PROJECT REPORT

Implementation of SAP for Enterprises

Resource Planning

Course Code MAN502

BUSINESS PROCESS RE-ENGINEERING

Submitted
To
Dr. AMIR IQBAL
Submitted
By
Nosheen Mehfooz (22980)
Paras Raj (22829)

Fall 2019

INSTITUTE OF BUSINESS MANAGEMENT

Table of Contents
1. Scope.......................................................................................................................................................3
2. Introduction............................................................................................................................................4
3. Benefits of implementation SAP.............................................................................................................4
4. Current Practices.....................................................................................................................................5
5. Importance of SAP system......................................................................................................................7
6. Impact of SAP System in Business Operations........................................................................................8
7. SAP in procurement................................................................................................................................9
8. SAP in Maintenance Engineering..........................................................................................................10
9. SAP benefit............................................................................................................................................12
10. Current flow chart.............................................................................................................................13
11. SAP implemented Chart....................................................................................................................14
12. Matrix of Change...............................................................................................................................15
13. Conclusion.........................................................................................................................................16

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List of Figures:
Figure 1: Organization communication cycle.....................................................................................3

Figure 2: Expected cycle of resource planning...................................................................................5

Figure 3: Procurement cycle in SAP...................................................................................................9

Figure 4: Maintenance Engineering Cycle in SAP...........................................................................10

Figure 5: General Task List for Maintenance Package Overview....................................................11

Figure 6: SAP Benefits.....................................................................................................................13

Figure 7: Current Flow Chart of Organization..................................................................................14

Figure 8: SAP Designing for Implementation..................................................................................14

Figure 9: Change Matrix...................................................................................................................15

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Implementation of SAP for enterprise resource
planning
1. Scope
The scope of our project mainly revolves around changing the practice of our current manual
practices to optimize the operations process, production planning, maintenance planning,
inventory management, market and sales planning. This will lead to improve efficiency and
decrease lead time to become market. Through SAP Information is readily available for the
proper users, all data is kept in a central repository, data redundancy is minimized, and there is a
greater understanding of the overall business picture. If a company does not have an SAP system
and employs separate standalone systems for functional areas of a business, the company will
not be running at its full potential.

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Figure 1: Organization communication cycle

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2. Introduction
Currently, industries are evolving globally and advancing towards industry 4.0. Automation has
led system to be autonomous and efficient. Results are achieved at a faster rate. But the majority
of Pakistan local companies are not well aware of automation and ERP system implementation
blessings, hence through ERP system various faced issues will be resolved and company CEO
expectation regarding KPI improvement will be possible.

3. Benefits of implementation SAP

Various benefits that can be observed are as follows: -

• Increase in organizational flexibility

• Cost reduction
• Fast amortization of investment
• More efficient business processes
• Higher quality of business processes
• Improved integrability
• Reduced complexity and better harmonization of IT infrastructure
• Better information transparency and quality
• Better and faster compliance with legal requirements and frameworks

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4. Current Practices
Currently below mentioned cycle follows:

Expected cycle

Figure 2: Expected cycle of resource planning

To start the sales process, a pre-sales activity such as a newspaper advertisement, television
commercial or word-of-mouth has prompted the need or desire to purchase a product or
products. The customer will then place a sales order. Next, the company will check the
availability of the item or items requested. If the item is in stock, the materials management
segment of the company will pull the item from the plant or warehouse, and prepare the item for
delivery to the customer. If the item is not in stock, this will prompt the materials management
segment of the company to begin the procurement process with a vendor to restock the item.
Once the item (good) has been received from the vendor, then the plant or warehouse will
prepare the item or items for delivery to the customer. At the issuing of the items to the customer
and the item receipt point from the vendor, the financial accounting segment of the business is
integrated into the overall process, with accounts receivable and accounts payable due.

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 Another process could have been included into this scenario had the company been a
manufacturing company. At the availability check point, in place of purchasing the item, the
item may have been produced. The procurement process may have played a role in the
production process as well, had a raw material or component part not been available to complete
the production of the item. In this illustrated example, all three processes of sales, procurement,
and accounting are integrated to complete the overall process of the cash-to-cash cycle. This is a
prime case of business process integration.
To achieve business process integration, it may be necessary to perform business process re-
engineering (BPR). BPR is an integral part of an ERP implementation and represents a
fundamental rethinking of the company’s current way of doing business. BPR is defined by
Hammer and Champy (1993) as “the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary measures of performance,
such as cost, quality, service and speed” (p. 32). The essential features and benefits of a bundled
ERP packaged software application are already developed based on industry best practices. For
companies to take full advantage of the many benefits offered by an ERP system, business
process reengineering is required to address the gaps in business practices, leveraging the
functionality of the new ERP packaged application. Most company business processes are
procedurally similar but industry uniqueness, distinct practices, and size play a significant role in
the gaps that a company must re-engineer for an ERP system implementation.
Research has found that successful ERP projects result when companies are involved in BPR
and BPR is included in the ERP selection (Tsai, Chen, Hwang, & Hsu, 2010; Muscatello,
Small, & Chen, 2003). Companies that adapt organization processes to increase information
flow across business organizations achieve greater success with IT investments than if they had
launched the ERP software alone. By changing business processes to align with the new ERP
system, a company can dramatically change the value derived from the technology and scale
operations profitability. The ERP system usually consists of several functional modules that are
deployed and integrated generally by business process. The ERP implementation creates cross-
module integration, data

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 standardization, and industry best practices, which are all combined into a timeline
involving a large number of resources.

5. Importance of SAP system

SAP systems are strongly characterized as operational information technology (IT) systems,
enabling management to have sufficient data for analysis and decision making purposes
(Mehrjerdi, 2010). This greatly contributes to a company’s capability to align with its core
business strategies and competences (Chan & Huff, 1993). Alignment involves “applying IT in
an appropriate and timely way and in harmony with business strategies, goals, and needs”
(Luftman & Brier, 1999, p. 109). These types of enterprise information systems provide a
holistic integration, functional operation, and real-time processes in a single common database.

Various benefits are as follows: -

 Increase in organizational flexibility

 Cost reduction
 Fast amortization of investment
 More efficient business processes
 Higher quality of business processes
 Improved integrability
 Reduced complexity and better harmonization of IT infrastructure
 Better information transparency and quality
 Better and faster compliance with legal requirements and frameworks

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6. Impact of SAP System in Business Operations
SAP allows the integration of processes within a company so they can act as a one centralized
system. The value of encompassing process integration permits companies to gain efficiencies in
overall and individual processes. It mainly focuses towards supply chain management, inventory
management, Operations planning, engineering planning and customer relationship
management. Once the SAP is integrated in industry the whole process is depended on SAP.
Industry begins with the sales process, a pre-sales activity such as a newspaper advertisement,
television commercial, or word-of-mouth has prompted the need or desire to purchase a product
or products. The customer will then place a sales order through SAP. Next, the company will
check the availability of the item or items requested through SAP. If the item is in stock, the
materials management segment of the company will pull the item from the plant or warehouse,
and prepare the item for delivery to the customer. If the item is not in stock, this will prompt the
materials management segment of the company to begin the procurement process with a vendor
to restock the item. Once the item (good) has been received from the vendor, then the plant or
warehouse will prepare the item or items for delivery to the customer. At the issuing of the items
to the customer and the item receipt point from the vendor, the financial accounting segment of
the business is integrated into the overall process, with accounts receivable and accounts payable
due. Another process could have been included into this scenario had the company been a
manufacturing company. At the availability check point, in place of purchasing the item, the
item may have been produced. The procurement process may have played a role in the
production process as well, had a raw material or component part not been available to complete
the production of the item. In this illustrated example, all three processes of sales, procurement,
and accounting are integrated to complete the overall process of the cash-to-cash cycle.

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 7. SAP in procurement

Figure 3: Procurement cycle in SAP

SAP in the procurement department has allowed us to improve our cash cycle time, connect all
related department to improve the process and also reduce head counts. It has also allowed us to
view and manage all POs, PR and budget related to CAPEX and OPEX. SAP system has made
planning related to all departments at a faster pace and reduce human error.

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 8. SAP in Maintenance Engineering

Figure 4: Maintenance Engineering Cycle in SAP

The maintenance of machine planning turned out to be feasible as per production planning and
practically possible. It also allowed to calculate maintenance cost and add it up to product cost
allowing us to calculate future product cost.

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 Figure 5: General Task List for Maintenance Package Overview

SAP allows the maintenance schedule to be followed, by all departments and keep track. It
allows tracking of maintenance and carry out root cause analysis feasible and effective
communication. Currently, shift in charge filling responsible for a sheet.

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9. SAP benefit
 Improved quality and timeliness of data.
 Better product life cycle decisions (repair or replace.
 Leverages SAP’s robust and stable system infrastructure.
 Improves accountability through the integration of SAP labor and inventory costing.
 Enhances customer experience with a unified interface to business
transactions.
 Reduce accounts receivable collections with better visibility into the AR process,
aging, and extension of credit and consequently,
 Also help to reduce the day’s sales outstanding.
 Effectively manage forecasting and handling sudden changes in demand and supply
process.
 Improve production efficiency and reduction in production quality issues and hence
reduce the cost of goods sold.
 To reduce transportation duties and taxes, and increase rebates and incentives. It
also helps to reduce transportation errors.
 To meet customer demands, you can smartly plan and manage the Supply Chain
Management process for an organization.
 Proper inventory optimization, order fulfillment, and shipping of the goods.

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 Figure 6: SAP Benefits

10. Current flow chart

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 Figure 7: Current Flow Chart of Organization

11. SAP implemented Chart

Figure 8: SAP Designing for Implementation

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12. Matrix of Change

Figure 9: Change Matrix

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13. Conclusion
SAP is an ERP management tool, it has made operations feasible by decreasing downtime,
removing communications barriers, allowing cash cycle to reduce and also improve inventory
management on the basis of real time information.
Through SAP downtime has decreased by 5%, cash cycle time improved by 10%, inventory
holding cost decreased by 3%.

SAP has also allowed the finance department and HR department to also improve their
process. The OPEX and CAPEX budgeting was improved, the asset tracking allowed to view
product cost depended on direct/indirect labor cost, maintenance cost, utility cost and
operational cost. It has made a check and balance procedure feasible and reliable.

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