SAP UNIVERSITY ALLIANCES ACADEMIC CONFERENCE INDIA July 16-17,2010

Global Bike Inc. (GBI) 2.0: Advanced Business Processes

Simha R. Magal, Ph.D. Professor of Management (MIS) and Director, ERP Program Seidman College of Business, Grand Valley State University Grand Rapids, MI, USA

Agenda
GBI 2.0
Development process The company Teaching materials

GBI Processes
Core processes Additional processes

Discussion

GBI 2.0

GBI 2.0: Development

Project Sponsor: SAP UAP Project Team
Simha R. Magal, Ph.D., Seidman College of Business, Grand Valley State U. Stefan Weidner, Otto von Guericke University, Magdeburg, Germany Jeffrey Word, Ph.D., SAP

Supported by
Interns Grand Valley State University ERP Program Otto von Guericke University Funding West Michigan CIO council Wiley

GBI 2.0: Development

Objectives
Engineer a teaching environment to facilitate two levels of learning Beginner level realistic single-company code enterprise with multiple master data Advanced level multi-company code teaching environment with single master data Create stable, flexible, and extensible foundation for future SAP UA curricula GBI 2.1GBI 3.0 Provide extensive background material, figures and examples to allow almost real-life business experience for students Cover all SAP ERP modules and processes included in the TERP 10 certification academy and later other SAP solutions

GBI 2.0: Development

Development process
Extensive research on industry, products, processes, etc. Systems and transports Sandbox system Development system Production system Master data imports LSMW eCatts

GBI 2.0: Development

Documentation
Enterprise structure configuration Process Configuration SAP transport requests Master Data Configuration and Import files UCC System/Client/Request Import Document

Testing
Global testing

Expansion (3.0 +)
Additional processes and capabilities Additional systems

GBI 2.0: The Company

Narrative
John Davis Grew up on trail bikes in the Rocky mountains of the US Won numerous championships Extendable! Unhappy with available bikes; built his own in his basement 1990: started making bikes for others Started Frankenstein Bikes Peter Schwarz Grew up on road bikes in the Black Forest region of Germany Engineer: designed ultra light bike frame from carbon composite material Started Heidelberg Composites Partnered with a local company to manufacture frames Both shared a passion for performance and an obsession with bicycle design Twist of fate Met in 2000 Recognized shared passion and complementary business models Merged to form Global Bike, Incorporated in 2001

GBI 2.0: The Company

Strategy
John and Peter are Co-CEOs GBI is a process centric organization John is responsible for (in terms of reporting) Sales, Marketing, Service and Support, IT, Finance, and Human Resources John sells products and brings in money Peter is responsible for Research, Design, Procurement, and Manufacturing Groups Peter builds products and spends money World class bicycle company serving both the professional and prosumer in touring and off-road racing. Focus on: Quality Toughness Performance

GBI 2.0: The Company

Organizational Structure

Global Bike Inc.

Co-CEO John Davis Co-CEO Peter Schwarz

Global Bike US

Global Bike DE

Dallas

Miami

San Diego

Hamburg

Heidelberg

GBI 2.0: The Company

Products
BIKE Bicycles GBI

ACCR Accessories

TOUR Touring

ORBK Off Road

PROT Protective

UTIL Utilities

Naming convention AAAA N### To support 1000 users

DXTR Deluxe touring bike

PRTR Professional touring bike

ORMN 1000 Mens standard

PADS Pads

HLMT Helmets

SHRT 1000 T-shirt

DXTR 1000 Black

PRTR 1000 Black

ORWM 1000 Womens standard

EPAD 1000 Elbow pads

OHMT 1000 Of f road helmet

RKIT 1000 Repair kit

DXTR 2000 Silver

PRTR 2000 Silver

KPAD 1000 Knee pads

RHMT 1000 Road helmets

PUMP 1000 Air pump

DXTR 3000 Red

PRTR 3000 Red

CAGE 1000 Water bottle cage

BOTL 1000 Water bottle

FAID 1000 First aid kit

GBI 2.0: The Company

Customers
Customer Customer Name Number 1000 2000 Numbering NN### 3000 4000 5000 6000 Addresses are SAP offices! 7000 8000 9000 10000 11000 12000 Rocky Mountain Bikes Big Apple Bikes Philly Bikes Peachtree Bikes Beantown Bikes Windy City Bikes Furniture City Bikes Motown Bikes SoCal Bikes Silicon Valley Bikes DC Bikes Northwest Bikes Street Fiddler's Green Circle Morton ST West Chester Pike Summit Boulevard City Denver Stat e CO

New York City NY Philadelphia Atlanta PA GA MA IL

Van de Graaff Drive Boston Highland Parkway W Fulton Chicago

Grand Rapids MI MI CA CA DC WA

One Towne Square Detroit Von Karman Ave Hillview Ave Pennsylvania Ave 108th Ave Irvine Palo Alto Washington DC Seattle

GBI 2.0: The Company

Vendor Number Vendor Name Street Summit Boulevard Walnut ST N O'Connor Blvd Thornall St Richmond Ave City Atlanta Cincinnati Irving Edison Houston LaCrosse McLean Grand Rapids Portland Miami Scottsdale Carlsbad State GA OH TX NJ TX WI VA MI OR FL AZ CA

Vendors
Numbering NNNNN###

101000 102000 103000 104000 105000 106000

Olympic Protective Gear Boomtown Tire & Wheel Dallas Bike Basics Lightbulb Accessory Kits Space Bike Composites

Night Rider Aluminum Products S Front St Spy Gear Rapids Nuts n Bolts Green Blazers Seats Fun n the Sun Seats n Bars Sunny Side Up Tire Redwood Kits Greensboro Dr. Eagleview Blvd 68th Parkway SW Blue Lagoon Dr. N. Scottsdale Road Palomar Airport Rd.

Addresses are SAP offices!

107000 108000 109000 110000 111000 112000

GBI 2.0: The Company

Information Architecture
Prior 2009 GBI divisions running multiple, independent IT environments 2009 GBI integrated shared services for all IT functions in the Dallas Office All ERP Functions centralized Primary Objectives: Reduce Costs Deliver Best-in-Class Technology to all divisions

GBI 2.0: The Company

Key Processes
Procurement (buy) Fulfillment (sell) Production (make) Inventory and Warehouse Management (store) Material Planning (plan) Enterprise Asset Management (maintain) Customer Service (service) HCM (people) Financial Accounting (track) Management Accounting (track) Lifecycle data Management (design) Program and Project Management (projects) BI / SEM Mile wide and inch deep

SAP ERP / TERP 10

GBI 2.0: The Company

Processes are all integrated

2010 John Wiley and Sons

Source: Magal and Word, Integrated Business Processes with ERP Systems, Wiley, 2010

GBI 2.0: The Company

Enterprise Structure Financial
Business Area Bicycles BI##

CC US## CoA US## CA##

CC DE## CoA DE## GB## AU## JP## Extendable! CA Asia AS##

Chart of Accounts (global) GL## CA North Am. NA## CA Europe EU##

Operating Concern (global) GL## Client GBI

GBI 2.0: The Company

Enterprise Structure SP Logistics
SLoc

DL## RM##

MI## TG## FG##

SD## TG## FG##

TO## TG## FG## MI##

HD## RM## SF## FG## MI##

HH## TG## FG##

PE## TG## FG## MI##

SF## FG## MI##

MI##

MI##

MI##

Central Purchasing Organization (global) GL##

Purchasing Org. US## CA## PO DE## PGr Europe N## AU## Asia AS##

Purchasing Group North America N##

Dallas

Miami

S. Diego

Toronto

Heidelb.

Hamburg

Perth

Extendable!

DL##

MI##

SD##

TO##

HD##

HH##

PE##

CC US## Client GBI

CA##

CC DE##

AU##

GBI 2.0: The Company

Enterprise Structure Sales and Distribution
Distribution Channel Wholesale WH

Distribution Channel Internet IN

SO West

SO West

SO North

SO North

SO North

UW##
SO East

CW##
SO East

DN##
SO South

GN##
SO South

AN##
SO South

UE##

CE##

DS##

GS##

AS##

Extendable!

CC US##

CC CA##

CC DE##

CC GB##

CC AU##

Credit Control Area (global) GL##

GBI 2.0: The Company

Enterprise Structure HCM (US)
Employee Group 9
External
90 Junior Consultant 91 Senior Consultant

Employee Group 2
Retiree

20 Pensioner

21 Honorary

Employee Subgroup

Employee Group 1
Active

10 Intern

11 Hourly Wage

12 Salary scale

13 Executive

Materials Management MM##

Personnel Subarea

Personnel Area Dallas DL## Company Code US## Client GBI

Miami MI##

SD##

GBI 2.0 Teaching Material

Single Company Code Infrastructure
One company code
US00 / DE 00

Multi company Code Infrastructure

Available: August 2010!

99 company codes (01 99)

US## / DE##

Available: January 2011

Common general ledger Unique master data

### (1000 copies)

Unique general ledger Unique master data

000 -> 0##

Exercises
Master Data
Review

Exercises
Master data
Review Create

Processes
Execute

Processes
Execute

Financial impact
Limited understanding due to common GL

Financial impact
More complete understanding due to unique GL

GBI 2.0 Teaching Material

One company / One client / One story (on UA Portal on SCN) Multiple options for teaching material UAP materials (UA Portal on SCN)
Exercises Available: Solutions (to exercises) August 1, 2010 Case studies Instructor notes (for case studies)

Wiley materials

Text book Explanation of concepts Real world Examples GBI examples / scenarios Demos Exercises Master data Process execution Variations and extensions Supporting materials IM, power point, test bank, solutions to exercises)

Available: August 2010 (Prelim version)

CORE PROCESSES

Core Processes
Financial Accounting (G/L accounting) Procurement (Materials Management) Fulfillment (Sales and Distribution) Production (Production Planning and Execution) Management Accounting (cost center accounting, internal orders)

Financial Accounting
Scenario
Invest in GBI Purchase assets and consumables Pay mortgage

Assumption

Create GL entries

Review financials

Not tied to any process

Procurement
Scenario
Purchase trading goods Procure to stock

Create purchase requisition

Assumption
We know how much to buy
Send payment to vendor Create and send purchase order

Receive invoice from vendor

Receive goods from vendor

Fulfillment
Scenario
Sell what was purchased Sell from stock

Pre-sales activity

Assumption:
Receive payment from customer Process customer ales order We have what enough in inventory

Send invoice to customer

Pick, pack, ship goods to customer

Production
Scenario
Produce a bike Make to stock

Create planned order

Assumption:
Receive materials from production to inventory Create production order

We know how many to make We have needed raw materials in inventory

Produce and confirm production

Issue material to production order from inventory

CO Cost Center Accounting

Create an assessment cycle

Scenario
Allocate accumulated costs to cost objects

Process Cost Center Report

Post Expense to Cost Center

Carry Out Assessment

Process Cost Center Report

CO Internal Orders
Scenario
Create Internal Order

Check Balance of Internal Orders

Allocate costs associated with temporary activity (picnic)

Commitment Management

Settle Order to Cost Center

Verify Commitment

View Effects of Goods Receipt

Post Goods Receipt

ADDITIONAL PROCESSES

Additional Processes
Warehouse Management Material Planning Integrated Processes Customer Service Enterprise Asset Management Financial Accounting (Asset accounting) Human Capital Management (Recruitment and Hiring) Management Accounting (Profitability analysis, profit center accounting, product, cost accounting)

Warehouse Management - 1
Create Purchase Order Make Payment to Vendor Receive goods from vendor

Scenario
Purchase for delivery to San Diego WH

Receive invoice from Vendor

Create transfer requirement

Confirm Transfer Order

Create Transfer Order

Warehouse Management - 2
Create Stock Transport Order (DL)

Scenario
Transfer from Dallas plant to San Diego WH
Pick, Pack, Ship goods (DL)

Confirm Transfer Order

Create Transfer Order

Receive goods (SD)

Create Transfer Requirement

Warehouse Management - 3
Scenario
Create Sales Order Send invoice and receive payment Create Outbound Delivery

Fill customer order from San Diego WH

Ship Goods (Goods Issue)

Create Transfer Requirement

Confirm Transfer Order

Create Transfer Order

Material Planning
Scenario
Create Sales and Operations (SOP) Plan

Plan production of FG Plan production of SFG Plan procurement of RM

Deal with planned orders and purchase requisitions

Disaggregate SOP

Complete MPS and MRP runs

Transfer data to Demand Management

Integrated Processes Fulfillment + Procurement +Production

Scenario
Make to order Procure to order Customer order triggers fulfillment Lack of inventory of bikes triggers production Lack of inventory of RM triggers procurement

Assumption:
Assumptions about availability of materials is removed

2009 John Wiley and Sons

Source: Magal and Word, Essentials of Business Processes and Information Systems, Wiley, 2009

Integrated Processes
Three Scenarios
Fulfillment + Production + Procurement (previous slide) Fulfillment + Production + Procurement + Warehouse Management Fulfillment + Production + Procurement + WM + Material Planning

Customer Service
Create Service Notification Business Complete Service Order Create & Release Service Order

Scenario
Repair bicycle under warranty Costs will be settled to an internal cost center

Additional Scenario
Repair bicycle out of warranty Bill the customer for repairs

Settle Costs

Issue Materials to Order

Technically Complete Service Order

Confirm Issued Service

Enterprise Asset Management

Create Maintenance Request Business Complete Create Maintenance Order

Scenario
Planned maintenance Replace an air filter on a ventilation fan Accumulate labor and material costs Settle costs to an internal cost center
Release Order

Settle Cost

Technically Complete

Withdrawal Material for Order Completion Confirmation

FI Asset Accounting
Scenario

Purchase Asset

Purchase and depreciate an asset Automobile for one of the CEOs

Review Financials

Complete a Depreciation Run

HCM - Recruiting
Scenario
Create Position

Transfer Employee Data

Create an advertisement

Recruit for an open position Select a suitable candidate Hire the candidate

Select and hire

Create Applicants

Perform Profile Matchup

Discussion

Questions?

Criticisms?

Ideas? Praise?

Comments? Suggestions?