurance payments, subscriptions, training

expenses etc. These invoices will be passed through T-code F-43 or FB60.

o The respective departments will approve the document for

expenses.

o The Finance dept verifies the document & updates the payables a/c

i.e. creates a liability.


o The system prompts the user in case an advance exists for the

service.

o Finance processes the payment through the normal bank payments

after adjusting the advance.

o The cheque printing process would be manual / automatic based on

requirements and specifications.


A) At the time of booking the expense

Dr. Expense a/c

Cr. Vendor a/c

Cr. TDS Payable a/c

B) At the time of outgoing payment

Dr. Vendor (main) a/c

Cr. Vendor (advance) a/c

Cr. Bank (Clearing) a/c

C) At the time of upload of the bank statement, the following entry will clear the

bank sub account. Entry will be as follows:

Dr. Bank (Clearing) a/c

Cr. Bank a/c

Process flow in SAP for Advance paymentsThe advance payment request is approved by the respective department based on the PO terms & conditions through standard workflows.The finance department verifies the payment approval.The advance payment to vendor is processed as a normal with respective Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

for TDS in FI.Entry in SAP

Dr. Vendor (Down Payment) A/c

Cr. Bank A/c.

Cr. TDS Payable A/c.

Process Flow In SAP For Importso PO is raised on the foreign vendor after necessary approvals from

the respective departments & heads.

o Next step involves paying up any advance to the foreign vendor, if

the terms of the PO so state. Emi. would request the bank to open a

Letter of Credit in favour of the vendor.

o Once the LC is opened, the vendor dispatches the goods to Emi..

Simultaneously it sends the set of Non-Negotiable documents viz.

Bill of Entry, Shipment documents, etc.

o At location, Goods receipt is done. Once this is done, an entry is

passed in FI to update Inventory & GR/IR a/c.

o The next step is Invoice verification where various expenses are

booked & vendor liability created. At this stage, the system will

prompt in case an advance already exists.

o The bank will remit the amount to the vendor as per the PO.

o Once the bank pays the vendor, it debits the account of Emi. along

with its charges & intimation is send for the same.

o Emi. acknowledges this payment & makes appropriate entries in FI.

Exchange rate differences between date of IV and date of payment

is accounted for at this point.

Flow of journal entries in SAP:

A) Release Advance payment to vendor


Dr. Vendor (advance) a/c


B) At the time of GR / Service entry sheet update Excise register RG23A.

Dr. Inventory a/c

Cr. GR/IR a/c

C) At the time of Invoice verification the system will prompt the user to notify if any

advance payment exists. Exchange rate differences are also accounted for here.

Dr. GR/IR a/c

Cr. Vendor (AP) a/c


For payments made to vendor for the material

The bank directly remits the amount after the usance period & debits Emi.’s a/c for

basic invoice value & also bank charges. On receipt of intimation, Emi. makes

appropriate entries in it books including impact of exchange rate fluctuations.

Automatic payment run –

This clear all the open items in the Vendors Accounts & will list down all the cleared

items after which automatic cheque printing will be done by the system. Finally, the

FI postings will also be done by the system automatically. The functioning of the

Automatic Payment run is explained in the Bank Accounting chapter.

Manual payment run –


made. Also the cheque printing & FI posting will be done manually.


The entry would be:

Dr. Vendor A/c

Cr. Bank (Clearing) A/c

Cr. Vendor (advance) A/c



Dr. Bank (Clearing) A/c

Cr. Bank A/c

At the period end, entries will be passed as part of foreign exchange items valuation

for balances in foreign exchange

For Payment through Bills of Exchange, the Vendor Invoice is cleared and a Special

GL Open Item is created. For raising a liability towards the Bank, the Bank Bills

Payable is credited and the Bank Bills Payable clearing A/c is debited as an

offsetting entry.

Dr. Vendor (AP) A/c

Cr. Vendor (Bills/Exch) A/c

Dr. Bank Bills Payable Clearing A/c

Cr. Bank Bills Payable

When Emi. pays off the Bills Payable on the due date, the special GL open item is

cleared, the Bank A/c is credited, the liability towards the Bank is cleared and the

Bank Bills Payable A/c is credited as an offsetting entry

Dr. Vendor (Bills/Exch) A/c

Dr. Bank Bills Payable


Cr. Bank Bills Payable Clearing A/c

Cr. Bank A/c

Withholding TaxesTDS to be deducted from the Vendors will be handled by Withholding taxes

functionality in Country Version India. The TDS certificates and challans can be

printed through CIN module.

The type of recipient categorizes the vendor, which is necessary for printing the

withholding tax form.

Following Recipient Types will be created in SAP system.

Country Rec. ty DescriptionIN A Companies-Resident

IN B Companies-Non-Resident

IN E Individual-Resident

IN F Individual-Non-Resident

IN G HUF-Resident

IN H HUF-Non-Resident

IN K BOI-Resident

IN L BOI-Non-Resident

IN M AOP-Resident

IN N AOP-Non-Resident

IN Q AJP-Resident

IN R AJP-Non-Resident

IN S Firm-Resident

IN T Firm-Non-Resident

IN W Co-op Society-Resident

IN X Co-op Society-Non-Resident

IN Y Local Authority-Resident

IN Z Local Authority-Non-Resident


The withholding tax keys correspond to the Official Withholding Tax laws for

example, official income tax Section Code, according to which tax is withheld. The

system can therefore assign the withholding tax items to the correct withholding tax

return

Following Withholding tax keys will be created in SAP system.

Official Key Name National Tax Code

194A Interest other than on securities

194C Payment to contractors & subcontractors

194D Insurance commission

194H Commission brokerage

194I Payment of rent

194J Fees for professional/technical services

195 Payable to non-resident

Following reasons for exemption from withholding tax will be defined. and this

indicator will be maintained in the vendor master record.

Exmpt.resn TextAL Lower deduction: Cert. u/s 197AN No deduction: Cert. u/s 197AP Lower deduction: Cert. u/s 195AR No deduction: Cert. u/s 195BN No deduction: Decl. u/s 197ABP Lower deduction: CA cert.BR No deduction: CA cert.

We define the section codes that are covered by the enterprise. we create one

section code for every permutation of local tax office and the district tax office that

you report to.

Section code Name 11000 EMI Transmission Limited.

Withholding tax types will be used for withholding and posting tax at the time of creating an invoice liability of the Vendor or at the time of payment whichever is earlier.


Following withholding tax types will be created to deduct the TDS at the time of invoice.

Withholding Tax Type(Invoice) NameA0 194A-INV-BAS-InterestA1 194A-INV-S/C-InterestA2 194A-INV-ECS-InterestA3 194A-INV-SEC-Interest

C0194C-INV-BAS-Advertising contracts

C1194C-INV-S/C-Advertising contracts

C2194C-INV-ECS-Advertising contracts

C3194C-INV-SEC-Advertising contracts

C9 Sec 195 Customer Interest

CA194C-INV-BAS-O/than advertising contract

CB194C-INV-S/C-O/than advertising contract

CC194C-INV-ECS-O/than advertising contract

CD194C-INV-SEC-O/than advertising contract

CK194C-INV-BAS-Sub-contracts

CL194C-INV-S/C-Sub-contracts

CM194C-INV-ECS-Sub-contracts

CN194C-INV-SEC-Sub-contracts

D0194D-INV-BAS-Insurance commission

D1194D-INV-S/C-Insurance commission

D2194D-INV-ECS-Insurance commission

D3194D-INV-SEC-Insurance commission

H0194H-INV-BAS-Commission brokerage

H1 194H-INV-S/C-Commission Document #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

brokerage

H2194H-INV-ECS-Commission brokerage

H3194H-INV-SEC-Commission brokerage

I0 194I-INV-BAS-RentI1 194I-INV-S/C-RentI2 194I-INV-ECS-RentI3 194I-INV-SEC-Rent

J0194J-INV-BAS-Fees for prof/tech services

J1194J-INV-S/C-Fees for prof/tech services

J2194J-INV-ECS-Fees for prof/tech services

J3194J-INV-SEC-Fees for prof/tech services

M0195-INV-BAS-Income-foreign exch. assets

M1195-INV-S/C-Income-foreign exch. assets

M2195-INV-ECS-Income-foreign exch. assets

M3195-INV-SEC-Income-foreign exch. assets

MA195-INV-BAS-Long term capital gain-115E

MB195-INV-S/C-Long term capital gain-115E

MC195-INV-ECS-Long term capital gain-115E

MD195-INV-SEC-Long term capital gain-115E

MK195-INV-BAS-Long term capital gain-other

ML195-INV-S/C-Long term capital gain-other

MM195-INV-ECS-Long term capital gain-other

MN195-INV-SEC-Long term capital gain-other

N0 195-INV-BAS-InterestN1 195-INV-S/C-InterestN2 195-INV-ECS-InterestN3 195-INV-SEC-InterestNA 195-INV-BAS-RoyaltyNB 195-INV-S/C-RoyaltyNC 195-INV-ECS-RoyaltyND 195-INV-SEC-Royalty


NK195-INV-BAS-Fees for technical services

NL195-INV-S/C-Fees for technical services

NM195-INV-ECS-Fees for technical services

NN195-INV-SEC-Fees for technical services

O0195-INV-BAS-Any other income

O1 195-INV-ECS-Royalty

O2195-INV-ECS-Any other income

O3195-INV-SEC-Any other income

W1

W2Sec 194C - Contractors Surcharge

W3Sec 194D - Insurance Commission Invoice

W4Sec 194D - Insurance Commission Surcharg

W5 Sec 194I - Rent Invoice

W6Sec 194I - Rent Invoice Surcharge

W7Sec 194J Prof/Technical Invoice

W8Sec 194J Prof/Technical Surcharge

Following withholding tax types will be created to deduct the TDS at the time of payment.

Withholding Tax Type(Payment) NameA5 194A-PAY-BAS-InterestA6 194A-PAY-S/C-InterestA7 194A-PAY-ECS-InterestA8 194A-PAY-SEC-InterestC5 194C-PAY-BAS-Advertising contractsC6 194C-PAY-S/C-Advertising contractsC7 194C-PAY-ECS-Advertising contractsC8 194C-PAY-SEC-Advertising contractsCF 194C-PAY-BAS-O/than advertising contractCG 194C-PAY-S/C-O/than advertising contractCH 194C-PAY-ECS-O/than advertising contractCI 194C-PAY-SEC-O/than advertising contract


CP 194C-PAY-BAS-Sub-contractsCQ 194C-PAY-S/C-Sub-contractsCR 194C-PAY-ECS-Sub-contractsCS 194C-PAY-SEC-Sub-contractsD5 194D-PAY-BAS-Insurance commissionD6 194D-PAY-S/C-Insurance commissionD7 194D-PAY-ECS-Insurance commissionD8 194D-PAY-SEC-Insurance commissionH5 194H-PAY-BAS-Commission brokerageH6 194H-PAY-S/C-Commission brokerageH7 194H-PAY-ECS-Commission brokerageH8 194H-PAY-SEC-Commission brokerageI5 194I-PAY-BAS-RentI6 194I-PAY-S/C-RentI7 194I-PAY-ECS-RentI8 194I-PAY-SEC-RentJ5 194J-PAY-BAS-Fees for prof/tech servicesJ6 194J-PAY-S/C-Fees for prof/tech servicesJ7 194J-PAY-ECS-Fees for prof/tech servicesJ8 194J-PAY-SEC-Fees for prof/tech servicesM5 195-PAY-BAS-Income-foreign exch. assetsM6 195-PAY-S/C-Income-foreign exch. assetsM7 195-PAY-ECS-Income-foreign exch. assetsM8 195-PAY-SEC-Income-foreign exch. assetsMF 195-PAY-BAS-Long term capital gain-115EMG 195-PAY-S/C-Long term capital gain-115EMH 195-PAY-ECS-Long term capital gain-115EMI 195-PAY-SEC-Long term capital gain-115EMP 195-PAY-BAS-Long term capital gain-otherMQ 195-PAY-S/C-Long term capital gain-otherMR 195-PAY-ECS-Long term capital gain-otherMS 195-PAY-SEC-Long term capital gain-otherN5 195-PAY-BAS-InterestN6 195-PAY-S/C-InterestN7 195-PAY-ECS-InterestN8 195-PAY-SEC-InterestNF 195-PAY-BAS-RoyaltyNG 195-PAY-S/C-RoyaltyNH 195-PAY-ECS-RoyaltyNI 195-PAY-SEC-RoyaltyNP 195-PAY-BAS-Fees for technical servicesNQ 195-PAY-S/C-Fees for technical servicesNR 195-PAY-ECS-Fees for technical servicesNS 195-PAY-SEC-Fees for technical services


O5 195-PAY-BAS-Any other incomeO6 195-PAY-S/C-Any other incomeO7 195-PAY-ECS-Any other incomeO8 195-PAY-SEC-Any other incomeWA Sec 194C Contractors PaymentWB Sec 194C Contractors SurchargeWC Sec 194D Insurance CommisionWD Sec 194D Insurance Commision SurchargeWE Sec 194I - RentWF Sec 194I - Rent SurchargeWG Sec 194J - Prof/ Technical PaymentWH Sec 194J - Prof/ Technical Surcharge

Withholding Tax codes will be maintained for different rates of TDS.

Following Withholding tax Codes will be created and maintained in the Vendor

Master.

Flow of Entries in SAP:

A) When TDS is deducted during the Invoice Verification

Dr. GR/IR A/c


Cr. Vendor A/c

Cr. TDS Payable A/c

B) When TDS is deducted during payment transaction.

Dr. Vendor A/c

Cr. Bank Clearing A/c

Cr. TDS Payable A/c

C) For paying the TDS deducted.

Dr. TDS Payable A/c

Cr. Bank A/c

GapsNone

Workaround SolutionsNot applicable

Integration RequirementsThe accounts payable module is closely linked with the materials management

module of sap as well as the banking sub-module in finance. Since the individual

applications (general ledger and sub ledgers) all exchange data, individual business

transactions only have to be entered once. The accounts payable component is not

merely a basis for correct accounting procedures. Due to the close integration with

material management, it provides data for effective payables management

accounting data is posted for vendors in accounts payable. From there, the data is

sorted by vendor and made available to other components, for example material

management. When you post data in accounts payable, the system creates a

document and passes the data entered to the general ledger. General ledger


accounts are then updated according to the transaction concerned (payable, down

payment, bill of exchange, and so on).

Reporting Requirementso FK10N – Display Vendor Balances

o FBl1N – Display Vendor Line items

o S_ALR_87012078 – Due Date Analysis for Open Items

o S_ALR_87012084 - Open Items - Vendor Due Date Forecast

Authorisation RequirementsThe authorization requirements would finalised during the realization phase.

Migration RequirementsCutover data for vendor masters, balances & open line items (including special GL

items) will have to be captured as part of data migration. The formats for the same

will be finalized during the realization phase. BDC programs would have to be written

for the same.


5.Asset AccountingExpectationAsset Accounting will have to record and manage the Fixed Assets and the




general ledger.

DescriptionThe scenarios for Asset Accounting are:

8. Acquisition of an Asset.

9. Asset Additions

10. Retirement with or without Revenue

11. Depreciation Calculation

12. Asset Under Construction

13. Asset Transfers


ExceptionNone

Business requirement:Asset Accounting will have to record and manage the Fixed Assets and the




general ledger.


Changes to Existing Processeso Maintenance at an Individual Asset Level rather than a Group level

o Asset will be identified for Plant, Cost Center, which it belongs to

o Identification of the Asset at the Purchase Order level

o Capitalization of Asset on GRN

o Depreciation will be calculated and posted to Cost Center in SAP

o Asset Under Construction will be used.

Solution in SAPThe Asset Accounting application component records and manages accounting data

of all Fixed Assets.

Process Flow for Acquisition of an Asseto Approved requisition for the purchase of an Asset

o PO is released. At this point there will be a reference of the asset in

PO. Asset master will be created by FI and the number will be

provided.

o The asset is received (via GR) by the stores and the excise records

are updated.

o The asset is capitalised and fixed asset account is updated.

o Finance department will do the invoice verification for the GR.

o At this stage the system will prompt in case any advance is already

paid to the vendor. Vendor liability is created and the invoice is

available for the payment.

o In the next step payment is processed for the fixed asset purchased

while adjusting the advance already received.

o Respecting bank account is updated and vendor liability cleared.



At the time of GR / service entry sheet update excise register RG23C.

Dr. Asset A/c

Cr. GR/IR A/c

At the time of invoice verification the system will prompt the user to notify if any

advance payment exists.

Dr. GR/IR A/c

Cr. Vendor (AP) a/c


Automatic payment run –

This clear all the open items against the IV & will list down all the cleared items after

which automatic cheque printing will be done by the system. Finally, the FI postings

will also be done by the system automatically.

Manual payment run –


made. Also the cheque printing & FI posting will be done manually.

Dr. Vendor a/c




Dr. Bank (Clearing) a/c

Cr. Bank a/c

Low Value AssetsIn case of acquisitions of value less than Rs. 5000, the Asset is written off in the year

of acquisition itself, but the Asset inventory has to be maintained. For such Assets an

Asset Class for Low Value Asset will be created. Any acquisition for which the value


is less than Rs. 5000 will be posted to an Asset under this asset class. The

depreciation key assigned to this class will be 100% depreciation and will be posted

during the next period’s depreciation run.

Process Flow for Retirement of an AssetWhen the Asset is no longer useful it is retired with proper approvals

The asset may be sold for Revenue or may be scrapped.

Gain/Loss on Retirement is calculated by the system.

Customer Payment is received and open item cleared


For Retirement without Revenue, the Net Book Value of the Asset is the Loss on

Sale of the Asset.

Dr. Accumulated Depreciation A/c

Dr./Cr. Gain/loss on Sale of Fixed Assets

Cr. Asset Acquisition A/c

For Retirement with Revenue, the Customer will be debited by the Sale Proceeds,

the Asset Disposal will be credited by the Sales Proceeds, the Asset acquisition A/c

and the Accumulated Depreciation A/c is balanced to zero, the Gain/loss is

calculated and posted to Gain/Loss A/c and the offsetting entry will be posted to

Asset Disposal clearing A/c

Dr. Customer A/c

Dr. Accumulated Depreciation A/c

Dr. Asset Disposal Clearing A/c

Dr./Cr. Gain/Loss on Sale of Fixed Assets

Cr. Asset Acquisition A/c

Cr. Asset Disposal A/c

Depreciation CalculationDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

Depreciation is calculated in SAP based on the Depreciation keys attached to the

Asset. The depreciation keys are assigned for the Asset Class and when the Asset is

created, these are defaulted for the Asset. Depreciation keys describe the method of

Calculation, rate of depreciation.

There will be two Depreciation areas – One for Book Depreciation as per Schedule

VI of the Companies Act, 1956, and one depreciation area for IT depreciation as per

rates mentioned in the Income Tax Act.

As per the Income Tax Act, depreciation on Fixed Assets is calculated on the Block

of Assets. For this purposes, Group Assets will be created for each Block and will be

assigned to the Asset. Depreciation Area for IT Depreciation will be included for

Depreciation at Group Asset level.

Process for Asset Under ConstructionAsset Under construction (AUC) is used for Asset built in-house, or for projects.

Currently in Emi., these are being created as division and then on completion,

transferred to the Asset. In SAP there will be a separate Asset Class called Asset

under Construction. For Assets being constructed in-house, an Asset will be created

under the Class of AUC. During the period of construction, all the expenses incurred

will be posted to the AUC Asset. On completion of the construction, the AUC is

settled to the Asset. The settlement posts the values to the Asset to be capitalized.

AUC is not depreciated hence the depreciation key for zero depreciation will be

assigned to the AUC Asset.

Flow of Journal entries in SAP

A) When expense is incurred for the AUC

Dr. AUC Asset A/c

Cr. Bank/ Vendor A/c

B) For Settlement of AUC to final Asset

Dr. Asset A/c

Cr. AUC Asset A/c

C) If some items are not to be capitalized and transferred to P&L A/c


Dr. Expense A/c

Cr. AUC Asset A/c

Transaction Type For posting any transaction related to Fixed Assets, a transaction type has to be

entered. The transaction type classifies the business transaction (for example,

acquisition, retirement, or transfer). The transaction type controls various system

activities when business transactions are posted.

GapsNone


Integration RequirementsAsset Accounting is closely integrated to General Ledger through Account

Determination. Asset Class is assigned to Account Determination and GL Accounts

are assigned to the Account Determination. GL Accounts for Acquisition, Disposal,

Depreciation and Gain/Loss on Sale of Assets Accounts are assigned.

Asset Accounting is integrated with CO by assigning a Cost center in the Asset

Master. Through this assignment the depreciation gets posted to the cost center and

also to the profit center to which the cost center belongs.

Reporting Requirementso S_ALR_87011963 - Asset Balances by Asset Number

o S_ALR_87011964 - Asset Balances by Asset Class

o S_ALR_87011966 - Asset Balances by Cost Center

o S_ALR_87011967 - Asset Balances by Plant

o S_ALR_87011979 - Physical Inventory by Cost Center

o S_ALR_87011981 - Physical Inventory by Asset Class

o S_ALR_87011982 - Physical Inventory by Plant

o AW01N – Individual Asset ValuesDocument #: SAPA1/EMI/11/02/2011/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

o S_ALR_87012026 - Depreciation Current Year

Authorisation RequirementsThe authorization requirements would be finalised during the realization phase.

Migration RequirementsCutover data for Asset masters, balances will have to be captured as part of data

migration. The formats for the same will be finalized during the realization phase.

BDC programs would have to be written for the same.


6. Bank Accounting

DescriptionBank Accounting record and manage the accounting data relating to all banking

transactions and management of Cheques Lots.

The functions involved here are:

7. Bank Receipts

8. Outgoing Payments

9. Bank Reconciliation

10.Cheques Maintenance

11.Maintaining Foreign Exchange rates

12.LC Payments


ExceptionNoneChanges to Existing Processes

o Bank Reconciliation will be done by Bank Statement upload

o Automatic Payment Program for Payments

o Pay in slip will be generated from SAP and this will post the

payment.

Solution in SAPBank Receipts:


Checks received from Customers will be deposited in the bank through the pay in

slip generated through SAP using T-code FF68. This transaction also triggers a

payment posting to the Customer ledger.

Outgoing Payment:Payments can be handled manually or through Automatic Payment program.

Automatic Payment Program (T-Code F110) selects all the open items due for

payment till the next payment date. A proposal is created showing the list of items

selected for payment. This proposal can be edited and open items can be blocked

for payment. After running the payment run, the payment is carried out and postings

are made clearing the open items. Checks and payment advices are also printed.

Activating Check printing for all the Banks may become difficult to manage at a later

stage. Hence it is recommended to activate it for Banks where the payment

transactions are voluminous. Later on based on the comfort level the balance can be

brought into SAP.

Bank Reconciliation:The Bank reconciliation process is based on the entries passed through the Bank

sub account and main account. The process is dependent on the Bank Statement

updation. Bank Main account balance is the actual balance as per the bank

statement whereas the Bank sub accounts denote the reconciliation items. These

sub accounts show entries, which are not cleared in the bank statement. Adding or

subtracting the Bank sub accounts will prepare Bank reconciliation statement.

Check Lot Maintenance:Check lots are maintained for House Banks. These check numbers are assigned

serially internally to the payment documents. However in case of manual payment

transactions and for manual check creation check number can be assigned manually

to the payment document through T-code FCH5 – Manual Checks.

If during check printing the check gets spoiled checks can be reprinted giving

appropriate reason codes. The check number gets void and the next free number is

assigned to the payment document. In case of misappropriation or loss of checks,

unused checks can be voided in SAP.


Giving blank checks and checks of type not over a certain amount can be handled by

voiding unused checks and when the check is used, cancelling the voiding

information.

Maintaining foreign exchange rate table:Foreign exchange rates are maintained in the exchange rate table (T-Code OB08).

These rates will be used for translating transactions posted in foreign currency. For

transactions posted in foreign currency, the system picks the exchange rate from this

table or it can also be entered manually while doing the posting.

GapsNone


Integration RequirementsNone

Reporting Requirementso FS10N – Display GL Balances

o FCHN – Check Register

Authorization RequirementsThe authorization requirements would be finalised during the realization phase.

Migration RequirementsCutover data for Bank masters, balances will have to be captured as part of data

migration. The formats for the same will be finalized during the realization phase.

BDC programs would have to be written for the same.


To-Be Process Document

MATERIAL MANAGEMENT


PREFACEPurpose of this Document

The purpose of this document is outlines the Materials Management to be business processes of EMI Transmission Ltd. and how it will be handle after the SAP implementation.

Intended Audience

The intended audience for the Materials Management SAP TO BE is EMI’s employees and other persons authorized by EMI who are in any way related to business processes involving Materials Management.

Related Documents/ References

S. No. Title Author


The following abbreviations and acronyms have been used in this document.Abbreviation/Acronym Description

Delphi Delphi Computech Pvt. Ltd.

EMI EMI Transmission Ltd.

PR Purchase Requisition

PO Purchase Order

GR Goods Receipt

GI Goods Issue


Organization of this Document

The Material Management SAP TO BE consists of 13 chapters. These are as follows: Chapter 1: Organisation Structure that describes the organisation structure to be configured in SAP.Chapter 2: Material Master data, which describes creation and maintenance of material master record.Chapter 3: Vendor Master data, which describes creation and maintenance of vendor master record.Chapter 4: Prices and Taxes, which describes price and taxes applicable for different kinds of procurement and the mechanisms for determining the same.Chapter 5: Account Determination, which describes the mapping of purchase sub-heads to different accounts.Chapter 6: Purchase Requisition, which describes the creation, changing and releasing of Purchase RequisitionsChapter 7:. Purchase Order (PO), which describes the creation, changes and releasing of POs.Chapter 8: IM (Goods Receipts), which describes the entry of material received against order.Chapter 9: IM (Goods Issues), which describes the issue of material received against reservation.Chapter 10: IM (Goods Sent for Job Work), which describes the sending process of material for job work.Chapter 11: IM (Stock Transfer / Transfer Posting), which describes the posting of material into several plants and storage locations.Chapter 12: Invoice Verification, which describes the creation, changes and releasing of incoming invoices.Chapter 13: Period Closing, which describes the process for opening and closing the posting periods in SAP.


Contents1 ORGANIZATION STRUCTURE.......................................................................1-12 MATERIAL MASTER.......................................................................................2-63 VENDOR MASTER........................................................................................3-134 PRICES AND TAXES....................................................................................4-165 ACCOUNT DETERMINATION.......................................................................5-186 PURCHASE REQUISITION...........................................................................6-217 PURCHASE ORDER.....................................................................................7-258 INVENTORY MANAGEMENT (GOODS RECEIPTS)....................................8-299 INVENTORY MANAGEMENT (GOODS ISSUES).........................................9-3110 IM (GOODS SENT FOR JOB WORK).........................................................10-3411 IM (TRANSFER POSTING / STOCK TRANSFER).....................................11-3612 INVOICE VERIFICATION............................................................................12-3813 PERIOD CLOSING......................................................................................13-41


222222

1. Organization Structure

Expectations

The organizational structure should facilitate the planning and procurement process for

the materials and services required at EMI.

Description

EMI is in the business of Design, Manufacture and Sales of all types of Electrical and

Mechanical fittings and accessories used on Overhead Lines / Sub Station. The

organization structure in EMI should facilitate ease in operations and proper MIS

(Management Information System) at all levels of the organization.


None.

Changes to Existing Processes

None.

Solution in SAP

In SAP-MM, the enterprise structure is represented in the following way:

Plant

Purchase Organization

Purchasing Groups

Storage Locations

Each of these components is described in the following sub-sections.


223223

Client

A grouping or combination of legal, organizational, business and/or administrative units

with a common purpose.

EMI (a corporate group)

Company Code

This level represents an independent accounting unit within a client. Each company code

has its own balance sheet and its own profit and loss statement.

EMI, Thane (a subsidiary company, member of a corporate group)

Plants

A plant is an organizational unit within Logistics, serving to subdivide an enterprise

according to production, procurement, maintenance, and materials planning. In all

transactions and related documents, the plant is taken as the reference with respect to

which the material is maintained and valuated.

EMI has only one plant. The production plant is in India (Nashik) only. Nashik plant

carry out the production and produces all types of Electrical and Mechanical fittings and

accessories used on Overhead Lines / Sub Station.


224224

The EMI plant is as follows:

Plant Description SAP Code

Nashik EMI, Nashik 1000

Purchasing Organizations

A Purchase Organization is an organizational unit within logistics in SAP, which

subdivides the company to facilitate efficient and effective purchasing. A Purchase

Organization procures materials and services, negotiates conditions of purchase with

vendors, and bears responsibility for such transactions.

Purchasing Organization for EMI: In EMI, the purchasing is centralized at Thane. Purchasing Organization at EMI is as

follows:

Description SAP Code EMI Purchase Organization 1000

Purchasing Organization Relation with Plants


225225

Purchasing Organization is related to the plant and the relationship is as follows:

Plant

SAP Code


SAP Code

Nashik 1000 EMI Purchase Organization 1000

Purchasing Groups

Purchasing groups are responsible for purchasing activities. A purchasing group can be

a buyer or group of buyers. Purchasing Groups for EMI are defined based on the type of

materials to be procured, and are as follows:

Raw Material Purchase Group

Capital Materials Purchase Group

Packing Materials Purchase Group

Import Material Purchase Group

Consumables Purchase Group

Provide a list of buyer names and contact details.


226226

Storage Locations

A storage location is the place where stock is physically kept within a plant. Material can

be stored in more than one storage location within a plant. A storage location can be a

physical or logical.

Storage Locations in EMI:Plant Storage Loc. Description SAP Code

1000 Raw Material RM00

Forging FRG0

Stainless Steel SS00

Aluminum

AL00

Nuts and Bolts

NB00

The Storage Location would be assigned to warehouse and plant. As the Quality

Control (QC) department keeps testing equipment or material for inspection, so it has to

be assigned the status of a storage location.

Gaps

None.

Workaround Solutions

None.


227227


Organization structure is integrated with all modules of SAP.

Reporting Requirements

None.


The authorization should be granted to high authorities in EMI.


None.


228228

2. Material Master

Expectations

The Material Master should contain all the necessary information about various

activities like purchasing, sales, inventory management, planning and valuation.

Description

EMI is in the business of Design, Manufacture and Sales of all types of Electrical and

Mechanical fittings and accessories used on Overhead Lines / Sub Station.EMI using

Raw Material, Consumables, Semi finished, Finished, Capital, and Packing Material.

Some materials are specific for a purpose and some could have multiple purposes.


None.


None.

Solution in SAP

Material master is a central repository that contains information about all the materials

that the company procures, produces, stores and sells and is maintained in different

views of the material master. Various functions like Purchasing, Inventory Management,

Material Requirements Planning (MRP), Invoice Verification, Accounts can use the

same data. A material number uniquely identifies each material master record. Each

material is identified by its material type.


229229

Material Type

Material type is an influencing factor for the material master and controls views of the

master, type of pricing, and number assignment and account determination for the

material. In SAP each material is assigned to a material type.

Material Coding in EMI could be internal (numeric) or external (alphanumeric). The

maximum length of material code is 18.

Material types of EMIDescription SAP Material Type

Raw Material (ROH)

Semi-finished products

(HALB)

Finished Material (FERT)

Consumables (ZCON)

Capital / Asset (ZCAP)

Subcontracting (ZSCT)

Material Group

Material group (base material group) is the level in the material group hierarchy, which

must be assigned directly to a material when it is created. It is defined across the


230230

corporate and sub-divides the complete material assortment from a business

management viewpoint. Material groups are as follows:

Group Description SAP Material Code

Electrical Items Group ZEIG

Mechanical Items Group ZMIG

Instrumentation Items Group ZIIG

Operating Items Group ZOIG

PRT items Group ZPRT

Scrap Items group ZSIG

IT Items ZITI

Lubricants ZLUB

Miscellaneous ZMIS


231231

Material Master Levels and views

Material master has organization level and material specific views.

2.5.4.1 Organizational LevelsThe following organizational levels are relevant for Inventory Management:

General Data

This level contains material data that applies to all subsidiaries, plants, and

warehouses. Examples of general data are the description, weight, volume, basic unit of

measure and alternative unit of measure of a material. General data is accessed using

the material number.

Plant Data This level contains material data that applies to one particular plant, for example, the

material's MRP (Materials Requirement Planning) data and its plant-level stocks. Data

defined at this level applies to all storage locations in a plant. Plant data is accessed


232232

using the plant number. Examples include MRP type, purchasing group, planned

delivery time and batch indicator.

Storage Location Data

This level contains material data specific to a storage location. The inventory data is an

example of the data maintained for each storage location. Storage location data is

accessed with the plant number and the storage location number.

Valuation DataThis level contains data for the valuation of a material (for example, valuation price).

Valuation data is accessed with either the plant number or the company code,

depending on the system setting (valuation level). The system derives the company

code from this data. If, however, the material is split-valuated, the valuation data is

defined at valuation-type level.

This structure makes it easier to manage information about materials across an entire

company. It also prevents redundant storage of material data when the same material is

used in more than one plant or stored in more than one storage location.

2.5.4.2 Material Master ViewsMaintenance and display of material master records is done using views. Since the

information needs of each department are unique to that department, each department

has a separate "view" of the master data. For example, when we maintain material data

from the viewpoint of storage, the system displays only the data that is relevant for

storage of the material, regardless of the organizational level at which the data is stored.

General data that is relevant for more than one view (for example, the material's

description, its weight, and its volume) appears in several views.

Primary Views for Procurement


233233

Material master has the following views:

Engineering

Purchasing

MRP

Sales

Plant and Storage

Work Scheduling

Accounting

Quality Management

The primary views for procurement are Purchasing, Engineering and Accounting.

Purchasing

Includes information related to purchasing a material. Examples include purchasing

groups responsible for material procurement, over-delivery and under-delivery

tolerances, and the order unit.

Sales

Includes information related to sale of a material. Examples include Material Pricing

Groups, Account Assignment Group, Transportation Group, Item Category Group, Sale

Unit Division etc. for material sales.


234234

Engineering

Includes engineering and design information of a material. Examples include CAD

drawings, basic dimensions, and design specifications.

Accounting

Includes valuation and costing information. Examples include standard price, past and

future price, and current valuation.

Gaps

None.


None.


All the modules of SAP use Material Master except HR. HR only uses the Material

Master in exceptional cases.


None.


The Departmental Head should be granted rights to create and change the Material

Master data. Display authorization can be given to all users.


All material master records are to be uploaded.


235235


236236

3. Vendor Master

Expectations

Vendor master should provide all the necessary details like type of vendor, address and

contact details, procurement currency, payment terms, etc.

Description

The raw material, import materials, packing materials, consumables is procured by EMI

from different vendors. Job work done by different subcontractors. Spares are primarily

procured from some local vendors. General items are procured locally in Thane or close

to Nashik.


There would be separate vendor groups for different types of vendors.


None.

Solution in SAP

Vendor master records contain important data on vendors. Data can also be stored in

the vendor master record that applies to certain specific organizational levels (e.g.

company code, purchasing organization, plant) within the enterprise. Vendor master has

a number, range and type / group. Vendor master records consist of three areas:

General data Data that applies equally to each company code within the enterprise and includes

address, telephone number, language of communication with vendor, etc.

Company code data


237237

Data that is maintained at company code level. This includes payment transactions,

number of control account or reconciliation account, etc.

Purchasing dataData of importance with regard to the enterprise’s purchasing activities and which is

kept at purchasing organization level and includes contact person, terms of delivery,

order currency etc.

Vendor Codification

A unique 5 digit system generated numeric code will be assigned to each vendor. This

helps in better control on vendor numbering.

Vendor Groups

Vendor grouping is required to differentiate between the vendors and to use different

reconciliation accounts and number ranges.

The different vendor groups in EMI are:

Description GroupRaw Material Supplier EMRMImport EMIMConsumables EMCB

Packing EMPMSubcontracting / Conversion EMCM


238238

Partner Functions

Business Partner "vendor" can assume different roles in its dealings with the company.

Accordingly, in a procurement transaction, the “vendor” is first the ordering address,

then the supplier of goods, then the invoicing party, and finally the payee. For this

reason, several partner roles (partner functions) can be assigned to the vendor.

Gaps

None.


None.


Vendor master is used by the MM and FI modules. Vendor master is linked to FI using

the reconciliation account in the vendor master.


None.


The Departmental Head should be granted rights to create and change the Material

Master data. Display authorization can be given to all users.


None.Document #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

239239


240240

4. Prices and Taxes

Expectation

Pricing should be done in order to get the material cost. Prices should indicate the

various discounts or surcharges or taxes or freight applicable to the material during the

procurement of material.

Description

EMI procures raw material, import materials, packing materials, consumables and other

materials.



None.

Solution in SAP

Pricing in SAP is handled through the Pricing Procedure. For each material item a

pricing procedure is determined based on the following parameters:


Vendor (from Vendor master)

Plant

Material

A combination of all above

The pricing procedure contains a series of Condition types (price elements). A separate

condition type in the pricing procedure will represent each of the price components.Document #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

241241

There are four basic categories of condition types in SAP:

Prices

Discounts and surcharge

Taxes

Freight

SAP provides the functionality for pricing the material automatically or manually while

creating a PO.

Gaps

None.


None.


This is used by Materials Management module.


None.


The Procurement Head should be granted rights to create and change the pricing data.

Display authorization can be given to all users.


242242


None.


243243

5. Account Determination

Expectation

Account Determination should provide information about the accounts movement in

purchasing, inventory management, physical inventory and invoice verification. It should

therefore be enabled to capture the financial impact on any transaction, including

movement of that material. The different materials falling under the same material type

can either be posted to in one G/L account or different accounts as the need be.

Description

EMI has various types of materials and services. The accounts movement is different

for different materials. There are separate accounts for diffrent materials / services. E.g.

the GR/IR clearing account and the SR/IR Clearing Account is for services. Similarly

there is a provision for inventory related accounts.


None.


None.

Solution in SAP

In SAP a valuation class is assigned to each material type. A material type may have

one or more valuation classes depending upon the requirement. The valuation class is

assigned to one or more G/L accounts as per the requirement. Various types of G/L

accounts are GR/IR clearing, inventory posting account etc. The various valuation

classes are as follows:


244244

Material Type Valuation Class Raw Material

1000Semi-finished products

2000Finished Material

3000Consumables

4000Capital / Asset

5000Subcontracting

6000

Gaps

None.


None.


This is integrated with FI module.


None.


None of the users should be granted this authorization, as this is a configuration activity.

It should only be done by the authorized person appointed by EMI.


None.


245245

6. Purchase Requisition

Expectations

Purchase Requisition should be raised only if there is insufficient stock of material in

stores, or if there is either an emergency requirement of any material or any services for

immediate consumption. The purchase requisition must be duly approved by the head

or concerned person (within the budget limit) and emergency purchase requisition

should be made available directly for procurement of material / services.

Description

This component is used to give notification of requirements of materials and/or external services and keep track of such requirements. Requisitions can be created either directly or indirectly. "Directly" means that someone from the requesting department enters a purchase requisition manually. The person creating the requisition determines what and how much to order, and the delivery date."Indirectly" means that the purchase requisition is initiated via another SAP component.Purchase requisitions can be subject to a release (clearance, or approval)

procedure.


None.


None.

Solution in SAP

Purchase process in SAP is initiated through purchase requisition functionality. A

purchase requisition 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.


246246

Purchase Requisition

Purchase Requisitions are released from various departments for the items to be purchased. Following are the types of purchase requisitions. PR for ServicesPR for job work / subcontractingPR for cost center Various Purchase Requisition scenarios are explained in detail below.(i) PR FOR SERVICES: The PR raised against requirement of services like Equipment services, Annual maintenance service etc. are released by concern depts.

Following points are considered to create PR for serviceso Identification of required service

o Service codification.

o Service PR Creation on Cost Centre

(ii) PR for job work / subcontracting

o The PR is raised against the requirement of Material against job Work.

The Concern dept. will raise the PR. For a Subcontract PR a Bill of

Material will be created and based on this PR is raised.

(iii) PR FOR COST CENTRE:

The PR is made for the requirement of items like general stationary, computer stationery, housekeeping materials which are not to be inventoried.o List of repetitive items to be purchased against cost center is maintained.

o Physical stock of these items is taken in last week of every month.

o Based on the minimum order level and physical stock concerned authority approves

the requirement, based on the requirement PR Created

o PR is forwarded to purchase department for procurement.

(iv) PR FOR ASSETS: The PR made against requirement of Capital Items like jigs & fixtures, Machinery, tooling, pallets etc. o List Of Requirement / Estimate Is Prepared.


247247

o Approval of Estimate from Higher Authorities

o Asset Code Creation

o Pr Creation

Purchase requisition numbering

The number ranges for purchase requisitions are:

Document Type

Description

NB Standard Pur. Req.

Item No. in Purchase Requisition

Item No. in PR is the serial number of the item. There would be a difference of 10

between two item numbers.

Gaps

None.


None.


Any department can use purchase requisition for material or services required.


None.


248248


The Departmental Head should be granted rights to create and change the requisition.

Display authorization can be given to all users.


None.


249249

7. Purchase Order

Expectations

The purchase order should contain all the procurement and material / services related

information required by vendor. It should provide the quantity to be purchased, delivery

date and other contractual stipulations. It is a legal document and should be verified and

approved by respective department heads.

Description

EMI policy is to raise the PO after the proper approval from the responsible authority

who would check and approve the quantity and value. If there is an OEM related PO

then there would be direct PO followed by approval, and if there is a non-OEM

procurement than it would follow the RFQ process in order to get the material of

desired specifications.


Procurement of all materials will be followed by requisition.


None.

Solution in SAP

Purchase Order

The purchase order can be used for a variety of procurement purposes. We can procure

materials for direct consumption or for stock. Delivery of the total quantity of material (or

performance of the total volume of services) specified in a purchase order item can be

spread over a certain period in a delivery schedule. This schedule would be recorded in


250250

the PO indicating the individual quantities with their corresponding planned delivery

dates.

The various types of PO for PLL would be:

PO for raw materials.

PO against services

PO for job work / subcontracting

PO for cost center items.

PO for asset items

PO related to PR Purchase Order Type Purchase Requisition Type Standard (for raw material)

NB Standard NB

Import ZIMP

Asset / Capital ZCAP

Consumables(for Cost Centre)

ZCOM

Subcontracting SUBCService ZSER


251251

Procurement Types

The various types of procurement for EMI are:

Standard

Subcontracting

Services

The service Purchase Order is raised with account assignment and service item

category. We generally use purchase orders for only for short term procurement. If

entering into a longer-term supply relationship with vendor, it is advisable to set up a so-

called outline agreement, since this usually results in more favorable conditions of

purchase.

Number Ranges

The following number ranges are proposed for EMI:

Document Type

Description Proposed Number ranges

NB Standard (for raw material)

_____ to _________

ZIMP Import _____ to _________

ZCAP Asset / Capital _____ to _________

ZCOM Consumables(for Cost Centre)

_____ to _________

SUBC Subcontracting _____ to _________

ZSER Service _____ to _________


252252

Release Strategies

Like other purchasing documents PO is also subjected to release strategies.

The PO is a legal document and should be duly approved by the person in the

organization who is responsible for approving legal documents.

Gaps

None.


None.


This is required by the Materials Management in SAP.


None.


The Departmental Head should be granted rights to create and change the Purchase

Order. Display authorization can be given to all users.


None.


253253

8. Inventory Management (Goods Receipts)

Expectations

The Goods Receipts Process should ensure that the quantity of the materials is as per

the desired specifications as in the Purchase Order and it should ensure that the

required materials, components and spares are delivered to the concerned user in time.

The GR process should be reflected in inventory and accounts.

Description

EMI deals with all inventory related activities and maintains corresponding records. EMI

has a goods receipts process for diffrent materials. Almost all materials are to be kept in

the Store. The materials subjected to quality inspection would be posted as Quality

Inspection stock in the system, before they are available for use.


None.


The manual process in EMI would be replaced by the standard GR process of SAP.

Solution in SAP

Goods Receipts

Goods receipt process in SAP is used to receive the material ordered in the PO. This

process enables the plant / process to be run efficiently. The GR can be done with

reference to PO.


254254

Type of GR / Material Document

Whenever there is a transaction in inventory management, the system creates a

document called material document . The GR type proposed for EMI is:

WE (Goods receipts for purchase orders)

Number range

The Proposed Number range for GR is

Account Movement

When GR is posted the following entries are passed in system:

Stock Account Debited

GR/IR clearing account Credited

Gaps

None.


EMI should follow the standard GR process in SAP.


It is integrated with almost every department that uses stock materials.


None.


The stores person should be granted rights to create records in the GR in SAP.


255255


None.


256256

9. Inventory Management (Goods Issues)

Expectations

The Goods Issue process should be used in case of material requirement by any

department. The goods issue should be done in such a way that there is optimum use

of the material required and the inventory level is within the prescribed range.

Description

EMI deals with all inventory related activities and maintains corresponding records. EMI has a goods issues process for different materials. Almost all materials are to be kept in the store.


None.


Approval process should be reviewed.

Solution in SAP

Goods Issue

1. Goods issue to cost centre

2. Goods issue to Sub-contractor for job work

3. Goods transfer from store location to store location in a plant

4. Goods issue from store location to store location in a plant - Two steps

1. GOODS ISSUE TO COST CENTRE ( 201): Materials issued against reservations from indenting departments to respective objects like Cost Centre.


257257

1) Reservation containing material, qty and cost centre entered by the requesting

department

2) Reservation Print is taken from the system.

3) Material & qty will be issued to requesting department, with reference to

Reservation.

4) Issue document is generated.

2. GOODS ISSUE TO SUB-CONTRACTOR FOR JOB WORK( MOV 541):Goods issued to sub-contractor for job work based on job work purchase order.1. MRP requirement for the finished product will trigger the requirement for material

to be sent for job work. (Considering the materials availability at vendors end)

2. Request for issue of job work material to stores dept. from buyer.

3. Stores issue material to vendor through MIGO and MOV 541.

4. Against 541 documents JOB WORK delivery Challan is generated.

3. GOODS TRANSFER FROM STORE LOCATION TO STORE LOCATION (311):

1. Material transfer from one location to another within the locations.

4. GOODS ISSUE FROM STORE LOCATION TO STORE LOCATION TWO STEPS

(Mov 313 & Mov 315):Material stock transfer from one location to another location within the plant1. Supply through MIGO & Mov 313, supplying SLoc and receiving SLoc.

2. Receive through MIGO & Mov 315 and receiving SLoc.

Gaps

None.


258258


None.


It is integrated with PP, and other modules those use stock items.


None.


The stores person should be granted rights to record the GI in SAP.


All open transactions are required to be uploaded.


259259

10. IM (Goods Sent for Job Work)

Expectations

To ensure that goods sent out to contractor for job work are received back in time and

that the inventory is updated as per movement of goods.

Description

Material is sent outside the plant premises in order to get job work done which cannot

be performed in the plant. The request for job work is raised and depending upon the

requirement it is sent to the appropriate vendor. The required material to be issued to

the vendor and after the job it is taken back.


The value of the material sent and taken back is to be considered and the process

should be discussed.


None.

Solution in SAP

Job Work / Subcontracting

For the job work, the PO is raised with Special Item category and sent to the vendor

along with the material to be worked. The material is transferred to the vendor and is

received back after the job done.

All the other information is the same as in GR.


260260

Accounting Entries

The system adds the cost of the material sent and the charges given to vendor on the

incoming material.

Gaps

None.


None.


It is integrated with MM and PM.


None.


The Stores person should be granted authorization to enter the GR in SAP.


None.


261261

11. IM (Transfer Posting / Stock Transfer)

Expectations

It may be required to transfer material from one storage location to another location.

Especially in the case of job work, this transaction is to be used for material to be

provided to the vendor.

Description

EMI has several locations in the plants and the material is transferred from one location

to another as per the requirement. In case of job work the material is transferred to the

vendor location for job.


This is as per the fiscal year defined in system.


None.

Solution in SAP

Stock Transfer (Storage Location to Storage Location)

A stock transfer from storage location to storage location in the same plant simply

causes an update of the stock quantities in both storage locations. The stock value

remains unchanged, and the event is not relevant for accounting.

A stock transfer from storage location to storage location is possible for all stock types.


262262

Transfer Postings and Stock Transfers: Differences

Transfer postings differ from stock transfers in that transfer postings are not connected

with a physical goods movement. They usually involve a change in stock type, material

number.

One Step and Two step stock transfer

Both stock transfers and transfer postings consist of a "goods issue" from an issuing

point and a "goods receipt" at a receiving point. Stock transfer from storage location to

storage location either in one step or in two steps can be posted.

The advantage of the one-step procedure is that there is a single transaction in the

system. The two-step procedure, on the other hand, allows monitoring the stocks in

transit. After the goods issue is posted at the issuing point, the stock appears "in stock

transfer" at the receiving point and is managed as such in the system.

The two-step procedure is also required if users have authorizations only for their own

plants.

Gaps

None.


None.


It is integrated with Material Management and inventory management and FI.


None.


263263


The warehouse person should be granted the authorization to make the entries. Display

permissions can be given to all warehouse users.


None.


264264

12. Invoice Verification

Expectations

The invoice verification process must be done in order to clear the payments to

vendors. It should allow the invoices that do not originate in materials procurement

(such as services, expenses, course costs) to be processed and credit memos to be

processed, either as invoice reversals or return deliveries.

It should also process the adjustments that arise during the material procurements and

clear the various costs.

Description

Various types of invoices are generated for materials and Services. These invoices are

cleared from time to time and payment is made. There may be some disputed invoices

that are kept on hold in order to clear the invoice afterwards. The variances in invoices

are discussed and are cleared latter stage.


None.


None.

Solution in SAP

Logistics Invoice Verification

LIV covers the invoice verification process in SAP. The various transactions in LIV are

Invoice Verification, Credit Memo, Subsequent Debit and Credit. All invoices would be

verified through LIV. Various types of invoices in EMI would be verified by the LIV

section of SAP.Document #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

265265

Reference Documents

The invoice can be verified by:

Purchase Order

Bill of Lading

Delivery Note

Document Types

In LIV there are two types of documents that are created:

Accounting Documents

RE for gross posting

RN for net posting

Logistics Document

RD Post invoice

RS Cancel/reverse invoice.

Number Range

The proposed number range for the accounting document is

and

for logistics documents it is…….

Variance in Invoices

The following type of variances can occur in invoices

Price Variance

Quantity variance


266266

Price and Quantity Variances

If the variance in an invoice item is accepted, and we overwrite on the proposed value,

the system checks if the variance is within the tolerance limits defined. If it is outside the

limits, a warning message is displayed but invoice can still be posted. If an upper

tolerance limit is exceeded, the invoice is posted but blocked for payment. Release of

invoice for payment is a separate step.

Gaps

None.


None.


This functionality is integrated with FI only.


None.


The person who performs invoice verification should be granted authorization and the

higher authority should be authorized to release the blocked invoices.


None.


267267

13. Period Closing

Expectations

The period closing activities enable us to do the posting for two consecutive periods.

This is because some data (stocks and certain valuation data such as total value, total

stock, valuation class, price control indicator, and price unit) are managed both in the

current period and in the previous period.

Description

Currently there is no facility of period closing.


This is as per the fiscal year defined in system.


None.

Solution in SAP

SAP has two consecutive periods open in order to post the goods receipts and other

inventory management processes.

Gaps

None.


None.


It is integrated with all modules.


268268


None.


Only the MM Head should be authorized to close the period. Since it is a critical activity

in MM, the rights should be restricted to the MM head only.


None.


269269

To-Be Process Document

PRODUCTION PLANNINGVersion 1.0


270270

PREFACEPurpose of this DocumentThe purpose of this document is to record the business process requirements of

Insecticides India Ltd. (Henceforth referred to as EMI) and outline the requirement

mapping in SAP.

Intended AudienceThe intended audience for the Production Planning AS-IS Document are the employees

of EMI and other people authorized by EMI who are in any way related to Business

Processes involved in Production Panning.

Abbreviations and AcronymsAbbreviation/Acronym

Description

SO Sales OrderPrcOrd Process OrderPO Purchase OrderPR Purchase RequisitionPlOrd Planned OrderMM Material ManagementFI FinancialsSD Sales and DistributionCr CreditDr DebitPP Production and planningMRP Material Requirement PlanningPPC Production Planning and ControlBOM Bill of MaterialGR Goods Receipt


271271


Description

TCode Transaction Code


272272

Organization of this DocumentThe Production and Planning Business Blueprint consists of 9 chapters. These are as

follows:

Chapter 1: Plant Structure, which describes the flow structure to be configured in SAP

Chapter 2: Master Data, which describes the creation, maintenance and utility in SAP

Production and planning records. Masters are like material master, Work Center, Bill of

Material, and Routing etc.

Chapter 3: Supply & Demand Planning scenario describes an integrated planning

process, which is executed on a medium to long term basis including the elements of

standard SOP, Material requirement planning and capacity planning

Chapter 4: Material Requirement Planning at plant level, which describes the planned

production and purchase requisition, based on present inventory level and business

requirements.

Chapter 5: order planning describes the creation of planned and process orders and the

planning of processes, Work Centers, capacity, order scheduling and in process

operation details.


273273

Chapter 6: Shop Floor Control, which describes the confirmation and back flushing of

activities and quantities with respect to production date against an order.

Chapter 7: Costing at Production Order level, which describes the plan verses actual

costing in terms of standard activities, Bill Of Material and actual data at each Work

Center level.

Chapter 8: Production Order Reconciliation, which describes the order status,

settlements at the end of an order for costing and status updating

Chapter 9: Inventory Management in Production cycle, which controls process input and

output quantities with respect to material . Byproduct and losses during processes will

be recorded for product costing, order costing and inventory management.


274274

Contents

MODULE INTEGRATION1. ORGANIZATION STRUCTURE RELEVANT TO PP2 PP MASTER DATA3 SUPPLY & DEMAND4 MATERIAL REQUIREMENT PLANNING5 ORDER PLANNING AND SCHEDULING6 SHOP FLOOR CONTROL7 COSTING AT PRODUCTION ORDER LEVEL8 PRODUCTION ORDER SETTLEMENT9 INVENTORY MANAGEMENT


275275

Module Integration

Production Planning is integrated with all relevant modules.

o Materials Management – Material requirement planning,

Procurement, Inventory management etc.

o Sales & Distribution – Delivery, Availability check, Stock

transfers etc.

o Finance/Controlling – Material Valuation, Vendor payments,

Material costing etc.


276276

1. Organization Structure relevant to PP

ExpectationThe expectations are that the Organization Structure for Production and Planning

module ensures that the system is easy to use and operate, is scalable to future

changes in the Organization and can timely and accurately perform transactions and

generate relevant reports. Plant is the highest entity for Production and planning

activities.

DescriptionThe Organization structure represents the legal and organizational structure of the



different departments of an organization. The organizational structure forms a



Changes to Existing ProcessesPresently Production planning activities are not integrated with other functions like the

procurement, accounting, sales etc in the system. Most of the Production planning

activities are managed separately in Excel worksheets. The concept of Work Center,

Routing and Multi level BOM will be new.


277277

Solution in SAPProduction planning module does not have any organization structure element defined

of its own. The plants defined in MM module are the organization structure elements for

PP module, as all the activities/ processes of PP take place at plant level.

The following plants are defined in MM module and are relevant to PP.

Manufacturing Plants Locations

In the given business requirements for EMI, it is recommended to have one plant for

manufacturing processes that would be relevant to PP.

Manufacturing Plants:

# Plants LocationPlant Code

1 EMI Transmission Limited Nasik 1000

These plants will be assigned to the one company codes respectively and integrated in

the MM,SD and FI module.

Processes of planning and production will be controlled by respective master data at

plant level at head Office.

Multiple storage locations will be created in these plants for inventory management purpose. Storage locations for raw materials, Semi finish materials, finish material, and etc. will be created under each plant.

Required Data for PP module mapping in SAP


278278

Gaps

Process mapping for production and planning in new expansion area mentioned in point 1.3 would happen only after getting detail processes and specifications by EMI.Workaround SolutionsAfter actual data at plant level with product specification and process details are known,

SAP configuration would be mapped for,

EMI Transmission Limited (Nasik)In case of new plant, it will be created in the respective company code to map PP cycle

in SAP system. Under existing plant, production Planning in Discrete Industry mapping

will be possible once relevant data is made available by EMI team.


COMPANY CODE

PLANT

Work Centre data

Bill of Material

Routing Storage Locations

Material Master data

TRANSACTION DATA FLOW IN SAP

SD, MM & FI

279279

Integration Requirements PP- MM Integration The inventory management and production processing is done at plant level.

Storage locations will be assigned to plant.

These are list of production storage location.

Dept.Storage location

Die Casting DC01Profile Cutting PC01Galvanizing GA01Armour Rod AR01Machine Shop MC01Vibration Damper DA01Al Pipe AL01Forging FR01Sp. Damper SP01Scrap SC01Rework RW01Engineering EN01

Reporting RequirementsNone.

Authorization RequirementsIn SAP, MM team will map the plant structure for the production and planning activities.

Under plant, storage location will be managed by MM team to assign material at

respective plant. This has to be authorized by managing director.


280280

Migration RequirementsNone


281281

PP Master DataExpectationMaster Data should ensure that all the necessary details related to production,

processes and Material Requirement Planning (MRP) are captured in such a way that it

facilitates smooth transactions avoiding data redundancy.

DescriptionBill of Materials The standard BOM is there, which is used as a reference for the Routing. The

production is batch wise and the control of quantity to produce is the batch size, as per

the batch size the quantity ratio is fix for the semi finished/raw material.

The packaging material is having the fix ratio with

Work Center different products.

There are number of work centre used for the manufacturing process. One product

passes through different work centers.

All work centers work for 24 hours a days with 12 hours 2 shifts.

Routing The standard SOP (Standard Operating Procedure) is there for the process control. The

product wise process instruction, master list is to refer the standard parameters.

Sequence of operations is standard.

Special ConsiderationsMaster data has to be maintained at each plant level once new requirement comes.

Material master is controlling data for all modules. Masters in respective area like the


282282

material master, BOM and Routing has to be made before using new material for

transactions like MRP. Masters will be created based on business requirements.

Changes to Existing ProcessesMaterial master record will be maintained with different views in SAP. Material master

consolidates all the data of sales, MRP, purchasing, costing and accounting with

various views. The BOM and Recipe will be created for the use in different applications

like process order, MRP, inventory etc.

Solution in SAPThe following four primary production and planning master data is to be created for

plant. Whenever material inventory is to be stackable and/or valuate, material master

has to be maintained.

Material Master Record Semi finish & finish products will require masters. Material grouping will be done for

similar kind of products to create the material master. In material master, PP relevant

views are Basic data 1, Basic data 2, MRP1, MRP2, MRP3, MRP4 and work

scheduling. SAP is having unit of measure conversion table in each material. By

conversion factor, material inventory can be managed in multiple units. In transaction

processes, SAP will take base unit of measure as default unit.

In SAP, These views will be maintained in all relevant material masters. Each master

data has to be created at plant level and can be copied from one another. Each material

needs at least one storage location for production planning.


283283

Each material number will be unique in SAP, which integrates all related modules by

maintaining respective views. Uniqueness of material each material will drive Routing,

bill of material and material valuation at each stage.

Activities required before creation or change material master

Collection of various data for entry into master record

Creation/changing material master records

Functions of material master data maintenance

Complete, relevant and sequential master data to be entered into the system.

Changing of material master records to reflect the current scenario.

The master will be maintained centrally i.e. same material code across various plants.

The basic data will be the same for all plants but plant specific data will be created for

each plant separately.

If the data required for a particular function is not maintained in the material master, that

function will not be triggered, for example, if purchasing data does not exist for a

material system, it will not allow creation of any purchasing document for that material.

Material Master in SAP has mainly two controlling fields, viz Industry Sector & Material

Type. These are discussed in detail below:


284284

Industry Sector: Industry sectors have control functions in the SAP System. For

example, it is a factor determining the screen sequence and field selection in a Material

Master record. Once you have assigned an industry sector to a material, you cannot

change the industry sector subsequently. The standard SAP System contains the

following industry sectors. The ID used to identify the industry sector internally appears

in parentheses.

Plant engineering and construction (A)

Chemical industry (C)

Mechanical engineering (M)

Pharmaceuticals (P), etc.

As we are into Chemicals, we have chosen Chemical Engineering.

Material Type: Materials with the same basic attributes are grouped together and are

assigned to a material type. This allows managing different materials in a uniform

manner in accordance with company's requirements. The material type determines

certain attributes of the material and has important control functions. When you create

a Material Master record, the material type you choose determines:

Whether the material is intended for a specific purpose, for example, as a raw material or finished goods

Whether the material number can be assigned internally or externally The number range from which the material number is taken


285285

Which screens appear and in what sequence Which departmental data you may enter What procurement type the material has; that is, whether it is

manufactured in-house or procured externally, or both.In addition, the accounts affected by a material entering or leaving the stores depend on the material type.

Material Types & Number Ranges:The material types used and their respective number range will be

#Material Type Description Number Range

External/ Internal

(4 char long) (25 char long) (18 digits)

1Raw materials

100000000 - 109999999 INT

2Packaging Materials

110000000 - 119999999 INT

3

Active ingred. materials

120000000 - 129999999 INT

4Bulk materials

130000000 - 139999999 INT

5Semi finished Product

140000000 - 149999999 INT

6Finished products **

150000000 - 159999999 INTDocument #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

286286

7By-Products

160000000 - 169999999 INT

8Spare Parts

170000000 - 179999999 INT

9Consumables

180000000 - 189999999 INT

10Sample materials

190000000 - 199999999 INT

11Non valuated materials

200000000 - 209999999 INT

12

Production Work Center/Tool

210000000 - 219999999 INT

13 Trading Goods

220000000 - 229999999 INT14 Advertising Materials

** Finish Material Number range may be changed to external alphanumeric code.

View:A view in Material Master contains data relevant for a particular function. For example:

purchase view will have all the data relevant for purchase. These views are maintained

at various organizational unit levels. For example basic data is maintained at client level

and will be the same for all plants for a given material.

If the data required for a particular function is not maintained in the Material Master, that function will not be triggered, for example, if Purchasing data


287287

does not exist for a material, system will not allow creation of any purchasing document for that material.

In case of sale of material, that material should be created against Sales view. If more

than one Sales organization exists, material needs to be extended to all the Sales

organizations. Following are the views in the Material Master:

Basic Data View Classification View Purchase View Sales View MRP View Quality management View Work scheduling View Accounting View Controlling View

PP relevant views and fields in Material Master Record

Inputs to Material Master Record

Material master view Relevant Fields

Basic data 1 Base unit of measure, material group

and old material number

Basic data 2 None

Classification Class type, class and characteristics

MRP1 MRP type, MRP controller, lot type and

MRP group


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MRP 2 Procurement type, special procurement

type, batch entry, production storage

location, backflush, in-house production

time, planned delivery time, GR

processing time and schedule margin

key

MRP 3 Strategy group and availability check

MRP 4 Selection method for BOM & Routingand

individual/collective requirements

Work Scheduling Production scheduler, production

scheduling profile, batch record required

and batch management

SAP Material master views with field name details

View Field Description

Remarks

Plant Organizational Element identifies the data relevant for

that plantStorage Location Organizational Element

identifies the data relevant for storage location within a plant

Basic Data Material Material Description


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Remarks

DescriptionBase Unit of

MeasureBase Unit of Measure

Material Group Groups materialsOld material

numberOld material number

Division Determines Sales & business area

GenItem Cat Group

grouping that helps the system to determine item categories during sales document processing

Gross weight Gross weight expressed in the unit of weight

Net weight Net weight expressed in the unit of weight

Volume Space that the material occupies per unit of volume

Weight Unit Unit referring to the gross weight or net weight of the material.

Volume Unit Unit referring to the volume of the material

MRP 1 ABC indicator Indicator that classifies a material as an A, B, or C part according to its consumption


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Remarks

value. This classification process is known as the ABC analysis

MRP Type Key that determines whether and how the material is planned

Reorder point If the stock falls below this quantity, the system flags the material for requirements planning.

MRP Controller Specifies the number of the MRP controller or group of MRP controllers responsible for material planning for the material.

Lot Size Key that determines which lot-sizing procedure the system uses within materials planning to calculate the quantity to be procured or produced. For ex: lot for lot order quantity, fixed lot etc

Minimum Lot Size

Depends on lot size indicator


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Remarks

Maximum Lot Size

Depends on lot size indicator

MRP 2 Procurement Type

Indicator that defines how the material is procured. The following procurements types are possible: The material is produced in-house. The material is procured externally. The material can be both produced in-house/externally

Special Procurement

Defines the procurement type more exactly. The system determines the procurement type from the material type

Schedule Margin Key

Key that the system uses to determine the floats required for scheduling an order. Opening period float after production (only in the case of in-house production) float before production (only in the case of in-house production) release period (only in the case of production order


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Remarks

management)Planned delivery

timeNumber of calendar days needed to obtain the material or service if it is procured externally

Safety stock Specifies the quantity whose purpose is to satisfy unexpectedly high demand in the coverage period. The risk of shortfalls is reduced by having a safety stock. This has to be maintained for each plant.

MRP 3 Strategy Group The strategy group groups all the planning strategies that can be used for a particular material. It will decide the stock type production eg Make to Stock, Make to Order

Period indicator Unit of Period e.g. M, D, W.Total

Replenishment lead time

The total replenishment lead time is the time needed before

the product is completely available again

Availability Check


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Remarks

MRP 4 Selection method Selection of BOM at the time of MRP run.

Individual /coll. Indicator determining whether the following requirements are

allowed for the dependent requirements of the material

Work Scheduling

WS view to be maintained for in-house made components

Production Scheduler

Person responsible for Production scheduling

Production Scheduling

Profile

It determines creation and release an order at the same time, or release an order and

print the shop papers

Integration considerations

Following are the some integration points identified in Material Master

Basic Data:


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Base unit of measure, material description will be used in all the modules. The modules of PP, SD, FICO and QM also will use the same unit and description.

Purchasing: GR processing time, to cover internal quality lead time.

MRP: Strategy group will decide whether the production is for make to order

or for make to stock thus integrate with SD. MRP type decides the type of planning for the material, which

integrates with SD and PP. Lot Size decides whether we are opting fixed lot or lot for lot order

quantity. This will facilitate to create purchase requisitions/planned orders as per the lot quantity defined in the material master.

Quality Management View: QM Control key

Work Scheduling View: Production scheduler for assigning production Under delivery and over delivery tolerance to control the production

within specified limits

Sales: Sales Organization, distribution combination will decide the distribution

(Sale) of a material. Tax classification of materials determines tax codes based on which

sales tax is calculated.


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Accounting: In the case of Material Master the integration of FI with other modules happens because of the following reasons:

Valuation class decides the various G/L accounts to be updated at the time of transaction posting thus integrates FI with MM, PP, SD.

Price control indicator will decide pricing option for valuating the inventory stock. There are two indicators; V, valuates the inventory at moving average price & S, valuates the inventory at standard price thus integrates FI with MM.

Bill of Materials Bill of Material will be created for Semi finish and finish material at plant level. BOM will

have defined components, quantities, unit of measure and process byproducts for a

predefined base quantity of BOM header material. BOM will have an effective date that

is required during creation and further usage. Any material should have single BOM and

identified by its unique number. BOM will be used to maintain different component

details at plant level for a material.

In Bill of material, only one unit of measure can be entered against each component

material and quantity. After MRP run, it can be converted to other UOM based on

predefined conversion factor.

Inputs to BOM

Bill of material Relevant Fields

Initial input screen Material, plant and BOM usage


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General item view Item category, component, quantity and unit of

measure.

Header overview Base quantity, unit of measure, BOM status

Transaction codes for managing Bill of materials in SAP

Transaction description Transaction Code Remarks

Creating BOM CS01 Authorized user can create

the BOM

Change BOM CS02 Authorized user can

change the BOM

Display BOM CS03 This is only for display. No

changes are allowed here.

Work Center Work Centres are production facilities and persons involved in a production process that have capacities.Work Centres can be, for example:

Parts of the plant that are used for production (processing units) Parts of the plant that are used for intermediate storage (storage Work

Centers) Parts of the plant that are used for both intermediate storage and

production (Production storage location )Document #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

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The data in the Work Center are used, for example, for:

Scheduling: operation times and formulae will be entered in Work Center. So that

operation durations can be calculated.

Costing: Formulae are to be entered in Work Center. So that cost of an operation can

be calculated. Work Center will be assigned to a cost center.

Capacity: the available capacity and formulae for calculating capacity requirements are

entered in Work Center.


Resource

Defaults Costing Data Scheduling and capacity

Routing Cost center Lead time scheduling and

capacity planning

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Production operations are managed with Work Center by defining the Work Center in

Routing in each plant. Work Center category, type of Work Center capacity, Work

Center capacity formula, total hours available and factory calendar are to be defined.

Machines, where set of operations are performed, has to be identified as Work Center.

Work Center has six views to enter the Work Center data maintenance.

In the initial entry screen plant, Work Center name and Work Center categories are to

be entered.

Inputs to Work Center

Work Center views Relevant fields

Basic data Person responsible, usage and standard value

key

Default Control key, unit of measure for standard

values

Capacity Capacity category, Set up formula, processing

formula

Capacity header Capacity planner group, factory calendar, unit

of measure, start time, end time, length of

breaks, capacity utilization, number of

individual capacities, relevant to finite

scheduling and allowed overload

Scheduling Capacity category, set formula, processing

formula, dimension and unit measure of workDocument #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

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Costing Cost center, activity type and formulae

Technical System created

Transaction code for managing Work Centers in SAP


Creating Work Center CR01 Authorized user can

create a Work Center

Change Work Center CR02 Authorized user can

change the Work

Center

Display Work Center CR03 This is only for

display. No changes

are allowed here.

RoutingRouting describe the processes to be used for producing materials in process plant as well as the Work Centers and ingredients required for production.StructureA Routing consists of a header and several operations, each of which is carried out at a primary Work Center. An operation is subdivided into sub-operation.A Sub-operation is an independent process step that contains the detailed description of


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the process steps.The primary Work Center you assigned to the superior operation is automatically transferred to the Sub-operation.The system uses the Sub-operation data to determine the dates, capacity requirements, and process costs. During order processing, user also confirm the actual activities performed for the Sub-operations.

Depending on requirements, the Sub-operations of a Routing contain the following planning data for order processing:

A control key that specifies, for example:o Whether the respective step is processed internally or whether a

vendor will receive an order for external processing o Whether the system is to determine dates, capacity

requirements, and costs for a process step o Whether a confirmation must or can be sent during order

processing Standard values, that is, planned values for the activities to be

performed in the Sub-operation Relationships that specify how Sub-operations relate to each other in

terms of time External processing data that is used as a basis for ordering,

scheduling, and costing externally processed Sub-operations The way Sub-operations are related to each other specifies the sequence of the manufacturing process. Sub-operation relationships can be sequential, parallel, or overlapping.Several materials required for the execution of a specific process step can be planned for an operation or Sub-operation. These materials must be Document #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

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components of the BOM for the material to be produced.A Sub-operation contains standard values for activities. These values serve to calculate dates, capacity requirements, and costs.Several secondary Work Centers can be planned for operations and Sub-operations in addition to the primary Work Center. In addition, you can plan production Work Centers/tools (PRT) for operations and Sub-operations. A Sub-operation contains a number of process instructions that convey information relevant to process control.Inputs to Routing

Routing Relevant Fields

Initial input screen Material, plant

Routingheader view Routingusage, status, unit of measure

Operation overview Work Center, plant, control key, base quantity,

operational unit, breaks, set up time, machine

time, and unit of measure and details of external

processing if the operation is defined for external

processing.

Material component

allocation

New allocation, operation no, sequence

Managing material Routingin SAP


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Creating Routing CA01 Authorized user can create

a Routing

Change Routing CA02 Authorized user can

change the Routing

Display Routing CA03 This is only for display. No

changes are allowed here.

GapsNone.

Workaround SolutionsNone.

Integration RequirementThe MM, SD, FI/CO modules are integrated through material master record.

Bill of material, Work Center and Routing in SAP are maintained at the plant level. All

masters are to be maintained for a material within a plant. System will drive a whole

production flow based on master data control.



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Transaction Code Transaction description

CS11 BOM level by level

MM60 Materials list

MMBE Stock overview

CR60 Work Center info system

CR05 Work Center list

CA80 Work Center – where used list

Authorisation RequirementsAuthorisation for Master Data

Activity Authorized PersonsCreating master data Admin User Changing master data

Admin User

Reports display Shift Supervisor, Asst. manager, Asst Manager, Manager, Senior Manager

Migration RequirementsMater data for semi-finish and finish material, BOM, Routing and Work Center is to be

created and uploaded in SAP before Go-Live. Master is to be created for data

uploading purpose.


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supply & demandExpectation EMI has the expectation of creation of annual master plan depends on marketing or sales departments forecasts for the expected sales along seasonal wise supply for planning period of one year .

DescriptionIn the annual meeting, based on last year demand the forecast planning gets create for

the fourth coming year.

Monthly Production Plan issue by the Head Office to Factory after that they discussed

the plan to H.O. Authority for weekly production.

Production Plan


None

Changes in Existing ProcessesNone

Solution in SAPProduction & Procurement planning processes use the master data maintained in the SAP. Planning is done at several levels in SAP depending upon the planning objectives. In the PP module, the following levels of planning are proposed to be implemented and used:


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Demand Program (i.e. Planned Independent Requirements (PIRs)) generation for production based on a Make-to-Stock Demand Management strategy

Materials Requirement Planning for generating Planned Orders / Procurement Proposals for in-house produced sub-assemblies / components and externally procured items.

Demand ManagementPurposeThe function of Demand Management is to determine requirement quantities and delivery dates for finished product assemblies.

Demand management is based on a planning strategy. Planning strategy determines how customer requirements are met through planned production or procurement of a product. To create a demand program, Demand Management uses planned independent requirements.

Demand Management for EMIEMI Business process support to use a ‘Make-to-Stock’ strategy to cater to customer requirements. The objectives of the planning strategy are:

To ensure quick response to customers’ requirements by delivering from stock.

To adapt production levels / mix to match actual customer requirements (from customers’ sales orders) especially if the customer requirements exceed the planned requirements.

To optimize inventory levels by actively synchronizing the production levels to match actual demand, and to a lesser extent


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To smoothen the demand program and maximize production through available capacities / facilities.

Demand Management Procedure1. At the mid of each month, the month wise Production Plans transferred from

SOP will be split uniformly into daily (operative) Demand Programs for the next calendar month. The Demand Program will then be activated so that it will be taken into account during the subsequent MRP runs.

2. Changes, if required, based on the actual production / procurement situation may be made to the Demand Programs at any time.

Demand Management TransactionsTransaction

Trans.Code

Path Authorization

Planned Independent RequirementsCreate MD61 Logistics > Production >

Production Planning > Demand Management > Planned Independent Requirements

PPC Planner

Change MC62 Logistics > Production > Production Planning > Demand Management > Planned Independent Requirements

PPC Planner

Display MC63 Logistics > Production > Production Planning > Demand Management >

Users


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Planned Independent Requirements

Customer RequirementsCreate MD81 Logistics > Production >

Production Planning > Demand Management > Customer Requirements

PPC Planner

Change MC82 Logistics > Production > Production Planning > Demand Management > Customer Requirements

PPC Planner

Display MC83 Logistics > Production > Production Planning > Demand Management > Customer Requirements

Users


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Material Requirement Planning

ExpectationTo determine material requirement planning accurately before the production processes

start in the form of purchase requisition and planned orders.

Raw material requirement planning through purchase for the manufacturing scenario.

Finish material and semi finish material requirement planning for sale orders.

Scheduling and capacity planning has to be carried out, based on requirements date.

DescriptionRaw material planning

Currently on information of annual planning goes to purchasing department to start the

material analysis and other procurement procedure in advance to for availability of

regular and highly consume items. Also market price also taken into consideration.

The planning for the finish material for the coming month plans around the date 25 th in

the previous month and according to that, the raw material demand plans on the

monthly finish product demand. Request for the raw material goes to the Head Office.

Then the material procurement starts and ends up to the last week of the month. The

raw material procurement is also depends on the market price. Some time they make

the stock of the material.

The requirement for the raw material is created with the excess amount. So in the

exceptional cases the availability of the shop floor requirement is fulfilling.


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Special ConsiderationsWhenever there change in requirement user has to create new demand and then have

to take MRP run material wise.

Changes in Existing ProcessesBy the use of SAP, systematic and analytical planning will be in place. SAP will project

inventory data across the plant, so on-line system will update reservation of material

and new requirement for production & procurement.

Solution in SAPProduction planning and procurement activities trigger together with MRP run at plant

level in SAP. MRP views in material master will control the MRP activities.

Material requirement planning will be based on MRP strategy and MRP type. MRP

strategy defines the production planning strategy to be adopted like MTO or MTS and

MRP type defines the procurement type of the material. Material planning will be based

on the following two type of materials requirement.

Raw material requirement based on bill of material. Production planning of semi-finish & finished material based on bill

of material and Routing.Material Planning (MRP)Requirements will come to MRP through PIR. MRP will trigger bill of material and

Routing. Planned orders and purchase requisitions will be generated based on PIR

demand quantity.


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MRP has plant level controls like floats for scheduling, MRP controller, and special

procurement key. MRP will consider BOM & Routing, Routing selection, BOM explosion

date as per configuration. MRP will schedule the planned orders with lead-time

scheduling by default.

Transaction code for MRP execution in SAP will be possible by following transactions

MRP Transaction code Description

MD01 MRP run – Online

MD02 MRP run – Single Item, Multi Level

MD03 MRP run – Single Item, single Level

Calculating production dates in Lead-time scheduling

MRP will do planning process as per lead-time scheduling concept. SAP will execute

lead time scheduling during the planning run in addition to the calculation of basic dates,

in order to determine the production dates for planned orders.

In the initial screen of the planning run, set the scheduling indicator to 2 for lead-time

scheduling.


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Prerequisites:

-Routing to be created

-Schedule margin key – Defined in customizing for MRP by managing floats

-Scheduling parameter for planned orders – Schedule levels, Routing

determination, backward scheduling and basic dates.

Production dates calculation

The production dates are determined using the Routing. The system hereby uses the

floats that are allocated to the material via the schedule margin key in the material

master. These floats include the float before production and the float after production,

as well as the extra time factors specified in the Routingsuch as the queue times, move

times, setup times, labor times, machine times, and so on.

Product wise floats will be created and Routingwill be created for each material. This will

derive dates of each operation by SAP. In backward scheduling Independent

requirement date will be consider and based on operation sequences, in the backward

the start date will be derived. SAP will calculate duration of each operation from

predefined setup time, operation time and teardown time as per Routing master data.

GapsMRP will not take the capacity loads into consideration while production planning of

semi-finish and finish material. It assumes that infinite capacity is available at

workstations.

MRP will not reschedule any production order.


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MRP takes default Routing and BOM. MRP will not allow selecting alternative Routing

or bill of material.

Workaround SolutionsCapacity Leveling is possible with T. code CM38, CM27 and CM31 but manual

intervention is required.


With MM module Consumable materials will be planned using the reorder level planning based on MRP type setting in material master. Generating collective requirements are needed for all components. Raw materials for the manufacturing will be planned through the MRP run for the open sales order.

Reporting RequirementsTransaction Code Transaction description

MD04 Stock/Requirement List

MD05 MRP List

CO09 Availability overview

Authorization RequirementsAuthorization requirements are explained in the table below:

Activity Authorised PersonsMRP Running and execution Asst. Manager, ManagerDisplay of reports Shift supervisor, Asst. Manager,

Manager and Senior Manager


313313


None


314314

Order Planning and Scheduling

ExpectationTo execute the production, system should create the in-house procurement element I.e.

Planned orders .

The Planned orders start and finish dates should guide user to control its sequencing.

Respective recipe and bill-of-material should be attached with production document.

Reprocessing is part of day-to-day business at various level of production.

SAP should support to reprocessing activities, material and operation recording to

register respective data.

DescriptionAs per the monthly plan (created by Head Office), they create the total demand for the

month and then they split it in to the daily production demand. Except the Monthly plan,

there is possibilities of other rush order demand.

There is batch wise production and for every batch, they create the Work Order. The

Work Order has the unique at the plant level. The creation of Work order happens just

before start of production. The Work Order contains the Bill of Materials i.e. component

description, Quantity, unit of Measure.

Special ConsiderationsPlanned orders are to be converted to Production Order manually. It is not automatic. If

the user wants to convert planned order to purchase requisition instead of converting to

Process Order, system allows him to do it.

SAP will schedule planned order and then Production Order based on the master data

(Routing) by lead-time scheduling. It will not consider the current Work Center load.


315315

Changes to Existing ProcessesPlanned orders will come into picture to have more control on production activities. User

can convert these planned orders based on the priority of sales requirements and

capacity planning.

Solution in SAPPlanned Independent Requirements will trigger the planned orders through MRP.

Planned order contains

-Scheduled start and finish dates.

-Quantity to be produced.

-Scheduling type.

-BOM of the material to be produced.

-produced.

-Detailed scheduling with capacity requirements.

-Planning plant.

-Production plant.

User can make changes to the planned order whenever required. Subsequent MRP run

will take care for the remaining quantity. Scheduled dates can be changed. System will

do rescheduling based on the scheduling type i.e. backward scheduling. User can firm

the planned orders. So that MRP cannot do any automatic changes to the planned

orders. If any changes made to planned order, it will be firmed automatically.


316316

MRP takes default Recipe for the planned order. It can be changed manually if required.

BOM material component and quantities can also be changed.

Production Order conversion through planned OrderPlanned order is to be converted to Production Order manually with T.Code CO40 for

individual conversion or with T Code MD04 directly. Master data will be transferred to

Production Order automatically and planned costs will be calculated.

User has to convert all the planned orders individually or collectively to Process Orders

manually. While creating the Production Order system performs the material availability

check at order creation or at order release. In case of any material deficit, system will

flash list of missing item list. But the system warning will not stop or will stop user for

releasing a Process Order. Material reservations will be carried out for the BOM items.

Planned costs will be generated for each Process Order.

Capacity requirements will be generated for the Work Centers.

System maintains each Process Orders with a status management. When the

Production Order is created, system gives the status ‘CRTD’ (Created). If the material

availability check has not done, then it is ‘MANC’ (Material availability check not done’,

‘PRC’ (pre-costed) etc.

Creating and downloading control recipes (optional) which contain the Process

Instruction along with its characteristics.


Process Order creation

Release Process Order

Conversion of planned order

PI sheet Creation

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Production Order typeOrder type is one of the main control which is having following items:

Manual and automatic selection of BOM and Routing.

Task list type

Reservation or purchase requisition selection.

Costing

Material availability check for materials.

Costing will make use of the Production Order type.

Production Order Numbering

Plant wise Production Order types will allow user to track respective Production Orders

with different numbers.


Planned costs calculation

Resource loading

Reservations for component items

Capacity requirements generation

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Each Order Type will have a unique number range assignment to identify specific plant

with order number. The order type is representing as the alphanumeric four-digit key.

Production Order SchedulingMRP will schedule the planned order with lead-time scheduling. When the planned

order is converted to Process Order, the scheduled dates will be transferred to

Production Order automatically. Rescheduling will be possible by manual intervention in

each Process Order.

Production Order scheduling is done on backward scheduling concept. Scheduling type

defined in the Production Order type parameters. SAP will calculate start date based on

finish date as an input. SAP is calculating dates based on defined days in lead-time

scheduling that are from operations execution time defined in Recipe.

Production process floats in schedule Margin Key in days Process Orders at multiple stages will take predefined start date based on schedule

margin key (for buffer time), where floats like opening period, before production, after

production, and release period for a Production Order are defined.


MRP RunBackward scheduling will calculate start date with lead time

Requirements

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Scheduling and capacity levelingIn lead-time scheduling the system does not take into account the capacity load of the

Work Centers affected.

Looking into SAP Work Center loading, dispatch of operations will be allowed manually

to distribute to suitable open date. SAP will have inbuilt capability to allow user to

distribute Work Center overloading in case of non-availability of capacity. User has to

dispatch operations to another dates in SAP system to avoid or reduce overloading of

Work Centers.

Input process batch and output batch Functionality of batch management will be used for input and output production

execution details. SAP batches use system generated internal numbering with

characteristics. It will record details for tracking purpose. Production Order always track

input and output batch details as and when required. SAP makes internal documents in

other modules like MM, FI-CO once posting is done.

Production Order Release


Manual scheduling is possible. Multiple routing can also be selected before release.

Overloading of Resource can happen in case of manual rescheduling. Earlier Production Orders have to be rescheduled before pulling the new order in between dates.

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This is another control given by SAP to have more control on production activities. If

required, order release can be done by the system automatically. Production Order

status changes to ‘REL’ (Released) from ‘CRTD’, after its release. Then system allows

goods movements.

If user wants to lock any Production Order, system will allow the same. Once Production

Order status is showing as locked, confirmation against order is not possible.

Read master data

In case of any changes in PP master data like BOM and Routing, SAP will allow

changes in Production Order if user selects “read master data” before release. If the

status of Production Order is “released” and later user wants to read the master data to

Process Order, then order status will be reversed to “created”. Then user has to release

the Production Order again.

e.g. If there is any change in BOM component quantities or the change in operations,

user can update the Production Order.

GapsSAP cannot change the order numbers or quantities if there is any changes in the input.

Rescheduling of released orders will not happen automatically. Each Production Order

manual rescheduling will be allowed.

Any change in Demand, like quantity change will not make any impact on the

Production Order. Externally Production Order is to be managed either by amending

Production Order quantities

Workaround SolutionsAgainst the change demand user has to take separate MRP RUN material wise.Document #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

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Integration RequirementsPP-MM Integration

Requirements of raw or consumable materials are to be planned as per the requirement

date that comes from MRP run. System checks for availability of material.

PP-CO Integration

System calculates the planned cost that is expected to be incurred during production.

Reporting RequirementsTransaction Code Transaction description

CO01 Production Order details specific to material

CM01 Work Centre Load

CM02 Orders

CM05 Work Centre Overload

CM38 Capacity Levelling (work centre view)

CM27 Capacity Levelling (individual capacity)

CM31 Capacity levelling (Order view)

COOIS Production Order information system

Authorisation RequirementsTable: Authorisation for Planned Order conversion

Activity Authorised Persons

List of planned orders, Process Orders with quantities, BOM

Shift supervisor, Asst. manager


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item (component), operation level activities details if any etc. Open planned order with sales order and customer details

Shift supervisor, Asst. manager

Planned Order conversion to Process Order

Asst. manager, Manager

Production Order release Asst. manager, ManagerRework Production Order release

Manager, Sr. Manager

Migration RequirementsNone.


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Shop floor controlExpectationShop floor control has to record the relevant data, analyze and control all the production

activities.

SAP has to consider the inter module integration.

Goods movement is to be simplified.

Product traceability during production cycle.

DescriptionThe batch wise production starts with the SOP (Standard Operating Procedure). The

SOP contains all the instructions to carry out the operations. They maintain the Log

Sheet, batch wise for the shop floor control. The log Sheet contains all the actual

parameter values.

Special ConsiderationsProduction Order confirmation at operation level with all relevant process details is part

of shop floor control. Every operation will be confirmed with the execution time details.

Actual confirmation of goods receipt and goods issue BOM item quantities will update

inventory level. Activity level actual data entry will be possible.

Changes to Existing ProcessesPlanned Order will be generated for each semi-finish and finish material. The inventory

will happen with production Order and planned order number. The process control will

happen with the control recipe, created through the process order. The actual

parameters will be saved with the production order.


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Solution in SAPAll semi finish and finish material will have a material master, BOM and Routing with

Work Centers. Production Order will be generated for each semi finish material. Semi

finished materials have to be identified wherever inventories and costing is required and

goods movements are required.

Each Production Order will have its own identity and operations. Release of Production

Order and operations and its Sub-operations will be done individually in SAP.

Every operation in the Production Order requires release, confirmation independently.

Each production required Goods Receipt individually. System creates a batch for each

goods receipt. System will track all relevant details by the confirmation process and

goods receipt through material documents generated for each process.

Activity wise costing will be possible for various Work Centers where Production Order

is maintained since costing will be at Production Order level. Variance of operations and

Work Centers will be booked at one Production Order.

Production Order confirmationData entry has to be done as and when the activities of production process completed.

Production Order or operation confirmation can be partial or final confirmation. Partial

confirmation is allowed for each shift. Production Order or operation status will be

updated to ‘CNF’ (confirmed) after the final confirmation.

Automatic goods issue for the few materials, which is called ‘backflush’, is posted with

confirmation of the operation at respective Work Center level (storage location). Other

materials which are consumed variably are issued for the operations before execution

starts.


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In case of wrong data entry, reversal is possible up to certain stages. Goods receipt and

goods issue posting dates are very vital for such reversals. By the process of reversal,

goods issue and goods receipt will be revoked. In case of any missing or changed

inventory status, system will show error.

Goods movement history, costing details will be recorded for each individual Production

Order. Document will be created internally along with each goods issue and receipt.

Order settlement is required to close the order for costing purposes after final

confirmation.

In case of batch fail, manual Production Orderis to be created and released.

Production Order confirmation flow

Reprocess


Actual phase confirmation

Goods issue and receipt from & to

respective storage location

Goods issue to the Process Order

Release of Process Order/release of operations

Process Order settlement and close.

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The Reprocessing will be done under the manually created Reprocessing Order with

the different order type and number range. The unique number range of order type

could easily identify the reprocessing order.

SAP will track all operations confirmation and quantity consumption if Reproduction

Order is systematically maintained.

Repetitive Manufacturing

GapsNoneWorkaround SolutionsNone Integration Requirements

PP-MM integration

Document will be generated for each goods issue and goods receipt.

PP-CO integration

Actual costs will be calculated after the Production Order confirmation. Production Order

needs settlement after its final confirmation.



CM01, CM02 and CM05 Work Center loading


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COOIS Production Order information

CO40N Planned order conversion to Production

Order(collective)

Authorisation RequirementsAuthorization requirements are explained in the table below:

Table : Authorisation for Shop floor managementActivity Authorised PersonsOperation level confirmation Shift supervisor, Asst. manager

Reversal of confirmation Asst. managerGoods movements Shift supervisor, Asst. manager

Migration RequirementsManually Production Order is to be created for each open requirement, which is under

execution. WIP material is to be issue against each Production Orders.


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Costing at Production order levelExpectationCosting is part of production order management. EMI business requires product order

level costing based on standard cost and actual cost. Variance based on planned

verses actual will help them to look into process method and component consumption.

DescriptionCurrently there is manual production costing in MS-Excel for all type of finish and semi

finish material.

Special ConsiderationsFor operation which is having more than six activity to be cost, dummy work center is to

be created and assign in Work Center for capturing the cost of activities.

Changes to Existing ProcessesIn today’s scenario, costing activity is done based on actual consumption and

manufactured goods value. Costing in SAP will be based on standard values, which will

be routed through production Order.

Solution in SAP

Product Cost by Order :


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The Product Cost by Order application component enables to analyze costs at the level of production orders. Costs charged to production orders are usually analysed and settled by lot. This means that variances can only be analysed after the entire planned production quantity has been put into inventory.

The Product Cost by Order component allows you to do the following: Calculate and analyze planned costs, target costs, and actual costs of

production orders and process orders Calculate or update the work-in-process inventory and the finished

goods inventory Calculate and analyze variances Transfer data to Financial Accounting (FI)

Each production Order will have a link with sale order in make-to-order scenario.

Production costs can be rolled up to sales order level.

SAP is having standard costing module, driven by cost center concept. Cost center will

have activity types with assigned costs. Each work centre will be assigned to a cost

centre.

Activity types and formulae are defined in Work Center. A formula is allocated to an

activity type in work centre. Using the formula and the standard time in operations,

system calculates how much activity is required to perform the particular activity type in

the operation. So that System can valuate the activity per activity type.

Production order costingTarget cost based on standard cost from cost sheet, planned cost is calculated at the

time of production order creation based on BOM item quantities and Routing data and


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Work Center formulas. And actual cost is calculated at the time of confirmation of

production order based on actual goods issued, total activity used for each operation

etc. System compares the actual costs with planned costs and standard costs and

generates reports. All goods issues and goods receipts are to be completed for the

production order before the order settlement.

Standard cost and planned costs:


Production order creation

Material with specific Master Recipe with work centre formulae

Material BOM

Standard cost and planned cost for production order

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Actual costs:

Costing for a Production Order is based on standard product costing. Any cost related

data has to flow through production order route. Flow of data in costing is outcome of

production Order activities, quantities and dates confirmation. Costing process is only

for analysis, not for control. SAP will maintain internal documentation to update records.

In case of collective orders, each production order is to be settled one by one to go for

next.

Production against sales order will allow analyzing actual cost of processes in make to

order scenario. Comparison of actual cost with standard cost will be possible.

Costing plan in production cycle


Production order confirmation

Actual activity used for the operation of production order

Actual material consumed to produce the finish material

Actual cost

Overheads

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Costing department has to update every activity cost in SAP. By defined value, SAP will

calculate planned cost for the production order while creating the order. Every

production order has standard cost, planned cost. Once production is confirmed, actual

cost will be updated against production order.

GapsNone


Integration RequirementsPP-MM integration: Goods issue and receipt will be traced in system for costing

purpose.

PP-CO integration :Work Centers are assigned to a cost center. Activity type is planned

on the cost center. With this integration the production overheads are charged to the

products.


Production Order wise costing


MB51, COOIS Production, consumption and process waste recording

Authorizations RequirementsTable: Authorization for Cost activity maintenance

Activity Authorization


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Activity wise cost key maintenance Asst. Manager and ManagerStandard cost for a material Asst. Manager and Manager



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Production order settlementExpectationEach production order is to be settled in SAP once it is finally confirmed. All open

reservations are to be released with respect to a production order.

DescriptionPresently in EMI no such mechanism exist to close or settle work order against sales

requirement. Sales order/work order is closed once the required quantities are

dispatched.

Work order level settlement, material issue and receipt concept is not existing. Day wise

and month wise total material issue and receipt is used for the purpose of variance

calculation.

Special ConsiderationsNone.

Changes to Existing ProcessesTotal value of issued material during the month will be taken for costing purpose.

Solution in SAPIn SAP, open process orders for a material are to be finally confirmed before going for

settlement. Production order settlement is the part of process, which updates order

costing. In SAP standard costing, planned costing and actual costing will be recorded at

production order level. Once order settlement is done, no goods issue and receipt

permissible.


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Production order level settlementFinal confirmation of a production order will allow for settlement processes. By final

order settlement system will close each production order in SAP.

Settlement profile is to be created with respect to order type. Based on order type,

profile PP01 will be assigned and settlement rule is to be created.

Goods issue and receipt against production orderDuring production order confirmation any missing component or quantity can be

adjusted. System will be allow material issue, receipt till the open period of material and

finance modules. Once production order is settled, all input material and operation level

cost will be loaded at order level. Changes in component item quantities or issuing new

unplanned component during production order confirmation will be allowed. Costing

variance analysis will be recorded at order level as planned and actual data details.

Production order will record standard cost, planned cost and actual cost once

confirmation done. Final settlement will record all cost elements and show variance

details. This variance is outcome of data recording.


Production order having standard and planned cost estimates

Production order final confirmation for settlement

All goods issue and receipt should be completed before final confirmation

Production order settlement

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Settlement of a production order is important after goods issue of component and

receipt of finish or semi finish items. Reason is settlement will impact financial

accounting and costing modules. SAP will close finally confirmed production order and

technically completed (TECO) status.

In SAP, the production order receives debit of cost from the material cost and the

overheads through the activity confirmation. The actual cost posted to an order can be

more or less than the value with which the order receives the credit when the goods

receipt is posted (confirmation of output).

When settlement is done this difference between the debit and the credit of the order is

posted in Financial Accounting. Thus the balance of the order is reduced to zero. The

balance on the order could be due to WIP orders or variances for completed orders. In

case of WIP orders the posting is done to WIP GL Account and in case of completed

orders the posting is done to the price difference GL Account. To carry out settlement

the settlement profile is created where we specify who will be the receiver, what will be

the settlement cost element used.

Gaps

None


Integration RequirementsProduction order settlement is happening with CO module once order completion by

goods issue and receipt done.


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Reporting RequirementsStandard SAP reports as below


CO88 Mass production order settlement

KO88 Individual production order settlement

KKS2 Individual order variance calculation

KOB3 Analysis line item for variances

KOB8 Analysis line item for order

Authorisation RequirementsActivity Authorization

Display of Production order level costing details

Shift Supervisor, Asst. Manager, Manager and Senior Management

Production order settlement

Asst. Manager and Manager



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Inventory ManagementExpectationInventory tracking, creation of requisition and material reservation for a Production

Order are to be managed.

Smooth flow of goods receipt and goods issue activities.

DescriptionGoods Issue to Production

Production department will send the issue slip to the store then store issues the material

to the production. The consumption of raw/packaging material product wise is

maintained in the register. The records are used to calculate the product cost.

Byproducts are there in the manufacturing process. They keep the records of

Byproducts but the use of Byproduct in the cost calculation is not there.

The scrap (that is wastage in the production) is also there. The excess quantity may get

issue to the shop floor to carry out the operation.

Special ConsiderationsNoneChanges to Existing ProcessThe components required for the production will get transferred to the production shop

floor and the consumption or the material issue will take from this storage location i.e.

from shop floor storage location.

Solutions in SAPIn SAP, material master for semi finish and finish product have one time-defined

controls in various views. By material’s MRP views, control at each inventory processes

will be defined.


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In inventory management, internal batch management will be used to track and manage

inventory by its characteristics values.

In case of in house, specific planning plant will be predefined in material master, so that

Production Order will be created on the specified plant once independent requirement

generated in SAP.

In SAP, material will be used with batch and quantity to manage inventory under

respective plant and storage locations. Storage location is SAP is logical stock keeping

bin, for inventory traceability and reporting purpose. During transaction posting SAP will

check material, quantity, batch and posting date during document saving.

In SAP, every storage location at plant level will have predefined material access. SAP

will not allow any material to stock in unassigned storage location within the plant.

Material can be tracked based on reservation, issue, and transfer at storage location.

Materials are to be issued to Production Order for the respective PIR. System will warn

about the missing parts at the time of Production Order release and make a note in

release log. Release can be carried out even though missing parts are there.

Material movement type to be used in EMI business relevant in PP

Movement Description Purpose

101

102 (reversal)

Finish product goods receipt

in inventory against a

Production Order and

reversal

Receipt of goods against

Process Order

261

262 (reversal)

Goods issue during

Production Order

Issue of goods against

Process Order


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confirmation and reversal

531

532 (reversal)

By-product goods receipt in

inventory during operation

and reversal

Goods receipt of

Byproducts

311 Transfer posting from

storage location to storage

location within plant

Goods movement within a

plant

312 Reversal of posting of 311

Material posting transaction code to be used in PP module

Transaction code Description Remarks

MB1A Goods issue to a Process

Order

For issuing material and

inventory adjustment against

Process Order

MB1B Enter transfer posting For batch and quantity

movement within a plant,

assigning a material and batch

with quantity etc.

MB1C Enter goods receipt Against Process Order, goods

receipt will be allowed

MB31 Goods receipt against

Process Order

Against Process Order, goods

receipt will be allowed


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GapsNone


Integration RequirementsMM module will have batch management for raw material to track internal lot number,

supplier name, date of receipt etc.


Report for current inventory and consumed item list for a selected storage location, plant, period etc.


MMBE Stock overview

MB52 Material Stock at storage location level

MB51 Material movement transaction

MB5B Material movement details

Authorizations Requirements Authorization requirements are explained in the table below:

Table: Authorization for Inventory ManagementActivity AuthorizationReport and Statement of goods issue and receipt

Shift supervisor, Asst. Managerand Manager

Inventory adjustment Asst. Managerand ManagerDocument #: SAPA1/EMI/22/12/2010/V1.0 © Delphi Computech Solutions Pvt. Ltd. l Confidential l

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Inventory reconciliation Asst. Managerand Manager

Migration RequirementsSemi finish, WIP and finish product is to be identified with specific material,

characteristics and storage locations under various plants. Data has to be uploaded to

SAP system.


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