CHAPTER 5 OSAMA MEHMOOD ALI1 ERP MODULES Alexis Leon.

CHAPTER 5

OSAMA MEHMOOD ALI 1

ERP MODULESAlexis Leon

ERP MODULES

Finance Manufacturing and Production Planning Sales and Distribution Plant Maintenance Quality Management Materials Management

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Financial Module Financial Accounting (General Ledger, Accounts Receivable,

Accounts Payable, Fixed Assets) Investement Management (Investment

Planning/Budgeting/Controlling, Depreciation Forecast/Simulation/Calculation)

Controlling (Overhead Cost Controlling, Activity Based Costing, Product Cost Accounting, Profitability Analysis)

Treasury (Cash Management, Treasury Management, Market Risk Management, Funds Management)

Enterprise Controlling (Executive Information System, Business Planning and Budgeting, Profit Center Accounting)

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FINANCIAL ACCOUNTING → General Ledger General LedgerGeneral Ledger produces the enterprise’s financial statements including the Balance Sheet, which shows the

enterprise’s assets, liabilities and equity at a point in time, the Income Statement, which shows the enterprise’s income, expenses and net profit over a period of time, the Cash Flow Statement which shows sources and applications of cash, and associated financial reports such as the Trial Balance. The rest of the reports are there to track the numbers on the financial statements back to individual transactions. Most businesses prepare monthly statements. Every ERP package has a General Ledger module.

General Ledger is unusual in that it receives transactions from many other modules. There are two ways to accomplish this: Detail and Summarized. In the detail method, every invoice, check, or other such transaction creates a separate General Ledger transaction. The advantage of this is that the General Ledger is continuously updated in real time so the entire set of ERP tables is in sync. The disadvantage is that there are large numbers of transactions. In the summarized method, transactions are accumulated for some period (typically a day) and posted in summary. Instead of many small transactions, there is a few big ones. The advantage is that there are far fewer transactions. The disadvantage is that the General Ledger is out of sync with the rest of the ERP until the data is posted.

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General Ledger has the following functions: Maintain Chart of Accounts Maintain Budgets Maintain Recurring Transactions Print Financial Statements Print Trial Balance Allocate Transactions Consolidate Transactions Periodic Processing Maintain Module Information

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FINANCIAL ACCOUNTING → General Ledger

Every enterprise purchases goods, services, assets, or office supplies from its suppliers (also known as vendors). Accounts Payable pays these suppliers on time (taking advantage of payment discounts if possible) while avoiding duplicate payments and bank over-drafts. Accounts Payable is the last step in the supply chain where Purchasing is the first. Accounts Payable accepts invoices, selects invoices to be paid, generates checks and forecasts future cash requirements based on due dates. Some AP checks are issued to people or organizations that are not worth putting on file since they are likely to receive only one check. Some enterprises prepay part of the invoice amount because the supplier requires a deposit. Every ERP has an Accounts Payable module.

Transactions

The first transaction records a supplier invoice. This can be verified against the related purchase order if there is one and the receiving report that lists what goods were actually received. Not every enterprise uses the last two options.

The second transaction pays supplier invoice(s). Each check can pay one or more supplier invoices. Invoices must be approved for payment before they can be paid.

The vast majority of the module's transactions consist of the above two. The third fundamental transaction is that of adjustment when things go wrong.

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FINANCIAL ACCOUNTING → Accounts Payable

Every business sells products and/or services to its customers. Order Entry creates invoices when a customer orders something and Accounts Receivable keeps track of what payments have been made to which invoices. Commonly, it also prepares a report ("Aged Analysis") which shows how long each invoice has been outstanding. Every ERP has an Accounts Receivable module.

Collection

If Accounts Receivable invoices become overdue, Collection initiates processes to collect the money. Usually this means a telephone call followed by a series of dunning letters of increasing severity. If these efforts fail, Legal may become involved or the invoice may be written off, or sold to a collection agency for a fraction of its face value. As part of CRM, details of each contact with the customer including date, employee, contact person, and activity are stored in Customer.

Transactions

The first transaction records an invoice. This is done by Order Entry/Invoicing rather than Accounts Receivable.

The second transaction records a customer payment. One customer payment can pay one or more invoices. Payment can be in cash, by debit card, credit card, or check. Somethimes payments are received without information about what invoices are being paid.

The vast majority of the module's transactions consist of the above two. The third fundamental transaction is that of adjustment when things go wrong. OSAMA MEHMOOD ALI 7

FINANCIAL ACCOUNTING → Accounts Receivable

A "fixed asset" is something the enterprise has purchased that has a useful life of more than one year. Fixed Assets keeps track of all these objects and allocates part of their purchase price to each year of their life. There are a variety of ways in which this allocation can be done. For some assets, the allocation or "depreciation" is specified by law. Not all ERP packages have a Fixed Assets module.

Fixed Assets has the following functions:

* Maintain Asset Information

* Enter Transactions

* Generate Depreciation

* Maintain Module Information

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FINANCIAL ACCOUNTING → Asset Accounting

FINANCIAL MODULE-INVESTMENT MANAGEMENT (Investment Planning/Budgeting/Controlling, Depreciation

Forecast/Simulation/Calculation)

Every enterprise has a reserve of funds. As the enterprise grows larger, the total reserve becomes larger and larger. Eventually, it is large enough that it is prudent for the enterprise to invest part of it to gain a higher rate of return than would be possible in a checking account. These investments include GICs, mutual funds, stocks, bonds, and other investment options. Investment Manager keeps track of these investments. Only large ERP packages have an Investment Manager module.

Investment Manager has the following functions: * Maintain Investment Information * Enter Transactions * Print Investment Summary * Maintain Module Information

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FINANCIAL MODULE - CONTROLLING (Overhead Cost Controlling, Activity Based Costing)

Controlling The controlling system gathers the functions

required for effective internal cost accounting. lt offers a versatile information system, with standard reports and analysis paths for the most common questions. In addition, there are features for creating custom reports to supplement standard reports.

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Overhead Cost Controlling Many organizations erience a signin t increase in the percentage of indirect

costs, which cannot be directly assigned to either the products manufactured, or to the services rendered. While cost monitoring and optimisation may be quite advanced in production areas, transparency is often lacking in overhead cost areas. The Overhead Cost Controlling sub system focuses on monitoring and allocation of overheads.

Cost Centre Accounting Cost centre accounting analyses where overheads occur within the

organization. Costs are assigned to the sub-areas of the organization where they originated. The system offers a wide variety of methods for allocating posted amounts and quantities. In particular, activity accounting permits, the allocation of great many costs to products, based on cost sources and enabling assignments, which were not previously possible.


Overhead Orders

Overhead orders subsystem collects and analyses costs, based on individual internal measures. This system can monitor and automatically check budgets assigned to each measure. Product Cost Controlling

Product Cost Controlling module determines, the costs arising from manufacturing a product, or providing a service. Plan and standard values, serve in valuating warehouse stock and for contrasting revenues received with costs. In addition, the values in Product Cost Controlling. are crucial for determining the lowest price limit for which a product is profitable. Simulations illustrate the effects of changes in production methods on the cost of goods manufactured.


FINANCIAL MODULE - CONTROLLING (Overhead Cost Controlling, Activity Based

Costing,

Activity-Based Costing

The goals of the entire organization, should come before the goals of individual departments, when it comes to business process reengineering. The Activity-Based Costing module, is a response to the growing need for monitoring and controlling cross-departmental business processes. in addition to functions and products. Seeing costs from a new perspective, substantially enhances organizational transparency in overhead areas. The system automatically determines the utilisation of business processes by products, customers, and other cost objects based on the cost drivers taken from the integrated accounting environment. This, signiiicantly reduces the effort involved in maintaining a business process model in a separate system.

Profitability Analysis

Profitability analysis subsystem examines the sources of returns. As part of sales controlling, Profitability Analysis is the last step in cost-based settlement, where revenues are assigned to costs according to the market segment. You can dehne any market segment-distinguishing, for example, between products, customers, orders, sales organizations, distribution channels and business areas-and evaluate it, according to contribution and revenue margins. information from Profitability Analysis, frames important decisions in areas such as determining prices, selecting customers, developing conditions and choosing distribution channels.


Cost Object Controlling

Cost object controlling helps you monitor manufacturing orders. Integration with the logistics components results in a logistical quantity flow, that provides instant information on actual cost object costs, allowing ongoing costing calculations at any time. Follow-up calculations determine and analyse the variances between actual manufacturing costs, and the plan costs resulting from Product Cost Planning.

FINANCIAL MODULETreasury (Cash Management, Treasury Management)

Cash Management

To anlyse financial transactions for a give period. It also records future developments for purposes of financial budgeting.

Treasury Management

It offers functions for managing financial deals and positions, from trading to transferring data to Financial Accounting.


Market Risk Management

It acts as an integrated central risk control station with monitoring and management functions.s

Funds Management

It supports Funds Management Process from budgeting all the way through to payments, including monitoring expenditures, activities, resources and revenues.


FINANCIAL MODULETreasury (Market Risk Management, Funds

Management)

FINANCIAL MODULEEnterprise Controlling

(Executive Informaiton Systems, Business Planning and Budgeting, and Profit Center Accounting)

Executive Information SystemsIt integrates data from Financial Components, other ERP Components, and

non-ERP data sources both inside and outside the enterprise. Business Planning and BudgetingIt supports Business Units and Groups in the calculation of business targets,

such as return on investment. It also supports central investment planning, budget release and tracking.

Profit Center AccountingAll business transactions in Financial Accounting, Material Management,

Asset Management, and Sales / Distribution, which affect profits, are automatically reflected in Profit Center Accounting


SALES AND DISTRBUTION


MAIN MODULES

1. Master Data Management

2. Order Management

3. Warehouse Management

4. Shipping

5. Billing

6. Pricing

7. Sales Support

8. Transportation

9. Foreign Trade


SALES AND DISTRBUTION

SALES AND DISTRBUTION – Master Data Management

Master Data1. Trading Community Architecture Customer, Supplier, Employee2. Products3. Salespersons4. Sales Territory


SALES AND DISTRBUTION – Order Management – Sales Order Management


SALES AND DISTRBUTION – Order Management – Purchase Order Management


SALES AND DISTRBUTION – Warehouse Management


1. Inventory Planning

2. Inventory Handling

3. Inventory Location, Assignment

4. Inventory Reporting

5. Inventory Analysis

6. Lot Control

7. Distribution Data Collection

SALES AND DISTRBUTION – Shipping


SALES AND DISTRBUTION – Billing


1. Invoice

2. Debit and Credit Memo

3. Proforma Invoices

4. Rebates

SALES AND DISTRBUTION – Pricing


1. Price Quotations

2. Discounts (Quantity, Payment Terms etc.)

SALES AND DISTRBUTION – Sales & Support


1. Price Quotations

2. Discounts (Quantity, Payment Terms etc.)

SALES AND DISTRBUTION – Transportation


1. Inward & Outward Movement of Goods

2. Transportation Planning and Processing

MANUFACTURING


MANUFACTURING Material and Capacity Planning


1. Material2. Labor Resources3. Plant & Machinery

MANUFACTURING Shop Floor Control


1. Shop Orders2. Work Orders3. Backward and Forward Scheduling

MANUFACTURING Quality Management


1. Shop Orders

2. Work Orders

3. Backward and Forward Scheduling

MANUFACTURING Cost Management


1. Costing Methods a) Weighted Average b) Standard c) LIFO d) FIFO

2. Product Cost

MANUFACTURING Serialization/Lot Control


1. Lot Control / Batches

2. Serialization / LPN (License Plate Number)

HUMAN RESOURCES


1. Personnel Management (HR Master Data, Personnel Administration, Recruitment, Travel Management, Benefits administration, Salary administration)

2. Organizational Management (Organizational Structure, Staffing Schedules, Job Descriptions, Planning Scenarios, Personnel Cost Planning)

3. Payroll Accounting (Gross / net Accounting, History Function, Multi-Currency Capability, International Solutions)

4. Time Management (Shift Planning, Work Schedules, Time Recording, Absence Determination)

5. Personnel Development (Career and Succession Planning, Profile Comparisons, Qualifications Assessments, Additional Training Determination, Training and Event Management)

HUMAN RESOURCES Personnel Management


Personnel Administration* Shared Employee Information

HR Master Data: Core HR Dataa) Jobb) Positionc) Graded) Employee Master Information

Recruitment* Automated Hiring Process (Manage Open Positions, Applicant Screening,

Selection, Hiring, Correspondence, Reporting, and Cost Analysis)* eHiring

Travel Management: Travel Approval to Travel Expense Report

Benefits administration: Define Benefits, Enroll Employees, Cost/Benefit Simulations

Salary administration: Salary Review Process, Manpower Costing

HUMAN RESOURCES Organizational Management


* Graphical Organization Charts

* Staffing Schedules by headcount, percentage, and working hours

* Work Center Descriptions

* Job Tasks and Description

HUMAN RESOURCES Payroll Accounting


* Centralized / Decentralized Payroll

* Apply Business Rules

* Country Specific Payroll (Language, Currency, and Regulatory Requirements)

HUMAN RESOURCES Time Management


* Attendance System

* Leave System

* Overtime/Late Sitting System

* Shift Planning (Manage Staff Shortage and Excess)

HUMAN RESOURCES Personnel Development


* Comparison of Qualification and Profile

* Training Need Analysis

* Training Schedules

PLANT MAINTENANCE


* Preventive Maintenance Control

* Equipment Tracking

* Component Tracking

* Plant Maintenance Calibration Tracking

* Plant Maintenance Warranty Claims Tracking

PLANT MAINTENANCEPreventive Maintenance Control


Planning, Scheduling, and Control of facilities and Equipment

Monitoring by:

a) Hours of Operation

b) Units of Production Produced

c) Gallons of Fuel Consumed

d) Number of Days in operation since the last service level

PLANT MAINTENANCEEquipment & Component Tracking


Acquisition and Utilization History

Asset Management

Identification of Chronic Problems

PLANT MAINTENANCEPlant Maintenance Warranty Claims Tracking


* Establish Type and Length of Warranty

* History of Warranty Maintenance

QUALITY MANAGEMENT


1. Quality Planning (Management of basic data for quality planning and inspection planning, Material Specifications, Inspection Planning)2. Quality Inspection (Trigger Inspections, Inspection Processing with inspection plan selection and sample calculation, Print shop papers for sampling and inspection, record results and defects, make the usage decision and trigger follow-up actions)3. Quality Control (Dynamic sample determination on the basis of the quality level history, application of statistical process control techniques using quality control charts, Quality Scores for inspection lots, Quality notifications for processing internal or external problems and initiating corrective action to correct the problems, Inspection lot processing and problem processing)

CHAPTER 5 OSAMA MEHMOOD ALI1 ERP MODULES Alexis Leon.

Documents

general ledger module

accounts payable

recurring transactions

individual transactions

small transactions

fewer transactions

large numbers of transactions

accounts receivable