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TERP10

SAP ERP – INTEGRATION OF BUSINESS PROCESSES (C_TERP_60)

TABLE OF CONTENTS

1) ERP Basics / SAP ERP positioning

1) SAP NetWeaver integration

2)

Lifecycle Data Management

3)

Procurement Cycle

5) Material Planning

7) Manufacturing Execution

9) Sales Order Management

11) ERP Financials – Financials Accounting (FI)

15) Management Accounting - Controlling - CO

20) Inventory and Warehouse Management / Stock Transfer and Transfer Posting

23) Enterprise asset management and customer service

27) Program and Project Management

31) Human Capital Management / HCM Structures

35) Business Intelligence / Business Information Warehouse

Abbreviations used:

Q = quantity - $ = price

-

oo – 1 (several to one)

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2012

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ERP Basics / SAP ERP positioning

ESA : Enterprise Services Architecture enables business i nnovation by:

Levering existing IT assets

Reducing TCO

Maximizing agility, flexibility, extendibility of business process

Enterprise services describe the broader business process logic. Web services are small, modular applications that use Internet technologies and are usually accessed as detailed functions in applications or enterprise services.

SAP Netweaver is the application and integration platform that best supports ESA using web services technology.

SAP R2: Mainframe computing/centralized computing

SAP R3 Ent e r p ris e (1992): Client Server architecture: 2 layer architecture (SAP basics + SAP application) Started Us ing Web AS

SAP ERP (2003): Service Oriented Architecture (SOA) powered by Netweaver . Uses Web AS

SAP ERP Central Component (ECC) Uses Web AS

Web AS • SAP ERP Central Component (ECC) Uses Web AS 1 additional feature offered by
Web AS • SAP ERP Central Component (ECC) Uses Web AS 1 additional feature offered by

1 additional feature offered by SAP ERP vs SAP ERP 2003

Composite applications

SAP Business suite :

SAP ERP (Entr. Ressource Planning)

SAP CRM (Cust. Relat. Mgt)

SAP PLM (Product Lifecycle Mgt)

SAP SRM (Supply Relat. Mgt)

SAP SCM (Supply Chain Mgt)

Solution map : Shows the processes enabled by a specific solution

4 addi t. features offered by SAP ERP 2003 vs SAP R3 Entreprise

Self services

Self service procurement

Internet sales

SAP NetWeaver integration People Integration • Portal infrastructure (SAP E nterprise P ortal) • Collaboration
SAP NetWeaver integration
People Integration
• Portal infrastructure
(SAP E nterprise P ortal)
• Collaboration
• Multi channel Access
Information Integration
• Business Intelligence
(SAP B usiness I ntelligence)
• Knowledge Management
• Master Data Management
Process Integration
• Integration Broker
(SAP Exchange Infrastruct)
• Business Process Management
Application Platform
• Support J2EE
(SAP Web Applic . Server)
• Support JAVA
• DB & OS abstraction
The central component of the Application Platform is the SAP Web Application Server (SAP Web AS )
• Operating System and DB independence
• Multilevel architecture
• Java and ABAP environment (open env ironment )
• Provides basics functions for almost all SAP systems

High scalability

The functions of the different SAP systems (such as SAP ECC, SAP CRM) can be divided into two categories:

Basis functions : are very similar in the various SAP systems . A re provided by the SAP WebAS, which is a further development of the classic SAP Basics.

A pplication functions : are different in the various SAP systems

Advantages of SAP NetWeaver :

1.

Openness and Extendibility (Microsoft.NET; IBM WebSphere)

2.

Immediate Integration

3.

Lower To tal Cost of Ownership

4.

Clear Roadmap

Organizational levels : represent the enterprise structure in terms of legal and/or business - related purposes.

Client

I s the highest - level element of all organizational elements

Company Code

FI – central org. element : balanced sheet, legally independent

Controlling area

Identifies a self - contained organ . structure for which costs and revenues can be manag ed and allocated. It represents a se parate unit of cost accounting.

Plant

Prod. Planning, logistics: central org. e lement

 

Storage Location

Inventory M anagement

Sales area

C ombination of:

sales organization

Distribution channel division

Purchasing organiz

E ach country in which plants operate has ONE purchasing organization . It purchase for all plant in the country.

Master data

Master data : data which is used long - term in the SAP system for several business processes and ensures NO redundancy of data in the system. Master data has an organizational aspect as the information is organized into VIEWS which are assigned to organizational elements. EX: Customer master = 3 views:

(Client): General data

-

(Company code): Financial Accounting data

-

(Sales Area):

Sales data

Transactions : application programs which execute business processes in the SAP system such as creating a customer ord er; posting an incoming payment, etc. Document : a data record that is generated when a transaction is carried out. Every transaction creates a document which contains all relevant pre - defined information from the master data and organizational elements assigned.

R eporting solutions

OLAP : online analytical processing: optimized for query. (Informative environment) OLTP : online transaction processing: optimized for transaction processes. ( Operating environment) SAP BW : enable the analysis of data from operative SAP applications as well as all other bus. applic . and external data sources s uch as databases, online serv s, i nternet.

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Lifecycle Data Management

SAP PLM is used in tight collaboration with SAP CRM and SCM.

4 components of Life Cycle Data Management : (DIPE)

1. Document management : integrate external files, by storage of the original d ocuments in secure storages areas or links to other objects.

2. Product structure browser : * is a navigation tool to manage product data . It displays all product - relevant info, such material master, BOM, routing, class, docs.

3. Integration : of most CAx solutions , Office application, GIS, Classification system using PLM interface

4. Engineering C hange and configuration management (ECM)* : let make change depe ndent on date, serial number. Replications of product data is a method used to run a separate system for engineering process in addition t o a production system.

Do cument is made up of a document info record and the original that belong to it.

Documents Info Record : Functions : Version management, Status management, Classification, Secure storage areas Purpose :

C an be linked to other objects in order to make the original information available to these objects (Material, Equipment, Functional location, Purchase requisition, Document, WBS

element, PRT, QM info record, Purchase order, Change number, Network operation, Production order, Cu stomer, Sales document item, etc. )

A llows to view and manage original s

C ontrol s the process flow.

Integrat ion in ECC through object links *

Interfaces to external systems (PLM interfac e + ArciveLink interface)*

DMS allows easy way to handle documents.

PLM Interface:

Third party CAD - CAx systems , Office appl, GIS, Class.System are connected to SAP ERP using PLM interface .

Third party archiving systems are connected by using the ArchiveLink interface .

B idirectional data exchange with third party systems.

Standard BAPI and RFC technology .

Transfer data with or without a GUI: The Easy DMS interface is a tool for creating and changing docs without an SAP GUI . (SAP is invisible) (BAP I, RFC, Java connectors).

SAP GUI . (SAP is invisible) (BAP I, RFC, Java connectors). Classification enables flexible searching .
SAP GUI . (SAP is invisible) (BAP I, RFC, Java connectors). Classification enables flexible searching .
SAP GUI . (SAP is invisible) (BAP I, RFC, Java connectors). Classification enables flexible searching .

Classification enables flexible searching . Also as a Variant configuration and Batch management

Create characteristics and allowed values .

Maintain classes and assign characteristics to them .

Create objects and assign classes to them (also assign characteristic values for this object) .

Search for objects by specifying the class to which it belongs and then specifyi ng the values for the charact. of the class . The classifications take place :

Directly in the object or

Indirectly in a transaction within the classification system.

Configurable material: is a product that can be made in several variants. (is not a finished product) Are all materials in a BOM always used to produce an item that the BOM represents? No. In the case of configurable materials , the BOM mentions all the materials for a ll variants. Thus some of the materials will be used only in some variants. Dependencies is a feature used to select the materials and operations for a specific variant of a configurable material.

* Product Structure Browser :

Is the central navigation and information tool in SAP Life - Cycle Data Management. It displays in tree - structure form all objects that belong to each other functionally, such as: materials , BOMs , documents , classes , characteristics , routings , etc. You can call and change each of the objects from the browser. The Enterprise Application Integration (EAI ) is a component that allows the direct viewing of originals in the product structure browser.

Engineering Workbench (EWB):

Is used as a maintenance environment for product structures an d can be used to create and maintain BOMs + R outings . You define a worklist that contains selected objects copied from the database to be processed.

* Engineering C hange management (ECM) : Advantages:

Changes that belong together are grouped in a change number

Monitoring and documentation of changes

Saving multiple change statuses for an object

Planning and realization of a specific effectivity

Integration in the logistics process chain

Change Number

H eader (general info -- date, validity, status) (No items)

Object types

Object management records (Actual objects affected)

Other info (accompanying docs, Classification -- facilitates search for changes, alternate dates for individual objects)

The ECR/ECO unlike change master record has a status network that enables change processes to be requested, checked, and released.

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Procurement Cycle

Organizational Levels/ Units represent the legal and/or organizational views of an enterprise.

 

Organizational Levels

Client

oo

 

H ighest organizational element) (defined in the system by a 3 digit key

Company Code

|

 

oo

R epresents an independent accounting unit . Balance sheet and P/L statements, required by law are created at this level.

 

1

   

Plant

   

|

Several plants can be affiliated with one company code, but a plant can only have one company code .

 

oo

1

 

Storage Location

|

Are completely independent o rg. units with separate Inventory Mgt ( =>can belong to < > plants, you can use the same storage location

1

number in more th an one plant ) . No Org. Level included for a PO because it’s not necessary until good are not received.

Purchasing Organization *

N egotiate the general condition of purchase for one or more plants or companies / Legally re sponsible for completing purchasing contracts

(do not set price conditions).

Purchasing Group

 

Buyer or group of buyers responsible for certain purchasing activities. No assign to a purchasing.

Purchasing Organization Types *

Plant - Specific Purchasing Organization

Cross - Plant Purchasing Organization

Cross - Company - Code Purchasing Organization

Purch. Org. procures materials for only one plant.

Purch. Org. procures materials for all plants belonging to one company code.

you can’t assign a company code to the Purch. Org. in Customizing. W hen you create a purchase order you must enter the company for which you want to procure the material.

Master data in Procurement:

Material Master Data/record:

Used by all Logistic modules . (The integration of all material data in a single database object prevents the problem of data redundancy). it’s subdivided into information grouped by user departments (function s) that manage the modules, so each one has a different VIEW of the material master record and is responsible for maintaining the data to support their f unction. The data maintained within a view may be valid for more that on Organizational level. For example the Views :

Basic Data applicable to the entire company - > Client : product description, material #, material group, unit of measure

Purchasing data for orders - > relevant to the Plant

Inventory Mgt data for posting goods movements and managing physical inventory

Accounting data for material valuation upon goods movements or in invoice verification. - > is relevant to the Company Code

Materials Planning data for material requirements planning (MRP) and Execution (Work Scheduling) - > is relevant to the Plant

Vendor Master Data

It contains information about a vendor from a Purchasing (Material Management) and Accounting (Financial Accounting) perspective. It controls how transaction data is posted and processed for a vendor. Also, it contains all the data you require to do business with your vendors. In Accounting, the vendor is regarded as the company’s crediting busine ss partner. The vendor master record is therefore maintained by Accounting + Purchasing Data is structured by orga nizational level s:

CLIENT

COMPANY CODE

Each PURCHASING ORG = PURCHASING ORG. DATA (payment conditions, etc)

= GENERAL DATA: vali d for the whole corporate group. (address, bank account, etc)

= COMPANY CODE DATA: ( ACCOUNTING data , payment transactions, tax)

Purchasing Info Records

C ontains info on a vendor and the material you procure from this vendor, allowing to find out at any time which vendors offer a particular material or which materials can be procured from a particular vendor. Purchasing info records can be referenced in the planning process to predetermine vendor specific information. Info s tore and maintain:

Current and future prices and conditions (freight and discounts)

Delivery data (planned delivery time, tolerances)

Vendor data

Texts

Conditions

A re used in purchase order s to determine price .

Type of conditions in Purchasing:

In a Contract: apply to all contract release orders created with reference to this contract.

In a Purchasing Info record : apply to all purchase order items that contain the material and vendor contained in the purchasing info record.

Extended conditions: are only included in the purchase order if it meets certain criteria . They are flexible. For ex. To define vendor discounts or include discounts for a material type.

SEE PROCUREMENT PROCESS DIAGRAM

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Reporting

Standard reports enable evaluation of documents and master data.

reports enable evaluation of documents and master data. Parameters that control the information presented in a

Parameters that control the information presented in a purchasing report list

(ROWS)

Selection criteria Selection parameter determines which purchasing

documents are analyzed by the report (COLLUMNS) Scope of list parameter determines which data is displayed

for a selected document

List Viewer and ALV Grid Control : standardize and simplify the handling of lists

Key elements

Functions

Uniform design of all lists and tables

Cross application, standar dized function with uniform icons

Simple creation and changing of layouts (display variants)

Choose detail Set filter: display lines with certain criteria Sort: ascending; descending order Add values create totals Create subtotals Layout: change the appearance of the list

(LIS) Logistics Information System T he following application - specific in formation systems are available under LIS

(Sales Information System)

(Purchasing Information System)

(Inventory Controlling)

(Transportation Information System)

(Shop Floor Information System)

(Quality Management Information System)

(Plant Maintenance Information System)

SIS

PURCHIS

INVCO

TIS

SFIS

QMIS

PMIS

Information System) SIS PURCHIS INVCO TIS SFIS QMIS PMIS How Information Structures are organized The Purchasing

How Information Structures are organized The Purchasing Information System is based on information structure which contains 3 basic types of information:

Characteristics : criteria used for collecting data on a subject (Ex: vendor; customer)

Period unit : (Ex: day; week; month)

Key Figures : are performance measures; quantitative information based on measurable facts and are updated f or each characteristic combination and periodicity.

Standard Analyses :

Drill down list

Analyses can be archived

Graphically supported

• Analyses can be archived • Graphically supported Flexible analyses : allow to determine the way

Flexible analyses : allow to determine the way in which data should be combined in an individual report procurement.

Combine characteristics and key figures from different information structures in one list

Use you r own formulas to calculate new key figures from existing on es

Choose between a variety of layouts

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Material Planning

 

Organizational Levels

Client

oo

   

H ighest organizational element) (defined in the system by a 3 digit key

   

|

oo

R epresents an independent accounting unit . Balance sheet and P/L statements, required by law are created at this level.

Company Code

1

|

Plant

oo

1

Several plants can be affiliated with one company code, but a plant can only have one company code .

Storage Location

 

|

Are completely independent org. unit s with separate Inventory Mgt ( =>can belong to <> plants, you can use the same storage location

1

number in more th an one plant ) .

Master data in Material Planning

Material

BOM

Routing

Material Master Data/record:

Represents the central source for releasing material - specific data. Used by all Logistic modules . (The integration of all material data in a single database object prevents the problem of data redundancy). it’s subdivided into information grouped by user d epartments (functions) that manage the modules, so each one has a different VIEW of the material master record and is responsible for maintaining the data to support their function. The data maintained within a v iew may be valid for more that on Organizational level. For example the Views:

Basic Data applicable to the entire company (Client): product description, material #, material group, unit of measure

Purchasing data for orders - > relevant to the Plant

Inventory Mgt data for posting goods movements and managing physical inventory

Accounting data for material valuation upon goods movements or in invoice verification. - > is relevant to the Plant

Materials Planning data for material requirements planning (MRP) and Execution ( Work Scheduling) - > is relevant to the Plant

In the Views 1 to 4 we have the fundamental settings for Material Planning:

MRP type : specifies how a material should be planned

o

MRP

o

Consumption based planning (strategy 40)

o

No planning

Lot size (key) : determines the lot size (quantity) of each of the procurement proposals .

Procurement type : controls how a material is to be procured

o

In house production (internal)

o

External procurement

o

Internal and External

In house production t ime : specifies how long procurement will last.

Safety stock can be set

Strategy group : control the behavior of planned independent requirements

Availability check group : control of the Available to Promise (ATP) check .

Production versions : defines the production procedure.

Material type :

Raw materials

Operating supplies

Semi - finished products

Finished products

• Semi - finished products • Finished products It’s the most important value assigned to a

It’s the most important value assigned to a material . Materials with similar basic attributes are grouped together by material type. This means you can manage your materials according to their business requirements. The material type attached to product identifies /determines /controls :

 

B usiness process and functions allowed .

Views ( S creens ) that appea r in the Material Master record

D epartment - specific data that can be maintained

Material # assignment

P rocurement types that are allowed (in - house production or external procurement)

GL - general ledger accounts that are updated

BOM:

 

The BOM co nta ins the assemblies or components that are to be included in the production of a material.

BOM’s are used in : MRP , production , procurement , product costing .

A BOM consist of a BOM header and the BOM items.

The base quantity in the BOM header specifies to which amount of the finished product the item quantities refer.

An item of a BOM can itself also contain a further BOM

In this way, multilevel production is described using the single - level BOMs of the finished product and those of the assemblies and where required, using the BOMs of the assemblies of and so on. Does SAP di rectly support multi - level BOMs ? No. These are represented through several sin g le - level BOM’s

A BOM can contain documen ts or text items .

BOM structure :

Header : settings that apply for the whole BOM

o

Material

o

Plant

o

Usage : determines the business applications for which a BOM can be used

o

Status: controls whether the BOM is active for particular applications

o

Description

o

Validity

o

Lot size area

o

Base Quantity (q of finish ed product the item q refers)

Items : components necessary for the production of the finished product.

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production of the finished product. www.sap - terp10.com.ar o Item category : specifies what kind of

o Item category : specifies what kind of item you are dealing with. Influence the processing of the component

§ Stock item : executed in the warehouse and used in production / must have a material master

§ Non stock item : directly assigned to a manufacturing order (not via the warehouse) / don’t need material master (and its number)

§ Variable size item

§ Documents item (design or diagram )

§ Text item

§ Class item

§ Intra material

or diagram ) § Text item § Class item § Intra material o Descriptions o Quantity

o

Descriptions

o

Quantity

o

Control data

Multi level BOM structure is exploded automatically by MRP and Product Cost Planning.

Routings:

Routings contain the step s that are necessary for production , that is :

Operations ,

Operation Sequences

Usage

Time elements (and base quantity: for ex. 10 min. per 1 pc.) relevant for scheduling operations.

Wor k C enters which these operations are to be executed.

Component allocations

Routing can be transferred to SAP APO (Advanced Planning and Optimization) in the form of production process models (PPMs)

A routing can be defined using the routing group and the group counter .

models (PPMs) A routing can be defined using the routing group and the group counter .

SEE MATERIAL PLANNING DIAGRAM

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Manufacturing Execution

Production types supported by ERP Operations :

Make to order prod : production with a Production Order

Process Manufacturing : production with a Process Order

Repetitive manufacturing : Period and Quantity - oriented production. Not order- related.

Project oriented production : with production lots.

Kanban : Replenishment - controlled using stock transfer, external procurement, in- house prod. Via self - controlled control cycle.

 

Organizational Levels

Client

oo

 

H ighest organizational element) (defined in the system by a 3 digit key

 

|

 

oo

 

Company Code

   

|

R epresents an independent accounting unit . Balance sheet and P/L statements, required by law are created at this level.

Plant

1

 

Several plants can be affiliated with one company code, but a plant can only have one company code .

 

oo

1

Storage Location

|

Are completely independent org. unit s with separate Inventory Mgt ( =>can belong to <> plants, you can use the same storage location

1

number in more th an one plant ) .

Master data for Manufacturing Execution

Material

BOM

Work Center / Resource

Task Lists (can be routings, rate routings, or master recipes.

PRTs (productions Resources / tools

Material Master Data /record:

Represents the central source for releasing material - specific data. Used by all Logistic modules . (The integration of all material data in a single database object prevents the problem of data redundancy). it’s subdivided into information grouped by user d epartments (functions) that manage the modules, so each one has a different VIEW of the material master record and is responsible for maintaining the data to support their function. The data maintained within a v iew may be valid for more that on Organizational level. For example the Views:

 

Basic Data applicable to the entire company (Client): product description, material #, material group, unit of measure

Purchasing data for orders - > relevant to the Plant

Inventory Mgt data for posting goods movements an d managing physical inventory

Accounting data for material valuation upon goods movements or in invoice verification. - > is relevant to the Plant

Materials Planning data for material requirements planning (MRP) and Execution (Work Scheduling) - > is relevant to the Plant

BOM:

 

The BOM contains the assemblies or components that are to be included in the production of a material.

BOM’s are used in : MRP , production , procurement , product costing .

A BOM consist of a BOM header and the BOM items.

The base quantity in the BOM header specifies to which amount of the finished product the item quantities refer.

An item of a BOM can itself also contain a further BOM

In this way, multilevel production is described using the single - level BOMs of the finished product and th ose of the assemblies and where required, using the BOMs of the assemblies of and so on. Does SAP di rectly support multi - level BOMs ? No. These are represented through several sin g le - level BOM’s

A BOM can contain documents or text items.

BOM structure :

Header : settings that apply for the whole BOM

o

Material

o

Plant

o

Usage : determines the business applications for which a BOM can be used

o

Status: controls whether the BOM is active for particular applications

o

Description

o

Validity

o

Lot size area

o

Base Quantity (q of finish ed product the item q refers)

Items: components necessary for the production of the finished product.

o

Item category : specifies what kind of item you are dealing with. Influence the processing of the component

are dealing with. Influence the processing of the component § Stock item : executed in the

§ Stock item : executed in the warehouse and used in production / must have a material master

§ Non stock item : directly assigned to a manufacturing order (not via the warehouse) / don’t need material master (and its number)

§ Variable size item

§ Documents item (design or diagram )

§ Text item

§ Class item

§ Intra material

or diagram ) § Text item § Class item § Intra material o o o Descriptions

o

o

o

Descriptions

Quantity

Control data

Multi level BOM structure is exploded automatically by MRP and Product Cost Planning.

Work Center

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An organizational unit that defines where and when an operation must be performed. The work center has an available capacity. Work centers can be:

- Machines

- People

- Production lines

Difference between cost center and work center Cost center is place where you incur your costs. Work center is a place where an operation is performed by a person/ machine (group). Link between them:

The activities performed at or by the work center are valuated using charge rates which are defined/determined by cost centers and activity types.

The re source - related data is maintained on several screens – views :

Basic data

Maintained on Plant level Name and description Person or group responsible for the maintenance of the master data of this resource Task list usage : specify the task list types (routing , master recipe, equipment task list, inspection plans) in which the resource can be used. Standard value key : are planned values for the execution of an operation . EX: setup time, machine time, personnel time. Standard values are used in costing, scheduling and capacity requirements planning in order to calculate costs, execution times and capacity requirements.

 

For the operation to be executed at a resource. By entering default values you reduce the effort necessary in editi ng operations, since the values are stored centrally and you do n ot need to enter them in each operation.

Default

Control key : how an operation is to be processed in a task list. Examples of such keys and indictors are: Scheduling : If you set this indicator, the system carries out scheduling for an operation. Capacity planning: If you set this indicator, the system creates capacity requirement records for the operation .

values

Standard text key Wage data

Cost center

Is assigned to a resource to link the resource to cost accounting and can now carry out product and order costing. Activity types: define specific output for the resource.

Formula key : to calculate costs, execution times and capacity requirements of phases carried out at a resource.

available

C alcul ate the execution of an operation during process order scheduling.

Capacities

Formula key : to calculate costs, execution times and capacity requirements of phases carried out at a resource.

 

calculate the execution of an operation during process order scheduling

Scheduling

Formula key: to calculate costs, execution times and capacity requirements of phases carried out at a resource.

 

People

HR

assignment

Positions

Qualifications

Routings:

Routings contain the list the sequence of s teps for producing a material , that is:

Operations ,

Operation Sequences

Usage

Time elements (and base quantity: for ex. 10 min. per 1 pc.) relevant for scheduling operations.

Wor k C enters which these operations are to be executed.

Component allocations

Routing (and BOM) can be transferred to SAP APO (Advanced Planning and Optimization) in the form of production process models (PPMs)

A routing can be defined using the routing group and the group counter.

Routings and Work Centers:

group and the group counter. Routings and Work Centers: • A work center is assigned to

A work center is assigned to an operation .

The standard value key in the work center specifies the time elements (standard values) that have to be taken into consideration during planning. EX: setup time, machine time, personnel time.

Scheduling formulas stored in the work center define the duration from the allowed time elements in the routing.

Routings and Bills of Material :

Production is described via a routing and a BOM

BOM components can be assigned to a certain operation

Production resource tools (PRTs) can also be assigned in the routing.

PRTs are operating facilities that are not location related , but that are necessary for production, such as a measuring instruments or a support.

Order Creation Options:

Without BOM – Routing With BOM – Routing W ith Routing W ith Planned Order

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Sales O rder Management - SD

• Kanban : Replenishment - controlled using stock transfer, extern al procurement, in - house
• Kanban : Replenishment - controlled using stock transfer, extern al procurement, in - house prod. v ia self - controlled control cycle.
Organizational Levels
Client
H
ighest organizational element) (defined in the system by a 3 digit key
Company Code
R
epresents an independent accounting unit . Balance sheet and P/L statements, required by law are created at this level.
oo
oo
It defines the distribution channel; a sales organization uses to sell products from a certain division.
|
| Each SD document is assigned to exactly one sales area. We use it to select master data when processing sales orders. Also select $ + discounts
1 Sales 1 I s the highest level organizational elements in SD (Logistics) .
o o
O rganization
Sales Org. 1 - oo CC . You maintain own master data. In sales statistics, is the highest level.
Is responsible for:
Sales
oo
• Distributing goods and services
Area
|
• Negotiating sales conditions
combina
1
• Product liability and rights of recourse
tion of
Distribution
Is the way in which sales materials reach the customer.
|
C hannel
Represents your strategies to distribute goods and/or services to your customer (ex. Wholesale, retail, internet) (1 or + Dist. Ch.)
It’s used to:
oo
• Define responsibilities
|
• Achieve flexible pricing
• Differentiate sales statistics
1
Represents a product line to group materials and services (pumps, motors, services) (1 or + Div)
1 oo
Division
The system uses the division to determine the sales areas a material or a service is assigned to.
|
P lant 1 - oo Company C ode.
oo
Plant and storage location are organizational levels that ca n be used by all logistic areas: < > points of views:
MM : The plant is location where the material is kept.
Plant
Production : represents a manufacturing facility
Sales and Distribution : represents the location from which goods and services are distributed and corresponds to a distribution center.
The
relevant stocks are kept here. T he plant has a central f unction:
• You have to create at least one plant in order to be able to use the sales and distribution module
oo
o
o
• A plant must be uniquely assigned to a company code
|
• The assignment between sales organizations and plants does not have to be unique
1
• The plant is es sential for determining the shipping point.
Are
completely independent Org. units with separate Invent ory Mgt (can belong to < > plants, it means that you can use the same storage
|
Storage Location
location number in more th an one plant ) .
It’s the high est level org. unit of shipping . It can be a loading ramp, a mail depot, etc
You assign a shipping point at plant level
Shipping point
oo
A shipping point is a physical place and should be near the delivering plant.
Shipping P oint oo - oo P lant
near the delivering plant. Shipping P oint oo - oo P lant Master data for SD
near the delivering plant. Shipping P oint oo - oo P lant Master data for SD
near the delivering plant. Shipping P oint oo - oo P lant Master data for SD

Master data for SD

Customer

Customer - material I nfo record

Material

Output (mail, EDI, fax)

Condition (EX: automatic pricing / customer discount)

Customer m aster : The customer master groups data into categories: (views)

General data : relevant for the SD and for A ccounting . Valid for all org. units ( Client level ) .

Sales A rea data : rele vant for SD . Valid for the sales area (sales org. - dist. channel - division) .

Here we store the mandatory partner functions for the customer master during the sales order processing:

o

Sold - to - party :

places the order

o

Ship – to - party :

r eceives goods or services

o

Bill - to - party :

receives the invoice for goods or services

o

Payer :

is responsible for paying the invoice

Company C ode data : is relevant for A ccounting . Valid for all org. units (CC level).

for paying the invoice • Company C ode data : is relevant for A ccounting .

Material master : views:

Basic data1 :

is relevant for the entire company (Client): product description, material #, material group, unit of measure

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Sales org . data :

is relevant for SD .

It is valid for the respective Sales org. and the Dist. Ch.

Sales plant data :

is relevant for SD .

It is valid for the respective D elivery plant.

Purchasing :

is relevant for MM. It is valid for the D elivery plant.

Customer - material Info R ecord master :

You can use the customer - material information to record data for a combination of certain customers and materials when processing a document (order, delivery). It is not obligatory for Sales. The data that can be maintained are:

Cross - reference from your customer’s material number to your material number and the customer’s material description .

Specific shipping information for this customer and material (such as delivery tolerances, specifying if the customer accepts partial deliveries or the default delivering plant).

Definition of customer group:

Customer Group identifies a particular group of customers for the purpose of pricing or generating statistics.

The definition can be found by placing the cursor on the field and choosing the F1 function key or pressing the Help icon; or the definition can be found in the glossary.

Output master : is information that is sent to the customer using various media (mail, EDI, FAX). In this master data you define:

Output Types : ( Quotation , Order confirmation, Invoice )

Partner functions : ( Sold - to - party , Ship – to - party , Bill - to - party , Payer )

Transmission medi um : ( Printe r, Tlex , Fax , Mail , EDI )

Time (at which output is sent): ( Immediately when saving , Using standard program )

Condition master :

Prices

Surcharges & Discount

Freight

Taxes

Order to cash business process

SEE SALES ORDER MANAGEMENT DIAGRAM

Reporting and analysis tools

SIS - Sales Information System belongs to SD . With SIS , you can compress data from sales doc s. to obtain information which will help you make strategic business decisions. SIS contains standard analyses as well as flexible analyses to help you evaluate statistical data.

Lists and reports : 2 categories:

Online list (provide data from documents / display documents / allow to review and change documents)

Worklist s (display work that needs to be processed / allow to organize task s into efficient work unit)

Information structures : (where data is stored)

Characteristics

Time unit

Key figures

Standard analyses:

Helps create sophisticated presentations and analyses for the data . The analysis is based on the information structures. In the first step, you select the required data scope according to the characteristics and the period of the info structure. This data is displayed in an initial list. A variety of drill - down features are available in the lists. Each analysis can be saved. Tools to analyze data include:

ABC analyses

Correlation

Classification

Dual classification

The analyses can be:

Printed

Download as a file to your local PC

Downloaded into a spreadsheet program

Sent to one or employees using the SAP workplace component

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ERP Financials – Financials Accounting (FI)

Tasks in Financial Accounting :

The component Financial Accounting (FI) focuses on the General Ledger , the processing of receivables and Asset Accounting .

Important tasks of Financial Accounting are the recording of monetary and value flows as well as the evaluation of the inventories .

The General Ledger (GL) contains the recordings of all accounting- relevant business transactions on to G/L accounts from a business point of view. Every general ledger is structured according to a chart of accounts .

The C hart of accounts contains the definitions of all G/L accou nts of the general Ledger. These definitions basically include the account number, the G/L account designation and the categorization of the G/L account as an income statement or Balance sheet account .

Reconciliation accounts connect the subledgers to the General Ledger in real time. (transactions cannot be posted to reconciliation accounts).

The Accounts Payable Accounting (AP) records all business transactions that have to do with the relationships to suppliers . It takes much of its data from Puchasing (MM – Materials Management)

The Accounts Receivable Accounting (AR) records all business transactions that have to do with the relationships to customers . It takes much of its data from Sales & Distribution (SD) .

The Asset Accounting (AA) records all busin ess transactions that have to do with the management of assets .

The Bank Ledger (BL) supports the booking of cash flows.

GR/IR account: it’s a clearing account used to ensure that goods are received for each invoice and vice- versa.

that goods are received for each invoice and vice- versa. Integration of the G/L a ccounts

Integration of the G/L a ccounts in FI :

The General Ledger is managed at company code level and from this the Balance sheet s required by the legislator as well as the P/L statement are compiled. The assets of a company are listed in the Balance sheet , divided into:

Assets - (app lication of funds) Liabilities - (source of funds) The business transactions that are entered in MM (material stock) or in Treasury, flows into Balance sheet in real time . The component Treasury (TR) focuses on functions such as payment means, Treasury Management, loans and Market Risk Management.

The aim of recording business transactions is to create a Balance sheet and P / L Statement in the sense of a report.

Financial Accounting VS Management Accou nting :

 

Financial accounting (FI)

Management accounting (CO)

Goal

E xternal reporting purposes - legal reporting . Balance sheet and P/L accounts are created in FI with general accounting standard (US - GAAP or IAS )

I nternal management information regarding cost and revenues .

Level

Defined by law for compliance. Legal reporting will be different for each country.

Cost and Revenues at a higher level (across countries)

Integration

Additional account assignment with specification of the assignment object

Direct Relation.

Invoice verification – accounts payable and purchasing // GI to prod. Order - GL accounts

 

Organizational Levels

Company

It’s an independent accounting entity. Does not usually extend across national boundaries. It’s an independent accounting entity. You should create a C ompany Code according to tax law, commercial law, and other financial accounting criteria. Company Code is usually created based on geographic considerations. The Company Code is the smallest SAP entit y that supports a full legal set of books.

Code

 

1

There must be at least one company Code in the production environment for a business to be live. I s assigned to ONE controlling area .

Business

I nternal purposes to create Balance sheet and Profit/Lost statements F acilitate external segment reporting across CC, covering the company’s main areas of operation. Can run across many CC. You can make postings to business area from several company code s because they are generally CC independent.

Areas

|

Controlling

Identifies a self - contain ed org. structure for which Costs and Revenues can be managed and allocated . It represents a separate unit of cost accounting. One or more company codes can be assigned to a controlling area , whic h enables cross company cost accounting between the assigned company

Area

00

codes. This is only possible if company codes and controlling area use the same operating chart of account and fiscal calendar year.

same operating chart of account and fiscal calendar year . GL - General Ledger Accounting Charts

GL - General Ledger Accounting

Charts of Accounts (COA) :

C ontains the definitions ( Account #, A . name, Type of G/L account – > 1) Profit and Lost or 2) Balance sheet ) of all G L accounts .

You can define an unlimited number of charts of accounts in the system . Each GL is set up according to a chart of accounts.

E ach CC is associated with 1 chart of accounts. Chart of Accounts oo – 1 CC . If Cross Company Code controlling required, the C hart of A ccounts can be assigned to multiple company code s . This means that the GL of these company codes have identical structure.

A CC can also have a country specific chart of accounts.

G / L Account Master Record : 2 segments .

COA - C hart of accounts : high level : Account description. A. type (balance sheet or P/L) A . group, A . consolidation number .

C ompany Code : details how the CC manages every account: account ctrl., mgt, bank detai ls, interest calculation, doc. c trl, field status…

Account Groups for G/L Accounts :

Acc. groups classify G L acc . into user - defined segments. (cash , asset, material, P/L, etc). The Field Status: SUPRE SS, REQUIRED, DISPLAY, OPTIONAL, is specified in the CC seg .

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Reconciliation Accounts and Sub - Ledgers :

The R econciliation account can post only through a subledger account (not directly). This ensures real - time integration of a subledger account with the general ledger.

Benefits of the New General Ledger :

- Extended data structure : allows additional fields.

- Real time D ocument split (online split) (a single invoice can be posted to multiple segments) .

- Real time Integration ( Reconciliation ) between CO and FI .

- Parallel accounting . M ultiple books can be maintained.

- C ontains functions that unify the conventional general ledger with the special ledgers components.

Posting Key (PK) : has a controlling function for the documents item. Each document line item contains one posting key. It specifies the following:

item contains one posting key. It specifies the following: • Account Type : (Balance sheet or

Account Type : (Balance sheet or P/L)

Debit or C redit posting

Field Status: SUPRESS, REQUIRED, DISPLAY, OPTIONAL . Which fields of the line item may have or require an entry

In the new ENJOY transaction (FB50); you no longer need to enter the posting key.

Account Information :

The balance display and line item display are provides to display the account data. The balance display is an overview of the saved transaction figures of an account. From the line item list , you can drill down to the document overview .

Accounts Payable (Cuentas por pagar)

(Integration of procurement cycle (Procure - to - Pay Process) with account payable)

Vendor Master Record : contain all data about a vendor, this controls how transaction data is posted and processed.

Vendor
Vendor

Level stored

data is posted and processed. Vendor Level stored Client Specific information, such as name , address

Client

Specific information, such as name , address

Level stored

Level stored

CC Purch. Org.

how particular CC will process transactions

Specific data to purchasing

Procurement process from the accounting view - Integration with Materials Management

MM FI FI Doc Doc Doc Invoice Pay IR 2 3
MM
FI
FI
Doc
Doc
Doc
Invoice
Pay
IR
2
3
Purchase order
Purchase
order
Goods Receipt GR 103 101 Storage location 105 F Goods Q receipt X area
Goods
Receipt
GR
103
101
Storage location
105
F
Goods
Q
receipt
X
area

Balance sheet

Documents generated

MM FI CO Doc Doc Doc 1
MM
FI
CO
Doc
Doc
Doc
1

Vendor

Reconciliation

3300 3300 3 2
3300
3300
3
2
MM Doc Consumption Raw Stock Raw 300 3000 1 1
MM
Doc
Consumption Raw
Stock Raw
300
3000
1
1
Libro mayor Vendor auxiliar de Subledger proveedores 3300 3300 3 2
Libro mayor
Vendor
auxiliar de
Subledger
proveedores
3300
3300
3
2
Bank-Cash GR / IR 3300 3300 3300 3 2 1
Bank-Cash
GR / IR
3300
3300
3300
3
2
1

A Financial document is created when goods are received and when the invoice is received , but not when the purchase order is created.

Effects of Goods Receipt

Effects of Invoice Verification

Account Posting

Material document is created (quantity)

A ccounting document is created

1. Good Receipt : Debit Stock, Credit GR/IR

Accounting document is created (value)

The provision in the GR/IR clearing account are reversed

2. Invoice Receipt: Debit GR/IR, Credit Vendor

Purchasing ( Purchase Order History is updated)

PO history is updated

3. Pay Vendor: Debit Vendor, Credit Bank/Cash

Quality Management (Inspection lot is created)

Open Item is created in the vendor’s account

Warehouse M gt (Transfer Req. is created)

If the invoice $ differs from the PO $ , the stock value and the current mov. price is recalcul . and updated in the material master, for a material valuated with moving aver. $

Output may be generated (GR slip

AP Invoice / Credit Memo Entry :

You create and post a vendor invoice or credit memo using a one screen transaction . This type of invoice entered directly in A/P is a miscellaneous invoice, without reference to

a purchase order. The A/P entry screen is divided into 4 areas:

Work templa tes

Header and vendor data

Line item information

Information area

Elements of the Payment process :

The standard system contains common payment methods and corresponding forms that have been defined separately for each country. During the payment run , the system does the following:

Posts payment documents

Clears open items

Prepares data for the printing of payment media

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Accounts Receivable

(Integration between order to cash cycle and accounts receivable )

C ustomer master record : contain data that controls how transaction data is posted and processed.

Level stored Customer Client specific information, such as name address Credit control area :
Level stored
Customer
Client
specific information,
such as name address
Credit control area :

Level stored

Level stored

CC Sales area

how particular CC will process transactions

(Sales org - Dist.Ch. - Div)

Specific data: conditions and terms of payments

The organizational unit for credit control is the credit control area . Can be assigned to individual company codes (decentralized organization) or to a group of company codes (centralized organization). A credit control area is generally managed by a sepa rate credit department, which is divided into a number of credit representative groups, with each group consisting of several credit representatives.

Credit Management master r ecord :

Credit Control Area Credit Department Company Company Company
Credit Control Area
Credit
Department
Company Company
Company
Credit Represent. groups Credit Represent. groups
Credit
Represent.
groups
Credit
Represent.
groups

The credit dept . sets up a separate credit mgt master record, which is an extension of the customer master record, so that data relevant to credit management can be maintained and monitored. The credit management master record consists of the following sections :

Credit Customer Mgt Credit Control Process :
Credit
Customer
Mgt
Credit Control Process :

G eneral data (customer’s address, communication data)

Credit control area data (credit limit, customer’s risk category) Overview (which contain the most important data from all sections)

When the order is placed, a check is run ( credit control ) to see whether the customer’s credit limit would be exceeded if the order were to be accepted. If this is not the case, the sales process can be carried out the usual way.

If the credit limit is exceeded, the order is blocked , and the cred it department has to act. The responsible credit representative can either be notified automatically via mail. Or can use a report to check list of all blocked orders.

The credit representative then clarifies the situation, either by using credit informat ion system, or by calling the customer.

Once clarification has been made, the credit representative releases the order , and the transaction can be processed in SD. If the credi representative decides not to release the order, the order is rejected .

Sales Process & integration :

Warehouse Confirm Transfer Order Pick Quantity Pick Quantity TO Transfer Request Sales Delivery/ Goods Invoice/
Warehouse
Confirm
Transfer Order
Pick
Quantity
Pick Quantity
TO
Transfer Request
Sales
Delivery/
Goods
Invoice/
Receive
Inquiry
Quote
Order
Shipping
Issue
Billing
Payment
10

Inventory

Change 4000 1
Change
4000
1
Inventory 4000 1
Inventory
4000
1
Cash/Bank 10000 3
Cash/Bank
10000
3

Documents generated

MM FI CO MM FI CO-PA FI Doc Doc Doc Doc Doc Doc Doc 1
MM
FI
CO
MM
FI
CO-PA
FI
Doc
Doc
Doc
Doc
Doc
Doc
Doc
1
2
3
Customer
Customer
Revenue
Reconciliation
Sub-Ledger
10000
10000
10000
10000
10000
2
2
3
2
3
Auto

Sales

Shipping

Billing

Account Posting

Sales order (SD)

Outbound delivery (SD)

Billing document (SD)

1. Goods Issue : Credit I nventory, Debit C ost of goods sold (Inv. Change)

No document (FI)

Transfer order (picking)

Invoice (FI)

2. Billing a customer : Credit R evenue, Debit customer (Reconc+Subdledger)

Goods issue (MM) (FI)

3. incoming Payment: Credit C ustomer (Reconc+Subdledger) , Debit B ank account

On the day of shipping , an outbound delivery documents is created. At this stage the effects in accounting start to appear.

The goods to be delivered are posted as a goods issue . A GI doc is created in MM ,

When the billing document is created in SD , an FI - accounting document that debits the custome r and credits revenue is automatically creat ed so that the goods issue is posted to the correct G/L accounts. The accounting documents debits cost of goods sold and credit inventory .

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The last stage in the sales pr ocess is billing . A billing document is created in SD, and a printed invoice is sent to the customer. At the same time, a document is created in FI so that the receivable and revenue can be posted to the correct accounts. The accounting document debits the customer and credits revenue .

Incoming payments in Accounts Receivable :

revenue . Incoming payments in Accounts Receivable : The items are cleared if the customer pays

The items are cleared if the customer pays his open items to the full amount or with an authorized deduction of cash discount. If a minor payment difference exists, this can be charged off automatically. The maximum amount that constitutes a minor payment difference is defined in tolerance group settings . Any greater difference (outside of tolerance) must be dealt with manually. Partial payment : the item being short - paid does not clear. Residual item : the open invoice is cleared and a new open item (residual item) in the amount of the payment difference is created.

Fixed Asset Accounting

Assets in FI Organizational levels :

Each asset belongs to a company code and a business area . All postings made for the asset (acquisitions, retirements, depreciation, etc.) are applied in the assigned company code and business area. Additionally, you can assign the asset to various CO objects (cost center, internal order, and activity type) and logistic organizational units (for selection purposes only).

Asset class : The asset class is the main criteria for defining the asset.

ü Each asset has to be assigned to an asset class. Ex. Building: Accounts for building. Machinery: account for machinery.

ü In the asset class, you can define certain control parameters and default values for depreciation and other master data.

ü You can create asset classes for intangible assets and leased assets.

ü The application component PM (Plant Maintenance ) is used for the technical management of assets.

ü The application component TR (treasury) is used for managing financial assets.

Asset Transactions : can be posted in various ways. In FI- AA you can post the following ways:

Without a vendor or a purchase order

To a vendor, but without reference to a purchase order

Via materials management using the MM functions (purchase order, goods receipt and invoice receipt)

(purchase order, goods receipt and invoice receipt) Transaction type : is necessary to enable the as

Transaction type : is necessary to enable the as set to be correctly listed in the asset history sheet.

Asset explorer : gives a clear overview of the activity for an asset per depreciation area and fiscal year for planned value, posted transacti ons, posted amounts, posted and planned depreciation, and depreciation parameters.

and planned depreciation, and depreciation parameters. Depreciation Areas : Often asset balances and transactions
and planned depreciation, and depreciation parameters. Depreciation Areas : Often asset balances and transactions

Depreciation Areas :

Often asset balances and transactions need to be valuated differently for various purposes. To keep more than one valuation basis, depreciation areas are kept in the system.

Depreciation Run :

Only after the depreciation posting run has been completed is the depreciation actually posted in asset accounting and in the GL . The depreciation is posted to the corresponding depreciation accounts in the general ledger and to the assigned CO cost object assigned to the asset master record. The run can be in direct or batch mode.

Prepare Financial Statements

To support legal repo rting requirements , currently several reports meet country - specific requirements.

Company code financial statements

Business area financial statements

Operating chart of accounts

Country specific chart of accounts

The Financial statement version determines the structure of a Balance sheet and income statements as far as which accounts map to which line items on the report.

When a transaction is posted in FI , it automatically appears on the Balance sheet . ( The account must be assigned to an appro priate line item in the financial statement version used when running the Balance sheet . Otherwise, the posting will appear at the end of the financial statement in a category called accounts not assigned ).

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Management Accounting - Controlling - CO

Comparison of Financial and management Accounting :

Management accounting contains all the functions necessary for effective cost and revenue controlling . It covers all aspects of management controlling and includes many tools for compiling information for company management.

Financial reports used for external reporting purposes, such as Balance sheet s and P/L statements, are created in Financial Accounting according to accounting standards (GAAP/IAS).

Typical Tasks in Management Accounting :

The main components of CO - Management Accounting : are used for different tasks and types of analysis.

Classify cost and reconcile data

Cost Element Accounting : Classifies the costs and revenues posted to CO . It also enables you to reconcile costs between Mgt. Accounting and Financial Accounting (CO - FI).

Control overhead costs and allocates costs

Overhead Cost Controlling : examines the origin of costs in the functional areas of an enterprise. Overhead costs include costs that cannot be direc tly assigned to a product or service. It is often difficult to determine what caused overhead costs. Activity - Based Costing (ABC) provides you with more ways of allocating costs.

Evaluate the cost of goods or services

Product Cost Accounting is used for c osting and evaluating the cost of goods manufactured for a product and the costs associated with providing a service or when carrying out a project.

with providing a service or when carrying out a project. Analyze Profit • Profitability Analysis :
with providing a service or when carrying out a project. Analyze Profit • Profitability Analysis :

Analyze Profit

Profitability Analysis : external focus. Looks at how profitable various market segments are (product divi sions for ex. ) and how profitability has evolved over a period of time.

Analyze success of individual profit centers

Profit Center Accounting : internal focus. Looks at how individual profit centers are performing in the enterprise. It ca n be used to represent the internal market in the enterprise, particularly if multiple valuation approaches and transfer prices are used.

Flow of values within Management Accounting :

Costs incurred in one part of the enterprise are often passed on to a different part. For example, you can allocate overhead costs from administrative cost center to production cost centers. These costs are then allocated to production processes.

Integration with other SAP ERP Applications :

Financial Accounting (FI) is a primary source of data for Management Accounting. Most expense in the general ledger result in a cost posting in Management Accounting. These expense postings to the G eneral ledger can be journal postings, vendor invoices, or depreciation postings fr om Asset Management . Sales Order Management ( SD) is a primary source for revenue postings from billing documents to revenue postings in Profitability Analyses (CO- PA), and Profit Center Accounting (PCA).

Human Capital Management (HCM) can generate cost pos tings in Management Accounting. HCM offers you the opportunity to allocate labor costs to various controlling objects. In addition, planned personnel costs can be transferred and used for Management Accounting planning.

In Materials Management (MM) , a good s issue transaction can create a cost posting in Management Accounting to whichever cost object is specified. Product cost estimates created in Management Accounting can update price fields in material master records. Finally, the creation of purchase orders in Materials Management can generate commitment postings within Management Accounting.

The Manufacturing area of Logistics also works closely with Management Accounting. BOM and routings, created in Manufacturing, can be used in Product Cost Accounting.

 

Organizational Levels

Controlling Area

 

I s the basic organizational unit in CO - Management Accounting.

(

CO - OM/CO - PC/EC - PCA)

I s a closed entity used for cost accounting . You can allocate costs only within a controlling area. These allocations cannot affect objects in other controlling areas. Multiple Assignments: You can assign more tha n one CC to a controlling area . This enables controlling across company codes. The contro lling area and its company code must use the same operating chart of acc ounts and the same fiscal year .

 

oo

Operating Concern (CO - PA)

|

R epresents the structure of external segments for the enterprise. You can assign several controlling areas to each operating concern so you can analyze them together. Profitability analysis (CO - PA) is used with Operating Concern.

Company Code

oo

1

I s an independent accounting unit. Financial and P/L statements are prepared at company code level to meet legal reporting requirements.

 

Business Areas

|

 

C an be used to group strategic business units for reporting P/ L and financial statements (not suitable for auditing, suitable for reporting purposes only). Business areas can also be cross - company code .

Plant (MM/PP)

   

R epresents a production unit and is the central organizational unit in Materials Management and Production Planning .

1

A Plant is assigned to a company code .

Purchasing Organ. (MM - PP)

 

I s an organizational unit used Materials Management – Purchasing .

Sales Organ. (SD)

 

I s an o rganizational unit used in Sales Order Management .

In cross - company code cost accounting , the contro lling area and the company code can have different currencies . You can use 3 currencies in CO :

Controlling area currency

Company Code currency or object currency (by default)

Transaction currency (used for posting a document to Management Accounting)

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Cost Center Accounting

G/L Accounts and Costs Elements :

As we know the chart of accounts is created in FI . All expense accounts are groups in one class ( class 4) and all revenue accounts in another (class 8) Expense accounts to which costs are posted for cost accounting purposes must also be created as cost elements in CO - Management Accounting . This ensures that all postings to this type of expense account

always arrive in CO at the same time.

Primary cost elements : (material cost, personnel cost, energy cost) g ive a direct, one to one, correspondence with GL account in FI…to allow costs to flow.

Secondary cost elements : (production costs, material overheads, production overheads) are created only in CO and are used for internal cost allocations , overhead calculation, settlement transaction and do not have any corresponding G L account in FI ….it does not flow to FI…

FI •  Expense accounts - class 4 •  Revenu accounts - class 8
FI
•  Expense accounts - class 4
•  Revenu accounts - class 8

CO

CO

  Primary cost element Primary cost element

  Revenu element Revenu element

Standard hierarchy represents all Cost Centers per Controlling Area: Only 1 standard hierarchy . The cost center is an organizational unit in a C ontrolling area representing a clearly delimited location where costs occur. Cost Center Accounting answers the question of where costs occur . ABC - Activity - based Costing answers the question of why (for what purpose) costs occur . Cost centers can be defined according to several different design approaches (Ex: low level unit that has responsibility for managing costs / geographic location / activities or services provided ) , b ut whichever approach is selected, it should be consistent throughout the enterprise.

Activity Types:

C lassifies the activities performed or produced by a cost center (ex . Machine Hour Rate). The costs of these resources need to be allocated to the receivers of the activity. Activity types serve as tracing factors for this cost allocation. Activity Document: Activity type , Q . ( ex. Consulting, 10 hs) Relationship between Cost Center/Activity Type : In an internal direct activity allocation , you need to enter

Activity type

Cost center

Quantity

Unit $ ( is calculated based on the $ of the activity + Q)

and generates a debit to the receiver and a credit to the sender for both the quantity and costs . Internal activity is allocated using secondary cost elements , which are store in the master data types as default values.

You can restrict the use of the activity type to certain types of cost centers by entering the allowed cost center categories in the activity type master record. You can e nter up to eight allowed cost center categories in the activity type master record, or leave the assignments “unrestricted” by entering an asterisk (*).

Statistical Key Figures :

Are a measurable quantity that ca n be assigned to Cost Centers, A ctivity types, Overhead Orders, Business Processes, and Profit Centers. (EX: total number of employees in a cost center, minutes of long distance calls…) You can use statistical key figures for cost allocation as a Tracing Factor in overhead cost allocations . Type s:

F ixed value is useful for statistical key figures that tend to remain constant over time (EX: number of employee)

T otals value must be entered for each individual period and is useful for values that tend to change each period (EX: Kilowatt hour of ele ctricity consumption). You can also transfer statistical key figures values from the Logistics Information System (LIS) by linking key figures from LIS with SKF’s in CO.

Master Data Groups :

When you use master data groups in reporting, each hierarchical level can produce automatic totals of the levels beneath it. The value (cost center, cost element, activity type, etc . ) is represented only once in the group. Each value can be used in more than one group. Each controlling area must have a unique standard hierarchy. The name of a master data group has to be unique for a client - CC, even if there are to CC for a Client (=>2 name s)

Cost Center Planning Process :

Imputs: Manual entries, formulas, HCM - Assests ? Steps: SOP, Production planning, Cost center planning, Product cost plann.

Prod / COST CENTER PLANNING PROCESS Product Group Sales Info CO-PA Syst Sales Sales vs
Prod /
COST CENTER PLANNING PROCESS
Product
Group
Sales Info
CO-PA
Syst
Sales
Sales
vs
Plan
Plan
Assets
HR
Forecast
Plan Quant
Additional Resources
Obtained or Sales
Plan changed
Accounting
Non
Planned
Planned
SOP
personnel costs,
values
Plan can
Scheduled
Cost Center
Sales & Operation
depreciation
Yes
vs
be met?
Activity
Requirements
(created in SOP)
Activities
Planning
Planning
Production
Product
Plan Activity
Cost
Plan Activity
Cost
Resources
Cost
Quantities
Planning
prices
Center
Planning
Additional
Internal
activity
Orders
planning
Routing
BOM
Overhead
Cost
Controlling

Planned values (such as planned personnel costs and planned depreciation) can also be transferred automatically to the Cost Centers from HR and Assets Accounting (FI - AA) . Both fixed and variable costs can be planned for each area of responsibility (Cost Center).

It is the aim of Cost Center Planning to calculate planning costs to define

deviations later and to prepare the allocation to cost bearers . The activity type planning is an important step in Cost Center Planning, as the planned activity amounts c an influence planned costs .

In the Sales Information System ( SIS ), the comp any can plan sales quantities for

a product or product group level for the following year. Similarly, sales quantity

planning can be accomplished in Profitability Analysis . The sal es plans can be compared with one another so that a single forecast can be transferred to SOP .

A capacity - based comparison of plan quantities with production resources then

takes place in SOP. If the plan cannot be met, additional resources must be obtaine d or the sales plan must be changed.

The activity requirements can then be created in SOP or Long Term Requirements (LTP) and transferred as scheduled activities to cost center planning .

In cost center planning , the plan activity quantities are created on the basis of scheduled quantities from SOP. Cost planning is performed for cost centers and internal orders, as well as

additional activity planning for Overhead Cost Controlling . Planned costs from HR and Asse ts can be transferred to cost center planning. Plan activity prices are then calculated. The calculated plan activity prices go to Product Cost Planning , which estimates the production costs of the planned products by using BOM and R outings . The costs of goods manufactured that were calculated on the basis of the sales plan are then transferred to CO - PA . These costs are used, alongside the forecasted revenues, to create a profit plan. You can use the results of this plan to make adjustments to the original sales plan, which then initiate the complete integrated planning process again.

Activity allocation

Posting from FI to a Cost Center : Activity allocation

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When a journal entry is created in FI that includes an expense line item , that expense can be posted to CO as a cost if:

ü A primary cost element has been created in CO that corresponds to the expense account used in the FI journal entry.

ü A valid controlling object (such as cost cente r) is referenced in the FI line item.

As a re sult is created (e ach document has a unique document number ):

1 FI document

1 CO document .

When an FI documents is cr eated that posts to an expense or revenue account

ü H aving a corresponding cost element,

ü A valid controlling object (such as cost center) is referenced for the expense line item,

As a result is created:

1 CO document . This CO document has its own unique number and contains the following details:

Controlling object posted to

C ost element used

Amount

When a primary cost is initially posted to in CO , it is treated as a one - sided journal entry , unlike a conventional, balanced financial accounting journal entry. Any transactions that create cost movements within Management Accounting are balanced entries . When a cost is moved from one controlling object to another, such as from one cost center to another, the sending object is credited and the receiving object is debited for the same amount.

Posting from MM to a Cost Center :

Goods issue for material consumption transactions posted in the MM can be assigned to a cost center . Also, you must enter a movement type to differentiate between the various categories of goods movements. As a result is created:

1 FI document that debits materia l consumption account and credits material stock (inventory) account .

The cost center is debited with the value of the goods issued using a primary cost element.

Direct activity Allocation : D eals with the measurement, posting, and allocation of an organ izational activity. You need to create the corresponding (measurable) tracing factors, known as activity types in Cost Center Accounting. For a direct activity allocation, the following info is needed:

S ender cost center – credited ( Cost cen ter that provides the activity ( using secon dary cost element )

R eceiver – debited ( Obj ect that receives the activity ( using secondary cost element )

A ctivity type

Q uantity of the activity provided.

A ctivity type • Q uantity of the activity provided. Periodic Allocations with sender/receiver relationships

Periodic Allocations with sender/receiver relationships techniques ( examples ):

Periodic Reposting (use original cost element )

Distribution (use original cost element )

Assessment (use secondary cost element)

Indirect Activity Allocation

Template Allocation

Internal Order

I s a cost collector that allows a better view of costs that could not be ite mized in detail in a cost center. Useful for planning, monitoring, alloc. of costs and reporting.

4 types/ categories :

Overhead orders : used to monitor overhead costs incurred for a particular purpose, such as conducting a trade fair, or tracking costs for mainten . and repair work.

Investment orders : used to monitor costs incurred in the production of a fixed asset, such as building a storage facility.

Accrual orders : used to offset postings of accrued costs ( costs calculated in CO) to cost centers.

Orders with revenue : used to replace the cost accounting parts of SD customer orders if SD is not being used, so that both costs and revenues ca n be tracked; or to monitor revenues not affecting the organization’s c ore business (miscellaneous revenue) .

Internal Orders - C ost Planning :

Costs are normally planned for orders that have a long life cycle . Orders with a short life cycle, such as for unexpected small repairs, are normally not planned.

3 options /ways for planning cost on internal orders:

Overall Planning : is the simplest level for planning order costs. You can plan overall values and annual values irrespective of the cost elements.

Primary/secondary cost and revenue planning :

can be used if you have deta iled information about an internal order. For manual planning purposes, primary/secondary

cost and revenue planning comprises the planning of primary costs, activity inputs, and revenues.

Unit costing : can be used to carry out more detailed planning than i s possible on costs elements.

Posting to an Internal Order : can be real or statistical (information postings only ) .

Commitments (future costs) :

I dentifies costs which be incurred in the future for materials and services requested or ordered. By recording commitments, as well as actual costs, you can compare the funds you have allocated to your planned or budgeted costs to determine funds availability.

A re created in the Purchasing function of Materials Management .

I s recorded automatically when you assign an overhead order to a purchase order.

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You reduce the commitment by posting a goods receipt against a purchase order. Actual costs are posted to the internal order. This process continues until the purchase order is closed and the commitment is reduced to zero.

You must have activated commitment management in Management Accounting for each controlling area .

Order Settlement :

Internal orders are usually used as an interim collector of costs and an aid to the planning, monitoring, and reporting processes. Whe n the task is complete, the costs have to be passed on to their final destination (cost center, fixed asset, profitability segment, etc . ). This is called “settlement”. It is another form of periodic cost allocation. Settlement can occur periodically , or at the end of the order’s life , depending on the type of order and its business purpose.

A settlement rule must be defined for each order. This rule is defined in the order master record.

Profit Center Accounting – internal focus

(EC - PCA) Profit Center Accounting

Measure profitability of areas of responsibility within the organization. reflects the success of a given profit center at meeting the profitability goal for which it was given responsibility.

I nternal controlling purposes .

Compar ison : If you divide your enterprise into profit centers, you can analyze the areas of responsibility and delegate responsibility to distributed units, which then become companies within the company.

Typical questions in Profit Center A ccounting: What is the ope rating profit of a profit center? Which fixed asset value is assigned to a profit center?

P rofit centers set up according to:

Products (product lines, division)

Geographical factors (regions, offices, or production sites)

Functions (production , sales)

Profit C enters are not real account assignment objects

CO linked to Profit Centers:

Controlling objects master data contain a profit center field. This is the link to debits and credits posted to those contro lling objects

Profit Centers Planning

Is an int egral part of overall business planning. 2 steps:

1. Transfer of planning data from cost centers, internal orders, CO- PA, product cost planning.

2. Modification of these planning data directly in the profit centers.

Profitability Analysis (CO - PA) – externa l focus

You can use Profitability Analysis (CO - PA) to analyze the profitability of segments in your external market. These segments can be defined by product, customer, geographical area, or other characteristics, and by your internal organizational units, for example: Company Code, Business Area. The aim of Profitability Analysis is to provide the board of directors, SD , marketing, planning, and other groups in your organization with market- oriented decision support.

Typical questions in CO - PA : How success ful was the last marketing campaign for a certain product line? Who are the largest customers an d who has the strongest growth? What effect does a price determination strategy have on a customer group?

Profitability Segment ( the affected market segment ) :

Is the combination of :

Characteristics : answer the question: “about wh at aspect do I want to report?” EX: divisions, regions, products, customers.

Characteristics values : are the key figures, answer the question: “what values can I have for the characteristics?” EX: Region south , Region north.

Value field : provide a view of a segment of the business. A nswer the question: “which key figures do I want to track and analyze?” EX: gross sales , discounts, cost of sales.

Product Cost Accou nting /controlling (CO - PC)

I t’ s concerned with all aspects of planning the cost of producing products or services, as well as tracking and analyzing the actual costs. 3 step process :

1. Product Cost Planning : used to estimate the costs to produce goods or services. - If a quantity structure (BOM and R outing) is available in Manufacturing Planning, then the system can automatically create a cost estimate based on this data. - If no quantity structure is available, then you can either enter the costing items manually with the unit costing tool or transfer them automatically from a non - SAP system using batch input.

2. Costs Object Controlling : collects costs incurred during production of a product or service using cost objects (such as production orders, sales or ders, process orders, production cost collectors). It focuses on simultaneous costing and the period - end closing, in order to compare planned and actual costs.

3. Actual Costing and Material Ledger : provides actual costs for each material at the end of the p eriod.

When you create a cost estimate with a quantity structure, you must enter

costing variant

material

plant

lot size

a cost estimate with a quantity structure, you must enter • costing variant • material •

The dates proposed from the costing variant specify the following:

The period of validity of the cost estimate (costing date from/to)

The selection date for the BOM and r outing (quantity structure dates)

The pricing data for the material components and activities (valuation date)

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The costing results can be saved and displayed as

Itemizations : (shows detail detailed information about the origin of the costs, such as quantities and prices of the materials and internal activities used).

Cost element itemizations : (groups the individual costing items into cost elements)

Cost component split : (groups the cost elements into cost components

Cost Rollup in Product cost Planning :

I t’ s used to ensure that the costs of goods manufactured, material and production costs, of all materials in a multilevel BOM are included in the cost estimate of the higher- level material. This is achieved by assigning the costs in a cost estimate to cost component.

Standard Price Update : 3 steps

1. Analyze the costs

2. Marking

3. Releasing

Effects of Marking and releasing a standard cost estimate

Standard prices in material master is updated .

I nventory is revaluated.

The following prerequisites must be met before a standard cost estimate can be marked or released:

Standard cost estimate must be free of errors (status KA, costed without errors)

The marking and release must be allowed

When you release the standard cost estimate, these future prices are updated as the current standard price. You can release a standard cost estimate only once per period, unless you delete the previously released standard cost estimate from the database. The standard or movin g average prices used to valuate inventory is determinate in the Price control setting in material master.

Material Master: prices:

Planned Prices 1, 2, 3 : can be used for raw materials and purchased parts, and to valuate the materials in the cost estimate .

Tax based and commercial prices : are entered for purchased parts in inventory costing for values such as the determination of lowest value. An inventory cost estimate can use these prices for valuation, and then update the costing results for finished and semi finished products in these fields.

Price control : indicator that controls which price is used to valuate the inventory of a material. The following option are available:

o

Standard price

o

Moving average price

These prices are used to valuate goods movements within SAP ERP and to valuate inventories . A standard cost estimate can be used to update the standard price . You can branch from the accounting and costing views to the results of standard cost estimates these results update the standard price.

Integration: S tandard Price and St andar d Cost Estimate :

Price control plays a crucial role in material valuation . When the price control indicator is set to S , the inventory is valuated at standard price. In addition, goods movements are valuated directly in the System using a price selected in accordance with the price control indicator .

If the standard price was updated by a standard cost estimate , it can be used in Cost Object Controlling .

The system can use the itemization of stan dard cost estimates to determine the target costs for manufacturing orders. The difference between target cost and actual cost can be analyzed at the level of variance categories, such as quantity or price variances. The saved itemization provides the basi s for the variance calculation.

In Profitability Analysis , you can use standard cost estimates (or other material cost estimates) to compare the revenues of the billed quantity with the cost component split of

the product.

A standard price is also required in the Material Ledger to determine the actual price.

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Inventory and Warehouse Management / Stock Transfer and Transfer Posting

Goods Receipt : is a goods mov ement in which the receipt of goods from both an external vendor and from production is posted. A GR leads to an increase of warehouse stock .

Good issue : is a goods movement in which a material withdrawal, goods issue, material consumption, or goods shipment i s posted to a customer. A goods issue leads to a decrease of warehouse stock .

A stock transfer/transfer posting consists of goods issue from the issuing point and a goods receipt at the receiving point. Stock transfer : is a removal of materials from a particular storage location into another storage location , within the same plant and between two plants . With stock transfer there is always a physical movement of goods . ( 1 and 2 step procedures possible). Example: Stor. Loc to stor. Loc , Plant to P lant , Company Code to Company C ode

Transfer posting : results in a change in the stock ID number or the stock category of a material. Transfer postings need not involve an actual physical goods movement . (Additional material movement is possible). Example: Stock to stock (quality inspection to unrestricted use) , Material to material , Consignment to warehouse

use) , Material to material , Consignment to warehouse 1 and 2 steps Stock Transfer Procedures
use) , Material to material , Consignment to warehouse 1 and 2 steps Stock Transfer Procedures
use) , Material to material , Consignment to warehouse 1 and 2 steps Stock Transfer Procedures
use) , Material to material , Consignment to warehouse 1 and 2 steps Stock Transfer Procedures

1 and 2 steps Stock Transfer Procedures

to warehouse 1 and 2 steps Stock Transfer Procedures   Same Plant stock transfer Storage Loc.
to warehouse 1 and 2 steps Stock Transfer Procedures   Same Plant stock transfer Storage Loc.
 

Same Plant stock transfer

Storage Loc.

It’s carried out within the same plant. A dvantage : you enter a single transaction in the system. Docs generated:

 

to

Storage Loc

stock transfer

1

MM material doc, containing 2 items for each item entered. 1 item for the removal (goods issue); 1 item for the placement (goods receipt).

1

step

No FI accounting document because the transferred material is managed in the same plant, and therefore has the same posting data. There is an accounting document if the material is split - valuated and the valuation type changes in the course of the transfer.

procedure

Storage Loc.

Advantage: e nables to monitor stocks that are in the process of transferring from one place to another. Once the goods issue is posted from the issuing point, the quantity is booked out. T he stock is regarded as in transfer at the receiving point In the case of stock transfer between two plants , the two step procedure is necessary if users have authorizatio ns only for their own plant in each case. At the time of physical inventory , you should not have any stocks in transfer because you cannot inventory such stocks. Restriction: only transfer material from (F) unrestricted use stock at the issuing location to (F) unrestricted use stock at the receiving storage location.

to

Storage Loc

stock transfer

2

steps

Docs generated:

 

procedure

2

MM material docs : 1 at the time of goods issue (removal from storage), and the 2 at the time of goods receipt (placement in storage).

 

No FI accounting document . There is not valuation.

 
 

Cross - plant stock trans fer (plant to plant in the same CC or d iff CC)

 
 

The

plants between which material is transferred can belong either to the same CC or to diff. ones .

1 step procedure

2 steps procedure

Can

only be booked out of (F) unrestricted use stock .

1 MM material doc,

2 MM material

Docs generated (also affects MRP)

containing 2 items (GR - GI)

When removing the material from storage, you must specify:

Plant to Plant

MM

-- >

1

FI (if the 2 plants are assigned to a diff. valuation areas).

 

- the material

-

Update in the stock accounts.

- the receiving plant,

The stock transfer is valuated at the valuation price of the material in the issuing plant (no valuation if the 2 plants are assigned to the same valuation area)

-

- the issuing organiz. l evel

Valuation takes place at the time of the first step.

 

Docs generated:

 

CC to CC

2

MM

 

2

FI: one for each CC.

 

Stock T ransport O rder : A stock transfer using a stock transport order has the following advantages compared with a stock transfer without a stock transport order:

Integration with MRP

Can plan GR for shipping and receiving

Can manage transportation and freight (delivery cost/ carrier )

Can post (GR) to C onsumption

C an receive goods into all stock types (F,Q , X)

Can monitor transport with PO history

The following statements are correct :

A stock transfer between storage locations is not relevant to accounting

You can enter stock transfers using the transaction MIGO

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Logistic Execution (LE) the link between procurement and distribution

(LE) the link between procurement and distribution Transfer order : is the document with which all
(LE) the link between procurement and distribution Transfer order : is the document with which all

Transfer order : is the document with which all material movements in the warehouse are executed. In Logistics Execution, there are 2 ways of modeling GR and GI: you can create either a delivery or an inventory management posting (generally with reference to a preceding document) at the beginning of the process. The following overview shows the document flow and the posting process for each of these methods:

If deliveries are used, the warehouse management activities (creat ing and confirming a transfer order) are completed before the inventory management posting. This posting always refers to the delivery.

The terms “shipping” or “shipping process” are often used in conjunction with deliveries. These actually only describe outbound goods movements, the original delivery process that relates to an order. Shipping is also the name given to the department responsible for the logistical process of delivery handling (picking, packing, loading). Since the delivery document can als o be used in other areas, we refer to deliveries related to sales documents as outbound deliveries.

   

Organizational Levels in LE

Client

Highest organizational element) (defined in the system by a 3 digit key

oo

Company Code