Introduction to

SAP

September 30, 2003

SAP Overview - Agenda

1. SAP R/3 System Overview

– SAP R/3 and Modules
– SAP Organization Structure
– SAP Master Data
– SAP Security

2. SAP R/3 Module Overview and Master Data

– Sales and Distribution
– Materials Management and
– Finance & Controlling

3. SAP R/3 System Benefits

– System Integration – Data Consistency
– Business Processes

2
Presentation Objectives

 Provide an introduction to the SAP R/3 system

 Introduce and define SAP R/3 terms

 Explain the system’s functionality

 Explain the purpose and function of master data

 Introduce SAP R/3’s approach to business processes

3
SAP R/3 System Overview
SAP R/3 Overview:
SAP R/3

• Systems, Applications and Products in Data

Processing

• German software company, founded in 1972

• Has been the market leader in ERP (Enterprise

Resource Planning) software, technology and product
development

• R/3 indicates Real Time – 3 Tier Architecture.

5
SAP R/3 Overview:
SAP R/3

• The R/3 system was designed

for use in open, or client/server
environments.

• R/3 works with a common

database. This means
information entered into the
system by one part of the
organization is immediately
available to all other parts of the
organization.

6
SAP R/3 Overview:
SAP R/3 Application Modules

 MRP  Sales Support  Shipping  General Ledger  Financial Assets

 Purchasing  Inquiries  Invoicing  Accounts Receivable Management
 Goods Movement  Quotations  Sales Information  Accounts Payable  Consolidation
 Invoice Verification  Orders  Cash Management  Foreign Currencies &
 Inventory Management  Financial Controlling Taxation
 Vendor Evaluation
 Purchasing Information SD FI
Sales & Financial  Cost Element Accounting
Distributi Accountin  Cost Center Accounting
 Sales Planning MM on g CO  Activity Based Cost Accounting
 Production Planning Materials Controlling  Activities and Services Costing
 MRP / MRP II Mgmt.  Order and Project Accounting
PP AM
 Forecasting
Productio Fixed Assets
 Capacity Planning Mgmt.
n
 Production Activity Planning  Technical Asset Mgmt.
 Costing
 Project Management
QM R/3 PS



Investment Control
Traditional Asset Acct.
Investment Mgmt.
Quality Project
Mgmt. System
 Quality Planning PM WF
 Quality Inspection Plant
Workflow  Funds Management
 Quality Control Maintenanc
 Resource Management
e HR IS
 Quality Documentation  Quality Control
Human Industry
 Quality Information Resources Solutions  Time Management

 Automates Business Processes

 Maintenance & Inspection Planning  Supports all modules
 Processing of plant maintenance orders
 Management of completion confirmations
 History Management  Payroll  Workforce Planning  Result of the ICOE’s
 Plant Maintenance Information  Travel Expense Accounting  Training Administration  Industry specific functionality
 Benefits  Organization Mgmt.
 Recruitment  Personnel Administration
 Personnel Administration  Time Management

7
SAP R/3 Overview:
SAP R/3 Application Modules

• Real time processing

• Data is entered once. Where it originates
• GUI Icons, User friendly
• Immediate checking, processing, and information availability

SD FI
Sales Financ
MM & ial CO
Materi
Distri Accou Integration
bution ntingControl
ling AM
PP als
Produ Mgmt. Fixed • Common cross-department data basis (no
ction Assets
redundancy in data storage)
Planni
QM
ng
Qualit
R/3 Mgmt.
PS
Projec • Up-to-date information
y PM WF t
Mgmt. Plant
Mainte HR IS
Workfl Syste
m
• Software development tools (for enhancements and
ow
nance Huma
n
Indust
ry
own developments)
Resou Soluti
rces ons

Usability
• Convenient standardized user interface
• Optional menu/command mode
• Intelligent online documentation and error dialog
•The Multi’s • Catchword catalog (detailed explanation of typical terms
• Multi-Company • Search aids (matchcode)
• Multi-Language • Mutiple transactions simultaneously (alternatives session)
• Multi-Currency • Long-running transactions in background processing
• SAP is internet ready
8
SAP R/3 Overview:
System Wide Features

• SAP Organization Structure

• Master Data

• Security

9
SAP R/3 Overview:
SAP Organizational Structure

The fundamental data and functional architecture of the

R/3 system...
– Defines the legal and organizational structure of a company from
different points of view.
– Includes flexible organizational units for creating a comprehensive
company structure.
– Links different application areas in the R/3 system to create an
integrated company structure.

10
SAP R/3 Overview:
SAP Organizational Structure

Client
Client
• Client is the highest level in SAP Chart of Accounts
R/3.

• The data within one client may Controlling Area A Controlling Area B
not be accessed while working in
another, different client.
Company A Company B Company C
• Some data is managed at the
client level because every one in
Plant 1 Plant 2 Plant 3
the corporate group of companies
will want to refer to exactly the
same information. Sloc A Sloc B Sloc A Sloc A

11
SAP R/3 Overview:
SAP Organizational Structure

Client
Chart of Accounts
• Consists of an organized list of Chart of Accounts
all General Ledger accounts for
an organization
Controlling Area A Controlling Area B
• Can be specific to a single
Company Code or used across
Company A Company B Company C
multiple Company Codes

• Can be used for one or multiple

Plant 1 Plant 2 Plant 3
Controlling Areas

• Can be maintained in different

Sloc A Sloc B Sloc A Sloc A
languages

12
SAP R/3 Overview:
SAP Organizational Structure
Client
Controlling Area
Chart of Accounts
• An organizational unit within a
corporation in which the internal
management of costs and profits
Controlling Area A Controlling Area B
can be performed

Company A Company B Company C

Plant 1 Plant 2 Plant 3

Sloc A Sloc B Sloc A Sloc A

13
SAP R/3 Overview:
SAP Organizational Structure

Client
Company Code
• The identification number of an Chart of Accounts
independent accounting unit
that can generate its own
financial statement. Controlling Area A Controlling Area B

• It is a legal requirement that a

group that operates in several Company A Company B Company C
countries must establish a
separate company code unit for Plant 1 Plant 2 Plant 3
each country.

Sloc A Sloc B Sloc A Sloc A

14
SAP R/3 Overview:
SAP Organizational Structure

Plant Client

• A plant is the central

Chart of Accounts
organizational unit to the
production planning and
inventory management Controlling Area A Controlling Area B
concept
• Typically represents a
Company A Company B Company C
manufacturing location or
distribution center
Plant 1 Plant 2 Plant 3
• A plant can be production site
or a group of storage locations
that share materials. Sloc A Sloc B Sloc A Sloc A

15
SAP R/3 Overview:
SAP Organizational Structure

Storage Location Client

• A physical or “virtual” location

Chart of Accounts
that the system uses to manage
inventory.
Controlling Area A Controlling Area B
• Defines the location of materials
within a Plant
Company A Company B Company C
• Inventory is managed in storage
locations at the quantity level.
Plant 1 Plant 2 Plant 3
• May be a warehouse, storeroom,
or a specific location within a
warehouse or storeroom Sloc A Sloc B Sloc A Sloc A

16
SAP R/3 Overview:
Master Data

• Master Data refers to core

information that is used by the
various SAP modules. This
information is typically entered
only once, after which, the user will
MM FI/CO
refer to the information to
accomplish other tasks.
PP Master QM
• The master data files can also be Data
updated with new information so SD WM
that its use as a reference is always
accurate.
• SAP’s functional modules share
and use the various master data
records across multiple areas and
processes.

17
 SAP R/3 Overview:
Master Data - Types of Master data

Sales and Distribution:

•Material masters
•Customer Masters
Customer Master
•Customer Material lists
•Customer Price records
G/L Account Master
Client
Purchasing: Chart of Accounts Chart of Accounts

•Material masters
A G/L Account BANK B
Bal sheet acct X
Account group FIN.
.

•Vendor master
.

•Info Records Company Codes

•Source Lists
CC 0001 CC 0003

Currency USD Currency CAD

Line item Line item

Display X Display X
. .
. .

Vendor Master Finance and Controlling: Inventory Management

Purchasing
RFQ •Material masters •Material masters
•G/L Accounts •Plants
?

Vendor
•Cost Centers •Storage locations
•Profit Centers
Quotation

18
SAP R/3 Overview:
Master Data - Material Master

SAP R/3

Material Master Record

Purchasing Sales Order
Processing
Central repository
of material data for
all areas within
logistics:
Finished Products
Semi-finished products
Raw materials
Consumables
Invoice Marketing Materials
Verification

Inventory Management 19
SAP R/3 Overview:
Master Data - Key Data in the Material Master

• Client level data

– Description and texts
– Units of measure, weights, volumes
– Material type

• Sales organization data

– Sales organization, distribution channel, shipping points...

• Inventory Management and Purchasing organization data

– Purchasing group, receipt processing time, quality inspection indicator, storage
location…

• Planning data
– Planning type, MRP controller, lot size data, forecast consumption data…

• Finance and Controlling data

– Material valuation, cost estimate data…

20
SAP R/3 Overview:
Master Data - Terms and Concepts

• Material
– A generic term for any article, item or service that is subject to materials
management. Material numbers are assigned internally by SAP or
externally by the user.

• Record
– A collection of data pertaining to one item.

• View
– A view groups together on a screen all the data for an item that a particular
department creates in a master record. Individual views can be processed
separately.

21
SAP R/3 Overview:
Master Data - Terms and Concepts

• Document
– A document contains text explaining components or functionalities in the
SAP system. The document type distinguishes the business transactions to
be posted. A document class explains the purpose of the document.

• Field
– The area on a screen where information is input or displayed.

• Extendable Master
– A master record in which a view has not yet been created.

22
SAP R/3 Overview:
Master Data - Terms and Concepts

• Populate
– Filling in information for a field in a view or document.

• Maintaining
– The act of placing information into a view or document , or continuing to
provide updated information into specific master records.

• Default
– The system automatically populates fields with pre-determined data,
however, changes may still be input manually.

23
SAP R/3
Security
SAP R/3 Overview:
Security

Security
• Controls the authority to perform a
particular action in the R/3 System.

• Profiles , Objects , Authorizations

– Each authorization refers to one
authorization object and defines one
or more permissible values for each
authorization field listed in the
authorization object.

– Authorizations are combined in

profiles which are entered in a
user's master record.

25
SAP R/3 Overview:
Security - Profiles

• An authorization profile gives

users access to the system. A
profile contains individual
authorizations, which are
identified by the authorization
name and one or more
authorization objects. If a
profile is specified in a user
master record, the user has all
the authorizations defined in
this profile.

26
SAP R/3 Overview:
Security - Objects

• Authorization objects allow you to

define complex authorizations.

• An authorization object groups

together up to 10 authorization
fields in an AND relationship in
order to check whether a user is
allowed to perform a certain
action.
• To pass an authorization test for
an object, the user must satisfy the
authorization check for each field
in the object.

27
SAP R/3 Overview:
Security - Authorizations

• This field contains the name of a

program group that allows users to
– Execute programs

– Schedule jobs for background

processing

– Maintain programs

– Maintain variants

• When creating a program, you can

specify an authorization group as
one of the program attributes. This
allows you to group together
programs for the purposes of
authorization checking.

28
 An Overview Typical Business Cycle

VENDOR USER COMPANY CUSTOMER

Controlling – Internal Reporting

Delivery of Goods /
Sales Processing Services

Sales Order Delivery* Billing Customer Invoice

Cost Center Accounting

Interface

Financial Accounting – Legal Reporting

FI – General Ledger
Receipt of Goods /
Services
FI Postings
Vendor Invoice
FI – Account Payable FI – Account Receivable
Receipt of Payment
Payment to Vendor
Cost Element Accounting

* Delivery – if materials are sold 29

 Module Overview:
Sales and Distribution
(SD)
SAP R/3 Overview:
SAP R/3 Application Modules

Sales and Distribution (SD)

• The SD application module
helps to optimize all the tasks
and activities carried out in
sales, delivery, and billing

31
Module Overview: SD

Sales and Distribution (SD)

• The process of taking orders, Customer
checking availability, delivering Order
goods, invoicing customers, and
receiving payment.

• Its functionality includes the

following:
– Sales order processing
– Delivery
– Billing
– Customer payment
– Sales Information System (SIS)

32
Module Overview: SD
SD Process

Sales Order Customer

Quotes Delivery Billing
Processing Payment

Planning, Reporting and Analysis

• The sales order is a legally binding agreement between a sales organization and a sold-to party
concerning the delivery of materials or the provision of services. The sales order specifies prices,
quantities and dates.

• The "Delivery" is the central shipping document. Delivery creation initiates shipping activities such
as picking and delivery scheduling. The data generated during shipping processing is recorded.

• The invoiced payment process resolves discrepancies between the order, receipt, and invoice.

33
Module Overview: SD
SD Process

Sales Order Customer

Quotes Delivery Billing
Processing Payment

Planning, Reporting and Analysis

• Billing and customer payment complete the sales and distribution process

• You can create billing documents with references to sales orders and deliveries.

• You can bill explicitly, process a billing due list or bill in batch.

34
Integrated Business Process Overview

Sales Logistics
FI AR
G/L COS / Invoice / Customer
Inventory GL Payment
Revenue

SD
Sales Order
Quotes Delivery Billing
Processing

Planning, Reporting and Analysis

35
Module Overview: SD
Sales Information System

Standard analyses 90
 These functions enable you to 80
target specific key figures and to
70
analyze them in detail.
60
 You can specify the level of detail in
which you wish to view the 50
East
information. 40
West
 The values for each list can also be 30
viewed graphically.
North
20
Flexible analyses
10
 Enables you to group together
0
and aggregate key figures 1st 2nd 3rd 4th
yourself and easily create reports. Qtr Qtr Qtr Qtr

36
Module Overview: SD
Organization Structure

Company A Company B

Sales Org A Sales Org B Sales Org C

Dist Channel 1 Dist Channel 2

Sales Organization
 Logical selling unit
Division a1 Division a2 Division a3 Division b1 Division a2  Geographical or other logical
subdivision of Company

Plant 1000 Plant 2000 Plant 3000

Division ่ Distribution Channel

 Combination of similar products  Usually the sales channels (i.e., Wholesale,
 Often used to define Product Line Retail, Direct Sale, Merchandising, Mail Order,
etc.)

37
Module Overview: SD
Master Data

• Sales and Distribution data

elements are comprised of:
– Material masters
– Customer Masters
– Customer Material lists
– Customer Price records
– Output
– Business Partners
– Sales Organization
– Distribution Channel
– Division
– Sales Group
– Sales Reps

38
 Module Overview:
Materials Management (MM)
SAP R/3 Overview:
SAP R/3 Application Modules

Material Management (MM)

• The MM application module
supports the procurement and
inventory functions occurring in
day-to-day business operations

40
Module Overview: MM

Materials Management (MM)

• Purchasing in SAP refers to the
process of requisitioning, vendor
sourcing, purchasing, receiving, and
paying for materials and services
used throughout the organization.

• Inventory Management manages

materials in a plant by material
number. Inventory management is
used to plan, enter, and check
goods movements.

41
Module Overview: MM
Purchasing

Requirement for Purchase Purchase Goods Invoice Vendor

Goods /
Services Requisition Order Receipt Verification Payment

Planning, Reporting and Analysis

• The SAP R/3 system supports procurement of materials through approved

suppliers and materials.

• The business process begins with the buyer determining the source to fulfill the
goods requirement and ends with vendor payment for goods.

• The invoiced payment process resolves discrepancies between the order,

receipt, and invoice.

42
Integrated Business Process Overview

Purchasing
FI
G/L GRIR/ Vendor
G/L Inventory /
Expense AP
GRIR Payment
Invoice

MM
Requirement Purchase Goods Invoice
for Goods /
Services Order Receipt Verification

Planning, Reporting and Analysis

43
Module Overview: MM
Purchasing Organization Structure

Company A Company B

Purch Org A Purch Org B Purch Org C

Purch Purch Purch

Group 1 Group 2 Group 2 Purchasing Organization
 Responsible for procuring materials and
services for one or more Plants
Plant 1000 Plant 2000 Plant 3000  Capable of spanning Companies to produce a
central purchasing organization
 Negotiates prices and delivery conditions with
Purchasing Group the vendor
 Required for entry of all purchase orders
• Individual buyer per Plant
 Can be a central buying group responsible for
• Group of buyers per Plant company wide purchases

44
Module Overview: MM
Inventory Management

• Materials are managed on Plant

both a quantity and value
basis.
Storage locations
• Work is managed at the plant
Building 1 Building 2
and storage location levels.

• Inventory management is used

for performing physical
inventories and inventory
counts within the SAP system.

45
Module Overview: MM
Master Data

• Materials Management Master

Data Elements are comprised
of:
– Material masters
– Vendor master
– Info Records

46
 Module Overview:
Financial Accounting
and Controlling
(FI/CO)
SAP R/3 Overview:
SAP R/3 Application Modules

Financial Accounting (FI)

• The FI application module is
designed for automated
management and external
reporting of general ledger,
accounts receivable, accounts
payable, and other sub-ledger
accounts with a pre-defined
chart of accounts

48
Module Overview: FI/CO
Financial Accounting

Financial Accounting (FI)

• The central task of G/L
accounting is to provide a
comprehensive picture for
external accounting and
accounts.
• Recording all business
transactions in a fully integrated
software system ensures that FI
the accounting data is always
complete and accurate.

49
Module Overview: FI/CO
Financial Accounting

Financial Accounting (FI)

• SAP R/3 Financial Accounting
applications in-scope include:
– General Ledger Accounting
– Accounts Payable
– Accounts Receivable

50
SAP R/3 Overview:
SAP R/3 Application Modules

Controlling (CO)
• The CO application module
represents the company’s flow
of cost and revenue

• CO is a management
instrument for organizational
decisions

51
Module Overview: FI/CO
Controlling

Controlling (CO)
• Controlling provides you with
information for management
decision-making.

• It facilitates coordination,
monitoring and optimization of all
processes in an organization.
• This involves recording both the
consumption of production factors
CO
and the services provided by an
organization.

52
Module Overview: FI/CO
Controlling

Controlling (CO)
• SAP R/3 Controlling applications
in-scope include:
– Budgeting
– Cost centers / Elements
– Internal Order Accounting
– Profit center Accounting

CO

53
Module Overview: FI/CO
Master Data

• FI/CO Master Data Elements

include
– G/L Accounts
– Cost Centers
– Profit Centers

54
Module Overview: FI/CO
Organization Structure

Client

Chart of Accounts

FI
Controlling Area Controlling Area

Company A Company B Company C

Profit Center Cost Center

Hierarchy Hierarchy

CO Profit Profit Cost Center A

Center A Center B
Manufacturing
Profit
Center A1

55
Module Overview: FI/CO
Organization Structure
Cost Center
 The smallest area of cost responsibility
within a company’s overall organizational
structure
 Must be assigned to a standard hierarchy
structure
 May define alternative hierarchy structures
for roll-up analysis
 Cost Centers may capture the following
types of postings for internal allocation
purposes:
 Transfer postings
 Postings from distribution
 Postings from internal cost allocations
 Represent lowest hierarchical level in cost
center accounting
Profit Center
 Calculates net profit at organization level
 A business unit within a company which
monitors both costs and revenue and
which behaves as if it is an independent
unit operating in the marketplace
 All objects with profit related data must be
assigned to a profit center, including cost
centers, internal orders, sales order line
items, projects, assets, etc.
 Must be assigned to a standard hierarchy
structure
 May define alternative hierarchy structures
for profitability roll-up analysis
 Represents lowest hierarchical level in
profit center accounting
56
Module Overview: FI/CO
FI/CO Processing and Reporting

Transaction Financial Management

Processing (FI) Reporting (FI) Reporting (CO)

Cost Center
Accounting
MM Accounts Payable
General Ledger
Internal Order
Accounting
SD Accounts Receivable
Financial
Profit Center
Statements
Accounting

57
 SAP R/3
System Benefits
SAP R/3 System Benefits

•Secure
•Multi-Lingual Information

•Integrated
•Multi-Currency

•Best Business
•Enterprise-Wide
Practices
59
SAP R/3 System Benefits:
SAP and Integration

The value of integration:

• Integrated systems enable simplified business processes, standard data

definition, and a common business language

• Simplified business processes enhance productivity to allow focus on value

added activities

• Integrated database allows data to be entered only once and all related
information to be updated automatically

• Integrated applications instill confidence in information and eliminates need

for redundant analysis and reconciliation

60
SAP R/3 System Benefits:
SAP and Business Processes

Purchase Goods Product

Manufacture
Order Receipt Delivery

MM, FI, MM, FI, MM, FI, PP MM, SD,

CO, PP CO, QM, WM CO, QM, WM FI, CO, WM

61