SAP Week 1 Notes

8/10/2019 SAP Week 1 Notes

1/39

SAP ERPINTEGRATION OF BUSINESS PROCESSES

WEEK 1DAY 1 (APRIL 23)

2 BASIC END-TO-END PROCESSES:

PTP: PROCESS OF PROCURE TO PAY GET TO PHYSICAL STUFF / PROCESSES TO GET TO (BUY RAW MATERIALS,

F/G, ETC). UNIT 5

o

Purchase requisition (optional to have)o Purchase order (PO)requirement

Both done at the purchasing area

O2C: ORDER TO CASH WHERE YOU CAN INTERACT WITH CUSTOMER, AND CONVERT WHAT YOU HAVE

(PHYSICAL STUFF) INTO MONEY. UNIT 8

o Creation of Sales order: Customer and material master data needed

EXAM: COMPUTER80 M/C3 HOURS

Integration of Business ProcessesGENERAL STRUCTURE OF SAP ERP- From Business prospective: Example (software needs)

1.

Organizational level (structures)Basic knowledge

2.

Master Data (Example > Microwave: Put stuffuse timenot changing in the systemonce

you have a structure)Making sure everybody in the company is taking the same thing.

3.

TransactionsBusiness Processes: How to do, etc.

4.

Reporting > keeping trackin SAP: Information system

Example: Buying a sofa

1.

Getting the placestructure to remember where the sofa is

2.

Getting the sofausing the sofa, not buying one every day

3.

How to use the sofainstructions

4.

Reporting the use

How different modules work together to complete a business process

Unit 1: SAP NetWeaver > definition of SAP AND NetWeaver

o

Unit 1 & 2 Check

Enhancement Packages: support packages


2/39

UNIT 1: SAP ERP AND SAP NETWEAVER

SAP ERP softwarelate 90s CHECKPAGE 5

SAP ERP DOES: Manage their resources (e.g. software), planning, integrating people, information and processes

o Accounting, HR, and logistics are the heart of every bus. enterprise

o Allows the integration, streamline, and transparency of business processes in an organizationall

computerized (companies can choose business functions needed; this simplifies upgrades and reducescosts of ownership)

o

Increases efficiency and profitability by allowing the company to gain better control of their

administrative and operations environment

o Drives down costs of integration and development by shortening time to benefit and leveraging IT

investments

o ABAPSAP own programming language

o Non-SAP members are able to use this softwareflexibility and standardization

SAP ERPIncorporates

SAP ERP financials: utilizing companys funds efficiently and therefore increasing profitability SAP ERP Human capital management: covers HR from recruiting and training through payroll

SAP ERP Operations: provides extensive solution for automating and streamlining procurement and

logistics execution, product development, manufacturing, and sales and services

SAP ERP Corporate services: introduces services solution for end to end life cycles for travel

management, environment, health and safety and real estate management.

2 Major Categories:

1.

Core SAP: Definitely need it(represent charts, FICO, Material management)Organizational functions

2.

Extensions of core: Based on bus evolvement practices in bus world now called EHP

a.

New processes, solutions, methodologies > integration of processes.

New solutions: SRM (Supplier relationship management). Example: CRM (Customer relationship

management)

SAP R/3is theformername of the mainenterprise resource planning:SAP ERP CORE

SAP ECC (SAP ERP Central Component)successor of SAP R/3Main component of ERP solution

Developed using ABAP (SAP own programming language)

Service oriented architecture
http://en.wikipedia.org/wiki/Enterprise_resource_planninghttp://en.wikipedia.org/wiki/Enterprise_resource_planning


3/39

SAP BUSINESS SUITE: offers additional solutions (listed down) that compliment, enhance and support processes

executed in SAP ERP.

ERP (Enterprise Resource Planning): Referred as the core of the business > Part of SAP BUS SUITE where bus

process, transactions are.

PLM (Product Lifecycle Management): Package > helps you specify specific bus needs with customers. Example

Engineer Data

SCM (Supply Chain Management)

CRM (Customer Relationship Management) SRM (Supplier Relationship Management)

- SAP NetWeaver: technical platform that empowers SAP BUS SUITE

WEB-BASEDmake it easier to build and SAP ECC (SAP ERP Central Component)

Business-driven technology

Helps reduce costs for SAP & IT landscapes (Information technology); it works with your existing IT infrastructure

to enable and manage changes in a flexible step-by-step approach

Allows you to add innovations to SAP ERP 6.0

Adds value while creating a foundation for future cross-enterprise processes

Serves as foundation for service-oriented architecture (SOA)

NetWeaver in simple words is an application and Integration platform in which Web Services play a major role

and which is open for Non-SAP applications and platform. It is used by organizations to improve productivity and

enhance efficiency by making all the resources that are available in an enterprise to work collectively. The SA

customers to bring heterogeneous environments at one platform use SAP NetWeaver. In addition, it enables

customers to use the already existing systems without putting in much investment.

SAP NETWEAVER > ALLOWS FOLLOWING ACROSS BUSINESS AND TECHNOLOGY BOUNDARIES:

PEOPLE INTEGRATION: bringing people together to use system, making process flow efficiently E.G. a portal

ESS (Employee sales service)

PROCESSES INTEGRATION: Ex: Invoice verification systems

INFORMATION INTEGRATON: Sharing information within different areas in the company

Utilizes open standards to enable integration with info. And applications

SAP NETWEAVER

INCLUDES A SET OF

TOOLS AND

COMPONENTS

Components Tools

SAP NetWeaver Application Server Adaptive Computing Controller

SAP NetWeaver Business Intelligence SAP NetWeaver Composition Environment

SAP NetWeaver Process Integration SAP NetWeaver Developer Studio

SAP NetWeaver Master Data Management SAP NetWeaver Visual Composer

SAP NetWeaver Mobile SAP Solution Manager

SAP NetWeaver PortalSAP NetWeaver Infrastructure

SAP NetWeaver Identity Management

ADVANTAGES OF SAP NETWEAVER:

1.

Openness and Extendibility (Microsoft.NET; IBM WebSphere)

2.

Immediate Integration

3.

Lower Total Cost of Ownership

4.

Clear Roadmap


4/39

CHECK FIGURE 9: Technology capabilities & Service-enabled Applications (SUB-COMPONENTS OF NETWEAVER)

-

Integration level employees, customers, partners: SAP NetWeaver capabilities in the User Productivity area:

(Portal & Collaboration, search, mobile, user interface technology)

o SAP NetWeaver is the central component in user productivity area

o A portal ensures a central point of access to information, applications, and services in the

company. All data is brought together in a single user interface; this facilitates authentication

and communication between different IT systems

-

Integration level: Process integration (Repository based modeling and design, service bus based integration and

SOA Management)

o

All work/procedures in a company are controlled by company processes

o

People exchange data within these processes; info can be exchanged from applications, which

can be run on different requirements:

Modeling business processes

Customizing an application that supports a business process

Exchanging data between applications and systems in the context of a bus process

Automating bus processes

The components that SAP NetWeaver provides range from Solution Manager

(Customizing) to Process Integration (Data exchange btw applications/systems) to

process automation tools such as SAP Business Workflow, ccBPM, and the SAP

NetWeaver Business Processmanagement tool.

Example: Showing a process for approving a travel application using the SAP Business

Workflow, and the posting of flights using the SAP Process Integration.

-

Integration level: Information (Information managementBusiness Intelligence and Content management)

o

SAP BusinessObjects BI and SAP NetWeaver Business Warehouse supports you in collecting and

evaluating key figures. It allows you to define objectives and monitor their realizationby

analyzing processes in your company can help you to make them more efficient

-

Integration level: Master Data (Data ManagementData management & Integration, Master Data

management)

o SAP NetWeaver Master Data Management (SAP MDM) allows you to create cross-company,

unified master data and distribute it across various dependent systems. It also checks new

master data to determine whether identical master data objects already exist, and identifies all

duplicates, which can be transferred to SAP BW (Business Warehouse) and used in analysis.

-

Integration level: SAP NetWeaver Mobiles

o Solution that provides the basis for a range of solutions for mobile applications known as SAP

xApps composite applications for mobile business.

o Service employees can be informed of new orders via a mobile device and they can confirm data

at the customers instead of writing down data on sheets.

o

Example: an enhancement of SAP HR Management allows you to enter mobile travel data and

working times


5/39

-

Basis for integration: Application FoundationApplication Platform (Life-cycle management, java

development, security and identity management and ABAP development)

o Technical basis of the SAP NetWeaver integration platform

o Supports J2EE and ABAP in a shared environment

o You can create Web Services in a development environment that supports all of the key

standards, such as Simple Object Access Protocol SOAP, web Services Description Language

(WSDL), AND Universal Description

-

Enhancement Packages (EHP)

Active after activation

Only one EHP version is allowed

Simplifies the way customer manages and deploys new software functionality

Optional packages that enable companies to take advantages of ongoing innovations while keeping their core

software stable; aligned with support packagesprovides stability

Provides customers with new developments and enhancements of applications for existing installations

(Example: Business functions functions can be chosen according to requirements)

Installation has no impact on existing business processes as long as no business functions has been activated

Capabilities included in EHP focus on 4 areas:

o Simplification: new capabilities to simplify processes

o Generic enhancement: for financials, HR, human capital management, operations and corporate

services

o Enterprise service bundlesEnterprise SOA: new services that illustrates the service oriented

architecture

o

Industry-specific enhancement: new capabilities for particular industries

Things to know:

o Facts: Installations cannot be removed, only 1 EHP level per system/per industry (components have to

be updated with future EHP implementations), and industry solutions (activation of industry bus

function has to match EHP industry software component during installation)

o Technical delivery: Cumulative (each EHP comes along with previous and new EHP when downloading

the latest package), Delta shipments (delivers only changed objects to your system), EHP for SAP

NetWeaverDifferent versions (Select the right package version for your software)

o Project perspective: Modifications after installation must be adjusted, regression test must be done,

effort estimation (recommended to install the latest EHP)

SAPLOGON

USER: terp10-DOCE

CLIENT: 310

PASSWORD: #ELECTRONICA

SERVER: TE.UCC.UWM.EDU

SYSTEM ID: TE1

SYSTEM #: 00


6/39

IT PRACTICES & IT SCENARIOS > PAGE 17> CHECK FIGURE 10

Looks at the overall SAP NetWeaver platform in ways that focus on key business goals rather than on isolated

technology components; business goals are:

The need to combine different integration technologies

The need to develop composite applications leveraging existing system investments

The desire to flexibly build new business processes

Data must be consistent

End to end process integration: Making process work consistently

Installed units: building blocks that are composed of clients, standalone engines, and usage types (usage types are built

from technical software components that form an installable and configurable unit).

LESSON UNIT 1 SUMMARY:

1.

INTEGRATION OF BUSINESS PROCESSES

2. ERP

3.

NETWEAVER4. IT (INFORMATION TECHNOLOGY)

UNIT 2: ERP BASICS > PAGE 29

Focus on ERP (CORE OF BUSINESS SUITE)

o HOW ERP CAN VIRTUAL A BUSINESS PROCESS?

- Organizational Structure:

Client > Controlling area > C.C. (Company Code), Organizational Unit (Module Specific - HR) > Position > Sales

Organization > Division (Line of Businessproducts) > Plant > Storage Locations > Shipping Points

o Companies based must decisions depending on the location

Client: Highest level unit of all organizational elements

o Setting up who the customer is

o General Data > shared within company > can be used by all company codes

Controlling Area: Combination/group of company codes that shared common characteristics; e.g.: based on

product.

o Itsan organizational unit from the Accounting component in the R/3 System, used to represent a closed

system for cost accounting purposes.

o

Internal > can be set up

o Not a legal entity

CC: Highest legal registered entity > Internal > Financial Accounting

o Not decided by the company (created according to tax law commercial law, and other financial

accounting criteria; usually created based on geographic considerations)

o One per country

Plant: physical location > setting up material management

o Central organizational unit in production planning

o Can be for manufacturing/distributing products, and providing services


7/39

- Master Data:

Material mater: Wal-Mart > Packaging is different > so material master is different

Personal Record: Call Centre

Customer Master Data

- Transactions

Must information for the Sales Order is copied from Customer Master Data and Material Master

- Reporting

Information can be accessed in reports available en SAP or can be pulled into the BW and reported there

BW: Business informationwarehouse

OLTP (Online transaction processing) - Operational: Online transactionsBusiness transactions/process

(sales orders)use daily basis

OLAP (Online analytical processing): All about reportingBusiness analysis

-

BI (Business Intelligence): Tools, planning, stimulation capabilities and warehousing

functionalities that allows strategic analysis and supports decision making and within the

company.


1. ORGANIZATIONAL STRUCTUREUNITS

a. CLIENT

b.

CONTROLLING AREA

c. COMPANY CODE

d. ORGANIZATIONAL UNIT

i.

POSITION

ii. PLANT - RELATED TO MATERIAL MASTER

iii. STORAGE LOCATION

iv. SHIPPING LOCATION

2. MASTER DATA

a. MATERIAL

b. CUSTOMER

c.

PERSONAL RECORD

3. TRANSACTIONS

a. CUSTOMER AND MATERIAL

i. PTP

ii. O2C

4. REPORTING

a. OLTP

b. OLAP

5. BI
http://www.google.ca/url?sa=t&rct=j&q=olap&source=web&cd=1&ved=0CD4QFjAA&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FOnline_analytical_processing&ei=KJ2VT4KoHOTX0QHy4_XmBw&usg=AFQjCNFpaif9V5Ki8hy2EGd4JljSUvE3-A&cad=rjahttp://www.google.ca/url?sa=t&rct=j&q=olap&source=web&cd=1&ved=0CD4QFjAA&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FOnline_analytical_processing&ei=KJ2VT4KoHOTX0QHy4_XmBw&usg=AFQjCNFpaif9V5Ki8hy2EGd4JljSUvE3-A&cad=rja


8/39

UNIT 3: FINANCIAL ACCOUNTING > PAGE 43

FICO (FINANCINGCONTROLLING)

1. FINANCIAL ACCOUNTING (FI): EXTERNAL REPORTING> shareholders, gov. agency CRA RAX

o Recording of monetary and value flows

o

For legal purposes/compliances

o

Part of income statement, B/S

o Focuses on General Ledger

2. GENERAL LEDGER ACCOUNTING

a. General ledger and sub-ledger (combination of accounts)

High level; and detailed level

THE VENDOR MASTER RECORD USED IN G/L

Summarizes the nature of the cost

Managed at a CC level

There is exactly one leading ledger in each client

Others ledgers can also exist (within the G/L)

Meant for legal reporting (different for each country)

Compiled the P/L statements (also called income statementsrepresents a company financial

status at one point of time) and the B/S(Assets of a company are listed in the B/Sdivided into

Assets & Liabilities)

You can create different reports using depending on requirements: countrys rules

When transactions are posted in FI, automatically appears on the B/S

b. General ledger Chart of accounts

Chart of accounts: contains the recording of all definitions/accounting business transactions on to

the G/L accounts in an ordered form CHECK > PAGE 74 HANDS-ON-ASSIGNMENTo Definitions consist of the account number, account name, and the type of G/L

o

One chart of account can be assigned to many company codes

o

For each company code, you have to specify one chart of accounts for the G/L

o Every G/L is structured according to a chart of account (Revenue is recorded

when invoiced; expense is recognized when services are procured outside the

company and provided internally)

c. General Ledger Account master Record

G/L Account Master Record:

2 segments: 1) the chart of account has high level control features the like description o

the account, whether the account is a balance sheet account or a P/L account, 2) thecompany code segment, details how the company code that uses that specific account

manages the account.

Account Groups for G/L accounts:

Classifies G/L accounts into user-defined segments

4 field statuses of a field can be suppress, required, display and optional

d.

Reconciliation Accounts

Reconciliation accounts and sub-ledgers:

Integrates all the sub-ledgers accounts with the general ledgers


9/39

Only contains collective postings; the posting data is represented in a more

differentiated way called sub-ledgers

Can only be posted through a sub-ledger account

e. Financial Statements Versions

Financial Statement Version:

Keeps the general ledgers so information can be used when needed to create a B/S or a

income statement - as far as account s map to which line items on the report Various financial statements have to be created to meet reporting requirements; you

define which accounts are to appear in which line items of the financial statement

Can be created for profit centers as standards

f. Profit Centers

Profit Center

Organizational unit (E.g. Plant)integral part of General Ledger

A line of businesspart of financial accounting, geographical location

Considered as master data in G/L

g. General Ledger Account postings and queries

G/L Account Posting:

When creating a post for G/L account documents, it contains:

o Header data, templates, line items (details) and information area

The posting key:

o Determine 3 results:

Account type for posting

Posting the document as credit or debit

Field status of the additional data

Account Information:

The balance display and line item display are provided to display the account data

3.

LESSON: 3 ORGANIZATIONAL UNITS IN FI

1.

CC (independent accounting unit): legally the smallest SAP entity unithas to report B/S by itself

2. Segment: new organizational unit available for SAP ERP 2004

In the G/L Accounting, segments can be used as dimension for reporting purposes

According to US-GAPP, a segment is a part of the company that incurs costs, generates revenue

and has its own financial data

Segmented reporting aims to:

Provide an insight into different business activities of a diversified company

Provide info about the general environment

Purposes:

Provide better overview of a companyseconomic performance

Improve a forecasting of the potential sales reserves of a company

Better anticipate risks and opportunities of a company

IAS (International Accounting Standards)

Distinguishes btw business and geographical segments

o Business segment: Represents a capacity of a company, involving the

manufacturing of products or provision of services


10/39

o Geographical segment: provides info about risks and revenues that differ from

other geographical segments in terms of economic or political factors.

2.

Third organizational unit is the controlling area; which identifies a self-contained organizational

structure for which costs and revenues can be managed and allocated.

i.

One or more company codes can be assigned to a controlling area; only possible if cc

and controlling area are all the same operating chart of accounts and fiscal calendar

year

4.

FSCM (FINANCIAL SUPPLY CHAIN MANAGEMENT):

-

Helps enterprises to optimize cash flows; manages cash in process

-

Manages four major processes: CHECK FIGURE 25 > PAGE 50

1)

Electronic bill presentment and payment (SAP Biller Direct): allows billers to sendand customers to

receiveinvoices electronically, making invoice more efficient

o Customers can access to info in internet

o Reduces media fragmentation

o

Vendor can interact with customer; example: processing insufficient payments or providing

customer service

2)

SAP Credit management: monitoring the total liabilities of customers, using appropriate credit lineso Advantage of centralized and company-wide management of credit lines

o Eliminates risks of customers exceeding the credit limit granted

3)

SAP Dispute management: system support for processing payment deductions

o Enables Cross-departmental resolution of dispute cases

4)

SAP Collections management: allows you to structure, classify, and minimize the receivables owed to

your organization

Following processes are linked to the previous ones

5)

SAP Cash and liquidity management

6)

SAP In-house Cash

7)

SAP Treasury and Risk Management

FINANCIAL ACCOUNTING MODULES:

b.

Covers two major Business processes

i.

Money coming inorder to cash (O2C)

ii.

Money coming outprocure to pay (PTP)

1.

Example: Loan at the bank

2.

Example 2: Buying and paying

a.

AR > O2C > Customer

b.

AP > PTP > Supplier

c.

Asset Accounting (AA)

related to management of assets

d.

Banking (BL) Supports booking of cash flows

e.

Treasury TR- (focuses on functions such as payment)

f.

Financial supply chain

g.

Management

5. CO: INTERNAL REPORTING> Management accounting

c.

Meant for internal management information regarding cost and revenues

d.

Audience: managers, shareholders


11/39

e.

Can analyze costs and revenues at high levelacross boundaries. Example: analyzing costs

and revenues for all production departments worldwide.

f.

Uses the costs and revenues from FI

g.

Provides controlling objects which allows an organization to internally track both, costs and

revenues

Example: T-Accounts

1)

Paying tuition $4000

a. Tuition Account (Expense): Credit $4000

b. Cash Account: Credit $4000

2) Tutoring $400

a.

A/R: Debit $400

b.

Revenue: Credit $400 (Revenue works as same as expense account)

3)

Receiving payment for tutoring

a. A/R: Credit $400

b. Cash: Debit $400

LESSON: ACCOUNTS PAYABLE > PAGE 83

1) VENDOR MASTER RECORD AND ACCOUNTS PAYABLE POSTINGSBUSINESS PROCESS FOR A/P:

a. The Vendor Master Record

o Purchasing organizationspecific settings

o

Specific general info at the plant level

o Business process: Global purchasing org. They have to enter data specific to purchasing in the vendor

master record before the suppliers master record can be used.

o Contains data that controls how transaction data is posted and processed (Info about vendor: name,

address)

o Any company code defined in the client will have access to this information

Once you have Vendor master Record set up, you can create and post a vendor invoice transaction business transaction

b. Invoice

1. DOCUMENT SPLITTINGPOSTING

o Has to be activated to ensure uniform splitting of the segment characteristics. Systematic segmentation

means that zero balance position is reached for each document with regard to the entity

o Used because corporate groups are required to create B/S at segment levelbut no segment entries

exist in two lines items, which means that they would not be complete. Furthermore, the balance is not

0 for the segmentsmeaning B/S is not balanced

2. VENDOR PAYMENT

a. Elements of the payment process

o Manually or through the use of the automatic payment program

EDIElectronic Data Interchange (Info in sent to bank inmediately online)

DMEDigital Media Interchange (bring a file to the bank)

b. Overview of the automatic payment program

Maintain parameters


12/39

Start proposal run

Edit proposal

Start payment run

Start printout

THE VENDOR MASTER RECORD > CREATE INVOICE > PAYMENT

3. INTEGRATION WITH PURCHASE TO PAY BUSINESS PROCESS

a.

Purchase to Pay Business Process Overview (P2P) PAGE 90

1)

Order requirement (Optional)

2)

Order

3)

Goods receiptMM (Material Management Document)

4)

Bill checkinvoice verification

5)

Payment processing

Sometimes you are buying things that are not for you; there is a step prior order requirement which ispurchase

requisition.

b. Purchase-to-Pay processAccount View (P2P) PAGE 9FIGURE 47

1)

GR/IR AllocationGoods receipt to warehouse; everything you post in here are temporal posting; use to

accommodate gap (because you dont pay immediately) btw business processpost as temporary

offset

a.

Always post twice in accounts

b.

Increase GR/IR (Credit) and assets (Debit)

2)

VendorsIncoming bills

a.

Once you receive the billIncrease A/P (Credit), also assets (Credit)

3)

Payment programBank accounts

a.

Increase * Credit Bank allocationb.

Debit A/Preduce

4)

Account statement

a.

Credit Bankexpense accountincrease

b.

Debit Bank Allocationreduce

Notes:

-

First 3 steps in the P2P Business process has nothing to do with finance compared with the SAP

Overview

-

PO is a legal document in SAP

-

Accounting gets involved in the Payment program-

GR/IR used as an clearing account for assets

-

GI/IR and Bank Allocation are middlemenclearing accounts - works as liability accounts

-

Financial documents are only created when goods and the invoice are received

LESSON: ACCOUNTS RECEIVABLE > PAGE 103

ACCOUNTS RECEIVABLE MASTER DATABUSINESS PROCESS FOR A/R:

1. THE CUSTOMER MASTER DATA

a. Customer Master Record:


13/39

-

Sales Areaspecific settings

b.

Credit Data:

-

Customer evaluation management

-

Checking credits , internal scoreAccount Receivable (Payment history, credit limit, etc)

-

What kinda risk class the customer is

c. Credit Management Process

-

Internal and external customer information at 2 sources: customer master record (internal info)

or external information (from other companies/sources)

2.

ORDER TO CASH BUSINESS PROCESS INTEGRATION WITH FINANCIAL ACCOUNTING

a. Order to Cash from the accounting point of view

1)

Sales order: Contains all relevant information for processing the customer order within the

framework of the transactionNo financial implication

2)

Delivery: Goods to be delivered are posted as goods issue; which is created in MM, and an

accounting document is created in FI so the goods issue is posted to the correct G/L

Reduce * Credit Product (Asset account)

Stock comparisonexpense accountincrease * debit

You recognize cost/expense

3)

Billing: Created in SD, invoice is sent to the customer (REVENUE IS RECOGNIZED). At the same

time a document is created in FI so that the receivable and the revenue can be posted to the

correct account

When the billing document is created in SD, an accounting document debits customer

and credits revenue automatically

-

Financial implications for billing documents:

Recognizing revenue

Recognizing A/R

4)

Payment by customer

Credits * increases revenue

Debits Customerreduce

b. Sales Order Process from the accounting view - B/S

1)

DELIVERYMM

-

Reduce * credit material

-

Stock change F/G Increase * credit

2)

BILLINGCustomers

-

A/R Increases * debit

-

Income increases * credit

3)

PAYMENTFI/AR

o Debit * increases Bank account

o Credit * reduce A/R

c. Sales of Services: Process from an Accounting perspective

Billing creates income

Payment settles receivables, leading to a credit memo on your bank account

3.

CUSTOMER PAYMENTS


14/39

a. Incoming payments in Accounts receivable

-

If there are payment differences , must be dealt with manually:

o Partial payments: the item being short-paid doesnt clear

o Residual items: the open invoice is cleared and a new open item (residual item) in the amount o

the payment difference is created

LESSON: FIXED ASSETS ACCOUNTING (AA) > PAGE 119

1. ASSETS MASTER RECORD

a. Assets in FI Organizational Unit:

i. Each asset belongs to a company code and business area.

ii. Assetswhat you own (Acquisitions, retirement, depreciation)

iii. You can assign the assets to various CO objectsControlling objects (cost centers, internal

order, activity type) and logistic organizational units

iv.

Ways to get assets: buy, transfer or make

b. Assets Classmain criteria for defining the asset

i.

Assets should by assigned to classesin the asset class you determine control parameters and

values for depreciation and other master data

ii. Assets do not appear in the same line item of the B/SSeparated by class

iii. The application componentPM (Plant Maintenance) is used for the management of assets

iv. Special assets:

a.

4000: Assets under construction

b. 5000: low-value assets

2. ASSETS TRANSACTIONS

a. Assets Transactions(Acquisitions, retirements)in asset accounting

-

In FI-AA you can post the following ways:

a. Without a vendor or a P.O.; the offsetting entry is made to a G/L clearing account

a.

Example: in the PTP (MaterialGR/IR; clearing account for assets)

b.

To a vendor, but without reference to a purchase order

c. Via materials management using the MM functions (purchase order, goods receipt and

invoice receipt)

b. Transaction type

-

Addition to the asset posting keys (Asset posting: acquisition, asset retirement, allocation, depreciation,

and appreciation):

a.

70Debit

b.

75Credit

i. Assets posting keys must be included when posting to an asset account.

ii. The transaction type is necessary for asset accounting, since it specifies exactly where the asset

posting is listed in the asset history sheet.

-

The transaction type is the distinguishing characteristic of the various asset posting, which include:

a. Buying and selling

b. Credit memos

c. Acquisitions from internal production

d.

Adjustment postings


15/39

e. Retirements without revenue

f.

Depreciation and appreciation

c. Asset ExplorerTool

-

It offers a clear overview of the activity for an asset (You can see transactions that have been posted to

the asset plus planned and posted depreciation per depreciation area, per period, for each fiscal year)

3.

DEPRECIATIONa.

Depreciation Areas

-

To keep more than one valuation basis, depreciation areas are kept in the SAP system. Separate

transaction figures are kept in each area:

i. Per asset and depreciation area & for individual value components such as balances,

depreciation, depreciation, and remaining book value

-

Various data is stored in the asset master record for depreciation areas, which control the calculation of

normal and special depreciation for the special depreciation areas

i.

Example: Book depreciation

b.

Control Data in depreciation areasi. In the asset master record, different data for valuation areas are stored. These data control de

calculation of normal and special depreciations for the respective areas

c. Depreciation Run

ii. Only after the depreciation postings run has been completed is the depreciation actually posted

in asset accounting and in the G/L. The depreciation is posted to the corresponding depreciation

accounts in the G/L and to the assigned CO cost.

iii. Same assets, different views


1. FICO (FINANCING AND CONTROLLING)

a. FIFINANCIAL ACCOUNTING

i.

3 Organizational Units

1)

CCMust have

2)

SegmentOptional

3) Controlling Area

ii. General Ledger AccountingCHECK > PAGE 74 HANDS-ON-ASSIGNMENT

iii.

FSCM

b. COMANAGEMENT ACCOUNTING

c.

ACCOUNTS PAYABLE

i.

USES Vendor Master Record

ii.

Creation of invoice

iii. Posting

iv. Payment

1) Overview of the automatic payment program

v. P2P business process


16/39

vi. SAP Account review

d.

ACCOUNTS RECEIVABLE

i. USES Customer Master Record

ii. Credit DataCHECK > PAGE 111 HANDS-ON-ASSIGNMENT

iii. Credit management process

iv. O2C process from an accounting point of viewSAP

v. S.O from an accounting point of view

vi.

Sale of services from an accounting perspectivevii.

Customer payments

1)

Incoming payments

e. FIXED ASSETS ACCOUNTING

UNIT 3 STRUCTURE

1) Organizational Unit

a.

FICC, Segment, Controlling Areab. A/PClient, CC, Purchasing Organization

c. A/RClient, CC, Sales Area

d. COOperating Concern, Controlling Area, CC

2) Master Records

a. G/L Account Master Record

b.

Vendor Master RecordClient, CC, Purchasing Org.

c.

Customer Master RecordClient, CC, Sales area

3) Processes

a. Payment Run

b.

P2Pc. O2C

d. Depreciation RunDifferent views

4) Reporting

a.

Asset Explorer

b.

OLTP

c. OLAP

d. BI

UNIT 4: MANAGEMENT ACCOUNTING > PAGE 151

1.

COMPARISON OF FINANCIAL AND MANAGEMENT ACCOUNTING

MANAGEMENT FINANCIAL

Internal Accounting External Accounting

Cost Accounting Financial Statements

Diverse Valuation Legal Requirements

Flexibility Standards

-

Management Accounting contains all the functions necessary for effective cost and revenue controlling.


17/39

-

Financial Accounting provides reports (B/S, P/L Statements) used for external reporting purposes in the CO

2. MANAGEMENT ACCOUNTING/CONTROLLING

a. Management Accounting Architecture:

- Profitability Analysis (CO-PA)

- Profit Center Accounting

- Overhead Cost Controlling (CO-OM)

-

Product Cost Controlling (CO-PC)-

Cost Elements accounting

Costs from CO-OM and CO-PC can flow into CO-PA, where together with revenue data, can be used to calculate

operating results, making it possible to establish how profitable the various are

Costs are either production or overhead cost

Other SAP components such as Human Capital management, and logistics (MM, SD, and PP) are also

integrated with CO

b. Flow of values within management accounting

-

Costs incurred in one part of the enterprise and pass on to a different part of the enterprise

a.

Example: allocating overhead costs from administrative cost centers toproduction cost centers

- Within the overhead cost controlling area, costs can be posted to cost centers, internal orders

and processes from the SAP ERP applications (external costs), then the cost centers can

allocate costs to other costs centers, to orders, Activity-based Costing (ABC)

- Flow of costs exits btw CO-PC and CO-OM

- Cost objects (production orders) can received direct cost posting from FI

- Profitability analysis can receive cost assessments from cost centers and ABC Costing

processes, settlement of cost from internal orders and production variances settle from cost

objects

c.

Integration with other SAP ERP Applications

- Data created in other SAP ERP applications can have a direct influence on CO

1.

Example: if a non-stock item is purchase, it is posted in the G/L. This is also post in the

cost center as a cost, for example for which the item was purchase. Those costs can be

pass on to production cost center

- Financial accounting is the primary source of information for CO

-

Most expense posting (journal postings, vendor invoices or depreciation posting form the

Asset Management) in the G/L result in a cost posting in the CO

- Sales order management is the primary source for revenue posting from billing documents to

revenue postings in Profitability Analysis (CO-PA), and Profit center accounting (PCA)

-

Human capital management can generate cost postings in CO; it offers the allocation of labor

costs

-

In MM, a good issue transaction can create a cost posting in CO to whichever cost object is

specified

-

The manufacturing area of logistics works closely with CO. Bills of material and routings,

creating in manufacturing, can be used in CO-PC

3. ORGANIZATIONAL UNITS

a. Organizational levels in Management Accounting


18/39

1) Operating concern

-

Represents the structure of external market segments for the enterprise

- You can assign several controlling areas to a operating concern

- Profitability Analysis is used in the operating concern

2) Controlling area:

- Basic organizational unit in CO

- Used for Cost accountingyou can allocate costs only within a controlling area (this costs do

not affect objects in other controlling areas)-

You can assign more than 1 company code to a controlling areaas long as CCs and

controlling area have the same operating chart of accounts and the same fiscal year variant

3) Company code

- Independent accounting unit

- P&L statements are prepared at the company code level to meet legal reporting requirements

- Business areas (BA) can be used to group strategic business units for P&L and financial

statements

4)

Plant

-

Production unita plant is assigned to a CC

-

Central organization in MM and PP5) Purchasing Organization

- Used in MM - Purchasing

6) Sales Organization

- Used in Sales order management

b. Multiple Assignment

-

By assigning more than one CC to a controlling area, you can perform cost accounting for all

company codes; you can allocate values in CO than can affect more than one CC

- In cross company code cost accounting, the controlling area and the CC can have different

currenciesby default, in a cross company cost accounting displays the CC currency as theobject currency (cannot be changed)

- You can use 3 currencies in CO:

1.

Controlling area currency

2.

Company code or object currency

3.

Transaction currency

4. COST CENTER ACCOUNTING

COST/REVENUE ELEMENTS

a. G/L accounts and Cost elements:

- Chart of account is created in FI; all expenses are allocated in one class (class 4) and revenues

in class 8

- Expense accounts to which costs are posted for cost accounting purposes must also be

created as cost elements in COthis ensures that all info from this account gets to the CO at

the same time

-

Cost elements make sure data flows inaccounts and transactions you can run the reports

- Secondary cost elements are defined only in CO and are used for internal allocations.

Secondary cost dont have any correspondence in FI


19/39

b. Standard hierarchy represents all cost centers per controlling area

- The cost center is an organizational unit in a controlling area representing location where

costs occur. You can make organizational divisions on the basis of functional, settlement-

related, activity related, spatial and/or responsibility related standpoints

-

Cost centers are used to differentiate assignment of OH costs to organizational activities

based on utilization of the relevant areas (cost determination function) and to differentiate

controlling of costs arising in a organization

- The costs center accounting component (CO-OM-CCA) tracks where costs occur in your

organization

- Cost centers can be defined in different ways:

1.

For each low-level organizational unit that has responsibility for managing cost

2.

As costs are incurred, they are assigned or posted to the appropriate cost center

3.

Cost could include payrolls, rend and utility costs, or any other costs relevant to a given

cost center

- The posting and assignment pr costs to cost centers not only makes managerial accounting

possible; but it is a vital step for utilization to the other controlling areas

c. Cost Center data

- Basic data: contains fields for name and description of cost center, name of responsible

person or cost center manager, department and profit center

- Cost center hierarchy: displays the standard hierarchy node to which the cost center is

assigned

- Profit center: identifies the purpose of the cost center (production, sales, etc)

- Company code and business area: represents the close ties btw CO and FI

d. Activity types

- Classifies the activities to be performed within a company by one or several cost centers

-

Serves as tracing factors for cost allocation- Quantify business activitiesmostly tangibles

-

In a internal allocation: the quantity of the activity (# of consulting hours) is enter into the SAP

ERP system; the system calculates the cost based on the activity price and generates debit to

the receiver and credit to the sender for both quantity and cost

- Internal activity is allocated using secondary cost elementsstored in master data

e. Cost Center/Activity type

- To allow internal activities allocations, you have to specify which costs centers provide which

activity types at what pricein SAP by planning the activity output/prices for a cost center

-

For direct allocations, you enter the quantity of the activity to be allocated manually

f.

Statistical key figures (SKF)Only for secondary cost element- A measurable quantity that can be assigned to cost centers, activity types, OH orders, busines

processes and profit centers

- Used as an allocation base (Tracing factor) in OH cost allocations

- You can define statistical key figures in two categories:

1.

Type 1: fixed value - is carried out over from the period in which it is posted to all

subsequent periods of the same fiscal yearremains constants over time

2.

Type 2: totals value - is not transferred to the following period but must be entered for

each individual periodtends to change over time

-

Can be linked to logistics information system (LIS)


20/39

g. Cost center planning process

-

Can be done automatically or by the help of formula planning

- Planned value can be also transferred from HR and FI-AA

- Aim to calculate planning costs to define deviations later and to prepare the allocation to

costs bearersbased on absorption costing, you try to allocate all costs in the OH area to the

cost bearers using different procedures

- Activity type planning is an important step in cost center planning

-

Also shapes price determination for activities of the cost centerh.

Posting Logic

-

When a FI document is created that posts to an expense or revenue account using a cost

element, a CO document is also created

- CO document has unique number and contains following information:

1.

CO object that was posted

2.

Cost element used

3.

Posted amount

i.

True and statistical objects in CO

-

Postings and revenues in CO can result in true and statistical postings

1.

True objects: can act as sending or receiving objects during cost allocationa.

Example: Cost centers, real internal orders, real projects, networks, make-to

order production orders, cost objects and profitability segments

2.

Statistical objects: cannot allocate cost to other objects

a.

Example: statistical orders, statistical projects and profit centers

j. Posting from FI to a cost center

- When a journal entry is created in FI that includes an expense line item, that expense can be

posted in the CO as a cost if:

1.

A primary cost element has been created in CO that corresponds to the expense

account used in the FI journal entry

2.

A valid cost center is referenced in the FI line item

- As a result 2 documents are created with unique numbers, FI & CO:

1.

FI: document that posts to an expense/revenue account having a corresponding cost

element and valid controlling object

a.

FI Document debits P&L account and credits B/S

2.

CO: contain following details: controlling object posted, cost element used and amount

a.

Debits controlling object, NO credits

k. Posting from MM to a cost center

- Goods issue transactions posted in MM component can be assigned to a cost centercalled

material consumption

l.

Direct activity allocation

-

Allocating activities by creating an activity type - only for primary cost element

-

Information needed: sender cost center, receiver, activity type and quantity

- Cost center used is derived from the master data

m. Periodic allocation techniques

- Assessment: designed for the allocation of primary and secondary cost from a sender cost to

receiver controlling objects; which are allocated at period-end closing according to rules uses

statistical key figuresto determine the allocation of the receiver


21/39

- Similar periodic allocations are: Periodic allocation reposting, assessment, distribution,

indirect activity allocation and template allocation

n. Real time integration COFI

- The FI document has the following features:

1.

Posting are made in real time

2.

It doesnt required clearing accounts

3.

Users can access the FI document generated in real-time from the CO document

5.

INTERNAL ORDER

a.

Internal Orders

- It is a flexible CO tool that can be used for tracking costs, and in some cases revenues within a

controlling area

- Data for internal order can be got obtained from MM, FI and CO

- 4 types:

1.

Overhead costs: used to monitor OH costs incurred in the production for a particular

purpose. Example: conducting a trade fair or tracking costs for maintenance work

2.

Investment orders: used to monitor costs in the production of a fixed asset, such as

building3.

Accrual orders: used to offset postings of accrued costs in cost centers

4.

Orders with revenues: used to replace the cost accounting parts of SD customer orders

if SD is not being used, or to monitor revenues not affecting the organizations core bus.

b. Planning/ calculating internal orders

- Three different cost planning levels for internal orders are:

1.

Overall planning: is the simplest level for planning order costs. You can plan overall

values and annual values irrespective of the cost elements

2.

Primary/secondary cost and revenue planning: can be used if you have detailed

information about an internal order.

3.

Unit costing: can be used to carry out more detailed planning in cost elements

- Posting to an internal order

a.

A Bucket that allows a better view of costs that could not be itemized in detail in

a cost center

b.

Can be real or statistical (information postings only)

c.

From FI to make an order: invoices, G/L account postings and revenues

d.

From CO: stat. key figures, funds commitments, activity allocations, reposting

e.

From MM: goods movements, pur. Requisitions, P.O

- Commitments

a.

Identifies costs which will be incurred in the future for materials and services

requested

b.

Commitments for future costs are created in the purchasing function of the

material management component

i.

A commitment is recorded automatically when you assign an OH order

to a purchase requisition or P.O line item

c.

You reduce the commitment by posting a goods receipt against a purchase

order

d.

You must activate commitment management in CO for each controlling area


22/39

c. Order settlement

-

Internal orders are usually used as an interim collector of costs and an aid to the planning,

monitoring, and reporting processes. When the task is complete the costs have to be passed

on to their final destination (cost center, fixed asset, profitability segment, G/L account,

assets, sales order with collectors)this is called settlement; meaning it has to be settled to a

permanent object

6.

PRODUCT COST ACCOUNTINGa.

Product cost accounting (CO-PC)

-

Concerned with all aspects of planning the cost of producing products or services, as well as

tracking and analyzing the actual costs

- Has following components:

1.

Product cost accounting: used to estimate the costs to produce goods

2.

Cost object controlling: collects costs incurred during production using costs objects

such as production orders

3.

Actual costing/material ledger: provides actual costs for each material at the end of the

period

b.

Product Cost Accounting: Overview- Used to estimate the costs of producing goods or providing services

- If a quantity structure (bill of material and routing) is available in manufacturing planning then

the system will create a cost estimate based on this data

- In cost object controlling the costs incurred during production

c. Product cost planning: Overview

- When you create a cost estimate with a quantity structure, you must enter the costing variant

the material the plant, and the lot size. The dates proposed from the costing variant specify

the following:

1.

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

2.

The selection date for the bill of material and routing (quantity dates)3.

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

- The costing results can be saved and analyze as:

1.

Cost element itemization groups the individual costing items into cost elements, the

cost elements group the cost in order of appearance

2.

The cost component split groups elements into costs components

d.

Price update

- Marking and releasing a standard cost estimate updates the standards prices for the material

in the material record. This results in the inventory being revaluated.

- The following prerequisites must be met before standard cost estimate can be marked or

released:

1.

Standard cost estimate must be free of errors

2.

The marking and release must be allowed. The company code and period in which the

standard cost estimate can be marked with a set costing variant are entered in the

authorization for a marking. The authorization should be set up once per period by the

employee responsible

e. Integration: Standard price and Std cost estimate

- Price control plays a crucial role in material valuation. When price control is set to S, the

inventory and good movements are valuated at standard price.


23/39

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

object controlling; the system use the itemitization of costs estimate to determine the

target costs for manufacturing orders.

- Profitability analysis, you can use the standard cost estimates to compare the revenues

of the billed quantity both the cost component split of the product.

- A standard price is also required in the material ledger to determine the actual price

7. PROFIT ANALYSIS IN CO

a.

Profit center1.

An organizational unit within the company (plant)

2.

Line of business

3.

Geographical location

- The goal of profit center Accounting is to measure the profitability of areas of responsibility

with the organization

- Management-oriented organizational unit used for internal controlling purposes.

- EC-PCA (Profit center accounting) lets you set to profit center according to product or

functions.

-

PCA allows you to calculate internal measurements of profitability

-

Account assignment logic in CO:1.

When Controlling is active each posting to a revenue or expense account that has been

set up as a cost element in CO requires an account assignment object.

2.

The master records of controlling objects contain a profit center field

b. Data flows to profit center accounting

- The following data is transferred to PCA:

1.

All postings for revenue and cost elements

2.

Expense and revenue accounts that are posted to using logistics transactions

3.

B/S account and other expense and revenue accountsoptional

c. PCA

-

Enables you to draw conclusions on the internal aspects of profitability

8. PROFITABILITY ANALYSIS (CO-PA)

- It is an application in CO used to analyze the profitability of segments in your external market

-

Includes a multidimensional reporting tool for creating reports that analyze data for any

market segment and any profitability measure

-

Two versions are available for profitability reporting: costing-based and account-based

- Aim: provide the board of directors, SD, marketing, with market-oriented decision support

- Costing-based:

1.

has reports that display values by values field (flexibly defined key figures)

2.

can be expanded with other anticipated values

3.

Produces revenues and cost of sales simultaneously when the billing document is

calculated

- Account-based:

1.

has reports that display values by cost and revenue elements

2.

reconciles directly with FI at account level

3.

shares data tables with other CO applications, such as Cost center accounting

4.

Post revenues when billing document is created

- Data flows in CO-PA:


24/39

a.

data from sales order management is one of the key sources of info for CO-PA

b.

Options to allocate the OH costs that werentallocated to Product cost

controlling to CO-PA in order to display all OH costs in CO-PA:

i.

Allocation of internal activities

ii.

Assessment

iii.

Order settlement

iv.

Project settlement

Allocation methods:

- Activity typemore accurateQuantify bus activities

- SKFprimary cost element

-

Assessmentsecondary cost element

2 types of costs: OH, and PC

Every transaction entry in the G/l passes on to the primary costssame account number

Secondary cost element uses to calculate revenues and expensesthrough estimation of prices comparison to the

standard price, difference goes to the difference account (revenues/expenses)

OH: Structure: Cost center; tool: Internal orderstemporary account

UNIT 5: PURCHASE TO PAY BUSINES PROCESS > PAGE 246

5 LEVELS OF ORGANIZATIONAL LEVELS IN THE PURCHASE TO PAY BUSINESS PROCESS

a. Organizational Levels in the Procurement Process (Legal)

- Analyze the structural and process organizations in your enterprise and the reconcile them

with the SAP structure. Once you have decided on an organizational structure, considerable

effort would be required to change it again

1)

Client: unit within tan SAP system that is self-contains both in legal and organizational terms and

in terms of data, with separate ,master records and an independent set of tables

- Can represent a corporate group

- Highest hierarchy in the SAP system

- Data entered to this unit level apply to all organizational unitsensures uniform data status

-

Access authorization is assigned on a client specific basis (a user master record must be

created for every user for the client)

- Defined in SAP by a 3 digit numeric key

COPA

PCA (Plant, estimate, do it) - all kindadocs can be generated here

OH (Primary element cost)

Cost ElementComponent

FI - G/L

PC (Secondarycost element)


25/39

2) C.C.: smallest organizational unit of external accounting for which a complete, self-contained

bookkeeping system can be replicated.

- Represents an independent unit producing its own balance sheet; a company within a

corporate group (client)

- Defined by a 4 character alphanumeric keyunique in the client

3) Plant: organizational unit within logistics that subsidies an enterprise form the viewpoints of

production, procurement, and materials planning

-

Defined by a 4 character alphanumeric keyunique to it in the client A plant may represent different entities:

o Production facility, central issuing storage location, regional sales offices, corporate

headquarters, maintenance location

4) Storage location: organizational unit that facilitates the differentiation of stocks of materials

within a plant. Inventory management on a quantity basis is carried out in the plan at storage

location level.

- Defined by a 4 character alphanumeric keyunique to it in the plant

5) Purchasing organization/Purchasing group:

1. Purchase Organization: organizational unit within logistics that subdivides the

enterprise according to the purchasing requirements.a.

Specific information related to purchasing organization

b.

Can be cross company codecentralized C.C

c.

Can also control de vendors

d.

Procures materials or services

e.

Negotiates conditions of purchase with vendors, and assumes responsibility for

these transactions

2. Purchasing group: key for a buyer or a group of buyers who is/are responsible for

certain purchasing activities. Purchasing group is internally responsible for the

procurement of a material or a class of materials and externally supplies the contact

person for vendors

a.

Not aligned to other units in the company

-

You can incorporate purchasing into the company structure by assigning the purchasing

organization to a C.C. ant to plants (Purchasing can be centralized or decentralized)

b. Organizational levels in inventory management

- 1 C.C can have multiple plants

- A client can have several C.C

- 1 plant can have multiple storage locations

- A specificstorage location can belong to 1 plant

- 1 plant can only have 1 company code

-

Since the key of a plant is unique to a clientby specifying the plant key, you specify the C.C

- Several purchasing organizations to 1 C.C.

- A specific purchasing organization can only belong to 1 C.C.

- There is a m:n (many to many) relationship between purchasing organizations and plants ;

meaning you can assign many plants to one purchasing organization, and one plant to several

purchasing organizations

1)

Plant-Specific Purchasing organization

-

A purchasing organization is responsible for procuring materials for just one plant ; this

purchasing organization is assigned to one C.C and to just one plant


26/39

2) Cross-plan purchasing organization

-

Purchasing organization procuring materials for several plants belonging to a C.C

3) Cross-company-code purchasing organization

Not assigning the purchasing organization to a company code. Then when you create a purchase

order, the system will ask you to enter the company code for which you want to procure the

material

THREE DIFFERENT DATA CATEGORIES:

MATERIAL MASTER RECORDS

a.

central source of material-specific data. It is used in all areas of logistics

- Data in the vendor records controls how transaction data is posted and processed for a

vendor. It also contains all the data you require to do business with your vendors.

- The master record is used not only in MM but also in FI

b. Material Master:

1)

Data required for following activities:

1.

Purchasing data for ordering purposes

2.

Inventory management data for posting goods movements and physical inventory

management

3.

Accounting data for material valuation

4.

Materials planning data for material requirements planning

2)

Data examples: basic data, MRP, Stocks at plant, accounting, storage, warehouse management,

purchasing, sales, work scheduling, quality management, forecasting, classification

3)

Every department creates its own view of a material master because each one of them stores

different information about the material

1.

Data available for whole enterprise: Material no., material short text, material group,

base and alternative units of measure

2.

Data that is valid within one plant: purchasing data, MRP data, forecasting data, work

scheduling

3.

Data that is valid for one storage location: storage bin description, picking area, etc

c. Material master: organization levels

- Material master can be organized in certain way to reflect the structure of an organization

making flexibility and integration avoiding redundancies:

1.

Data at client level: General material data that is available for the whole company is

stored at client level

2.

Data at plant level: data that is available for plants and storage locations are stored at

plant level

3.

Data at storage location level: data valid for particular storages is available at storage

location level

-

These 3 organizational level are relevant for the external procurement process; plant, client,

and storage location play a role when you enter data for purchasing, inventory management

and accounting

d. Data screens in Material master record maintenance

- Different levels of information:

1.

Initial level: material

2.

Main work level: purchasing, sales, accounting, MRP, forecasting, work scheduling


27/39

3.

Additional data level: texts, units of measure, additional EANs, document data and

consumption

- Material master records can be subdivided into the following types:

1.

Main Data: screens for the individual user departments, such as basic data, material

planning

2.

Additional data: you find additional data information, such as alternative units of

measure, material short descriptions and consumption values

VENDOR MASTER RECORD

- Contains information about a companys vendors, such as name and address, currency used

for transactions with the vendor, terms of payment, names of important contacts

(salespersons)

- For accounting purposes, the vendor is also a creditor of the company. The vendor master

record contains accounting data such as the reconciliation account form the G/L

- Vendor master record is maintained by accounting and purchasing

- Data is subdivided into different categories:

1.

General data: address, communication, control data, bank information, contact persons

2.

Company code data: account information, payment transactions, correspondence,withholding tax

3.

Purchasing organization data: purchasing data and partner roles

a.

Vendor master data

-

Subdivided into categories:

1.

General data: valid for a single client. It includes the vendor address and bank details

2.

Acc data: maintained at a company level. It includes the number of the reconciliation

and the payment methods for automatic payment transactions

3.

Purchasing data: maintained for each purchasing organization. It includes the purchase

order currency, incoterms, and various control data pertaining to the vendor.

-

Data in the vendor master can be maintained centralized or decentralized

b.

Vendor master record: organizational levels

-

Before you can order anything from a vendor, you must have previously maintained the

purchasing data. To enter invoices you need to create the accounting data beforehand

- General data, purchasing organization data and accounting data can be maintained centrally

or separately possible

PURCHASING INFO RECORDS

a.

Purchasing info records: provides the option of storing information about a vendor and a material as

the master data at purchasing organization level and plant level. It is an important source of information

for the buyer. You can define the following information in info records:

1)

Current and future prices and conditions (freight and discounts)

2)

Delivery data (planned delivery time, and overdelivery and underdelivery tolerances)

3)

Vendor data and vendor specific data about material

4)

Number of the last purchase order

5)

Texts

Following type texts are stored in the purchasing info record:

- Internal info record memo: this is an internal comment that is transferred to the purchase

order item. This text is not printed


28/39

- Purchase order text in the purchasing info record: this text is used to describe the purchase

order item. Its transferred to the purchase order item and printed

The data for the purchasing info record needs to be divided into generally applicable (valid for a

single client) data, purchasing-organization specific data, and purchasing organization-specific and

plant-specific data

b. Conditions:

-

Are agreements with vendors about prices, surcharges and discounts. Conditions can be

maintained when entering quotations, info records, outline agreements (contracts, scheduling

agreements) and purchase orders

- Following conditions are used in purchasing:

1.

Conditions in a contract apply to all contract orders created with reference to this

contract

2.

Conditions in purchasing info record apply to all purchase order items that contain the

material and vendor in the purchasing info record

3.

With general conditions, you can also display price agreements that dont only apply

to individual quotations, etc.

LESSON: PURCHASE REQUISITIONS AND PURCHASE ORDERS > PAGE 277

1) PURCHASE TO PAY BUSINESS PROCESS

Purchase to pay business process

1.

Determination of requirements

2. Determination of source of supply

3. Vendor selection

b. Purchase order

1. Purchase order handling

2. Purchase order monitoring

3.

Goods receipt

4.

Invoice receipt

5.

Invoice verification

6. Payment processing

2) PURCHASE REQUISITIONS

Purchase requisitions

- Purchase requisitions are internal documents for asking your purchasing department to

procure a particular quantity of a material or service for a particular date.- It can be created directly (created manually in the department that made the request.

Whoever creates the purchase requisition determines which material or service is ordered,

and the quantity and the date) or indirectly (P.R. from another SAP component is created

automatically; through materials planning as follows: in MR, with maintenance orders, with

production orders and with networks)

-

Can also come from SAP SCM or SAP SRM.

- When you create P.R. for materials that have a material master record, the system transfers

data in the material master record to the P.R.

- You can convert P.R. into RFQs, P.O or outline agreements


29/39

Processing purchase requisitions

- Using the creation indicator in the statistic data of the purchase requisition item so to see

which procedure was used to create the purchase requisition. When creating the purchase

requisition the requester can enter a source of supply for the relevant item or specify a

desired vendor

-

In the end the purchasing department is responsible for determining the source of supply and

for converting the P.R. into a purchase order or RFQ

Consumable material- Consumable materials are materials or services that are procured directly for an account

assignment object. Examples: office supplies: assigned to a cost center; computer systems:

assigned to an asset; machines.

- In the case of consumable material with a master record: there is no value-based inventory

management, and consumption is automatically updated in the Material master record

- In SAP: Consumable materialmaterial that is subject to procurement and whose value is

settled using the cost element accounts or the assets account

- A material master is not necessary when a material is procured for consumption (BUT IT DOES

FOR MATERIAL PROCURED TO BE STOCKED STOCK VALUE IS POSTED TO A STOCK ACCOUNT

DURING GOODS RECEIPT

STOCK VALUE AND QUATITY ARE UPDATED IN MASTER RECORD).Short description, material group and PO unit in the document must be entered manually in

the doc because there is no master record; if there is a master record, the material type

controls whether inventory management for a material is to take place on a value basis.

a.

The following material types exist by default for consumable materials:

i.

Non-valuated material (Material UNBW): Subject on quantity basis, low-

value material that have stock, and needs to be monitored (E.g.

operating manuals)

ii.

Non-stock material (NLAG) (Material type NLAG): Not possible in

inventory management. Allows you to store the info required to create

purchasing documents (text and units of measure)

- Material can be procured for stock and consumption. You also may purchase trading goods for

a customer (sales order), therefore you can enter an account assignment for the item of a

purchasing document or a P.R if it is intended for direct consumption.

- In certain cases, account assignment is mandatory. For example:

1.

If your order material that is not subject to value-based and post its values directly to

consumption (pure consumable material)

2.

If you order an article that doesnt have material master record

3.

If you order a service

I you want to procure material as consumable, an account assignment category must be performed

- The following are different examples of consumables materials:

1.

Consumable material without material master record

2.

Consumable material with material master record that is not subject to inventory

management (on quantity or value basis)

3.

Consumable material with material master record that is subject to inventory

management on quantity only

Account assignment objects


30/39

a. In the procurement process, the procured of material for stock and consumption is shown with regard

to account assignment

b. Consumption accounts (cost center, assets, project, production order, sales order, profit centers)

c. Account assignment category determines the account assignment object category that is to be charged,

which account assignment must be provided and which accounts are debited when goods receipt and

invoice is posted. Examples:

1) Account assignment for object cost center: you must enter G/L account number of the

consumption account and the cost center for which the material is to be procured.2)

Account assignment object assetcategory A: you must enter account assignment number. The

system automatically determines the G/L account to be charged from the asset number

cannot be entered manually

Procurement for consumption (1)CHECK PAGE 284 FIGURE 122

Stock material and consumable material: comparison

Stock material Consumable material

Necessary to enter material number Not necessary material number

No account assignment category Account assignment category mandatory

GR mandatory GR optionalQuantity, value and consumption updated in

Master record

Posting to consumption account

Adjusted of moving average price No value updated, quantity and consumption

update in material master record possible

1)

PURCHASE ORDERS

Formal request to a vendor to supply you with goods/services under conditions stated in the PO

You specify in the PO if material is purchased for consumption or stock

Purchase order

-

Save time by creating PO in reference to previous POs, P.R, QT, OR CONTRACTS

-

If no referenced; you need to enter ordering address, terms of payment and freight

(incoterms) from the vendor master record. If material master exist; material group and short

text are transferred automatically to the PO

- You can send the PO to a vendor or you carry out a stock transport order in another plant

belonging in your company or group

Purchase order format: Header: information that refers to the entire purchase order; item part: data describing

the materials/services ordered

Purchase order transactionsME21N, ME22N, ME23N

a.

ME21N: Single screen transaction, divided into 4 screens:

1)

Header: contains data relevant for the order

2)

Item overview: items with most important data; such as quantity, delivery date, price and plant

3)

Item detail: additional data

4)

Document overview : displays different purchasing documents

5)

ADDITION: Help function

Purchase order Transaction - Navigation

a. Info required: Vendor master: material group, vendor, plant, storage location

1) MESSAGESIssue a message


31/39

b. You can issue all purchasing documents as messages. Every time you create a PO, PR, contract,

scheduling agreement etc. the system creates a message from the document affected. This message is

posted in the message queue (contains all messages that havent been transferred to the vendor)

c. To issue the message: issue immediately (message is issued directly from the queueas soon as you

save the document), or issue later (you schedule a background job to process the message queue in

determine intervals, or you start the issue from the purchasing menumanually; rush orders)

d. You can specify which header texts and item-based texts the systems issue

LESSON: GOODS RECEIPT AND TRANSFER POSTINGSLOGISTICS > PAGE 303

1) GOODS RECEIPT PROCESSING

- When goods are delivered against a purchase order you should enter a G/R entry

- Other things to check: if the right material and quantity has been delivered, if perishable

goods are within their minimum shelf life

Goods receipt:

a. Every time you post the receipt of goods the system will create a material document; which contains

information on the material delivered and relevant quantity. The system also records the plant storage

location in which the material is put away.

b.

If goods receipt if valuated, an accounting document is generated in additionwith info about

accounting effects on the material movement

c. You can enter multiple goods receipt items against a purchase orderadvisable when goods come in

batches or are going to be distributed to several storage locations

Valuated goods receipt:

a.

For goods receipt you decide which stock type and quantity is posted. The stock type is relevant for

determining the stock available in Materials planning and is used for withdraws in inventory

management

b. You can post goods receipt for warehouse into 3 stock types:

1)

Unrestricted-use stock (no usage restrictions - available from MRP perspective, and withdraws

are possible for consumption)

2) Quality inspection stock (available from MRP perspective, no withdraws are possible for

consumption)

3)

Blocked stock (no available from MRP perspective, withdraws are possible for consumption)

c. Always use movement type 101 to post goods receipt for a PO to valuated stock(stock type for PO:

delivery tab. Stock type for production: goods receipt tab)

Movement types: examples:

a. When entering a goo movement you must enter the movement type. Example:

1) Goods receipt into warehouse: movement type 101

2) returning delivery to vendor: movement type 122

b. Example of goods movement: transfer postings or goods issues, goods receipt

c. Movement type determines the layout of the screen for document entry or updating quantity fields

Transfer postings:

- If you want to withdraw goods from the quality stock or the blocked stock you have to do a

transfer posting; which is changing the label

- Movement type controls between which stock types and transfer postings occur

- A document is created in the system to show the transfer postingand if transfer posting is

valuated, an accounting document is also created


32/39

- stock to stock transfer posting physical transfer posting between two storages locations;

not relevant for valuation

- material to material transfer postings movement type 309is linked with a stock value

change and is relevant for valuation

Documents for goods movements

a.

Material, quantity, movement type, and organizational level cannot be changed as soon as goods

movement is posted

b.

The document principle applies for IT-based inventory management. Material document and accountingdocuments (if valuated) are generated to prove that the movement has been made

c. Goods movements are valuated when they affected your companys accounting department. Example:

goods receipt posting for a raw material will increase your assets; so a material document is created and

an accounting doc also. However, if goods are being transferred within plants, no accounting doc

necessary

Material and accounting documents:

a. Material (consists in a headerincludes the posting day and name of creatorwith at least one item)

and accounting documents (records the effects of the movement on the accounts; document header

contains: document date, currency, posting date, reference; item level: G/L account number, and

quantity) are created; both are independent documentsb. Material document can be identified by material document year and material account number

c. Accounting document can be identify by company codewhich is taken from the plan in which the

movement of goods takes placeand year

Effects of goods receipt

a.

Material (quantity), and accounting (values) documents being created, other areas are affected:

1) Purchasing: purchase order history updated

2) Quality management (if active)- transfer requirement is created along with the goods being

placed into warehouse

3) Output may be generated, example: goods receipt slip or pallet

LESSON: INVOICE VERIFICATION AND VENDOR PAYMENT > PAGE 324

-

Invoice processing

-

Invoice verification with reference to PO

- Documents in invoice verification

- Posting an invoice

- Elements of the payment transaction

LESSON: REPORTING > PAGE 340

4)

REPORTING AND ANALYSIS FUNCTIONS IN PURCHASING

Reporting and analysis functions in purchasing

Analysis in inventory management

Reporting and analysis functions in invoice verification

1) SAP LIST VIEWER AND ALV GRID CONTROL

SAP list viewer and ALV grid control

Functions of the SAP list viewer/ALV grid control

Layout (display variant)


33/39

1) BASIC STRUCTURE AND CONCEPT OF THE LIS

SAP logistics information system (LIS)

Reporting in the LIS

Information structures

Reporting in standard analysis

UNIT 5: PURCHASE TO PAY BUSINES PROCESS > PAGE 246

UNIT 13: HUMAN CAPITAL MANAGEMENT > PAGE 839

ESS (EMPLOYEE SALES SERVICE)PEOPLE INTEGRATION

MOST IMPORTANT MASTER DATA IN HR: EMPLOYEE RECORDS

MOST IMPORTANT FUNCTION IN HR: PAYROLLDONE IN PERSONNEL STRUCTURE

RECRUITING, MANAGING EMPLOYEE, MANAGE ORGANIZATIONAL STRUCTURE

1)

HCM STRUCTURES

Organizational, enterprise and personnel structureinfotype 0001 (Organizational assignment)

a. Allocation of employees to the structure in the company is a very important step in HCM - first step in

entering personnel data

b.

3 Mayor areas of information:

1)

Enterprise sales structure: attach person to other organizational unitsmodule structure

2)

Personnel structure: Create HR structure to manage people

3)

Organizational structure: deeper than HRone position, lots of employees (jobs). Example: 1

employee secretary for two departments

c.

Information on the organizational assignment of employees is of great importance for authorization

checks, for the entry of additional data, and for the time management and payroll accounting Enterprise structure : personnel administration is determined by the elements:

a. Client: is an independent legal and organizational unit of the system (groupexample)

b. CC: is an independent company with its own accounting unit, a company that draws up its own B/S

c. Personnel area: is an organizational unit in the Personnel administration. It represents a subdivision of

the CCHR AREA

d. Personnel subarea: are subdivisions of personnel areas. The organization of the most important

subareas of personnel administration take place at this level

Definitions

a. A client can either be valid for a company code at the smallest level or for the entire corporate group.

a.

Consider before setting up a client:i.

There is usually no exchange of data between clients

ii. If an employee changes clients, you have to create the personnel

number again

b. The CC is defined in AccountingB/S and P/L statements are created in this level; highest level of a

company structure

c. The personnel area is used in Personnel administration and is unique within a clientmust be assigned

to a CC


34/39

d. Personnel subareaunique to personnel administration: employees assigned to a particular CC, or

personnel area. It is a further division of the personnel area. Principal organizational aspects of HR are

control in this level; namely: the pay scale, wage type structures and planning work schedules

Personnel structure

a.

Trying to organize your employees in groups. Organized in two levels:

1)

Highest level: employee group

2)

An employee subgroup

Both are subject to authorization checks, remuneration levels or different work schedules, forexample

DIVISIONS OF PERSONNEL STRUCTURE:

Personnel structure: employee group

o General division of employees. It defines the relationship between an employee and a

company in that the employee males a certain cont