fmsolutionscope v1604 en us

EHP4 for SAP ERP 6.0

June 2010

English

SAP Best Practices for Fabricated Metals V1.604

SAP AGDietmar-Hopp-Allee 1669190 WalldorfGermany

Solution Scope

SAP Best Practices SAP Best Practices for Fabricated Metals: Solution Scope

Copyright

© 2010 SAP AG. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.

Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.

Microsoft, Windows, Excel, Outlook, and PowerPoint are registered trademarks of Microsoft Corporation.

IBM, DB2, DB2 Universal Database, System i, System i5, System p, System p5, System x, System z, System z10, System z9, z10, z9, iSeries, pSeries, xSeries, zSeries, eServer, z/VM, z/OS, i5/OS, S/390, OS/390, OS/400, AS/400, S/390 Parallel Enterprise Server, PowerVM, Power Architecture, POWER6+, POWER6, POWER5+, POWER5, POWER, OpenPower, PowerPC, BatchPipes, BladeCenter, System Storage, GPFS, HACMP, RETAIN, DB2 Connect, RACF, Redbooks, OS/2, Parallel Sysplex, MVS/ESA, AIX, Intelligent Miner, WebSphere, Netfinity, Tivoli and Informix are trademarks or registered trademarks of IBM Corporation.

Linux is the registered trademark of Linus Torvalds in the U.S. and other countries.

Adobe, the Adobe logo, Acrobat, PostScript, and Reader are either trademarks or registered trademarks of Adobe Systems Incorporated in the United States and/or other countries.

Oracle is a registered trademark of Oracle Corporation.

UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group.

Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin are trademarks or registered trademarks of Citrix Systems, Inc.

HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C®, World Wide Web Consortium, Massachusetts Institute of Technology.

Java is a registered trademark of Sun Microsystems, Inc.

JavaScript is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape.

SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, Clear Enterprise, SAP BusinessObjects Explorer, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries.

Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other Business Objects products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP France in the United States and in other countries.

All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary.

These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.

© SAP AG of 67


Icons

Icon Meaning

Caution

Example

Note

Recommendation

Syntax

Typographic Conventions

Type Style Description

Example text Words or characters that appear on the screen. These include field names, screen titles, pushbuttons as well as menu names, paths and options.

Cross-references to other documentation.

Example text Emphasized words or phrases in body text, titles of graphics and tables.

EXAMPLE TEXT Names of elements in the system. These include report names, program names, transaction codes, table names, and individual key words of a programming language, when surrounded by body text, for example, SELECT and INCLUDE.

Example text Screen output. This includes file and directory names and their paths, messages, source code, names of variables and parameters as well as names of installation, upgrade and database tools.

EXAMPLE TEXT Keys on the keyboard, for example, function keys (such as F2) or the ENTER key.

Example text Exact user entry. These are words or characters that you enter in the system exactly as they appear in the documentation.

<Example text> Variable user entry. Pointed brackets indicate that you replace these words and characters with appropriate entries.

© SAP AG of 67


Contents1 Purpose........................................................................................................................... 8

2 Functional Scope – Supported Business Processes or Scenarios..................................9

2.1 Time-to-Market................................................................................................................... 9

2.1.1 Internal Order R&D Planning...........................................................................................9

2.1.2 Internal Order R&D Actual...............................................................................................9

2.1.3 Internal Product Development.......................................................................................10

2.2 Demand and Supply Planning..........................................................................................10

2.2.1 Logistics Planning.........................................................................................................10

2.2.2 Revenue Planning.........................................................................................................10

2.2.3 SOP through Long Term Planning Transfer to LIS/PIS/Capacity..................................10

2.2.4 Long Term Planning with Configured Materials.............................................................11

2.2.5 Forecasting of Make-to-Stock Products with Configured Materials...............................11

2.3 Operational Procurement.................................................................................................11

2.3.1 Sales of Nonstock Item with Order Specific Procurement.............................................12

2.3.2 Quotation for Procurement............................................................................................12

2.3.3 Consumable Purchasing...............................................................................................12

2.3.4 Procurement without QM...............................................................................................12

2.3.5 Procurement Contract...................................................................................................13

2.3.6 Stock Transfer with Delivery..........................................................................................13

2.3.7 Stock Transfer without Delivery.....................................................................................14

2.3.8 Return to Vendor...........................................................................................................14

2.3.9 Subcontracting..............................................................................................................14

2.3.10 Procurement & Consumption of Consigned Inventory...................................................15

2.3.11 Purchased Material Price Planning...............................................................................15

2.3.12 Purchasing with JIT Delivery Schedules........................................................................16

2.3.13 Purchasing Scheduling Agreement with Configured Materials......................................16

2.3.14 Internal Procurement: Cross-Company Stock Transfer.................................................17

2.4 Manufacturing & Scheduling Execution............................................................................17

2.4.1 Batch Management.......................................................................................................17

2.4.2 Serial Number Management..........................................................................................17

2.4.3 Make-to-Stock Production – Discrete Industry..............................................................17

2.4.4 Make-to-Order Production with Variant Configuration...................................................17

2.4.5 Make-to-Order Production w/o Variant Configuration....................................................18

2.4.6 Repetitive Manufacturing...............................................................................................18

© SAP AG of 67


2.4.7 Production Subcontracting (External Processing).........................................................18

2.4.8 Rework Processing (Stock-Manufactured Material)......................................................19

2.4.9 Rework Processing (Work-in-Process)..........................................................................19

2.4.10 Handling Unit Management (HUM) for Production........................................................20

2.4.11 Repetitive Manufacturing with Kanban Supply into Production.....................................20

2.4.12 Planning and Processing of Semifinished Goods..........................................................20

2.4.13 Reprocessing of defective goods in Make-to-Stock Production.....................................20

2.4.14 Production Processing with By-Product.........................................................................21

2.4.15 Subcontracted manufacturing with configured materials...............................................21

2.4.16 Make-to-order (multilevel production) with variant configuration including sales order costing........................................................................................................................... 21

2.4.17 Preventive Maintenance of Production Resource Tools................................................21

2.4.18 Make-to-stock (Multilevel Production) with Configured Materials..................................21

2.4.19 Combined Production Order Processing (only DIMP)...................................................21

2.5 Warehouse Management.................................................................................................22

2.5.1 Lean Warehouse Management.....................................................................................22

2.5.2 Physical Inventory / Inventory Count & Adjustment.......................................................22

2.5.3 Shipping and Receiving with Warehouse Management................................................22

2.6 Sales Order Management................................................................................................22

2.6.1 Sales Processing Using Third Party (w. Shipping Notification)......................................23

2.6.2 Credit Management.......................................................................................................24

2.6.3 Sales Order Processing: Sale from Stock.....................................................................24

2.6.4 Free of Charge Delivery................................................................................................24

2.6.5 Sales Quotation.............................................................................................................25

2.6.6 Sales Order Processing for Prospect............................................................................25

2.6.7 Sales Processing using Third Party (without Shipping Notification)..............................25

2.6.8 Debit Memo Processing................................................................................................25

2.6.9 Customer Consignment Processing..............................................................................25

2.6.10 Returnables Processing................................................................................................26

2.6.11 Sales Order Processing with Customer Down Payment................................................26

2.6.12 Credit Memo Processing...............................................................................................26

2.6.13 Sales Order Processing with collective billing...............................................................26

2.6.14 Sales with Scheduling Agreements...............................................................................26

2.6.15 Sales Scheduling Agreement with Configured Materials...............................................26

2.6.16 Non-Ferrous Metal Pricing (DIMP)................................................................................27

2.6.17 Fast Data Entry in Order Processing (DIMP).................................................................27

© SAP AG of 67


2.6.18 Cross-Company Sales Order Processing*....................................................................27

2.7 Complaint / Claim management.......................................................................................28

2.7.1 Returns and Complaints................................................................................................28

2.7.2 Batch Recall..................................................................................................................28

2.7.3 Sales Returns with Quality Management with Configured Materials.............................29

2.8 Quality Management........................................................................................................29

2.8.1 Quality Management for Procurement with Vendor Evaluation.....................................29

2.8.2 Stock Handling: Scrap and Blocked Stock....................................................................30

2.8.3 Sales Returns with Quality Management (QM).............................................................31

2.8.4 Quality Management in Material Transformation...........................................................31

2.9 Analytics........................................................................................................................... 31

2.9.1 Quarterly Plan - Sales Quantity Forecast with CO-PA.................................................31

2.9.2 SAP ERP Reports for Logistics.....................................................................................32

2.9.3 SAP ERP Reports for Accounting.................................................................................32

2.9.4 Reporting with SAP Business Explorer.........................................................................32

2.10 External Financial Accounting..........................................................................................33

2.10.1 Prerequisite Process Steps...........................................................................................33

2.10.2 General Ledger.............................................................................................................33

2.10.3 Accounts Receivable.....................................................................................................34

2.10.4 Accounts Payable..........................................................................................................35

2.10.5 Period End Closing Financial Accounting......................................................................36

2.10.6 Cash Management........................................................................................................38

2.10.7 Asset Accounting...........................................................................................................38

2.10.8 Asset Acquisition through Direct Capitalization.............................................................39

2.10.9 Asset Acquisition for Constructed Assets......................................................................40

2.10.10 Activate Document Splitting...........................................................................................41

2.10.11 Segment Reporting.......................................................................................................42

2.10.12 General Cost Center Planning.......................................................................................42

2.10.13 Manufacturing Cost Center Planning.............................................................................43

2.10.14 Standard Cost Calculation.............................................................................................44

2.10.15 Internal Order for Marketing and Other Overhead Planning..........................................45

2.10.16 Period End Closing General Plant.................................................................................46

2.10.17 Inventory Valuation for Year End Closing......................................................................47

2.10.18 Overhead Cost Controlling Actual.................................................................................48

2.10.19 Internal Order for Marketing and Other Overhead Actual..............................................48

2.10.20 Reference and Simulation Costing................................................................................49

© SAP AG of 67


2.10.21 Sales: Period End Closing Operations..........................................................................50

2.10.22 Period End Closing Activities.........................................................................................50

2.10.23 Activate Document Splitting for Discrete Manufacturing................................................50

2.10.24 Activate Document Splitting for Fabricated Metals........................................................51

2.11 Master Data Generation Descriptions and Reporting.......................................................51

2.11.1 Enterprise Structure Extension......................................................................................51

2.11.2 Master Data Generation................................................................................................51

2.11.3 Central Master Data Discrete Manufacturing.................................................................53

2.11.4 Central Master Data (for Library - Manufacturing).........................................................53

2.11.5 Central Master Data (for Foundation – Manufacturing).................................................53

2.11.6 Supplement Settings.....................................................................................................53

2.11.7 SAP ERP Reporting......................................................................................................54

3 Functional Scope – Functions.......................................................................................58

3.1 Financials......................................................................................................................... 58

3.1.1 Financial Accounting.....................................................................................................58

3.1.2 Management Accounting...............................................................................................59

3.2 Analytics........................................................................................................................... 60

3.2.1 Operations Analytics.....................................................................................................60

3.2.2 End-User Service Delivery: SAP Roles.........................................................................61

3.3 Procurement and Logistics Execution..............................................................................61

3.3.1 Procurement..................................................................................................................61

3.3.2 Inventory and Warehouse Management........................................................................63

3.3.3 HUM (Handling Unit Management)...............................................................................63

3.3.4 Inbound and Outbound Logistics...................................................................................64

3.4 Sales and Service............................................................................................................65

3.4.1 Sales Order Management.............................................................................................65

3.5 Product Manufacturing.....................................................................................................67

3.5.1 Production Planning......................................................................................................67

3.5.2 Manufacturing Execution...............................................................................................67

3.6 Quality Management........................................................................................................68

3.6.1 Quality Assurance / Control...........................................................................................68

© SAP AG of 67


SAP Best Practices for Fabricated Metals –Solution Scope

1 PurposeThis solution scope provides an overview of the processes and functions covered by the SAP Best Practices for Fabricated Metals V1.604 (U.S.). It describes the functions and explains their business purposes.

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

The solution scope does not provide technical explanations of how to use the functions. For further information on this topic, see the Business Process Documentation documents.

© SAP AG of 67


2 Functional Scope – Supported Business Processes or Scenarios

2.1 Time-to-Market

2.1.1 Internal Order R&D PlanningVarious internal projects consume resources and incur costs or expenses. These projects are usually done for future development of products. The costs of these projects need to be tracked for various purposes, such as cost control, return on investment calculations, and tax reporting. This process makes use of SAP's internal order functionality to track costs and status. For every project undertaken, an internal order is created. Cost planning is carried out on this order. Costs incurred for the project can then be posted on the order. Periodically, the costs collected on the order are settled to the assigned R&D cost center or to CO-PA (if CO-PA is activated). When the project is complete, and fully settled, the order is then closed by setting the appropriate status.

2.1.2 Internal Order R&D Actual

PurposeVarious internal projects consume resources and incur costs or expenses. These projects are usually undertaken for future development of products. The product lines are generally determinable for such projects. The costs of these projects need to be tracked for various purposes such as cost control, return on investment calculations, tax reporting, and so on.

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

Process Flow Create R&D internal order

Consumable purchasing

Post goods issues to R&D internal order

Settle internal order

Key Points Transparent view of outstanding orders, shipments and inventory

Automated efficient processing

© SAP AG of 67


2.1.3 Internal Product DevelopmentThis scenario supports companies in designing new products requested by their internal marketing department. SAP Product Lifecycle Management provides the project management functions to collect all costs and documents for product development. The project provides a central structure for cost collection and documentation management. Transparent BOM handling and product data management functions help to turn the product specification into an engineering BOM that can be copied to create the production BOM. All project activities are recorded.

2.2 Demand and Supply Planning

2.2.1 Logistics PlanningThis scenario covers the transfer of aggregated Production Planning based on Sales Quantity Planning to Long Term Planning (LTP). In LTP, a planning scenario is created to enable simulation of material requirements which can be based on the production plan. Planned requirements can be reviewed and adjusted as needed. Once the simulated requirements are accepted, the demand (independent requirements) is then transferred to active demand management.

2.2.2 Revenue Planning

PurposeThe revenue and the costs are planned on product and customer levels. The scenario is integrated in the complete planning cycle. The costs are received from CO-PC and cost center planning and the planned quantities are transferred to SOP.

Process FlowThis scenario consists of the following steps:

Revenue planning on basis of historical data

Cost calculation

Transfer to SOP

Key Points Integration to sales, financials, controlling and production

Use of automatic functionality for planning

Data can be planned in spreadsheet

2.2.3 SOP through Long Term Planning Transfer to LIS/PIS/Capacity

A part of annual operating planning (AOP), sales and operation planning (SOP) is a forecasting and planning transaction to enable sales, production, and to enable inventory targets to be reached on the basis of historical, existing, estimated, and future data. SOP is used to:

verify the sales (demand) plan from COPA or other sources

create a rough–cut production plan aimed to satisfy demand and to meet inventory targets

visualize capacity use of critical resources to verify the feasibility of the plan

© SAP AG of 67


2.2.4 Long Term Planning with Configured Materials

This scenario covers the creation of a Sales Operation Plan (SOP) which is used for Long Term Planning (LTP). In LTP, a planning scenario is created to enable simulation of material requirements which can be based on the production plan. Planned requirements can be reviewed and adjusted as needed. Once the simulated requirements are accepted, the demand (independent requirements) is then transferred to active demand management.

2.2.5 Forecasting of Make-to-Stock Products with Configured Materials

The planning strategy explained in this scenario is designed for planning the procurement (production or purchasing) of components by planning the components themselves. This is particularly useful in the following cases:

There is a variety of finished products (possibly with an irregular demand pattern where planning is not possible)

The finished products are consumption-based

The purpose of planning at component level is to procure components to stock (without sales orders) in order to react to customer demand as quickly as possible. This strategy can be used if the components are not segregated (that is, they are not uniquely linked at specific orders), and the costs should be tracked at component (material) level, not at order level.

2.3 Operational Procurement

© SAP AG of 67


2.3.1 Sales of Nonstock Item with Order Specific ProcurementIn this scenario a customer orders a material that is currently not in stock. The material is therefore procured from an external supplier. Example:

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

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

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

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

For the customer 100003 credit management is activated.

2.3.2 Quotation for ProcurementThe request for quotation (RFQ) process starts with a request for material(s) from vendors. The RFQ process includes a price comparison for the selection of the best source. The buyer evaluates the vendor responses to determine the best source of supply. The accepted quotation is converted into a purchase order and a rejection letter is sent to the vendor(s) whose quotations were rejected.

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

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

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

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

When the invoices are received from the vendor, they are entered with reference to a purchase order and item, providing a three way match of purchase order value, goods receipt value and invoice value. If there are any variances between invoice and purchase order value, the invoice is blocked and forwarded to the Buyer for approval. Checks to vendors are generated based on the net term condition reflected on the invoice, derived from the vendor master. Variances due to deviations from standard price are collected in the purchasing cost center and allocated to product line level based on a predefined percentage.

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

2.3.4 Procurement without QM

© SAP AG of 67


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

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

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

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

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

2.3.5 Procurement ContractThe process to create a contract begins with the need to secure a big number of supplies as well as reducing procurement costs. The creation of a contract can start if the following issues have been clarified:

- Number/amount of material or services

- Validity start / validity end

- Payment terms

- Quantity of each contract material/service,

- Price of each position in the contract

- Location to where the goods/service will be delivered.

A contract will be signed from a purchasing manager or a buyer.

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

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

© SAP AG of 67


Nevertheless, the process works without MRP, too. In that case the buyer creates the stock transport order directly.

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

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

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

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

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

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

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

2.3.8 Return to VendorThe return to vendor process begins with a requirement to return an item to a vendor. The initial activity is to request a Returns Material Authorization (RMA) from the vendor. This is a manual step and the RMA number will be entered into a text field in the return purchase order. The buyer will then create a return purchase order in the system. The return purchase order is similar to a standard purchase order except for the return flag which sets up the return delivery to enable shipment of the item(s) back to the vendor.

The return purchase order confirmation goes to the vendor and the return Delivery is sent to the shipping department where the item(s) are picked and shipped back along with a delivery note. When the shipping department creates the delivery the item(s) are relieved from inventory. A credit memo is generated which relieves the liability to the vendor.

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

A Subcontract Purchase Requisition is either generated via the Material Requirements Planning process or manually by a requestor. A Buyer will validate the accuracy of the Purchase Requisition and convert it into a Purchase Order. The purchase order is subject to approval based on predefined parameters prior to being issued to a vendor.

© SAP AG of 67


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

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

On goods delivery,

The scenario focuses on the following activities:

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

Optional: Create purchase order manually.

Approve purchase order (if needed)

Create Outbound Delivery document.

Post goods issue for delivery and shipping to subcontractor.

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

Goods receipt based on purchase order delivered by subcontractor.

Posting of component reservations and consumption of component quantities as provision of material.

Invoice receipt by line item

Invoice verification and validation of tax expenses.

Process of outgoing payment

2.3.10 Procurement & Consumption of Consigned InventoryIn consignment processing, the vendor provides materials and stores them on your premises. The vendor remains the legal owner of the material until you withdraw materials from the consignment stores. Only then the vendor requires payment. The invoice is due at set periods of time, for example, monthly. In addition, you can also arrange with the vendor that you take over ownership of the remaining consignment material after a certain period of time.

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

2.3.11 Purchased Material Price Planning

Purpose

© SAP AG of 67


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

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

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

Process Flow Transfer long term planning scenario to purchase information system

Download purchased materials for budget purchase price update

Review data and negotiate with vendors

Change materials planned price1 (material master)

Key Points Transferring the quantities of materials required from long term planning

Downloading the latest purchase prices

Material requirements valuated with the latest purchase prices

Planned prices used by product costing run to valuate the goods to come up with the standard cost

Standard costs are used as the new planned prices

2.3.12 Purchasing with JIT Delivery SchedulesWorking with scheduling agreements can shorten processing times and reduce the amount of paperwork you are faced with. One delivery schedule can replace a large number of discrete purchase orders or contract release orders. Inventories can be reduced to a minimum. You can carry out your manufacturing operations on the Just-in-Time (JIT) principle.

Your vendors require shorter lead times. Smaller deliveries are required, which can be spaced out over a longer period. Delivery scheduling enables vendors to plan and allocate their resources more efficiently.

2.3.13 Purchasing Scheduling Agreement with Configured Materials

Working with scheduling agreements can shorten processing times and reduce the amount of paperwork you are faced with. One delivery schedule can replace a large number of discrete purchase orders or contract release orders. Inventories can be reduced to a minimum. You can carry out your manufacturing operations on the Just-in-Time (JIT) principle.

Your vendors require shorter lead times. Smaller deliveries are required, which can be spaced out over a longer period. Delivery scheduling enables vendors to plan and allocate their resources more efficiently.

© SAP AG of 67


2.3.14 Internal Procurement: Cross-Company Stock TransferThis building block contains all settings required for the configuration of cross-company deliveries. The stock transfer process starts with the requirement of transferring material from one plant to another plant. Both plants belong to the same organization but have different company codes. The difference between cross-company and intra-company stock transfer is that, for internal procurement cross-company stock transfers, inter-company billing and invoicing is required. This request, which comes in the form of a stock transfer requisition, is created in the procuring plant either automatically by MRP or manually by a buyer. However, the process also works without MRP. In this case, the buyer creates the stock transport order directly.

2.4 Manufacturing & Scheduling Execution

2.4.1 Batch ManagementIf materials were handled in batches it might be necessary to change batch master data or to find out where a batch was used, for example, to perform a batch recall or report to government.

2.4.2 Serial Number Management

Using serial numbers, you can track each individual material during goods movement. This building block includes the configuration settings for serial number management and shows the serial number handling on finished goods level.

2.4.3 Make-to-Stock Production – Discrete IndustryThe scenario Make-to-Stock (MTS) Production focuses on:

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

Planned independent requirements

Production triggered by a production plan

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

Use of production versions

Optional enhancement: Serial number for finish product

Optional enhancement: External processing

Optional enhancement: Batch management processing

References to different procurement scenarios for raw materials

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

2.4.4 Make-to-Order Production with Variant ConfigurationThe MTO - Sales Order Processing with Variant Configuration scenario demonstrates sales order processing with materials with pre-selected characteristic values (material variants) and components that are produced according to sales quantities planned for these variants. If the sales order

© SAP AG of 67


configuration is not available as a material variant, then customer service can configure the material on the order by choosing the required characteristic values. A sales order cost estimate is created on saving the order which is subsequently used to valuate the cost of goods sold.

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

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

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

2.4.5 Make-to-Order Production w/o Variant ConfigurationThis scenario describes the entire process sequence for the standard sales process (Make-to-Order) with a customer. The business process covers all steps: from the customer quotation to the clearing of a customer account after payment is received.The process can be enhanced individually by executing optional steps, like serial number creation, subcontracting, QM in production, credit management and plant- and company closing.

2.4.6 Repetitive ManufacturingRepetitive manufacturing is commonly used when a production process meets the following criteria:

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

The goods produced are not manufactured in individually defined lots. (Instead, a total quantity is produced over a certain period at a certain rate per part-period.)

The goods produced always follow the same sequence through the machines and work centers in production.

Routings tend to be simple and do not vary much.

2.4.7 Production Subcontracting (External Processing)During the Manufacturing process when a “Planned Order” for Production is converted to a “Production Order”, the system will check to see if there are any routing/work centre operations which require external processing. External processing is when you have individual Production steps, that are operations or sub-operations, which are performed outside of your company by a vendor. This type of processing is particularly important for subcontracting. It can also provide a company with a feasible alternative to in-house processing, if capacity bottlenecks occur.

When a Production Order is scheduled, external operations need to be taken into account. The duration of an external operation is calculated either by using the planned delivery time or using the standard values. The system automatically creates a Purchase Requisition for the operation or sub-operation that requires external processing. The Production scheduler should inform the buyer they need to check the workload for Requisitions that require external processing.

When data is maintained for an external activity, a cost element is specified. The cost element determines how the external activity is to be valuated. A decision needs to be made as to whether an operation or sub-operation is processed externally via its control key. In the control key it is determined whether externally processed operations are scheduled on the basis of their standard

© SAP AG of 67


values or the planned delivery time. This information is needed to settle externally processed operations and sub-operations that have been marked as relevant for costing in their control keys

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

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

The output of the subcontracting order via printer / EDI is normally performed by the purchasing department (in the SAP standard). As the production process for the finished product is ongoing (not stock relevant), a material provision by the warehouse manager via delivery note or goods movement is not possible in the standard system.

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

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

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

2.4.8 Rework Processing (Stock-Manufactured Material)This process focuses on rework activities and material postings after production execution for the original material (including goods receipt of the product); with an additional rework production order.

In real business case issues with the produced material are observed after it has been posted into inventory. For realization of this process it gives several possibilities:

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

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

In this scenario the rework process of stock manufactured material is realized with creating a new production order, using the material that has to be reworked as input and getting the same material again as output. Costs are collected within the new production order and settled into controlling as production variances. Input component and product have the same material number.

2.4.9 Rework Processing (Work-in-Process)This scenario focuses on a rework process within production. All required rework activities are related to the parent production order. For this reason errors are recognized and corrections initiated such as insertion of a rework operation within the same production order. The additional rework operation is confirmed and settled within the original production order, causing production variances within controlling and price differences for the dedicated product.

© SAP AG of 67


2.4.10 Handling Unit Management (HUM) for ProductionA handling unit represents a physical object in the SAP system. It consists of a load carrier, one or more packed products and an unlimited quantity of packaging materials. Each handling unit has a unique identification number, which is typically printed as a barcode on a material tag. You can specify the material and the quantity that is to be packed in certain packaging, that is, in one handling unit. These requirements are reproduced in a packing instruction. This packing instruction can be used to create handling units automatically.

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

2.4.11 Repetitive Manufacturing with Kanban Supply into Production

This scenario focuses on a lean production control method. It describes a production process in a repetitive manufacturing environment. Furthermore, the supply to production is managed by KANBAN.

2.4.12 Planning and Processing of Semifinished Goods

The planning strategy explained in this scenario is designed for planning the procurement (production or purchasing) of components by planning the components themselves. This is particularly useful in the following cases:

There is a variety of finished products (possibly with an irregular demand pattern where planning is not possible).

The finished products are consumption-based.

The purpose of planning at component level is to procure components to stock (without sales orders) in order to react to customer demand as quickly as possible.

This strategy can be used if the components are not segregated (that is, they are not uniquely linked at specific orders), and the costs should be tracked at component (material) level, not at order level.

In this scenario, the material requirements planning scenario is used to create a six-month planning basis for a semi-finished product in a make-to-stock environment. Based on planned independent requirements and depending on warehouse stocks, planned orders (for production) or purchase requisitions (for purchasing) are created across all BOM levels.

A customer requirement initiates the production of the finished products. A customer order is created and directly triggers production requirement. The produced material will be stored in an individual customer stock.

In this multilevel production process, the semi-finished product is manufactured via make-to-stock production and required for the production of different finished products. The finished product is then produced in a make-to-order environment.

2.4.13 Reprocessing of defective goods in Make-to-Stock Production

This scenario focuses on a reprocess within production. After a quality control, you should be having some bad products. But, they will be not necessary transform in scraps product. In case that your

© SAP AG of 67


process authorizes to reprocess these bad products, you just have to create a new production order to achieve production.

2.4.14 Production Processing with By-ProductThis scenario enables you to produce more than one material within one production order, which is often required in disassembly processes, such as cutting of tin. Though it is mostly required within chemical and food industry, this process is also applicable to all other industries. You should not use this scenario on a DIMP system, since then you can use the combined order functionalities.

2.4.15 Subcontracted manufacturing with configured materials

The Subcontracted manufacturing with configured materials process involves sending components to a vendor for manufacturing processes and receiving the value-added finished material back into inventory.

A subcontract purchase requisition is either generated via the Material Requirements Planning (MRP) process or manually by a requestor. A buyer validates the accuracy of the purchase requisition and converts it into a purchase order. The purchase order is subject to approval based on predefined parameters before being issued to a vendor.

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

2.4.16 Make-to-order (multilevel production) with variant configuration including sales order costing

This scenario describes a typical business process for companies which manufacture products based on customer orders with multilevel variant components.

2.4.17 Preventive Maintenance of Production Resource Tools

This building block describes the Customizing, related settings and the master data required to use the optional preventive maintenance processes.

Preventive maintenance is used to maintain the high availability of technical systems in the long

2.4.18 Make-to-stock (Multilevel Production) with Configured Materials

The scenario Make–to–Stock (MTS) Production with Multilevel Variant Configuration describes a business process which is typical for companies with sales–order–independent lot size oriented production. The production is triggered by a production plan (planned independent requirements). The scenario consists of a two–level–production for subassembly and finished part using production versions, material staging and goods movements (goods issues and receipts) and confirmation of completion of the production orders. Furthermore, the scenario is supported by the main cost object controlling functions required, such as preliminary costing and period–end closing.

2.4.19 Combined Production Order Processing (only DIMP)This best practice describes all of the necessary procedures and steps needed to carry out the business process of Order Combination.

© SAP AG of 67


In the Fabricated Metals industry, different demands can often be satisfied during production using the same incoming component. For example, consuming a specific slab, several different demand elements can be satisfied. Execution on the shop floor will take place in one process/production order. There is the need to combine several demand fulfilling elements (process/production orders) to be executed in one. The order combination functionality in IS-MP satisfies this requirement.

This scenario shows how two production orders created for the same material are combined. However, there is no system restriction with regard to the combination of process orders with different header material or the combination of MTO and MTS orders.

2.5 Warehouse Management

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

A picking document is printed when a delivery is created for a storage location which is assigned to a warehouse. This is done automatically. There is no need for a user to deal with transport orders from the warehouse management.

2.5.2 Physical Inventory / Inventory Count & AdjustmentThis scenario shows the periodic process of making necessary adjustments to stock on hand after a physical count.

The process begins with the generation of the required inventory count sheets. Materials can be blocked here for posting during the physical inventory. Once the inventory sheets are printed out, the actual physical inventory count is realized for the given materials. Afterwards, the count result is entered in the system and then any discrepancies against the system quantities are reviewed. The inventory may be recounted until final counts are accepted and inventory differences are posted

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

2.6 Sales Order Management

© SAP AG of 67


2.6.1 Sales Processing Using Third Party (w. Shipping Notification)

In Sales Processing Using Third Party (w. Shipping Notification), your company does not deliver the items requested by a customer. Instead, you pass the order along to a third-party vendor who then ships the goods directly to the customer and bills you. The standard sales order automatically creates a purchase requisition for the materials to be delivered by the third-party vendor.

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

Key process Third Party Sales Order

Convert Purchase Requisitions to Purchase Order

Approval of Purchase Orders

Post Statistical Goods Receipt

Invoice verification

Billing

© SAP AG of 67


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

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

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

2.6.3 Sales Order Processing: Sale from StockThis scenario describes the entire process sequence for a standard sales process (sale from stock) with a customer. The business process encompasses all steps from creating an order to the clearing of a customer account after payment is received.

The process starts with the creation of a customer's standard sales order. Depending on the customer and the material, various special events take place during the order entry, such as customer/material pricing, insertion of applicable discounts, checking the availability of the materials, and checking the customer‘s credit history.

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

Once picked, the physically shipped quantity has to be registered in the system to ensure that there are no differences between the sales order and the delivery document. In the case of actual differences, this can also be documented and ensures correct postings.

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

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

© SAP AG of 67


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

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

2.6.6 Sales Order Processing for ProspectIn this scenario, you process sales order documents without first looking up the customer’s information.

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

2.6.7 Sales Processing using Third Party (without Shipping Notification)

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

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

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

2.6.9 Customer Consignment ProcessingThis scenario describes how finished products and trading goods are handled within a consignment process, such as when the products shipped to the customer are still owned by the company until they are sold by the customer to a third party. The materials, which are usually stored in the customer's store or warehouse, are posted in a stock (consignment stock) that is assigned to the corresponding customer. This allows the customer's current stock to be viewed at any time.

© SAP AG of 67


2.6.10 Returnables ProcessingStandard pallets belong to the manufacturer and are handled either as returnable goods or as packaging material. This scenario shows the shipment of standard pallets and their returns.

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

2.6.11 Sales Order Processing with Customer Down PaymentOften in business, especially in a make-to-order environment, customers may be required to pay some amount in advance before delivery of goods. This process is used to create requests for down payment, record the receipt of the down payment, create a final invoice after the deduction of the down payment received and a receipt of the final amount due on the invoice.

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

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

2.6.13 Sales Order Processing with collective billingThis scenario describes how to use the standard sales processing (sale from stock) for mass processing.

The process starts with the creation of some standard sales orders. Collective runs are used to create deliveries, post goods issues and for billing.

2.6.14 Sales with Scheduling AgreementsThis scenario deals with scheduling agreement processing which is very largely used in the discrete industries in the sales process (Make-to-Stock) with a customer. A Scheduling agreement is a sales document created in a sales area in order to control a streamlined demand from the customer. This document can not only identify the basic information for delivery, (e.g. material, quantity, price) but can also identify the detailed delivery dates. A Scheduling agreement can also be used to synchronize the change of demand between the customer and the supplier.

The business process covers all steps: from the customer scheduling agreement creation to the clearing of a customer account after payment is received. The process can be enhanced individually by executing optional steps, like batch creation, subcontracting, QM in production, credit management and plant- and company closing.

2.6.15 Sales Scheduling Agreement with Configured MaterialsThis scenario deals with scheduling agreement processing which is very largely used in the discrete industries in the sales process (Make-to-Stock) with a customer. A Scheduling agreement is a sales document created in a sales area in order to control a streamlined demand from the customer. This document can not only identify the basic information for delivery, (e.g. material, quantity, price) but can also identify the detailed delivery dates. A Scheduling agreement can also be used to synchronize the change of demand between the customer and the supplier.

© SAP AG of 67


The business process covers all steps: from the customer scheduling agreement creation to the clearing of a customer account after payment is received. The process can be enhanced individually by executing optional steps, like batch creation, subcontracting, QM in production, credit management and plant- and company closing.

2.6.16 Non-Ferrous Metal Pricing (DIMP)

Purpose This Business Scenario, Non-Ferrous Metal Pricing, represents the Business Process for Supply of Non-Ferrous materials as regards price determination in both purchasing and sales within the logistic chain.

.

Key process Definition of a NF material containing the non-ferrous metal Ferrochrome

Definition of different base values specific to the non-ferrous metal

Definition of different rate determination methods based on business requirements

Mapping of default values in master data, purchasing and sales documents

Definition of prices

Definition of Pricing Agreements (Coverage)

Supply of Non-Ferrous metals provided by customers

2.6.17 Fast Data Entry in Order Processing (DIMP)

Purpose This scenario describes how the fast data entry functionality works in third party sales as well as in make to order production with variant configuration.

Key process

Fast Sales Order Entry Processing

Fast Purchase Order Entry Processing

2.6.18 Cross-Company Sales Order Processing*This scenario shows how sales are processed across company codes.

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

Focus:

Delivering plant belongs to a different company code

Direct delivery from delivering plant to customer

© SAP AG of 67


Customer invoice and intercompany billing document

Internal transfer prices

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

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

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

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

2.7 Complaint / Claim management

2.7.1 Returns and ComplaintsThis scenario describes sales order returns processing. The process starts a return sales order with reference to the original invoice for the goods. An RMA document is printed, and forwarded to the customer to be attached to the incoming goods. The goods are shipped back, a return delivery is created with reference to the RMA, and the material is received into return stock. The return stock location is set to be non-MRP relevant. The goods are inspected, resulting in a disposition to either return them to stock, or scrap. A credit memo is created from the billing run, and posted to the customers account.

Key process Create Sales Order

Create Return Delivery

Create Billing

Payment

2.7.2 Batch RecallIn this scenario, a defect batch is identified and must be recalled from customers and prospects who have received the batch.

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

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

© SAP AG of 67


Key process Creation of direct mailing to customer

Preparing follow-up process for the return of the batch

Receiving of returned batch into return stock

Decision of further usage of the returned stock

Creation of credit memo for customer

2.7.3 Sales Returns with Quality Management with Configured Materials

This scenario describes sales order returns processing with quality management inspection lots. The process starts with the creation of a return sales order, which references to the original billing document for the goods. An RMA document is printed, and forwarded to the customer to be attached to the incoming goods. The goods are shipped back, and a return delivery is created with reference to the sales order that is specified on the RMA. An inspection lot is created, and the material undergoes a quality evaluation, resulting in a usage decision. The goods are inspected and subsequently either returned to stock, scrapped, or returned to the vendor. A credit memo is created from the billing run, and posted to the customers account.

Key process Return Sales order creation which references to the original billing document for the goods.

Print RMA document (Return Material Authorization)

Delivery creation

Quality inspection for returns (QM in Sales)

Quality Usage Decision

Release Returns to Billing

Create Billing Document

2.8 Quality Management

2.8.1 Quality Management for Procurement with Vendor Evaluation

Purpose

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

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

© SAP AG of 67


Process Flow

Goods Receipt based on Purchase Order

Inspection Defects Recording

Usage Decision after inspection

Quality Notification creation and completion

Goods return to vendor and return delivery creation

Vendor Evaluation process

Key points Quality inspection

Results recording / Usage decision

Defects and returns

Vendor evaluation

2.8.2 Stock Handling: Scrap and Blocked Stock

Purpose This scenario deals with the different processes of returns from customer, rework from

production, and other logistic business processes

Process Flow

Returns from Customer

Rework from production

Other logistic processes and reasons

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

Key process Customer returns scrapping: goods issue to CO-PA

General stock scrapping: goods issue to cost center

Block material - stock transfer unrestricted to blocked

Unblock material - stock transfer blocked to unrestricted

Unblock material - stock transfer blocked to quality inspection stock

© SAP AG of 67


2.8.3 Sales Returns with Quality Management (QM)This scenario describes sales order returns processing with quality management inspection lots. The creation of the return sales order references the original billing document for the goods. The goods are shipped back and a return delivery is created with reference to the sales order. After quality inspection the goods are returned to stock, scrapped, or returned to the vendor. A credit memo is created from the billing run, and posted to the customers account.

Key process Creation of return order

Creation of return delivery

Quality inspection

Release returns for billing and billing

2.8.4 Quality Management in Material Transformation

Purpose In this scenario, various strategies for managing the quality of your products are used. When

applying quality checks on goods receipts (for production orders, or for purchase orders), you can decide how to deal with the received material depending on the outcome of the Quality Check.

Process Flow Creation of inspection lot for a production version

Inspection lot after production

Usage decision after inspection

Inspection and usage decision

Key process In internal processes, the scenario focuses on the following activities:

Quality Management during production applying a sampling procedure with inspection points

Quality Management at production goods receipt (inspection lot, scrap blocked stock, second class material)

In external processes, the scenario focuses on the following activities:

Quality Management for subcontractor procurement with quality inspection and usage decision

2.9 Analytics

2.9.1 Quarterly Plan - Sales Quantity Forecast with CO-PA

© SAP AG of 67


Purpose Review the Sales forecast on a quarterly basis

Key process flows covered Sales quantity planning on basis of actual data

Transfer to SOP

2.9.2 SAP ERP Reports for Logistics

PurposeIn the area of Logistics and Production various reports can be used to monitor and control your company processes.

2.9.3 SAP ERP Reports for Accounting

Purpose

The reporting tools and existing reports can be used to satisfy reporting requirements in most cases. In the area of Accounting various reports can be used to get information about all fields of financial Accounting.

2.9.4 Reporting with SAP Business Explorer

PurposeThe Business Explorer Analyzer (BEx Analyzer) is the analysis and reporting tool of the Business Explorer that is embedded in Microsoft Excel. Using the NetWeaver Business Client (SAP NWBC) you have the possibility to show every Power List with the BEx Analyzer.

The following documentation gives examples of some Power Lists shown with BEx Analyzer. It is described how you can start the BEx Analyzer using the NetWeaver Business Client (SAP NWBC).

© SAP AG of 67


2.10 External Financial Accounting

2.10.1 Prerequisite Process StepsThis building block contains process steps that have to be done as prerequisite before you can start to work through the standard Business Process Documentation of selected logistics scenarios. This building block is required for the use of Best Practices scenarios in a demo environment. This data is required for the scenarios and usually does not exist directly after activation. The following list shows all necessary steps required for creating the required transactional data. This building block is not relevant for usual business operations.

2.10.2 General Ledger

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

The SAP FI General Ledger Accountant has the following features:

Free choice of level: corporate group or company

Automatic and simultaneous posting of all sub-ledger items in the appropriate General Ledger Accountant accounts (reconciliation accounts)

Simultaneous updating of General Ledger Accountant and cost accounting areas

Real-time evaluation of and reporting on current accounting data, in the form of account displays, financial statements with different financial statement versions and additional analyses.

Essentially, the General Ledger Accountant serves as a complete record of all business transactions. It is the centralized, up-to-date reference for the rendering of accounts. Actual individual transactions can be checked at any time in real-time processing by displaying the original documents, line items, and transaction figures at various levels such as:

Account information

Journals

Totals/transaction figures

Balance sheet/profit and loss evaluations

Process Flow Posting General Ledger Account Documents

Displaying the Document Journal

Displaying G/L Balances (List)

Carrying Out Recurring Entries

Account Maintainance: Automatic and Manual Clearing

© SAP AG of 67


Key Points Provides a comprehensive picture of external accounting and accounts

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

Ensures that the accounting data is always complete and accurate

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

Simultaneous updating of general ledger and cost accounting areas

Real-time evaluation of and reporting on current accounting data

Financial statements with different versions and additional analyses

Actual individual transactions can be checked at any time in realtime processing

2.10.3 Accounts Receivable

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

Business Process Accounts Receivable focuses on the following activities:

Post down payment request

Post down payment manually

Post customer invoice

Post a credit note with invoice reference

Posting Payments Using the Payment Program

Posting Manual Payment

Automatic Clearing of open items in customer accounts

Manual Clearing of open items in customer accounts

Manual Bank Statement Processing

Reprocessing an Account Statement

Dunning

Account Balance Interest Calculation

One-Time-Accounts Postings

Setting a Credit Limit

Credit Control Reporting

General Business Processes: In this document you can find some transactions which cover the following general business processes

© SAP AG of 67


Displaying an accounting document.

Displaying and Changing Line Items

Displaying Balances

Reversing a Document

Reversing a Document – Individual Reversal

Reversing a Document – Mass Reversal

Process Flow Post down payment request/ manually

Posting customer invoice and

Post a credit note with invoice reference

Posting payments using the payment program

Posting manual payment

Automatic clearing of open items in customer accounts

Manual clearing of open items in customer accounts

Manual bank statement processing

Reprocessing an account statement

Dunning

Account balance interest calculation

One-Time-Accounts postings

Setting a credit limit and credit control reporting

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

data to the general ledger

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

All business transactions are posted to accounts

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

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

2.10.4 Accounts Payable

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

© SAP AG of 67


Business Process Accounts Payable focuses on the following activities:

Down payment request / clearing

Post down payments using the payment program

Post vendor invoice

Enter vendor credit memo

Review and Release Blocked Invoices

Select invoices to be Paid

Review and block invoices for payment as needed

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

Manual payment

Manual bank statement processing

Display of posted documents

Process Flow Post Accounts Payable Documents

Manual and automatic clearing of open items

Post down payments using the payment program

Post manual and automatic outgoing payments.

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

data to the general ledger

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

All business transactions are posted to accounts

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

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

2.10.5 Period End Closing Financial Accounting

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

Day-end closing

Month-end closing

Year-end closing

© SAP AG of 67


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

Creating the balance sheets and P&L statements

Document the posting data

No additional postings are required for day-end closing.

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

Compact-Document journal

Evaluation of the documents that have not been posted

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

Accounts receivable and accounts payable accounting

Inventory accounting

Asset accounting

Year-end closing is split into two phases:

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

You then prepare and create the financial statements and document the business transactions using the balance audit trail

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

Any postings done in the old fiscal year automatically adjust the relevant carry-forward balance. Closing the old fiscal year and carrying out the closing postings before opening the new fiscal year is not necessary.

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

Process Flow day-end closing

month-end closing

year-end closing

Key Points Updating Exchange Rates

Gaps in Document Number Assignment

Invoice Numbers Allocated Twice

Displaying the compact document journal

© SAP AG of 67


2.10.6 Cash Management

PurposeCash Management in SAP ERP Financials provides three basic functions:

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

Performs analysis and reporting of current and future cash flows to help you make cash management decisions (analysis and decision)

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

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

Process Flow Cash Management Status Analysis

Cash Concentration

Key Points Posting of a vendor invoice in local and foreign currency.

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

Posting of planning items and memo records.

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

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

Automatically archiving memo records

The cash concentration function identifies the relevant amount and transfers them from one account to another.

Period End Closing Activities

o Cash Position & Liquidity Forecast

2.10.7 Asset Accounting

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

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

© SAP AG of 67


As a result of the integration in SAP ERP, Asset Accounting (FI-AA) transfers data directly to and from other SAP ECC components, for example posting from the Material Management (MM) component directly to FI-AA. When purchasing an asset or produce an asset in-house, directly posting the invoice receipt or goods receipt is possible, or the withdrawal from the warehouse to assets in the Asset Accounting component. At the same time, you can pass on depreciation and interest directly to the Financial Accounting (FI) and Cost Accounting (CO) components. From the Plant Maintenance (PM) component, maintenance activities that require capitalization to assets are available.

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

Component Functions

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

Asset Accounting (FI-AA) Valuation of fixed assets and settlement of assets under construction

Cost Accounting (CO) Posting cost-accounting depreciation

Process Flow Acquisition from purchase with vendor

Acquisition with Automatic Offsetting Entry

Retirement with revenue

Asset Sale without customer

Post-Capitalization

Write-Ups

Settlement Assets Under Construction

Down Payment Request for Assets under Construction

Depreciation Posting Run

Posting Acquisition and Production Costs Values

Depreciation Simulation/Primary Cost Planning

Key Points Entire lifetime of the asset from purchase order or the initial acquisition (possibly managed

as an asset under construction) through its retirement

Calculate values for depreciation and interest

Depreciation forecast

2.10.8 Asset Acquisition through Direct Capitalization

PurposeTo purchase an Asset investment(s) that does not have an asset under construction (AuC) phase, it is necessary to capitalize the asset directly in Asset Accounting. The need for a new asset is requested and approved by the cost center manager, purchased through the purchasing

© SAP AG of 67


department, and the costs associated with the purchase order are capitalized when the Vendor invoice is processed.

Process Flow Create quote for make-to-stock item

Convert quote to order

Pick and ship items

Invoice customer

Receive payment

Key Points Purchasing an asset investment that does not have an asset under construction phase

through capitalizing the asset directly

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

Asset purchased through the purchasing department

The costs associated with the purchase order are capitalized when the vendor invoice is processed


o Order Settlement (Asset Under Construction)

o Depreciation Simulation /Run

o Posting Acquisition and Product Cost Values

o Open and Close FI Period Asset

o Recalculating Values

o Fiscal Year Change

o Account Reconciliation

o Year-end closing Asset Accounting

2.10.9 Asset Acquisition for Constructed Assets

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

The recommendation of using Investment orders to capture the costs of AUC assets during the period and month-end processing will ‘settle’ the costs from the Investment order to the AUC. This is done so that budget information can be entered for the AUC and tracking of the actual-to-budget can be performed. Once the AUC is completed, the final asset is created in the appropriate asset class, and the Investment order is set to ‘complete’ so that the next settlement will transfer the AUC asset value to the completed asset.

© SAP AG of 67


Process Flow Create Investment order with asset under construction

Create Budget for asset

Release Investment order

Post invoice to Investment order

Monitor order

Asset under Construction settlement

Complete order

Key Points Transparent view of an asset for acquisition

Automated efficient processing

2.10.10 Activate Document Splitting

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

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

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

Process FlowThe following functions are provided to support this building block:

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

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

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

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

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

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

© SAP AG of 67


Accelerated closing – The elimination of additional periodic splitting programs significantly speeds up the closing process.

2.10.11 Segment Reporting

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

Process Flow Posting G/L Account Documents with different segments

Allocation of un-allocable segment at the period end

Balance Sheets and P&L Statements

Cost of Sales Accounting – P&L Statements

Receivables and Payables by segment.

Key Points In accordance with IAS/IFRS, segment reporting is required for product-related enterprise

areas.

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

2.10.12 General Cost Center Planning

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

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

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

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

Transfer planned depreciation from assets

Download cost elements to spreadsheet for income/expense budget

© SAP AG of 67


Update budget values for income and expense excluding operations

Upload cost elements for income and expense excluding operations

Plan accrual costs, statistical key figures, assessments

Confirm non-operating cost center budget

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

Key Points Copying the previous year’s actual expenses for the cost centers into an AOP budget

version

Changing copied data

Depreciation transferred separately into AOP

Downloading data to spreadsheets by each cost element and cost center

Uploading the adjusted data into SAP

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

Activating the planned data of the AOP version

2.10.13 Manufacturing Cost Center Planning

PurposeDuring the annual budgeting process, the managers of manufacturing cost centers plan the costs for various cost types/elements for their respective cost centers. The usual starting point for development of these plans is the actual data for the current/previous year.

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

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

The resource requirements in the form of planned activity quantities are transferred from Sales and Operations planning to the cost centers as planned activity consumption. Plan reconciliation between the SOP activity requirements and manually planned requirements on the operational cost centers is carried out. Once the activity quantities and budget amounts are finalized, planned activity prices are calculated in the system.

© SAP AG of 67


Process Flow Download of cost center budget into spreadsheets, revision by cost center managers,

upload of revised data

Transfer of planned activity requirements from production (SOP)

Manual completion of planned data

Calculation of planned activity prices (input for AOP Standard Cost Calculation)

Key Points Copying the previous year’s actual expenses for the cost centers into an AOP budget

version

Changing copied data

Depreciation transferred separately into AOP

Downloading data to spreadsheets by each cost element and cost center

Uploading the adjusted data into SAP

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

Activating the planned data of the AOP version

2.10.14 Standard Cost Calculation

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

Once the planned prices for purchased parts are updated and planned activity prices are calculated, a costing run is done to calculate the new standard planned prices of the materials. The calculated standards are checked. The responsible persons are asked to make necessary corrections, for example in master data. Once the calculations are considered to be correct, the prices are updated as future planned costs in the respective material master records.

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

Process Flow Create and execute costing run

Analyze proposed standard prices

Repeat annual operating plan scenarios

Edit cost run and execute

AOP – revenue cost of sales transfer

Create frozen costing run / Execute costing run

© SAP AG of 67


Mark as future planned price

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

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

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

Responsible persons are asked to make necessary corrections

Prices are updated as future planned costs in material master records

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

Revaluation of existing inventory to the new standard prices


o Costing Run

2.10.15 Internal Order for Marketing and Other Overhead Planning

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

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

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

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

Process Flow Creation of internal orders

Cost element planning on internal orders

Settlement of internal orders (planned costs)

Key Points After creating the internal order, you set a planner profile and plan costs at cost element

level. Revenues can also be planned if the order is with revenues.

It is also possible to assign budgets to an internal order. Budgets are lump sums that are not broken down in cost elements.

© SAP AG of 67


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

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

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

2.10.16 Period End Closing General Plant

PurposeThe Plant/Central closing process is done to make sure that all financial postings are made to represent the plant activity for the period. Daily activity in the plant is posting various financial documents into the general ledger and cost-controlling module. This process ensures that all activity in the plant is shown correctly, and that no financial postings are missing. Some data (total stock value, total stock, valuation class, price control indicator, and price unit) are managed by period. For these values, and goods movements, to be posted to the correct period, the period must be set whenever a new period starts. Management reporting needs to receive plant information with reference to variances, WIP, and scrap to allow for the correct reporting of these figures. The production/process orders that are no longer active need to be flagged as closed so that future postings will not be allowed. This process ends by flowing into the Central Closing process that finishes the financial reporting of the company.

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

Process Flow Run assessment cycle for quality costs

Ensure goods movements and production transactions are complete

Open new MM period

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

Close completed production orders

Data collection for summarization hierarchy (reporting)

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

Run profitability report

Key Points Run assessment cycle for quality costs

Ensure goods movements and production transactions are complete

Open new MM period

© SAP AG of 67


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

Close completed production orders

Data collection for summarization hierarchy (reporting)

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

Run profitability report

2.10.17 Inventory Valuation for Year End Closing

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

The business process documentations include the following process steps:

Stock valuation, using lowest value principle for raw materials, packaging materials and trading goods.

Additional devaluations by movement rate

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

Stock value reporting in the form of a comparison analysis

Manual stock value adjustment posting in the Financial Accounting component

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

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

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

Process Flow Stock valuation, using lowest value principle for raw materials, packaging materials and

trading goods.

Additional devaluations by movement rate.

Inventory costing for finished and semifinished products, in accordance with the lowest possible value principle.

Stock value reporting in the form of a comparison analysis.

Manual stock value adjustment posting in the Financial Accounting component.

© SAP AG of 67


Key Points Stock valuation for raw materials, packaging materials and trading goods on base of lowest

possible value

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

Stock value adjustment

2.10.18 Overhead Cost Controlling Actual

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

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

Process Flow Actual posting for a cost center

o For primary costs the related cost center is posted

o Cost center update with the correct values

o Posting of statistical key figures

Periodic and year end activities

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

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

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

o Maintaining the controlling version

o Lock period

Key Points Process a G/L document for various purposes

Necessary steps for preparation of periodic and year end activities

2.10.19 Internal Order for Marketing and Other Overhead Actual

PurposeVarious internal projects consume resources and incur costs or expenses. Usually the purpose of these projects is the future development of products. The product lines are generally determinable

© SAP AG of 67


for such projects. The costs of these projects need to be tracked for various purposes such as cost control, return on investment calculations, tax reporting, and so on.

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

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

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

Process Flow Create internal order

Post general ledger account

Check settlement rule

Check settlement

Check actual budget

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

It gives a transparent view of an internal order

It allows automated efficient processing

2.10.20 Reference and Simulation Costing

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

With this component, you can create base planning objects. A base planning object is a reference object of Product Cost Planning, which you create in Reference and Simulation Costing to plan costs for a new product or service and simulate changes to existing cost estimates. If you plan a new product for which there is no master data in the SAP ERP, you can perform initial planning and cost projections by creating a Base Planning Object using Reference and Simulation Costing. Using this method, you manually plan the costs for an item.

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

© SAP AG of 67


Process Flow Create and cost Base Planning Object

Analyze Results

Change Base Planning Object

Report from Information System

Key Points Reference and Simulation Costing

Base Planning Object

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

Reporting from Information System

o Monitoring the base planning object

2.10.21 Sales: Period End Closing OperationsThis scenario describes the collection of periodic activities in Sales & Distribution such as day ending activities or legal requirements like Intrastat and Extrastat reporting.

2.10.22 Period End Closing Activities

Purpose

This building block provides the means and sequence of period end closing steps related to SAP Best Practices.

The SAP Best Practices Fabricated Metal Package covers many types of scenarios with a broad variable implementation approach. It is possible to select scenarios and implement different solution scopes. Because it is unclear what scenarios are available, period end closing cannot be fixed to scenarios.

The solution for SAP Best Practices provides a flexible method for period end closing on daily, monthly and yearly basis. It should be possible to select all required steps depending on the solution scope selected.

The purpose of this scenario documentation is to provide a method to help select these steps. Specific period end closing steps are not described here.

2.10.23 Activate Document Splitting for Discrete Manufacturing

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


© SAP AG of 67



The installation of document splitting in Discrete Manufacturing is optional. You have to install and activate document splitting before you create any transaction data.

2.10.24 Activate Document Splitting for Fabricated Metals

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



2.11 Master Data Generation Descriptions and Reporting

2.11.1 Enterprise Structure ExtensionThis building block creates a new plant within a new company code.

2.11.2 Master Data GenerationThe SAP Best Practices Package covers various descriptions on how to create master data.

These descriptions are:

Create Accounts and Account Groups

Segments and Profit Center Maintenance

Functional Areas Maintenance

Create Cost Center and Cost Center Group

Maintain Cost Center Hierarchy

Create Cost Element and Cost Element Group

Create Cost Collector

Maintain Assessment Cycles

© SAP AG of 67


Create Standard Cost for Individual Material

Create Activity Type / Groups

Create Internal Order

Maintain Vendor Evaluation

Create Vendor Master

Create Purchasing Info Record

Create Source List

Create Purchasing Contract

Create Customer Master

Create Sales Price Condition

Maintain Capacity

Create Work Center

Maintain Work Center Hierarchy

Create Resources for Process Industry

Create Product Group

Create Raw (ROH) Material

Create Semi-finished Good (HALB) Material

Create Trading Good (HAWA) Material

Create Finished Good (FERT) Material (non configurable)

Create Finished Good (FERT) Material (configurable)

Create Configurable Material Variant

Create Engineering Change Number

Create Production Version

Maintain Material Plant Extension

Maintain Material Storage Location Extension

Create Serial/Equipment Number

Maintain Material Sales Organization Extension

Create New Bill of Material

Maintain Bill of Material - Configurable Material Link

Create Routing

Create Reference Operation Set

Maintain Material Scheduling via Routing

Create Master Recipe

Attach Material Variants Routing to Parent Material Routing

Create Configuration Profile

Create Variant Classification

© SAP AG of 67


Load BOM Dependencies

Create Standard Work Breakdown Structure (WBS)

Create Standard Network

Maintain Network Parameters for Sales Order

Create Output Conditions SD

Create Tax Conditions SD

Create Material determination info record

Create Free Good determination info record

Maintain Catalogs – Create Code Groups and Codes

Maintain Catalogs – Create Selected Sets and Selected Set Codes

Create Master Inspection Characteristic

Maintain Material Specification

Create Batch Classification

Maintain Material Master Extensions

Create Employee

Create Sales Representative

Create Task List

Create Service Master

Create Service Product

Create Warranty

Create Service (DIEN) Material

2.11.3 Central Master Data Discrete ManufacturingThis building block contains all central master data objects which are required for Manufacturing.

2.11.4 Central Master Data (for Library - Manufacturing)This building block contains all central master data objects which are required for Manufacturing.

2.11.5 Central Master Data (for Foundation – Manufacturing)This building block contains all central master data objects required for trade, as well as central master data objects like customer, vendor and output records, required for manufacturing.

2.11.6 Supplement Settings

The building block Supplement Settings contains additional settings that are necessary to run SAP Best Practices for Fabricated Metals. The settings are in the following areas:

Definition of Item Category Groups

Definition of Product Hierarchies

Definition of Serial Number Profiles

© SAP AG of 67


2.11.7 SAP ERP ReportingIn SAP ERP various reports can be used to monitor and control your company processes. SAP Best Practices focuses on the following reports:

General Ledger

Recurring Entry Documents

G/L Account Statements

Financial Statement

Financial Statement: Actual/Actual Comparison

Compact Document Journal

Line Item Journal

Recurring Entry Documents

EC Sales List

Advance Return for Tax Sales/Purchases

Chart of Accounts

Cost Element Accounting

Controlling Documents: Actual Costs

Internal Orders: Master Data Report

Cost Center Accounting

Cost Centers: Actual/Plan/Variance

Range: Cost Centers

Range: Cost Elements

Cost Centers: Planning Overview

Range: Actual/Budget Commitments

Cost Centers: Activity Prices

Product Costing

Multilevel BOM: Value / Amount / Status

Cost Component

Itemization

Cost Elements

Analyze/Compare Material Cost Estimates

Analyze Product Cost Collector

Analyze Product Order

Profitability Analysis

Execute Report

Information System

Costs/Revenues/Expenditures/Receipts

© SAP AG of 67


Actual Costs/Revenues

General Logistic

MRP List

List Display of Purchase Requisitions

Stock Overview

Outbound delivery monitor

Sales and Distribution

List of Sales Orders

Sales Order Selection

Analyze Sales Orders

Actual Cost Line Items for Sales Documents

List Billing Documents

Release Billing Documents for Accounting

Incomplete SD Documents

SD Documents blocked for Delivery

SD Incomplete Documents

Purchase Requisition per Account Assignment

Purchase Orders by Account Assignment

Quotation List

Expiring Quotations

Expired Quotations

Completed Quotations

Credit Overview

Customers With Missing Credit Data

Credit Memos

License: Assigned documents

Check of Customer Master Regarding Legal Control

Backorders

Sales Support Monitor

Returns

Materials Management and Procurement

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

List of Notifications

Analysis of Purchase Order Values

Purchase Order by Material

Purchase Order by Vendor

© SAP AG of 67


Purchase Order by Document Number

Purchasing Group Analysis

Release Purchasing Documents

Assign and Process Purchase Requisitions

Stock Requirement List

SC Stock Monitoring for Vendor

Vendor Analysis

Mass Activation of Planned Changes for Vendor

Material Document List

Display Warehouse Stocks of Material

Accounting Documents for Material

Material Documents with Reason for Movement

Batch Analysis

Availability Overview

Plant Analysis

Material Analysis

Consignment and Pipeline Settlement

Collective Conversion

Production

Production Order Information System

Missing Parts Info System

Capacity Planning

Long-Term Capacity Planning

Long-Term Planning: MRP List

Change Plan

Evaluation of Product Group Planning

Selection: Plan/Actual/Variance

Costs/Revenues/Expenditures/Receipts

Actual/Plan/Variance Absolute/ Variance %

Order Progress Report

Display Production Order Confirmation

© SAP AG of 67


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

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

SAP Best Practices can be used by mid-sized enterprises that need rapid implementation or by large companies that need to create a corporate template for their subsidiaries. It can be easily applied to existing customer solutions.

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

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

o Extensive reusable documentation that you can use for self-study, evaluation, and for project team and end-user training.

o Complete preconfiguration settings that give you everything you need to run integrated key processes "out of the box" with reduced installation effort. The configuration is fully documented including preconfigured business processes, training material, and user roles. It is built using the latest technology, so you can adapt it quickly and easily.

3.1 Financials

3.1.1 Financial AccountingThe Financial Accounting component supports the valuation and reporting of your inventory according to different regulations.

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

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

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

A reduction in operating costs and an increase in efficiency.

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

3.1.1.1 General Ledger

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

© SAP AG of 67


software system that is fully integrated with all the other operational areas of a company to ensure that the accounting data is always complete and accurate.

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

3.1.1.3 Accounts Payable Records and manages vendor accounting data via the Accounts Payable (AP) component. The function connects AP directly to the G/L using a special reconciliation account.

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

3.1.1.5 Inventory Accounting Supports the valuation and reporting of inventory according to different regulations. Carries inventory values in two additional currencies/valuations via the Ledger component. Performs all goods movements in the Material Ledger in up to three currencies or valuations. Translates currency amounts into foreign currencies at historical exchange rates at the time of posting. Supports the determination of actual costs (compared to standard costs) for externally procured materials and materials produced in-house via Actual Costing. Valuates material inventories, such as raw materials as well as semi-finished and finished products, accordingly.

3.1.1.6 Tax Accounting

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

3.1.1.7 Financial StatementsAs part of the period or year-end closing, individual companies create financial statements according to country-specific regulations.

3.1.2 Management AccountingThe Management accounting component provides valuation and recording of financial data as the basis for all cost- and revenue-related reporting.

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

An increase in revenue

o Maximization of profitability by customer

A reduction in operating costs and an increase in efficiency

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

o An improvement in inventory visibility

3.1.2.1 Cost Center and Internal Order AccountingRecords costs incurred during the company operations by assigning them to cost centers (assigned to managers or organizational units). Plans, records, and then analyzes costs against the plan. Uses internal orders to plan, collect, and settle the costs of internal jobs and tasks. Monitors internal

© SAP AG of 67


orders throughout their entire lifecycle using the SAP system: from initial creation through the planning and posting of all actual costs, to the final settlement and archiving.

3.1.2.2 Product Cost Accounting Helps a company to know the costs incurred by its products in order to successfully manage the product portfolio. Calculates cost of goods manufactured (COGM) or cost of goods sold (COGS) broken down by each step of the production process. Uses cost information gathered about the product automatically in other SAP applications.

3.1.2.3 Profitability Accounting

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

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

Key functions include the following:

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

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

Workforce analytics support human capital management policy development and decision making.

3.2.1 Operations AnalyticsSAP ERP provides operational analytics that facilitate the compilation of detailed operations reports and support informed operational decision making - giving management and employees the information they need to increase insight into business processes. In addition sales planning can allow organizations to generate a complete picture of the entire supply chain, including the impact of sales on operations.

3.2.1.1 Sales Planning

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

3.2.1.2 Procurement Analytics

Monitors purchasing operations (for example, how many goods have been received for purchase orders for the last month) using various standard analyses and reports and facilitates the detailed analysis of the purchasing activities and procurement processes taking place within your enterprise (for example, ranking your suppliers according to purchasing values).

© SAP AG of 67


3.2.1.3 Inventory and Warehouse Management Analytics

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

3.2.1.4 Manufacturing Analytics

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

3.2.1.5 Sales Analytics

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

3.2.1.6 Customer Service Analytics

Provides organizations with a comprehensive view of key figures of all service-related scenarios.

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

SAP Best Practices provides several predefined roles to be used in the SAP Netweaver Business Client (NMBC) to ensure an efficient system access for end-users. These can be used out of the box or otherwise be easily adapted to company specific needs.

3.3 Procurement and Logistics ExecutionWith SAP ERP Operations, you can manage end-to-end logistics for complete business cycles. The solution enables a wide range of activities, from self-service requisitioning to flexible payment processing, including management of material flows.

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

3.3.1.1 Requisitioning

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

Manual creation of Shopping Carts

Empowers employees to create and manage their own requisitions for products or services. It relieves your purchasing department of this administrative burden while making the procurement process both faster and more responsive. Providing catalogs of the most frequently ordered

© SAP AG of 67


materials ensures that employees can easily manage their own purchase orders in accordance with your organization's rules.

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

Approval

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

3.3.1.2 Purchase Request Processing

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

Source of Supply Assignment

Conversion of Demands to Purchase Orders

The requirements that have been created and released for procurement (for example, demands for spare parts coming from plant maintenance, demands for raw materials determined in a planning run, or requests for office supplies entered by an employee) are transferred to purchasing as purchase requisitions. They are presented to the buyer in worklists that support him or her in converting the requisitions into purchase orders. Release procedures are available to control critical procurement processes.

Automated conversion of Demands to Purchase Orders

In the extended classic and standalone scenario, SRM automatically determines existing sources of supply for requirements. As the strategic purchaser or employee responsible for sourcing, you can have the system propose sources of supply and assign them to an item. You can use a report that enhances automatic sourcing with the grouping of requirements.

3.3.1.3 Purchase Order Processing

When a purchase order has been created a number of checks and validations make sure that the right contract, discount, price, etc is referenced correctly. Purchase Order Processing also deals with the communication of the purchase order to the supplier.

When a purchase order has been created a number of checks and validations make sure that the right contract, discount, price, etc is referenced correctly.

3.3.1.4 Receiving

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

Goods Receipt

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

© SAP AG of 67


Returns handling

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

3.3.2 Inventory and Warehouse Management Processes in the area of Inventory Management address the recording and tracking of materials on a quantity and value basis. This includes planning, entry, and documentation of stock movements such as goods receipts, goods issues, physical stock transfers, and transfer postings as well as the performance of physical inventory (stocktaking). Warehouse Management Processes cover warehouse-internal movements and storage of materials.

3.3.2.1 Warehousing and Storage

Processes warehouse-internal movements and storage of materials.

Warehouse Management Receiving and Shipping - Full WM

Warehouse Management is used for storage of the raw materials, as well as for storing finished goods. Pallets are stored in the central storage area with storage bin management. Internal transfer orders are used for putaway, internal transfers and removal from storage. Warehouse management is integrated with inbound logistics, production and outbound logistics.

Inventory Management

Manages the stocks of a company in quantities and values. It is integrated with supply chain accounting and is responsible for goods receipts and goods issues, and for managing different stock categories (available, blocked stock, in quality assurance, and so on) and special stocks (including consignment stock, project stock, and so on). Enables a summarized visibility of stocks in the supply chain.

Production Supply

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

Storage and Stock Management

Serial Numbers

Batch Management: This includes the handling of batches and batch determination for delivery picking, for production supply, or in internal warehouse processes.

3.3.3 HUM (Handling Unit Management)Handling units can be created at the end of production (packing of finished goods) or at a later stage after creating outbound deliveries. This depends on the packing process in your company.

If the stock is posted directly into storage and is available for picking there are two options for how to further process handling units:

- If the handling units are posted onto a storage location with Warehouse management, stock transfer orders are used for putaway and picking. Within picking, the stock transfer order allows you to specifically select the handling units to be picked from the stock overview list.

- If the handling units are posted onto a standard inventory managed storage location without warehouse management and storage bin management, putaway does not require a stock transfer order. However, due to missing storage bin management, at picking of the handling

© SAP AG of 67


units for the delivery the handling units have to be selected one by one, or (in practice) the number is scanned from the label.

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

3.3.4.1 Inbound Processing

Goods Receipt

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

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

Determination of External Demands

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

Shipping Notification

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

3.3.4.2 Outbound ProcessingGoods Issue

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

Warehouse stock is reduced by the delivery quantity.

Value changes are posted to the balance sheet account in inventory accounting.

Requirements are reduced by the delivery quantity.

The serial number status is updated.

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

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

A worklist for the proof of delivery is generated.

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

Delivery Processing & Distribution

© SAP AG of 67


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

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

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

3.4.1.1 Account Processing

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

3.4.1.2 Sales Order Processing

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

3.4.1.3 Contract Processing

Quantity Contracts

Monitors agreements that a customer will order a specific quantity of releasable products during a specified period. The following functions are covered:

Creating a basic agreement (quantity contract)

Creating a purchase requisition

Assigning requisition and creating purchase order

Approval of purchase orders

Contract monitoring

Goods receipt

Invoice receipt by line item

Outgoing payment

© SAP AG of 67


3.4.1.4 Billing

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

Billing documents such as invoices, credit, or debit memos, can be created based on order information only or based on order and delivery information, where, e.g., the quantity to be invoiced is derived from the delivery note.

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

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

3.4.1.5 Returnable Packaging Management

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

3.4.1.6 Consignment

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

3.4.1.7 Service Contract Management

Create and manage service contracts with related billing plans, price agreements and conditions. Service contracts can be referenced in subsequent service processes. Service plans enable contractual preventive maintenance strategies based on time and/or performance.

3.4.1.8 Customer Service and Support

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

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

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

3.4.1.9 Warranty & Claims Management

Warranty Claim Processing fulfills the needs both of manufacturers, importers or vendors of complex products and their suppliers. Warranty Claim Processing offers a solution that can deal with a large number of warranty claims and, as far as possible, automatically. Only those claims that produce negative results in the automatic checks are included in manual processing.

© SAP AG of 67


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

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

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

3.5.2 Manufacturing Execution Supports the process of capturing actual production information from the shop floor to support production control and costing processes.

Make-to-Order

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

Repetitive Manufacturing

Is a rate-based, lean production control system. Based on production and assembly lines, the takt times are used for scheduling. An optimizer and heuristics are available for model mix planning and line balancing. Continuous input and output are considered during scheduling. The production runs without any orders for run schedule quantities and production versions. Backflush of labor and material at reporting points support the lean execution process.

KANBAN Supply for Production

The KANBAN method for controlling production and material flow is based on the actual stock quantity in production. Material that is required on a regular basis is continually provided in small quantities in production. Replenishment or the production of a material is only triggered when a higher production level actually requires the material. This replenishment is triggered directly in production using previously maintained master data. The entries you have to make in the system are reduced to a minimum. All other actions in the system are carried out automatically in the background.

With KANBAN, the production process controls itself and manual posting is reduced as much as possible. The effect of this is a reduction in lead time and in stock.

Batch Management

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

© SAP AG of 67


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

Defect tracing, recall activities, and recourse requirement.

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

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

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

3.6 Quality Management Quality management supports the company throughout the product life cycle and along the supply chain. It offers a wide range of functions and collaborative services, which are fully integrated into SAP ERP, for assuring and managing the quality of products. It also focuses on prevention and continuous process improvement through collaboration and sustained quality control.

3.6.1 Quality Assurance / Control Quality Inspection

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

© SAP AG of 67