Polythene Sap b1 v1.2

FUNCTIONAL & TECHNICAL BUSINESS BLUEPRINT
Prepared For: Polythene Industries Limited
Author: Daisy Ndanyi
Version: 1.2
Date: 17/10/2017
DOCUMENT CONTROL
Version Control
Date Version Changed by Comments
30/10/2017 1.2 Daisy Ndanyi Final Version
Document Approval
Name Position Date Signature
Chief Executive
Hasit Patel
Officer (RPWL)
Jan Larsen CEO (Plexus)
Financial Controller
Rao Srinivas
(Plexus)
CEO (Polythene
Gautam Patel
Industries Ltd)
Project Manager
Shalin Shah (Polythene Industries
Ltd)
System
Sidik Rashid Administrator
(RPWL)
Managing Director
Mala Bhatt
(BK)
Technical Director-
Francis Njiraini
(BK)
Head of Consulting
Antony Gitonga
(BK)
Project Manager
Daisy Ndanyi
(BK)
Implementation
consultant (BK)
Polythene Industries Limited Page 2 of 114

TABLE OF CONTENTS
1 GENERAL .............................................................................................................. 6
1.1 ABBREVIATIONS .................................................................................................. 6
2 INTRODUCTION ................................................................................................... 7
2.1 PURPOSE ............................................................................................................. 7
2.2 COMPANY PROFILE .............................................................................................. 7
2.3 DATABASE SETUP ................................................................................................ 7
2.4 SCOPE .................................................................................................................. 7
2.5 STANDARD SAP B1 FUNCTIONALITY .................................................................... 8
2.6 PROCESS FLOW LEGEND .................................................................................... 10
3 SAP BUSINESS ONE CONFIGURATION ............................................................... 11
3.1 SYSTEM INITIALIZATION .................................................................................. 11

3.1.1 COMPANY DETAILS ................................................................................................................... 11
3.1.2 DOCUMENT SETTINGS ............................................................................................................... 14
3.1.3 GENERAL COMPANY SETTINGS ................................................................................................. 16
3.1.4 FISCAL YEAR & POSTING PERIODS ........................................................................................... 20
3.1.5 MULTI-CURRENCY & EXCHANGE RATE TABLE ............................................................................ 21
3.2 VAT SET UP ........................................................................................................ 21
3.3 WITHHOLDING TAX SETUP: ............................................................................... 22
3.4 USER SET UP & SAP LICENSING ......................................................................... 22
3.5 DEFINE HOUSE BANK: ........................................................................................ 23
3.6 DEFINE SALES EMPLOYEES/BUYERS .................................................................. 23
3.7 DEFINE WAREHOUSES ....................................................................................... 24

3.7.1 DEFINE ITEM GROUPS............................................................................................................... 24
3.8 DEFINE SUPPLIER GROUP .................................................................................. 24
3.9 DEFINE CUSTOMER GROUP ................................................................................ 25
3.10 SYSTEM CONFIGURATION DATA APPROVAL ................................................... 25
4 MASTER DATA CONFIGURATIONS ...................................................................... 26
4.1 BUSINESS PARTNER MASTER DATA CONFIGURATION ....................................... 26

4.1.1 CREDITOR MASTER DATA DEFINITION (SUPPLIERS) ................................................................ 26
4.1.2 DEBTOR MASTER DATA (CUSTOMERS) ...................................................................................... 27
4.1.3 ITEM MASTER............................................................................................................................ 29

4.1.4 PRICING ................................................................................................................................... 30
4.2 MASTER DATA CONFIGURATION APPROVAL ...................................................... 32
5 STANDARD SAP B1 PROCESSES ......................................................................... 33
5.1 SAP STANDARD PURCHASING PROCESS ............................................................ 33

5.1.1 PURCHASING PROCESS OBJECTIVE .......................................................................................... 33
5.1.2 PURCHASING PROCESS CONFIGURATION ................................................................................. 33
5.1.3 PURCHASING PROCESS OVERVIEW........................................................................................... 37
5.1.4 CURRENT PROCUREMENT PROCESS .......................................................................................... 39
5.1.5 SAP B1 PROCUREMENT PROCESS .............................................................................................. 41
5.1.6 PROCESS FLOW – SAP B1 “TO-BE” PROCUREMENT PROCESS .................................................... 42
5.1.7 FUNCTIONAL SPECIFICATION- SAP B1 “TO-BE” PURCHASE PROCESS ...................................... 43
5.1.8 PURCHASING PROCESS APPROVAL ........................................................................................... 45
5.2 SAP STANDARD STOCKS MANAGEMENT MODULE ............................................... 46

5.2.1 STOCKS MANAGEMENT OVERVIEW ........................................................................................... 46
5.2.2 SAP STANDARD STOCKS MANAGEMENT CONFIGURATIONS ...................................................... 47
5.2.3 PROCESS FLOW: STOCK TAKE SAP B1 “TO BE” PROCESS .......................................................... 54
5.2.4 FUNCTIONAL SPECIFICATION: STOCK TAKE SAP B1 “TO BE” PROCESS .................................... 54
5.2.5 PROCESS FLOW: STOCKS TRANSFERS SAP B1 “TO-BE” PROCESS .............................................. 56
5.2.6 FUNCTIONAL SPECIFICATION: STOCKS TRANSFERS SAP B1 “TO-BE” PROCESS........................ 57
5.2.7 STOCK MANAGEMENT PROCESS APPROVAL .............................................................................. 58
5.3 SAP STANDARD PRODUCTION MODULE ............................................................. 59

5.3.1 BILL OF MATERIAL: ................................................................................................................... 59
5.3.2 PRODUCTION PROCESS OBJECTIVE .......................................................................................... 59
5.3.3 PRODUCTION PROCESS CONFIGURATION................................................................................. 60
5.3.4 BY-PRODUCTS IN BOM AND PRODUCTION ORDER .................................................................... 61
5.3.5 PRODUCTION COSTING............................................................................................................. 62
5.3.6 PRODUCTION PROCESS OVERVIEW .......................................................................................... 64
5.3.7 CURRENT PRODUCTION PROCESS ............................................................................................. 65
5.3.8 SAP B1 “TO BE” PRODUCTION PROCESS ................................................................................... 71
5.3.9 PROCESS FLOW – SAP B1 PLASTIC BAG PRODUCTION PROCESS .............................................. 72
5.3.10 FUNCTIONAL SPECIFICATION – SAP B1 PLASTIC BAG PRODUCTION PROCESS .................... 72
5.3.11 PROCESS FLOW – SAP B1 PAPER BAG PRODUCTION PROCESS ............................................. 76
5.3.12 FUNCTIONAL SPECIFICATION – SAP B1 PAPER PRODUCTION PROCESS ............................... 77
5.3.13 PROCESS FLOW – PRODUCTION REWORK SAP B1 PROCESS ................................................. 81
5.3.14 FUNCTIONAL SPECIFICATIONS – PRODUCTION REWORK SAP B1 PROCESS ......................... 81
5.4 PRODUCTION PROCESS APPROVAL .................................................................... 82
5.5 SAP STANDARD SALES MODULE ......................................................................... 83

5.5.1 SALES PROCESS OBJECTIVE ...................................................................................................... 83
5.5.2 SALES CONFIGURATION ........................................................................................................... 83
5.5.3 SALES PROCESS OVERVIEW ...................................................................................................... 86
5.5.1 CURRENT SALES PROCESS ........................................................................................................ 87
5.5.2 SAP B1 SALES PROCESS ............................................................................................................ 89
5.5.3 PROCESS FLOW: SAP B1 LOCAL/ EXPORT SALES “TO BE” PROCESS.......................................... 90
5.5.4 FUNCTIONAL SPECIFICATION: SAP B1 LOCAL/ EXPORT SALES “TO BE” PROCESS .................... 90
5.5.5 SALES PROCESS APPROVAL ...................................................................................................... 92
5.6 BANKING ........................................................................................................... 93

5.6.1 INCOMING AND OUTGOING PAYMENTS .................................................................................... 93
5.6.2 OVERVIEW ................................................................................................................................ 94
5.6.3 ACCOUNTS PAYABLES ............................................................................................................... 96
5.6.4 ACCOUNTS RECEIVABLE ............................................................................................................ 98

5.6.5 PETTY CASH PROCESS OVERVIEW ............................................................................................ 99
5.6.6 STAFF IMPREST PROCESS OVERVIEW: .................................................................................... 101
5.6.7 INTER-BANK FUND TRANSFER OVERVIEW .............................................................................. 102
5.6.8 MANUAL BANK RECONCILIATION ........................................................................................... 102
5.6.9 BANK INTEREST CALCULATION ............................................................................................... 103
5.6.10 BANKING PROCESS APPROVAL ........................................................................................... 103
5.7 FINANCE .......................................................................................................... 104

5.7.1 FINANCE CONFIGURATION ..................................................................................................... 104
5.7.2 OVERVIEW .............................................................................................................................. 105
5.7.3 FINANCE MODULE APPROVAL ................................................................................................. 107
5.8 FIXED ASSETS .................................................................................................. 108

5.8.1 OVERVIEW .............................................................................................................................. 108
5.8.2 ASSET PROCUREMENT – ASSET CAPITALIZATION:.................................................................. 108
5.8.3 ASSET REGISTER..................................................................................................................... 109
5.8.4 ASSET SALE............................................................................................................................. 109
5.8.5 ASSET DISPOSAL .................................................................................................................... 109
5.8.6 DEPRECIATION RUN ............................................................................................................... 109
5.8.7 FIXED REPORT ........................................................................................................................ 109
5.8.8 FIXED ASSETS MODULE APPROVAL ......................................................................................... 110
6 REPORTING ..................................................................................................... 111
6.1 LIST OF SAP B1 STANDARD REPORTS MODULE-WISE ...................................... 111
6.2 LIST OF STATIONERIES IDENTIFIED TO BE CUSTOMISED ............................... 113
6.3 LIST OF REPORTS IDENTIFIED TO BE CUSTOMISED......................................... 114

1 GENERAL
1.1 ABBREVIATIONS
ABREVIATION DESCRIPTION
AP Accounts Payable
AR Accounts Receivable
BK Bluekey
BP Business Partner
BS Balance Sheet
COA Chart of Accounts
COS Cost of Sales
DB Database
FA Fixed Assets
FMS Formatted Search
GL General Ledger
GRN Goods Receipt Note
IS Income Statement
JE Journal Entry
JV Journal Voucher
KGS Kilograms
KRA Kenya Revenue Authority
TRA Tanzania Revenue Authority
MTR Metre
QC Quality Control
SAP B1 SAP Business One
SBO SAP Business One
SDK Software Development Kit (for SAP Business One)
SQL Microsoft SQL Server (Database Engine)
TN Transaction Notification
UDF User Defined Field
UOM Unit of Measure
WIP Work in Progress

2 INTRODUCTION
2.1 PURPOSE
The Business Blueprint is a core implementation document for SAP Business One. It is used to
define and document important information required for initialization and setup of the SAP
Business One system. The business blueprint is also use to achieve a common understanding
of how Polythene Industries Limited intends to run SAP Business One to support their
business.
2.2 COMPANY PROFILE
2.3 DATABASE SETUP
Only one database will be created in SAP B1 system with below DB code and entity name.
DB Code Entity Name

SBK_ POLY_ACC Polythene Industries Limited
2.4 SCOPE
PHASE I – IN SCOPE
 General Ledger & Banking
 Sales
 Purchasing
 Stock Management
 Production
 Accounts Receivable
 Business Partner Master Data
 Accounts Payable
 Fixed Assets
 iTax Package & Mobility
 4 Customized Reports

PHASE II- IN SCOPE
 Integration with Ramco Group Reporting Tool
 Integration of SAP with Sales Force CRM
OUT OF SCOPE
 Services & Projects, CRM
 ISO Documentation & Changes, Customized Procedural & Training Manuals
 Bulk e-mailing facility, SDK Add-ons & 3rd Party, MS Outlook Integration, EFT
Integration/Module
 Crystal Report Writer Training, XL Reporter
2.5 STANDARD SAP B1 FUNCTIONALITY
The following standard SAP B1 functionality will be implemented/used by Polythene Industries

Limited
Sales – AR
Sales Opportunity Management NO
Sales Blanket Agreement NO
Sales Quotation YES
Sales Order YES
Delivery YES
Return YES
AR Down payment Invoice NO
AR Down payment Request NO
AR Invoice YES
AR Invoice + Payment YES
AR Reserve Invoice YES
AR Credit Note YES
Purchasing – AP
Purchase Blanket Agreement NO
Purchase Request YES
Purchase Quotation YES
Purchase Order YES
Goods Receipt PO YES
AP Invoice YES
AP Down payment Invoice NO
AP Down payment Request NO
AP Reserve Invoice YES
AP Credit Note YES
Landed Cost YES
Business Partners
Business partner master data YES
Activities YES
Banking
Incoming Payments YES

Outgoing Payments YES
Bank reconciliations YES
Internal reconciliations YES
Payment Wizard YES
Stock management
Item Master data YES
Serial Numbers YES
Batches YES
Business Partner Catalogue Number YES
Goods Receipt (not linked to supplier) YES
Goods Issue (not linked to customer) YES
Stock transfer YES
Stock takes YES
Stock revaluations YES
Price lists YES
Pick and Pack Manager YES
Resources
Resource Master Data YES
Resource Capacity YES
Set Daily Internal Capacities YES
Production
Bill of materials (Template BOM) YES
Bill of materials (Production BOM) YES
Bill of materials (Special BOM) YES
MRP
Forecast NO
MRP Wizard NO
Service
Service call NO
Customer equipment card NO
Service contract NO
Financials
Chart of accounts YES
Journal entries YES
Journal vouchers YES
Recurring postings YES
Reverse transactions YES
Exchange rate differences YES
Budget Setup YES
Cost accounting YES

2.6 PROCESS FLOW LEGEND
Business Form to
SAP B1 Document be printed
System
Function
Outside
B1 System
Decision
Other Process
Process End

3 SAP BUSINESS ONE CONFIGURATION
3.1 SYSTEM INITIALIZATION
3.1.1 COMPANY DETAILS
The following initial parameters will be setup for Polythene Industries Limited:
General Information
Configuration Data Value Remarks
Company Name Polythene Industries Limited
Street/P.O Box 17931
Block Ramco Industrial Park
City Nairobi
Postal Code 00500
County
Country Kenya
Email Address
Website www.polythene.co.ke
Printing Header Polythene Industries Limited
Telephone 1 020 3517941
Telephone 2 020 3517940
Fax
Accounting Data
Tax Authority Name Kenya Revenue Authority
VAT Number 1 (PIN No) P000599641H
VAT Number 2 Optional
Description: Enter your
second identification tax
number for the tax on
sales/purchases
Accounts Office Ref Optional
(used only for additional
information)
Company Reg No. C32924
Business Reg No
Basic Initialization
Local Currency
Description:
The local currency is the KES
currency in which the
company is
Legally required to keep its
books.
Note: Setting cannot be
changed after system
initialisation.

System Currency
Description:
The system currency may
be a different currency than
the local currency and is USD
especially useful for
subsidiaries of global
companies whose head office
uses a different
currency than the subsidiaries
initialisation.
Default Account Currency  Local Currency Most of the General ledger
Description:  All Currency accounts will be defined as all
Determines the default currencies, but where ledgers
account currency for new needs to be defined by
accounts: specific currency e.g. bank
• Local Currency: accounts they will be defined
Transactions can be posted as per the foreign currency.
only in the defined local For sub ledgers e.g.
Currency. customers and suppliers the
• All Currencies: Transactions currency will be specific to the
can be posted in all customer or supplier account
currencies defined in the i.e. USD, KES. The system
company database; however, though will translate all
balances, totals, and foreign transactions to local
reconciliations are calculated currency due to reporting,
and displayed in local however when you open the
Currency only. ledger you will be able to view
the foreign currency balance
as well as the local currency
balance.
Display Account Credit  Yes
Balance with Negative Sign  No
initialisation.
Use negative Amount for  Yes
Reverse transaction  No
Permit more than one  Yes

document type per series.  No
Description:
To be specified if series
contain more than one
document type.

initialization
Use Continuous stock  Yes
Description:  No
Continuous stock will
automatically book any
change in the value of the
stock directly on your stock
account.

initialization.
Inventory valuation method  Moving Average:
to default into new item. This option calculates the
inventory value by the item's
cost price. This field is
updated dynamically by every
stock receipt posting.
 Standard Price:
This option calculates the
inventory value by a fixed
price. The item's standard
price should be set before you
start working in your
company.
 FIFO:
This option calculates the
inventory value by the FIFO
method (first in first out).
Each inventory receipt
transaction creates a "layer"
of quantities linked to costs;
each inventory release
transaction will use quantities
and their corresponding costs
from the first open layer/s.
Manage Item Cost per  Yes Best practise is to manage
Warehouse. Calculating inventory pricing item cost per warehouse.
for each individual
Note: Setting cannot be warehouse.
initialisation.  No:
Calculating inventory pricing
for all warehouses.
Use Purchase Accounts  Yes
Posting System.  No

initialisation.
Allow stock release without  Yes

item cost  No
Description: Permits items to

be included in documents
such as deliveries or A/R
invoices, even when a cost
price has not been
determined.
3.1.2 DOCUMENT SETTINGS
The following parameters define the setting for sales and purchasing documents.

Calculate Gross Profit  Yes
 No
For calculation of gross profit  Item Cost
Base Price Origin is based on:  Last Purchase Price
 Last Evaluated Price
 Pricelist
Calculate % Gross Profit as:  Profit/Sales Price
 Profit/Base Price
Document Remarks Include:  Base Document Number
(i.e. an invoice created from a
Sales Order would list
“Created from Sales
Order Number: xxx” in the
Remarks section of the
Invoice)
 BP Reference Number
For a Sales BOM in  Price and Total for Parent
Documents, Display: Item Only
(A Sales BOM is a collections  Price for Component Items
of individual items in a set
with a specific price e.g.
Blisters)
Response to Release / Receipt  Without Warning
of Inventory Outside Defined  Warning Only
Range  Block Release / Receipt
Block Negative Stocks  Yes
 No

Block Negative Inventory By  Company
 Warehouse
 Item Setting
Rounding Method  By Currency
Can determine in the
currency definition how
the decimals and rounding
of a currency are treated.
Rounding will be posted to
a Rounding Account
Options Available by
Currency:
- Round to One
- Round to Ten
- Round to Five Hundredth
- Round to Ten Hundredth
 By Document
Rounding amount goes
into discount. Applies only
for Sales Document. No
option available - Rounds
to one only
Exchange Rate Base Date  Posting Date
(A/P Documents)  Document Date
Display Rounding Remark  Yes
 No
Use Warehouse Address  Yes
 No
Manage Freight in Documents  Yes
 No
Block documents with earlier  Yes
Posting Date  No
Allow Future Posting Date  Yes Come back to it
 No
Use Document Exchange Rate  Yes
When Copying to Target  No
Document
Manage Inventory by  Yes
Warehouse  No
(With this option stock
minimum level will be
managed globally by
item.)
Display Cancelled and  Yes
Cancelation Marketing  No
Documents in Reports.

3.1.3 GENERAL COMPANY SETTINGS
The parameters below refer to general settings to be setup for Polythene Industries Limited.
BP Information
Activate Approval procedures
Description: Approval  Yes
procedures apply to Sales,  No
Purchase and Stock
documents (e.g. Sales
Quotation, Sales Order, AR
Invoice, Purchase order, AP
Invoice, Stock Transfer)
Budget Information
Initialize Budget Features Yes
For document which deviates  Warning
from Budget. Sends an alert when the
budget is exceeded. You can
confirm and add the
transaction, or cancel.
 Block deviations from

budget and Warning for:
For Monthly Budget
Check Points:
Purchase Orders
A check is made against the
budget during the issuing of
purchase orders, including all
open purchase orders and the
current one.
Goods Receipt POs
A check is made against the
budget during the issuing of
goods receipt POs, including
all open goods receipt POs
and the current one.
Accounting
A check is conducted during
the issuing of an A/P invoice
or any other accounting
transaction that involves a
G/L account relevant to the
budget.

Display Information
Default Language  English(United Kingdom)
 English(United States)
Decimal Settings Amounts in ledger: 2

Price: 2
On Exchange Rates: 4
Quantities: 2
Thousands Separator (,)
Decimal Separator (.)
Exchange Rate Posting  Direct
Description: Determines the  Indirect
display of exchange rates in
SAP Business One. This
setting affects the calculation
that you use to enter the
exchange rates in the
Exchange Rates and Indexes
window.
Direct: Select Direct to
display the exchange rate
according to the foreign
currency (Meaning: 1 foreign
currency is Equivalent to how
many local currency).e.g.:
one dollar will be equal to X
KES/TZS so the value in
exchange rate table will be
inserted as 103/1600.
Indirect: Select Indirect to
display the exchange rate
according to the local
currency (Meaning: 1 local
currency is equivalent to how
many foreign currency).for
e.g. for the indirect exchange
rate posting the calculation
will be done as 1 KES/TZS is
equal to 1/103 = 0.01 USD
OR 1/1600 =0.0006 USD
respectively.

initialisation

Stock Information
Serial Numbers and batches Management Method
 On Every Transaction
You are required to assign
serial or batch numbers on
every inventory transaction.
 On Release only
You are required to assign
serial or batch numbers only
on release (delivery, transfer,
AR invoice).
Unique Serial Numbers by  None
 Serial Number
 Mfr Serial Number
 Lot Number
Auto. Create customer  Yes
equipment card  No
Description: If this option is
selected for items managed
by serial numbers customer
equipment card is
automatically created in the
Service Module which can
then be referenced in Service
calls
Basic Setting for Batch Status  Released

 Not Accessible
Description: Choose an option  Locked
to define the default status
for item batches:
• Released – you can perform
transactions on a batch.
• Not Accessible – you cannot
release a batch in sales
documents or in A/P credit
memos because the status
defines batches in the middle
of a production process or a
quality check. However, you
can release a batch in
inventory transfer documents.
(Not Accessible & Locked
Same behaviour, You use the
status mainly to distinguish
between Locked and Not
Accessible

batches in reports)
•Locked – you can release the

batch in stock documents
only, (for example, inventory
transfers or goods issue
documents)
Set GL Determination by  Warehouse

Choose option if you want to
Description: System will report stock, cost of sales and
derive accounts to be used for sales account by warehouse.
posting transactions from
option chosen  Item Group
report stock, cost of sales and
sales account by category of
items. E.g. Consumer
Goods, Accessories.
 Item Level
set accounts determination by
individual items.
Add Warehouses to new items  Yes
Automatically  No
Description: Select if you

want to add all warehouses
each time you create a new
item, or to automatically add
a new warehouse to existing
items.
Withholding Tax  Yes
Description: Select to have all  No
new items liable to
withholding tax by default.
When this field is selected, all

new items have the
Withholding Tax Liable
checkbox in the item master
data selected by default

3.1.4 FISCAL YEAR & POSTING PERIODS

Standard posting periods Fiscal Calendar (Company January to December
Accounting Period)
Note: Once posting periods E.g. Date From: 01/01/..to
has been defined for a Fiscal 31/12/..
Year it cannot be modified
Number of Posting Periods:
 1 (year),
 (quarters)
 12 (months)
Super users will have the option to change the status of the Posting Periods as and when
required (ad-hoc). The different Period statuses are:
o Unlocked (All users, with respect to their authorizations, can post all types of
transactions and documents to this period. This status is assigned by default to new
posting periods.)
o Unlocked Except Sales (All users with respect to their authorizations, can post to this
period all types of transactions and documents, except for documents of the Sales –
A/R module. Assign this status once the period ends, but there are still purchasing
documents, such as late A/P invoices, and other transactions that should be posted to
this period.)
o Closing Period (Users with full Period—End Closing authorization can post to this period
all types of documents and transactions. Assign this status to the period if the following
conditions apply: The period has ended, all late transactions have been posted & Only
year-end closing remains to be done)
o Locked (Neither documents nor transactions can be posted to the period. Assign this
status to the period after all adjustments have been posted and the year-end closing
process is complete for this period)

*The period status can be configured to Automatic Change of Period Status to 'Closing Period'
and a date to apply the change fixed. However the super user can always go back and re-open
the period.
*When above configuration is not done, it means that the super user will have to change the
period status manually. Polythene Industries Limited will use the manual method.
3.1.5 MULTI-CURRENCY & EXCHANGE RATE TABLE
In terms of multiple currencies, any currency can be created in SAP Business One - the initial
list of currencies to be created includes:
Currency Code Currency Name

KES Kenyan Shillings
USD US Dollar
EUR Euro
*The currencies list can be added as and when required.
SAP B1 uses a single exchange rate table to record the exchange rates, which will be updated
by the finance controller with rates from central bank or a reliable source. The update in SAP
will be done manually using either daily rates, half month mean rates or monthly mean rate.
*You will not be able to post any transaction in SAP B1 if the exchange rate table is not
updated for that specific date.
3.2 VAT SET UP

Multiple VAT codes set up by default, these include:
VAT CODE VAT NAME INPUT/OUTPUT
I0 Zero Rated Input VAT Input
I1 Input VAT 16% Input
I2 Exempted from Input VAT Input
O0 Zero Rated Output VAT Output
O1 Output VAT 16% Output
O2 Exempted from Output VAT Output
Each VAT code will be linked to the VAT Accounts i.e.

 All Input VAT codes will be linked to: Input VAT account (Asset Account)
 All output VAT codes will be linked to: Output VAT account (Liability Account)
A VAT Control account will be created in SAP B1 under the Chart of Accounts as a liability
account where the net value of the Input VAT control and Output VAT control will be posted
using a manual journal entry. It’s from this account where VAT Payable will be paid from or
VAT receivable will be received.

3.3 WITHHOLDING TAX SETUP:
SAP B1 supports withholding tax setup, and below illustrates the withholding tax codes:
W/TAX W/TAX Description W/TAX Charged To Category

CODE %
WT1 Withholding Tax on 5% Suppliers Invoice

Management or Professional or
Training Fees (Residents)
WT2 Withholding Tax on 20% Suppliers Invoice
Management or Professional or
Training Fees (Non-Residents)
WT3 Withholding Tax on Contractual 3% Suppliers Invoice
Fees –Building, civil or
engineering works (Residents)
WT4 Withholding Tax on Royalty 5% Supplier Invoice
(Residents)
WT5 Withholding Tax on Royalty 20% Supplier Invoice
(Non-Residents)
WT6 Withholding Tax on General 15% Account Invoice
Interest (Residents)
WT7 Withholding Tax on General 15% Account Invoice
Interest (Non-Residents)
WT8 Withholding Tax on Dividends 5% Account Invoice
(Residents)
WT9 Withholding Tax on Dividends 10% Account Invoice
(Non-Resident)
WT10 Withholding VAT 6 % 6% Suppliers/ Payment/Receipt
Customers
A withholding Tax control account will be created under the Chart of Accounts as a liability
account. Withholding tax codes will be linked to this account to facilitate posting of the
withholding tax when deducted. Payments to KRA/TRA/URA will be made from this account.
The withholding tax will setup per business partner and all suppliers or customers subject to
withholding tax will be defined in SAP B1.
3.4 USER SET UP & SAP LICENSING

SAP Business one licenses is assigned per user code (named user licenses). Each User in SAP
B1 will be created with a unique identifier i.e. user code. The user code is limited to 8
characters in SBO. Licenses will be linked to these users depending on their functions in the
system. The detail of this licenses functionality can be found in SAP B1 license type document.
As each type of license has different functionality access rights which can be limited through
the security rights. Over and above this the administrator (super user) can add authorizations
and approvals.
Notes*
- The user code field is limited to only 8 characters.
- User Codes cannot change after creation.

3.4.1.1 LICENSES SUMMARY
License Type Quantity
Professional Licenses
Limited Logistics Licenses
Limited Financials Licenses
Limited CRM Licenses
3.4.1.2 DEFINE SAP B1 USERS:

User Code User Super Email Address Mobile Initial Department License
(up to 8 Name User? Phone Password Type
characters)
Note:
Cannot
change after
creation
Gautam NO 0733 726
GPATEL gautam@polythene.co.ke poly1234 Management
Patel 101
Rao YES 0722 203
SRAO rao@ramcoplexus.com poly1234 Finance
Srinivasa 098
Shalin YES 0739 415
SSHAH finance@polythene.co.ke poly1234 Finance
Shah 020
Samuel NO 0720 331
SMUNENE accounts@polythene.co.ke poly1234 Finance
Munene 126
Elisaphan NO 0728 928
EOWITI owiti@polythene.co.ke poly1234 Finance
Owiti 813
Harish NO 0722 203
HPATEL harish@polythene.co.ke poly1234 Sales
Patel 097
Robert NO 0722 313
RMUGANZI robert@polythene.co.ke poly1234 Sales
Muganzi 343
Amit NO 0722 878
APATEL stores@polythene.co.ke poly1234 Sales/Stores
Patel 922
Niraj NO 0714 826
NVERMA niraj@polythene.co.ke poly1234 Stores
Verma 868
3.5 DEFINE HOUSE BANK:

Bank Bank Branch Branch Account No Account Swift Currency
Code Name Code Name Name Code
Stanbic Upper Hill Polythene
Bank Medical Industries
31 010 Center 01-00000-198956 Ltd SBICKENX KES
Stanbic Upper Hill Polythene
Bank Medical Industries
31 010 Center 01-00000-198964 Ltd SBICKENX USD
3.6 DEFINE SALES EMPLOYEES/BUYERS
Sales Employee Name

Gautam Patel

Amit Patel
Harish Patel
Robert Muganzi
3.7 DEFINE WAREHOUSES
Warehouse Code (*8 Warehouse Name Physical/Logical?

Characters)
RGIP001 MAIN STORE PHYSICAL
KRON001 KRONA PARK STORE PHYSICAL
DISP001 DISPATCH STORE PHYSICAL
PROD001 PRODUCTION FLOOR - LOGICAL
EXTRUSION
PROD002 PRODUCTION FLOOR - LOGICAL
PRINTING
PROD003 PRODUCTION FLOOR – BAG LOGICAL
MAKING
QRTN001 QUARANTINE WAREHOUSE LOGICAL
REJE001 REJECTS WAREHOUSE LOGICAL
3.7.1 DEFINE ITEM GROUPS
Item Group Name Item Sub-Group Name
RAW MATERIAL - PLASTIC LDGP GRANULES

LD GRANULES
LLD GRANULES
HD GRANULES
PP GRANULES
GP GRANULES
BOPP FILM FORMS
CPP FILM FORMS
PVC FILM FORMS
MASTER BATCH
INKS
RAW MATERIALS - PAPER BROWN PAPER
WHITE PAPER
FINISHED GOODS - PLASTIC
FINISHED GOODS - PAPER
WORK IN PROGRESS - PLASTIC
WORK IN PROGRESS - PAPER
SPARES
NON-STOCK PLATES
SERVICES
3.8 DEFINE SUPPLIER GROUP

Supplier Group Name Supplier Sub-Group Name
RAMCO GROUP COMPANIES PLEXUS
ALTUS
ORITSU
EKON
KORA
LOCAL INK
PAPER
OTHERS
FOREIGN PAPER
PLASTIC
3.9 DEFINE CUSTOMER GROUP
Customer Group Name Customer Sub-Group Name
RAMCO GROUP COMPANIES PLEXUS

ALTUS
ORITSU
EKON
KORA
LOCAL
EXPORT
3.10 SYSTEM CONFIGURATION DATA APPROVAL
Approval:
Concurrence:

4 MASTER DATA CONFIGURATIONS
In SAP B1 the following master data will be defined in SAP B1:

- Business Partners
- Suppliers
- Customers
- Item Masters
4.1 BUSINESS PARTNER MASTER DATA CONFIGURATION
4.1.1 CREDITOR MASTER DATA DEFINITION (SUPPLIERS)
- Current Suppliers database will be cleaned up and populated in Bluekey designed excel
templates and migrated in SAP B1 via Data transfer work bench.
- Once the system goes live only specific users to be identified during implementation will
be authorised to create new suppliers in the system.
Below are the supplier master data key definitions:

- Supplier Code
o The Supplier code will take the letter ‘S’ then the first acronym for the supplier
name and a 4-digit auto number. E.g. Crown Paints will be SC0001
- Supplier Name
- Supplier Group
o As defined in section 3.9. The sub-groups will be defined as business partner
properties in SAP B1.
- Supplier Currencies: Multiple supplier accounts will be created for the suppliers
transacting in more than one currency.
o USD
o KES
o EUR
- PIN Number:
o All local suppliers must have a Pin number.
- General Information:
o Telephone Nos.
o Mobile Nos.
o Fax
o Email
o Website
o Industry
- Contact Persons
o Name
o Position

o Tel No.
o Mobile No.
o Email
- Address:
o Pay To:
o Street / PO Box
o Block
o City
o Postal Code
o County
o Country
o Street No.
- Payment Terms- The list can be added as and when required.
o Cash
o 30 Days
o 50% Advanced Payment
o 100% Advanced Payment
o 60 Days
o 90 Days
o 120 Days
- Accounting Details
o Accounts Payable:
 This will be defined as per the account in the Chart of Accounts
o Tax Status:
 Liable/Exempt?
 Default Tax Group
 Supplier Subject to Withholding Tax will be defined at this level.
4.1.2 DEBTOR MASTER DATA (CUSTOMERS)

- Current customer database will be cleaned up and populated in Bluekey designed excel
templates and migrated in SAP B1 via Data transfer work bench.
- Once the system goes live only specific users to be identified during implementation will
be authorised to create new customers in the system.
Key Customer Master Data Fields:

- Unique Customer Code (A convention to be defined)
o The Customer code will take the letter ‘C’ then the first acronym for the supplier
name and a 4-digit auto number. E.g. Crown Paints will be CC0001
- Customer Name

- Customer Group
o As defined in section 3.10. The customer sub-groups will be defined as BP
properties in SAP B1
- Credit Limit
o To be provided where possible.
- Payment Terms
o Cash
o 30 Days
o 60 Days
o 90 Days
o 120 Days
- Pricelists:
- Currencies:
o USD
o KES
o EUR
- General Details
o Telephone Nos.
o Mobile Nos.
o Fax
o Email
o Website
o Industry
- Bill to address
o Street / PO Box
o Block
o City
o Postal Code
o County
o Country
o Street No.
- Ship to address
o Street / PO Box
o Block
o City
o Postal Code
o County
o Country

o Street No.
- PIN Number (Mandatory for local customer accounts)
- Sales Rep
o Each customer can be linked to a Sales employee in SAP B1.
- Territory (Customer Location)
o Nairobi
o Mombasa
o Kisumu
o Nakuru
o Eldoret
o Kiambu
- Accounting:
o Control Account
 This will be defined as per the account in the Chart of Accounts
 Consolidated BP - N/A
 Tax Status:
o Liable/Exempt?
4.1.3 ITEM MASTER
- All items will be created in SAP B1 as item master data. This includes
o Raw Materials
o Semi-finished products
o Intermediary items
o Finished Goods
o Consumables
o Service items.
- Current items list will be cleaned up and populated in Bluekey designed excel templates
and migrated in SAP B1 via Data transfer work bench.
- Once the system goes live only authorised users to be identified during implementation
will be able to create new items in the system.
- Item Code Definition (Predefined convention)

o This will be automated based on item groups. E.g.
 Raw Materials Plastic – RMPL0001
 Raw Materials Paper – RMPA0001
 Finished Goods Plastic – FGPL0001
 Finished Goods Paper – FGPA0001
 Work In Progress Plastic – WPPL0001

 Work In Progress Paper – WPPA0001
 Spares – SPRS0001
 Non-Stock Item –NOST0001
- Item Description
- Item Groups
o As defined in section 3.8 of the blueprint document
- Item Type
o Inventory Item
o Sale Item
o Purchased Item
- Inventory Data
o Inventory UoM
- Sales Data:
o Sales UoM
- Purchase Data
o Purchase UoM
- Tax Group
- Stock Control Account
o This will be setup as defined in the chart of accounts
4.1.4 PRICING
 Using the different pricing options in SAP Business One, you can set predefined prices
for selling and buying items. Prices are assigned to price lists and to specific business
partners. For example if all your large accounts have discounted prices since they
purchase in larger volumes you can create a relationship between pricing levels that
updates automatically. On top of the basic price list functionality, you can add discounts
based on percentage, dates and quantities.
 Pricelists can be assigned to customers and items in SAP B1.
 SAP B1 uses below hierarchy in determining the price to be picked on the marketing
documents.

 You can base a price list on another price list by using a factor. For example if your
margin is 20%, you can set your sales price list to be based on the purchasing price list
with a factor of 1.2. When a base price list is updated, the target price updates
automatically.
 You can specify a currency as the primary currency for each price list.
 You set an indicator for the price list that all prices entered will be considered gross
prices (meaning that they include tax).
 You can set a validity date range for a price list. This allows you to implement seasonal
price lists or set a price list to expire on a set date.
 You can set a price to be manual. For example, you can lock down a price in your sales
price list rather than letting it be updated automatically when a related price list is
updated. This means the price will not change unless you specify otherwise.
 You can enter prices in the primary currency, and two additional currencies for exact
pricing in different currencies.
 You can set prices by units of measure for items with a defined UoM group.
 Once you have managed your price lists, assign the appropriate price lists to your
business partners.
 There are two ways to assign price lists, either by the business partner group or by
assigning the price list to payment terms (that are associated later with business
partners). If needed, you can override this price list in the business partner master.
Pricelist Name Base Pricelist Factor

Basic Price List

4.2 MASTER DATA CONFIGURATION APPROVAL
Approval:
Concurrence:

5 STANDARD SAP B1 PROCESSES
5.1 SAP STANDARD PURCHASING PROCESS
5.1.1 PURCHASING PROCESS OBJECTIVE
 Perform the basic process steps for purchasing items.

 Explain the consequences of each steps on inventory and accounting.
 Keep vendor history and prices.
5.1.2 PURCHASING PROCESS CONFIGURATION
 The following defines the basic document involved in the purchasing process:
o Purchase Request:
 A Purchase Request is generally a document generated by a user to
notify the purchasing department of items or services needed. The
document specifies quantities, and a timeframe for the requested items.
It may also contain authorization information to proceed with the
purchase.
 Purchase requests are also known as purchase requisitions. Some
companies require a purchase requisition for all purchases and others
only require them for certain types of purchases.
 A purchase request can be copied to a purchase quotation in order to find
the best price or the purchase request can be copied directly to a
purchase order if the vendor is known.
o Purchase Quotation:
 The purchase quotation is the document for requesting pricing and
delivery information from your vendor in advance of the purchase order.

 You can create a purchase quotation, send the document to your vendor
and when you receive information from the vendor on prices and delivery
dates you can enter this information in the purchase quotation. In this
way, you can store the complete history of the sourcing process in the
system.
 The information tracked in the quotation enables you to pick the right
vendor for the purchase.
 Using quotations helps to reduce costs, improve quality and increase on-
time delivery.
 You can create several purchase quotations for many items and many
vendors in a single process.
o Purchase Quotation Comparison Report:
 A purchase quotation report allows you to compare offers to pick the
optimal vendor for your purchase. Then you can create the purchase
order from the selected quotation.
o Purchase Order:
 A purchase order is a commercial document issued by a buyer to a seller
specifying the items or services that the seller will provide the buyer.
 The purchase order includes the agreed-to quantities and price for the
products listed.
 Normally, when goods are received, purchase orders are matched with
delivery note and vendor invoices before the invoices are paid. In SAP
Business One, this process is automated: the purchase order can be
linked to the goods receipt (which shows information from the vendor
delivery note), which then can be linked to the A/P invoice (which
contains the information from the vendor’s invoice). This automation
allows information to be consistent and retained throughout the process.
You never have to enter data twice.
 When a purchase order is added in SAP Business One, no value-based
accounting changes occur. However, the order quantities are listed in
inventory management. You can view items and quantities on order in
various reports and windows, such as the inventory status report and the
Item Master Data window.
o Goods Receipt PO:
 You create a goods receipt PO when you receive goods from a vendor. In
most companies, the person in the warehouse or the office responsible
for taking delivery of shipments executes the goods receipt PO. If a
Goods Receipt PO is used when purchasing services, the person for whom
the services are rendered usually issues the document.
 A goods receipt PO can be created directly by selecting the document
name in the module menu, or it can be built from an existing purchase
order. If you are basing your goods receipt PO on an existing PO, you
may copy all the data contained in the PO or use the draw document
wizard to select the data to copy from one or more existing Purchase
orders. Even if you copy all data from an existing PO you can still adjust
quantities and prices—as well as dates, vendor, and item information—
before you post (add) the document.

Regardless of how you create your goods receipt PO, there should be no

differences between the data in the goods receipt PO and the vendor’s
shipping document (delivery note) sent with the items, because the
details in the vendor’s document are legally binding. If there are any
discrepancies between the base PO data and the vendor’s shipping
document, you should resolve them with the vendor before you post your
goods receipt PO.
 It is essential that the quantities and prices in your goods receipt PO
match the vendor’s shipping document.
 A goods receipt PO cannot be amended after it has been added to SAP
Business One because it triggers both inventory and (when using
perpetual inventory) accounting transactions. Your only option for fixing
an incorrect goods receipt PO is to cancel the document and create a new
goods receipt PO.
 The following are other documents used in a procurement process.
o Landed Cost:
 When importing goods, companies incur certain additional costs, such as
customs, transport and insurance fees, or taxes. These additional costs
can be allocated to the imported items and reflected in the accounting
system using the Landed Costs function in SAP Business One.
 If your company runs a perpetual inventory system, creating the landed
costs document automatically posts a journal entry in the accounting
system. The journal entry updates the moving average and the FIFO
price of the imported items.
o A/P Down Payment Invoice:
 Companies have a business need to issue and receive invoices that
include tax (or VAT) for down payments made or received. These invoices
are then cleared with partial or final invoices. Companies record a down
payment received in SAP Business One by creating a payment not based
on an invoice.
 The down payment invoice:
 Creates an accounting posting which impacts the VAT
 Does not affect inventory values or perpetual inventory
 Does not change the status of the base document that was drawn
into it
 Once the actual payment for the down payment invoice is made, create
the proper payment document, based on the down payment invoice. A
down payment invoice can be paid partially.
 After you create the payment document, a journal entry is recorded in
the corresponding control account.
o Goods Return
 The goods return document is used to return delivered goods to vendors
or to reverse a purchasing transaction for an item completely or partially,
for example, a goods receipt PO in SAP Business One. Due to legal
stipulations, you cannot delete or make any accounting-relevant changes
to these documents. However, to return unwanted or faulty goods, or to
correct errors made when entering the above-mentioned documents, you
can create a goods return.

 When you create a goods return, the goods are issued from the
warehouse and the quantities are reduced. If your company uses
perpetual inventory, SAP Business One automatically creates the relevant
posting to update the inventory values as well.
 You can create a goods return either based on a goods receipt PO or not.
If you choose to do the latter, and run the perpetual inventory by moving
average, make sure that the prices of the items in the independent goods
return are identical to the prices posted in the respective original
purchase transaction.
 Reopening the item quantity has the following consequences:
 The status of the purchase order changes to Open.
 The open quantity is increased by the item quantity in the goods
return document. If the sum of the remaining open quantity plus
the returned quantity is higher than the quantity in the original
order, the open quantity is increased up to the quantity in the
original order.
 The delivered quantity is decreased by the quantity in the goods
return.
 For service type transactions, the open amount is increased
accordingly by a value equal to the value from a goods return line.
If the sum of the remaining open amount plus the returned
amount is greater than the total amount for the original order line,
the total amount is used as the open amount.
 If there are any freight charges related to the returned item, these
charges are reopened in the same way as the item quantities.
 If the item is managed by batches, the returned batch-allocated
quantity is increased by the quantity from the return line.
o A/P Credit Note
 When you create a delivery for a purchase order or an A/P invoice in SAP
Business One, legal stipulations prevent you from deleting or making any
changes to these documents. You may, however, want to return the
goods to the vendor for a variety of reasons, or you may find that you
have made a mistake while creating the documents.
 The A/P credit memo is the clearing document for the A/P invoice.
Therefore, if the vendor has delivered goods, and you have already
created an A/P invoice, you can reverse the transaction either partially or
completely by creating an A/P credit memo.
 You create the A/P credit memo based on the A/P invoice to establish a
link between the two transactions in SAP Business One. However, it is
also possible to create an A/P credit memo without having a base
document.
 SAP Business One lets you create an A/P credit memo with a zero
amount. You can do this when you clear A/P invoices for no-charge items,
such as items that are part of a promotion or covered by a service
contract.
 You correct both the quantities and the values with the credit memo. SAP
Business One reduces the inventory of the credited items by the quantity
specified in the credit memo, posts the value of the credit memo to the

vendor account in the accounting system, and reduces the expense
account by the same amount.
o A/P Reserve Invoice:
 A/P reserve invoices enable you to create relevant posting in the
accounting system only and do not affect inventory and inventory values.
You use A/P reserve invoices to document an A/P invoice you receive
from a vendor before goods arrive.
 After you receive the goods, you create a goods receipt PO based on the
A/P reserve invoice to update inventory quantities and inventory values.
 SAP Business One enables you to create an A/P reserve invoice with a
zero amount before you receive no-charge items, for example, items that
are part of a promotion or under the coverage of a service contract.
 The A/P reserve invoice is relevant for items only and is not available for
services.
 You close an A/P reserve invoice by creating an outgoing payment.
5.1.3 PURCHASING PROCESS OVERVIEW
Title Description
Traceability Generate and manage purchasing documents i.e.
Purchase Orders, Goods Receipt PO, Landed Cost and A/P
Invoice.
Process Goal Optimization of Polythene Industries Limited’s purchasing
and inventory management business processes
Responsible Procurement
Stores
Finance
Triggers Purchase Request
Minimum Inventory Levels
Notes User Defined Fields:
 Landed Cost Form
o Estimation Date
 Purchasing Documents
o File Number
Alternative Flow Streamlined Purchase Process:
 Purchase Orders >> A/P Invoice
 A/P Invoice
 Recurring Transactions
Business Rules Approvals:
- Purchase Order
- Goods Returns
- A/P Credit Note
Validation
- Purchase request is mandatory for local purchase
process.
- Purchase Order is mandatory for stock items and
some service items.

Title Description
- Goods receipt PO is mandatory for stock items.
- Supplier Ref. No will be mandatory on the A/P Invoice.
- Price variance between LPO and AP Invoice should be
blocked if +- 3%
- Quantity variance between LPO and GRN should be
blocked if +-5%
Documents - Purchase Blanket Agreement
- Purchase Request
- Purchase Order
- A/P Down Payment Invoice
- Goods Receipt PO
- Goods Returns
- Landed Cost
- A/P Invoice
- A/P Reserve Invoice
- A/P Credit Note
Glossary
Current System Hansa World
Key Measurement of - Processing of end to end procurement documents in
Success for Process SAP B1
- Stock costing
- Purchasing History
- Supplier Ageing
Legislative Requirements - Correct VAT allocation
- Withholding Tax
- Withholding VAT
Policies and Procedures
Main Master Data Objects Supplier
Item Master Data
Implementation Notes Alerts:
- Minimum level stock deviation alert
- Open purchase requests
Default SAP numbering series will be used for the

numbering series
Reports Standard B1 Reports
- Open Items List
o Open Purchase Request
o Open Purchase Quotations
o Open Purchase Orders
o A/P Down Payment Invoice
o Open A/P Invoices
o Open A/P Credit Notes
o A/P Reserve Invoices – Unpaid
o A/P Reserve Invoices – Not yet delivered
- Document Drafts Report

Title Description
- Purchase Analysis Report
- Purchase Request Report
- Purchase Quotation Comparison Report
- Blanket Agreement Fulfilment Report
- Supplier Ageing Analysis and statement
Stationeries Standard SAP B1 Stationeries

- Purchase Blanket Agreement
- Purchase Request
- Purchase Order
- A/P Down Payment Invoice
- Goods Receipt PO
- Goods Returns
- Landed Cost
- A/P Invoice
- A/P Reserve Invoice
- A/P Credit Note
Stationeries to be customised
- Marine Cover Note Application
Requirements for Future
Processes for Phase 2…
Data Migration Open AP Invoice, AP Credit Note and Outgoing payment
Questions for Business to None
Clarify Process
5.1.4 CURRENT PROCUREMENT PROCESS
The procurement process at Polythene Industries Limited is divided into the following:
i. Normal Procurement Process
o Local Procurement
 The procurement process begins with a manual LPO being raised by the
factory or administration department. This is because, the Director may
not be available to raise this document. One of the challenges Polythene
Industries Limited are facing is that users are at times not putting the
price in the LPO.
 The LPO is then sent to the supplier, for goods to be delivered.
 If an advance payment is required, this is paid. However, this is rare in
local procurement.
 Once the goods are delivered by the supplier, a GRN is raised to receive
the items. The stores clerk also signs the picking list of the supplier. This
is then taken to the finance department to book the supplier invoice.
Variances are also allowed between the LPO and GRN as items such as
paper supplied, cannot have the exact quantity delivered. They would like
to put a price variance allowance to be set at 3% and a quantity variance
allowing +- 5% to be set.
 The supplier invoice is received and booked.

o Import Procurement
 After daily meetings between the director and factory department, stock
levels are determined and the director makes a decision on what to
import.
 Based on a call conversation between the director and the supplier, an
agreement is reached and a proforma invoice is raised by the supplier
and sent to Polythene Industries Ltd. The proforma invoice is then signed
by the director of Polythene Industries Limited.
 Based on the signed proforma, the LPO is raised in Hansa World and the
signed proforma is sent to the supplier as a confirmation.
 If required, an advance payment may be asked by the supplier before the
goods are delivered.
 The export process then begins with Polythene Industries Limited
applying for IDF and Marine Insurance. The supplier then sends the
invoice, packing list, BOL & COO to Polythene Industries Limited which
are then sent to the clearing agent for clearing. Polythene Industries
would like a form to be created for them so as to enable the marine cover
note application details to be captured. The details on the form have been
shown below. Once this details have been captured, this will be printed
from SAP B1.

 A goods receipt note is then raised after these items are received. This is
received into the main store warehouse.
 Additional charges incurred during the importation process are also
booked to add up to the cost of the item. Examples of these landed cost
items include:
 Agency fees
 Port charges
 Shipping line charges
 Container offloading charges
 Bank/LC charges
 Demurrage charges
 Storage other charges
 Insurance
 RDL
 IDF/MSS Levy
 Transportation
 Supplier Invoices are then booked accordingly when received.
ii. Utilities Procurement Process – This involves recurring invoiced utilities e.g.
electricity
iii. Petty Cash Procurement Process
 Expensed Items - This is via cash requested from finance or claims from staff having
utilised their own money towards incurring company expense.
5.1.5 SAP B1 PROCUREMENT PROCESS
For the Local Normal Procurement Process, SAP B1 will enforce the standard purchase
cycle as defined by SAP Best Practice i.e. Purchase Request>Purchase Quotation>Purchase
Order > Goods Receipts> A/P Invoice.
Any Open LPOs due to under-delivery or cancelling of delivery, will be closed manually. The
Open Items List report will be used to identify them.
For Service Procurement Items, the same process will be used without Goods Receipts
documents i.e. Purchase Request>Purchase Quotation>Purchase Order > A/P Invoice. The
items will be selected as non-stock items where the expense account will have been mapped
already. E.g. Stationary
For the Import Normal Procurement Process, SAP B1 will enforce the following purchase
cycle i.e. Purchase Order >Marine Cover Note >> Goods Receipts>Landed Cost > A/P Invoice.
The total cost of landed cost items should be within pre-set percentages of the total products
cost. Anything above this should trigger an alert as defined below:
 Raw Materials – 9%
 Semi-Finished Goods e.g. PVC Rolls -19%
The File Number should also be captured in the whole purchase cycle. The Landed Cost
Estimate Date will also be captured on the landed cost document, as they may have estimate
and actual costs.
The Marine Cover Note form will be created in SAP B1 using User Defined Objects.
For Utilities Procurement Process, Recurring AP Invoices will be setup where necessary to
ease the work of the finance department and recurring alerts will be triggered when due.

For Petty Cash Procurement Process, this kind of purchases will be done as per the petty
cash process described in the banking section of this blueprint. Their daily float is KES
500,000.
Alerts on Permits
 Polythene Industries Limited have requested that a customised form is created for them
to capture a list of their different permits with their expiry dates. Different alerts will
then be created as follows:
o Work Permits – 2 months before expiry date
o Tax Compliance – 3 Days before expiry date
o Insurance Policies – 15 Days before expiry date
o Business Licences - 2 months before expiry date
 These alerts will go to the FC & Chief Accountant
5.1.6 PROCESS FLOW – SAP B1 “TO-BE” PROCUREMENT PROCESS
Purchase Purchase Purchase Purchase

Local/ Import Document
Requisition Request Requisition Request
Start Procurement? Local Approval Approved
(Draft) Approval (Final) 5A
1 4
2 3 5
Import
Minimum Stock
Level Alert Rejected
2a Purchase
Quotations Quotations Alert
Purchase Order Purchase Quotation From Suppliers Purchasing
Comparison Report Purchase Dept.
(Draft) 7
9 Quotations 6
10
Purchase Quotations
(Optional)
8 NO
Rejected
Purchase
Purchase Order Advance
Order Receive Shipment
Approved (Final) Payment Required?
Approval /Services
12 13
11 15
YES
Incoming Payment
Purchase Order Process
12A 14
GRPO (Optional)
AP Invoice GRPO
16A
(Optional) 16
20A
Payment Process Supplier AP Landed Costs

Invoice No Applicable?
21
20 17
Landed Cost Invoice Landed Cost

End 19 18 YES

5.1.7 FUNCTIONAL SPECIFICATION- SAP B1 “TO-BE” PURCHASE PROCESS
Task Task Name Process Comment

1 Decision: A decision is made on whether a
Local/ Import local or import procurement will
Procurement be made.
2a SAP B1: The procurement process can be
Minimum Stock triggered by a minimum stock
Level Alert level alert set in SAP.
2 SAP B1: A purchase requisition is raised The procurement process can
Purchase once a user requests for an item also be triggered by a
Requisition but it is not in stock purchase request document.
(Draft)
3 SAP B1: The Purchase requests will be
Purchase routed for approved based on the
Request approval matrix defined
Approval
4 SAP B1: The document will be approved or The document approver will
Document rejected by the authorizer. receive an alert in SAP B1
Approval If rejected the document will be system requesting him or her
routed back to the originator to to approve the document.
amend it as required
5 SAP B1: Once the purchase requisition is
Purchase approved it will be committed in
Requisition SAP B1 system by the requester.
(Final)
5A SAP B1: The purchase requisition can be
Purchase printed and filed if required.
Request
6 SAP B1: Alert Once the purchase request is
Purchasing approved and committed in SAP
Dept. B1, the purchase department will
be notified via a system alert to
begin the procurement process.
7 Outside SAP Quotations will be sent by
B1: Quotations suppliers to Polythene Industries
from Suppliers Ltd after they request for
quotations from various suppliers.
8 SAP B1: The quotations sent will be filled This will be optional in the
Purchase in SAP. procurement cycle
Quotations The Purchase quotations will be
(Optional) based on the purchase requisition
in SAP B1.

9 SAP B1: Once all quotations are received Comparison can be done
Purchase and captured in the system, the based on various factors such
Quotation purchase comparison report will as cost and date of quotation
Comparison be executed to compare the
Report quotations.
10 SAP B1: After a quotation has been
Purchase Order selected, a purchase order will be
(Draft) raised based on the purchase
quotation.
11 SAP B1: The approver will either approve
Document or reject the purchase order
Approval
12 SAP B1: Once the purchase order is
Purchase Order approved, the initiator will receive
(Final) an alert in the system notifying
them of the decision and will add
the document in the system.
12A SAP B1: The purchase order will be printed For import procurement, the
Purchase Order and issued to the supplier. marine cover note application
will be entered after this step.
13 SAP B1: Sometimes before the supplier
Advance can supply the services or goods
Payment an advanced payment or down
payment is required
Required?
14 SAP B1: An incoming payment on account Journal Entry:
Incoming will be raised against the supplier Debit: Supplier
Payment account Credit: Bank
Process
15 Outside SAP The company will receive the
B1: Receive goods delivered by the supplier.
Shipment
16 SAP B1: GRPO The GRPO document will be used
to post the goods received, in the
system.
16A SAP B1: The GRPO can be printed from the
GRPO(Optional) system
17 SAP B1: If the item is imported, there will
Landed Costs be additional landed costs.
Applicable?
18 SAP B1: A landed cost document will be Journal Entry:
Landed Cost raised in the system to book the Debit: Stocks
additional costs. Credit: Landed Cost (LC)
Clearing Account
19 SAP B1: A landed cost invoice will be Journal Entry:
Landed Cost raised to pay the suppliers who Debit: LC Clearing Account
Invoice provided the landed cost services. Credit: Supplier

20 SAP B1: The supplier Invoice will be based Journal Entry:
Supplier AP on the GRPO. Debit: Goods Received Not
Invoice Invoice
Credit: Supplier
20A SAP B1: AP The A/P Invoice can be printed if
Invoice required.
(Optional)
23 SAP B1: The supplier payment will be
Payment made when the invoice is due.
Process
5.1.8 PURCHASING PROCESS APPROVAL
Approval:
Concurrence:

5.2 SAP STANDARD STOCKS MANAGEMENT MODULE
5.2.1 STOCKS MANAGEMENT OVERVIEW
Title Description
Traceability Manage Stock levels;
Pricing correct on Sales and Purchasing documents
Movement of stocks from one warehouse to the other
Process Goal Stock accuracy and accurate purchasing and selling price
list
Responsible Stores
Procurement
Finance
Triggers Any stock movement not generated by the Sales,
Purchase or Production process;
Changes required to pricelist.
Notes Document Numbering:
- Default SAP numbering series will be used.
Alerts:
- Minimum and maximum stock levels
User-Defined Fields:
- Job Card reference number
Alternative Flow None
Business Rules Approvals:
o Stocks Transfer Request
o Stocks Transfers
o Goods Receipt
o Goods Issue
o Stock Counting
o Stocks Posting
Documents o Goods Issue
o Goods Receipt
o Stock Transfer
o Stock Take
o Price List
Glossary N/A
Current System Hansa World
Key Measurement of Stock control and accurate pricing
Success for Process
Legislative Requirements
Policies and Procedures Stocks Valuation Method – Moving Average
Main Master Data Objects Item
Price List
Implementation Notes
Reports Standard SAP B1 Stocks Reports
o Item List

o Open Item List
o Document Drafts Report
o Last Prices Report
o Inactive items
o Inventory Posting List
o Inventory Status
o Inventory in Warehouse Report
o Inventory Audit Report
o Batches and Serials Inventory Audit Report
o Inventory Valuation Simulation Report
o Serial Number Transaction Report
o Batch Number Transaction Report
o Bin Location List
o Bin Location Content List
o Price Report
o Discount Group Report
o Inventory Counting transactions Report
o Stock Turnover Analysis
o Stock valuation Method Report
Customised Reports
- Stock Ageing Report
- Tonnage Turnover Report
Stationeries o Stocks Transfer Request
o Stocks Transfer
o Goods Receipt
o Goods Issue
o Stocks Counting
o Stocks Posting
Test Scenarios Create new items
Update existing price lists
Costing
Data Migration Item Master
Item Groupings
Price List
Stock on Hand
5.2.2 SAP STANDARD STOCKS MANAGEMENT CONFIGURATIONS
 Using SAP Business One, you can track your inventory in the warehouse in real time.
Every transaction that you add, will update your inventory quantity levels, and if you
are using perpetual inventory, the monetary value as well.
 Most companies require the ability to report their inventory situation at any time; while
some companies such as services providers, do not have the need to track inventory
information at all.

 In SAP Business One, you can choose between activating “Perpetual Inventory” which
will track the monetary value as you add or remove inventory or you can run your
accounting without this function.
5.2.2.1 Valuation Methods
 Let’s first try to understand how your choice of valuation method affects your
accounting system. At the end of the year, you need to know the monetary value of
your inventory in the warehouse. You may say – that is easy, it’s the summary of all
my purchases. That is almost correct, except this does not really give us the cost of the
units remaining in the warehouse.
 Commonly, a particular item may be purchased throughout the year at different prices.
The valuation method you choose will help the system to determine how much the item
sold actually costs. This is also called Cost of Goods Sold.
 Based on the company line of business, an appropriate valuation is determined. We will
now look at the four options available in SAP Business One.
o Moving Average: The item cost is calculated by dividing the total inventory
value by the on hand quantity.
o FIFO: The item cost is calculated as the cost of the oldest unit on hand.

o Standard Cost: The unit cost is determined manually when you setup the item.
Variances that occur due to a different purchase price are recorded to a
variance account, and the unit cost is not affected.
o Serial/Batch Valuation Method Cost: The item cost is assigned to the

individual serial or batch number unit and is used when the unit is selected in a
sales document.
5.2.2.2 STOCK REVALUATION:
 Inventory Revaluation allows you to re-evaluate your item costs and inventory value
without changing quantity levels. Typically revaluation is done during the year- end
closing process.
5.2.2.3 WAREHOUSE SETUP
 Warehouses are key building blocks of your company database. If you keep inventory in
stock, you have a constant need to know which items you have, how many, and where

they are located. Knowing this helps you make better decisions in terms of fulfilling
customers’ orders and planning your future purchases.
 The warehouse in SAP Business One represents a physical location, but can also be a
virtual one. For example some companies create warehouses to represent major
vendors that use consignment, or a warehouse can represent items that are in
transport.
 The warehouse setup contains a code and name, a location, a checkbox to identify
whether it is used for drop ship, and the Nettable checkbox to identify whether to
automatically include this warehouse in the MRP run.
5.2.2.4 MULTI BIN FUNCTIONALITY
 Within the warehouse you can define up to 4 sublevels which can be used to identify a
bin location.
 A sublevel can be an aisle in the warehouse, a zone, an area or even a shelf.
 Bin location codes consist of the warehouse code plus the code for each sublevel.
 For example, you might have a warehouse (warehouse 05) that has 4 aisles and each
aisle has 4 shelves divided into 3 bin locations. We could set this up as in the following
diagram:
 Polythene Industries Limited currently do not have bin locations in place.
5.2.2.5 CYCLE COUNT AND INVENTORY TRACKING
 Periodically, you are required to conduct a cycle count to verify that the on hand
quantities as they appear in SAP Business One match the physical count in the
warehouse.
 For Polythene Industries Limited, cycle counts will be done on a monthly basis.

 Once the Inventory Cycles are created, you can either assign them to the item master
data.
 Once you have set up the timing of the cycle count, new and existing items are updated
with the appropriate cycle count code, alert, and the user assigned to the count. You
can modify these settings for each item and warehouse in the item master data.

 When you receive an alert, open the Cycle Count Recommendations report to view all
items that are due to be counted. Select the items you wish to count and choose the
Inventory Counting button to open the counting documents. There are two document
types: Inventory counting and Inventory Posting.
 Inventory Counting:
o The Inventory Counting document lists the items to be counted and identifies
the users performing the count. You have the option to freeze the items so they
cannot be issued during the count.
o From the Inventory Counting document, you can also print out a count sheet
(without current stock quantities) for the counters to fill in as they perform the
count.
o After the count, you enter the quantities into the Inventory Counting document
either manually or by importing from MS Excel.
 Inventory Posting:
o If you have a difference between the counted quantities and the stock quantities
currently in the system, you then copy the inventory count to the Inventory
Posting document.
o Here you simply identify the item cost and post any differences to adjust your
inventory levels and value.
o Any variances will be approved by the Head of Finance in the system. An
approval template will then be setup accordingly.
5.2.2.6 PICK AND PACK
 The pick and pack process is an optional step in your sales cycle. If you manage a large
warehouse, and have dedicated personnel to collect the items, pack and ship them,
then the pick and pack manager can be helpful.

 The pick and pack manager scans your open sales orders, production orders, inventory
transfer requests, and reserve invoices by requested delivery date and priority. It also
presents the accumulative available quantities ready to be picked and shipped. If there
is not enough available quantity, the column To Release will be blank. If your
configuration allows you, you can choose to release for pick list quantities that are not
available.
 The sales orders can be released and pick list printed to pick the items from the
warehouse.
 Once the items are picked from the warehouse using the picking list a delivery can be
generated from the pick list.
5.2.2.7 STOCKS TRANSFER
 You use this function to transfer inventory from one warehouse to another.
 An inventory transfer can also be carried out as a consignment for a customer. The
items are then stored in the customer’s warehouse and are sold from here.
 This will be used by Polythene Industries Limited to do the following:
o Transfer items from the main store to the production floor for producing finished
goods products
o Transfer finished goods products to the dispatch stores warehouse
5.2.2.8 GOODS RECEIPT

 The Goods Receipt window lets you increase the inventory level in situation that is not
the direct result of adding a purchasing document. For example, you may need to add a
goods receipt if you discover during an inventory count that part of the stored quantity
has not been taken into consideration. You can enter the overlooked quantity in SAP
Business One by adding a goods receipt.
 When you purchase an item, the warehouse inventory increases automatically when
SAP Business One enters the transaction. For example, if you create a goods receipt
PO, the warehouse inventory increases accordingly by the specified quantity.
5.2.2.9 GOODS ISSUE
 The goods issue function lets you reduce the inventory level in a situation that is not
direct result of a sales document entry. For example, if five units of an item suffer
water damage in a warehouse, they cannot be sold and are removed. In such a case,
you can post a separate goods issue using the function described here.
 After an item is sold, the warehouse inventory is automatically reduced when SAP
Business One enters the transactions. For example, if you create a delivery document
that is based on a sales order, the warehouse inventory is reduced by the specified
quantity once the delivery document is added.
5.2.2.10 TREATMENT OF DAMAGED ITEMS
 The raw materials damages incurred at Polythene Industries Limited may be as a result
of spillage or small damages when offloading. As the damages incurred are usually
negligible, Polythene Industries Limited have advised that they will not be tracking
these damages.
 Finished goods (Plastic) damages will however undergo a recycling process in SAP B1.

 Finished goods (Paper) will be converted into waste paper and sold to customer.
5.2.2.11 REPAIRS DONE EXTERNALLY

 Polythene Industries Limited may have repairs that are done externally for their
machine spares and would want to track this process in SAP B1. To achieve this, the
stock transfer document will be used to transfer the spare from the main store
warehouse to a virtual warehouse called Repairs. This will be printed out of SAP B1.
When the goods are brought back, this will be transferred from the Repairs virtual
warehouse to the Main Store Warehouse.
 A supplier invoice will be raised for the service done, when received by Polythene
Industries Ltd.
5.2.3 PROCESS FLOW: STOCK TAKE SAP B1 “TO BE” PROCESS
Stock
Physical Stock Counting
Take Stock Counting Record Counted Quantity
YES Count Complete YES
Required? 3 on the Stock Count Sheet
4 5
1 6
NO NO
Print Stock Count

Process End
Sheet
2
3A
Stock Update the Stock

Edit Stock Stock Posting Sign-off the Count sheet
Posting Counting
Posting (Draft) 7
Approval Document
14 9
10 8
YES
Edit
Document
Stock Posting
Rejected Approval
Document?
11
12
NO
Approved
Process End
13 Stock Posting Print Stock Posting
(Final) 15A
15
5.2.4 FUNCTIONAL SPECIFICATION: STOCK TAKE SAP B1 “TO BE” PROCESS
1 DECISION: Stock takes are planned .

Stock Take activities in an organization and
Required? based on the planned stock
takes the stock taking will be
executed.
2 SAP B1: Process If stock take is not required the

End process will be terminated.

3 SAP B1: Stocks Stock counting document will

Counting be created in SAP B1 with all
items that requires physical
count.
3A SAP B1: Stocks The stock count sheets will be This will be exported in
Count sheet printed and issued to the Excel as per Polythene
counters to start the counting Industries Limited’s request.
process.
4 Outside SAP B1: Stocks will be counted

Physical Stock physically in SAP B1.
Count
5 Decision: Users will finalize counting of
Counting the stocks physically in the
Complete? stores.
6 OUTSIDE SAP The counters will record the

B1: Record counted quantities on the count
Counted Quantity sheets.
on the Stock
Count Sheet
7 Outside SAP B1: The count sheets will be signed Once the stock counting is
Sign-off the Stock off physically. finalized the count sheets
Count Sheet will be signed off by the
stocks accountant and the
counter.
8 SAP B1: Update Counted stocks will be recorded

the Stock in the system against the open
Counting counting document in SAP B1
Document to record the physical count per
item and warehouse.
9 SAP B1: Stocks The Stock Posting will be The stock sheet will be
Posting(Draft) posted in the system by the routed for approval based
stocks accountant after on the approval matrix
verifying all the stocks defined in the system.
variances.
10 SAP B1: Stock The stock posting document This will be approved by the
Posting approver will receive a system FC of Polythene Industries
(Approval) alert in SAP B1 requesting Limitess
him/her to approve the
document.
The stock posting can either be

approved or rejected in SAP B1.
11 SAP B1: Stock The authorizing signatories will

Posting Approval be take decisions.

12 SAP B1: Edit If the stock posting document

Stock Posting is rejected the users will
Document? receive an alert with the
decision and they will either
edit the draft or close it based
on the remarks from the
authorizer
13 SAP B1: Process If document is rejected and no

End further action is required, it will
be sent for approval in SAP B1.
14 SAP B1: Edit If the document is rejected and

Stock Posting further action is required, the
stock posting will be edited and
resubmitted for approval.
15 SAP B1: Stock Once the stock posting Journal Entry:

Posting (Final) document is approved the
Debit: Stock Loss / Stock
initiator will receive a system
Ledger
alert and they will add the
stock posting document. Credit: Stock Ledger / Stock
Gain
15A SAP B1: Stock The stock posting document

Posting will be printed and filed if
required.
5.2.5 PROCESS FLOW: STOCKS TRANSFERS SAP B1 “TO-BE” PROCESS
Production Alert to
Material Requisition Stocks Transfer Items Received
Start Process Stores
2 4 5
1 3
Production Production
Items Received Stocks Transfer
Damaged? YES Process Complete? Process
9 8
10 7 6
NO NO
Stock Transfer (To Production
YES Damaged Whse) Rework Process
11 12
End

5.2.6 FUNCTIONAL SPECIFICATION: STOCKS TRANSFERS SAP B1 “TO-BE” PROCESS
1 SAP B1: A production process is

Production planned by the production
Process department.
2 SAP B1: Material Based on the raw materials This will be a stock transfer
Requisition and packaging materials request document in SAP B1.
required the production
department will create a
material requisition in SAP
B1.
3 SAP B1: Alert to Store Department will

stores receive an alert in SAP B1
notifying them of the stocks
required by the production
department for production
process.
4 SAP B1: Stocks The Stock Transfer will be Journal Entry:

Transfer posted in the system by the
Debit: Stock Ledger
Store user.
Credit: Stock Ledger
This will have details such
as the person who the items
have been given.
5 OUTSIDE SAP Items are physically

B1: Items received on the production
Received floor.
6 SAP B1: The production process will

Production be executed in SAP B1 as
Process described in the production
section.
7 OUTSIDE SAP The production process will

B1: Production be completed.
Process
Complete?
8 SAP B1: Stocks Once production of the This will be from the production
Transfer finished goods is completed, floor to the main store.
the goods will be transferred
Journal Entry:
back to the stores
department. Debit: Stock Ledger
9 Outside SAP B1: The items will be physically Journal Entry:

Items Received received into the main
Debit: Stock Ledger
warehouse.

10 Decision: Based on the quality check

Damaged? of the products, a decision is
reached whether there are
items that have been
damaged.
11 SAP B1: Stocks The stocks will be Journal Entry:

Transfer (To transferred to the damaged
Debit: Stock Ledger
Damaged goods warehouse in
Warehouse) preparation of being Credit: Stock Ledger
recycled.
12 SAP B1: The damaged products will Production rework process has
Production be recycled through a been described in the
Rework process production process production section of this
blueprint.
5.2.7 STOCK MANAGEMENT PROCESS APPROVAL
Approval:
Concurrence:

5.3 SAP STANDARD PRODUCTION MODULE
5.3.1 BILL OF MATERIAL:
 Use the Define Bill of Materials function to create a multilevel BOM, one level at a time.
 The BOM has a hierarchical arrangement of components. Enter all the child items and raw
materials required to assemble and produce the finished product.
 In SAP B1 there are 4 types of Bill of materials:
o Production
 The Production Bill of Materials (BOM) represents a finished product (parent)
comprising different inventory components (child components). During the
production process, you turn the components into the finished product.
Select the Production BOM to include the product in the MRP run and to
process standard production orders.
 Components in the Production BOM are physical items, for example, a screw,
a wooden board, a measured quantity of lubricant or paint, or virtual entities,
such as one work hour.
o Sales and Assembly
 The Sales BOM and the Assembly BOM represent a finished product
assembled at the sales stage, that is, the finished product is composed of its
component items only when the parent product is actually sold. The
component items are stored and tracked individually in the warehouse.
 For both the Sales BOM and the Assembly BOM, you do not manage the
parent product as an inventory item, but rather as a sales item. The
components can also be sales and inventory items in their own right. When
you create the delivery to dispatch the customer order, the components are
backflush issued from inventory.
 Use a Sales BOM where there is a fixed combination of components and the
customer needs confirmation of each item. The component items cannot be
altered or removed from a sales order. Other items cannot be inserted
between the parent and component items in the sales order. However, the
quantities of the component items can be modified.
 Use the Assembly BOM when you would not expect the customer to check
each component in the order, such as a gasket set.
 Note: The components for Sales BOMs and Assembly BOMs must be sales
items.
o Template
 The Template BOM is a bundle of items, where the parent product is the first
item on the list. It does not act as a BOM once it is added to the sales
document, but rather as a list of items brought together at the same time.
You can update the quantity of those items, swap items, or delete them in
the BOM or the sales order. The components appear below the parent as a
list of items in a sales document. Use the Template BOM when you require
flexibility in selecting components for a product.
5.3.2 PRODUCTION PROCESS OBJECTIVE
 Perform the basic process steps for production module.

 Explain the consequences of each step of production process on inventory and
Accounting.

5.3.3 PRODUCTION PROCESS CONFIGURATION
 The following defines the basic document involved in the production process:
o Production Order:
 Production Order Types: SAP Business One supports three types of
production orders.
 Standard
o Based on the bill of materials and used to produce a regular
production item.
o You manage material transactions of the regular production
process.
o You can change components at the production stage.
o When you open a new standard production order, all the
components are filled in automatically.
 Special
o Used to produce and repair items or to perform activities that
are not necessarily bill of materials items, for example, repair
orders for customer equipment cards or rejected assemblies.
o You create special production order components manually.
 Disassembly
o Used to dismantle a parent item of the regular product into its
child items. The separate parts can then be put into inventory
and sold. For example, you can purchase a used car, take it
apart, and sell the individual components.
 Production Order Issue Methods
 You issue component items using either the Manual or the Backflush
method.
o Manual – You issue individual component items to the
production order. This enables you to post components issued
to a production order precisely when they are required in the
production process.
o Backflush – SAP Business One automatically issues item
transactions for the needed component items (as defined in
the Components tab) when a product is reported as
completed.

 Production Order Status
 Planned – SAP Business One initiates production orders with planned
status. Since the production order is not released to the shop floor for
manufacturing:
o You cannot yet issue items or report completion of the
production order.
o You can update the production order.
 Released – You change the production order to this status when you
release it to the shop floor for production. At that stage:
o You can report transactions for the production order and the
issue of the components.
o You can update the component items as long as there are no
transactions for the selected component.
o You can add a new component.
 Closed – The production order is closed when you cannot add any
new transactions to it. You close the production order when
production is completed.
o Issue Components
 Use this window to issue manual items to production orders, and to report
disassembly orders completion.
 Backflush components are issued automatically.
o Report Completion (Receipt from Production)
 Use this window to report the completion of the product. For Standard and
Special production orders, post the finished product to the inventory.
 For Disassembly production orders, post the components to the inventory.
5.3.4 BY-PRODUCTS IN BOM AND PRODUCTION ORDER
o By-products are defined in bill of materials and production orders as items, but with
negative quantity.
o Both Manual and Backflush issue method are supported for by-product.
o By-products are received to warehouse by Receipt from Production, like the main final
product.
5.3.4.1 RECEIVING BY-PRODUCTS
o By-products are received from production into the warehouse by a Receipt from
Production, along with the main final product.

o When the Manual issue method is used, then quantities can by manually adjusted.
However, when the Backflush issue method is used then the quantity is derived from
the quantity of the main final product.
o The unit price (item cost) of the receipt is defaulted from the selected pricelist, but can
be manually adjusted. By-products automatically appear on the document.
o By-products with Backflush issue method are added or removed together with the
parent item, they are bound together.
o By-products with Manual issue method can be added or removed from the document as
independent lines.
o The transaction type can also be set for by-product, though it has no direct effect on
stock or accounting. It is recommended to receive rejected by-products into a different
warehouse with different accounts.
5.3.5 PRODUCTION COSTING
5.3.5.1 OVERALL PRODUCT COST
o The overall costing for the production CAN be both the direct costs and overheads. The
direct costs will include the direct raw materials (RM) and direct packing materials (PM).
The overhead costs will include labour, electricity etc. configured as resource.
o The BOM can be set up to include the following;
o Direct Costs
 Raw materials
 Packing Materials
o Overheads
 Labour
 Electricity
o In summary the Finished Good cost (production) will be calculated at Direct Costs
(RM+PM) + Overheads
o Direct Costs
o Direct costs (RM+PM) will be set up in the system as stock items.
o The stock valuation method will be moving average as per company policy.
o SBO will calculate the Moving Average Cost according to receipts from suppliers
and production. The issue method for all stock items will be manual.
o Overheads
o The overhead costs will be set up as resource and included in the BOM.

o The expense account set up on each resource will be used to determine the
account used to track the amount of overhead updating stock cost. This account
will have a credit balance as the debit amount will update the cost of the stock
item being produced. When the actual overhead is incurred and processed it will
again be posted to the same overhead account and it will clear the amount on
this account.
5.3.5.2 PRODUCTION ORDER SUMMARY
o Actual Component Cost

o Total value of all component items (not including non-inventory components)
issued for the production order.
o Actual component cost = Cost per component * Component issued quantity
o Actual Additional Cost
o Total value of all non-inventory component items, for example, a service or
labour cost.
o Actual Product Cost
o Total value of all products (the completed parent items) received from the
completed product order.
o Actual product cost = Cost per component * Expected component usage
quantity
o The calculation of expected component usage quantity is based on the
completed products, which may be equal to or different from the component
issued quantity for the product order. When the two quantities are different, the
variance appears.
o Expected component usage quantity = Planned component quantity * (Actual
parent completed quantity / Planned parent quantity).
o Total Variance
o Displays the difference between product cost and component cost.
 Total variance = Actual product cost - Actual component cost.
o Variance Per Product
o Displays the total variance divided by (quantity completed + quantity rejected).
o Variance %
o Displays the percentage of the variance per product value.
o Planned Quantity

o Total planned quantity of the production order.
o Completed Quantity
o Displays the total quantity reported as completed.
o Rejected Quantity
o Total quantity rejected in the Production Order.
5.3.6 PRODUCTION PROCESS OVERVIEW
Title Description
Traceability Manage Stock levels;
Production orders
Process Goal Accurate stock costing and stock on hand values
Responsible Production Manager
Triggers Forecasts, Sales Orders, Production Orders
Notes Approvals:
 Stock Transfer
User-defined Fields:
 Reject Reasons
o Start-up
o Change-over
o Misprint
o Trimming
 Machine Type
o CI Print
o Flexo
 Operator Name
 Shift
 Start Time
 End Time
Alternative Flow Rework
Business Rules o You will not be able to receive the bulk or FG in case
the components are not issued.
Alerts:
o Processed waste received above 3% should go to the
CEO
Documents Production Order

Receipt from production
Issue to Production
Bill of Materials
Glossary N/A
Current System Manual
Key Measurement of Accurate production costing, accurate stock levels,
Success for Process reporting on Production variances, Batch traceability.
Legislative Requirements None
Main Master Data Objects Bill of Materials

Implementation Notes Document Numbering:
- This will be created for the different production
stages:
o Extrusion Production Process
o Printing Production Process
o Bag-Making Production Process
o Recycling Production Process

o Bill of Materials Report
o Open Items List
Customised Reports
o Tonnage Turnover Report

Test Scenarios Create production order, Receipt from production –
complete and partial
receipt, Check production variances
Data Migration Bill of materials
5.3.7 CURRENT PRODUCTION PROCESS

The production process at Polythene Industries Limited is divided into two:
o Plastic Bag Production
o Paper Bag Production
The production process begins with an Order Confirmation being received by the production
department from the Sales department. If the items are not in stock then the order
confirmation is taken to the production department. The order confirmation contains details of
the order placed by a customer.
This information will enable the creation of a production card. Once received, the production
department will request for the raw materials required for the production run to be fulfilled.
Once the items are received, the production process begins.
5.3.7.1 PLASTIC BAG PRODUCTION PROCESS
The plastic bag production process at Polythene Industries Ltd is divided into different
processes based on the type of bag being produced. The following processes are used in plastic
bag production:
 Extrusion
 Printing
 Bag Making
 Extrusion Production Process

The extrusion process begins with a job card being created based on the details on the order
confirmation received. Once the job card is created, the raw materials required are defined on

a job card copy. This is used as a materials requisition document. The job card copy is taken to
the stores department to request for the raw materials required.
Based on the availability of the raw materials, this is issued out from the stores department
and received by the extrusion department.
The raw materials used at this stage include: granules, master batch and additives. These are
then used to produce plain plastic rolls of different sizes.
The produced plastic rolls are then transferred to the rolls department under extrusion to
cross-check the actual quantity produced.
During the receipt of the products, the net weight as well as the gross weight is captured for
the roll produced.
Polythene Industries Ltd have both process waste and reject items when they carry out a
production run. When rejected items are identified, the reason for rejection as well as the
operator’s name are captured, for tracking purposes. The process waste is usually 3% of the
quantity of the items produced. This may be as a result of trimming, power cut, machine start
up, setting and change-over. This will be included when setting up the bill of materials in the
system. A sample BOM has been shown below.
Certain types of rolls are imported as they cannot be manufactured internally. For these rolls,
the production process will start at the printing department.
 Printing Production Process

The production process begins with a job card being created for the printing department. The
plain paper rolls are requested from the extrusion department and received by the printing
department. The raw materials used such as ink and consumables are requested on email from
the stores department. At the printing production process, an approved artwork by the client
is printed on a plate and used to print on the plain rolls. Once the plain roll is printed on, the
finished good product becomes the printed roll for a particular customer.

 Bag Making Production Process
The bag making process is the final production process at Polythene Industries Limited. This
involves bag making, slitting and punching, rewinding, folding and stitching process.
This process has both process waste and reject items. The process waste may be due to
misprint wastage, start-up wastage, change-over wastage and trimming wastage. The process
waste is usually 3% of the items produced at this stage.
The finished product is then received as the plastic bag. This is then transferred to the dispatch
store for loading. A sample BOM has been shown below.
N/B: Any raw materials that remain on the production floor will need to be returned back to
the main store warehouse through a stock transfer document in SAP B1.

Waste Management Process - Polythene Bags
During the production process, Polythene Industries Ltd produce two types of waste:
 Required Process Waste – This involves waste that is produced during the production
process and is catered for as part of the reel size.
 Reject Items – This involves items that are produced at each production stage, that do
not meet the required specifications of the customer.
The waste items are recycled into black granules, for them to be reused again.
Fore certain grades such as BOPP, PVC, CPP and PP, recycling process cannot be done on
them. They will therefore be issued out and disposed from stores. Their value will hit a P & L
waste account.
5.3.7.2 PAPER BAG PRODUCTION PROCESS

The paper bag production process at Polythene Industries Ltd is a fairly new process. It has
been divided at a high-level into the following processes:
 Plain Paper Bag
 Printed Paper Bag
It can begin based on different scenarios such as:
 Inline Printing – In this process, the printing and bag making process is done
concurrently.
 Plain Printing – In this process, printing of a plain roll is done by Polythene
Industries Ltd.
 Bag Making – In this process, either a plain or printed roll is converted into a bag.
The printed roll may have been printed outside Polythene Industries Ltd.
In-Line Printing Process

This process begins with a job card being created for this process. Items required such as reels
of paper and ink are requested from the main store. Based on the reel size required, this is
used for the printing process. If the required reel size is not there, a closer reel size is used
and it undergoes slitting to the required size.
The printing and bag making process are done concurrently on the machine. The finished good
product is then received. A BOM will be created in SAP B1 for this process as shown below.

Plain Printing Process
This process begins with a job card being created for this process. Items required such as reels
of paper and ink are requested from the main store. Based on the reel size required, this is
used for the printing process. If the required reel size is not there, a closer reel size is used
and it undergoes slitting to the required size. Once the plain reel has been printed on, the
printed reel will be received as the semi-finished good. A sample of how the BOM will be setup
has been shown below.
Paper Bag Making process

The plain or printed reel is taken into a machine that folds the printed paper into a particular
bag size. Once this has been done, the final finished goods product is received. This is then
transferred to the dispatch store warehouse for loading.
A Bill of Material (BOM) will be created in SAP B1 for the plain paper bags as shown below.

There will also be BOMS for the plain printing paper bags.
After the production of these customer bags from different machines, the two products will be
merged into one item using a special production order. This will be done by issuing out the
inline and plain printing bags and receiving the final product. This will enable the sales
department to only see one item when loading products or raising sales orders.
Waste Management Process – Paper Bags

During the production process, Polythene Industries Ltd produces two types of waste:
 Required Process Waste – This involves waste that is produced during the production
process and is catered for as part of the reel size. This is usually 3% of the produced
quantity. It will therefore be included as a by-product in the BOM.

 Reject Items – This involves items that are produced at each production stage, that do
not meet the required specifications of the customer.
The waste items will be converted into waste paper. The waste paper will then be sold at a
small margin.
5.3.8 SAP B1 “TO BE” PRODUCTION PROCESS
In SAP B1, Bill of Materials will be created at each stage consisting of the semi-finished/
finished goods product and its components. This will be used to issue the materials used and
receive the semi-finished/ finished goods product. The Bill of Materials be used to track
planned vs actual production process. The processed waste will be setup as a by-product in the
system and will be received at zero cost. The rejected items will be received into a rejects
warehouse. This will help identify the rejected items and the good items.
Both direct and indirect costs will be added to the bill of materials that will be setup. The Bill of
Materials will include the following:
 Raw Materials
 Direct Costs
o Labour
o Electricity
A provisional cost will be indicated on the BOM and an actual cost will be passed at the end of
the month.
As per the blueprint workshop, it was agreed that the process waste will be defined at every
stage of the production process. The reject items will also be received at every production
stage, when they are produced.
N/B: You will therefore be able to analyse process waste at every production stage based on
the above setup.
The rejected items will undergo a rework process in SAP B1 to convert them into waste paper
or black granules for paper bag production and plastic bag production process respectively.
This will be done using a special production order, in the system.
To maintain one item code for sale per product, the products developed through inline printing
or plain printing will be merged to one item code by using a special production order. This will
ensure that the sales department use only one item for transacting.

5.3.9 PROCESS FLOW – SAP B1 PLASTIC BAG PRODUCTION PROCESS
Release Material
Production Order Raw Materials Material Request
Order Confirmation Production Request
Planned (Extrusion Available? NO (Draft)
1 Order Approval
Production Process) 4 5
3 6
2
YES
Extrusion Extrusion
Receipt from Issue Production Alert to Material
Production Stocks Transfer
Production Components YES Complete? Stores Request (Final)
Process 9
13 12 11 8 7
10
Close Production NO
Print Material
Order Request
14 7A
Production Order Printing

Printing Production Issue Receipt from
Printing Planned (Printing Production
YES Process Complete? YES Components Production
Required? Process) Process
18 19 20
15 16 17
NO
Close Production
Order
21
Bag Making
NO Process?
22
NO
Bag Production Order

Receipt from Issue Making Production Bag Making YES
Production Components YES Planned (Bag
Complete? Production
27 26 Making Production)
25 24
23
NO
Close Production Transfer to Dispatch

Print Stock Transfer
Order Store Warehouse
YES 29A
28 29
5.3.10 FUNCTIONAL SPECIFICATION – SAP B1 PLASTIC BAG PRODUCTION PROCESS

1 SAP B1: Order Based on the demand of
Confirmation finished goods or receiving of
the order confirmation, the
manufacturing process will be
triggered.

2 SAP B1: Create a Production Order for The default status of the
Production Order Extrusion Production Process. production orders will be planned.
Planned Multi-level production order can Information such as the shift and
(Extrusion be created for Semi-finished the operator details will be
Production and SKU’s. captured.
Process) Standard production orders will The start and end time will be
be created in SAP B1. filled for the production run.
3 SAP B1: Release The status of the production
Production Order order will be changed to
‘release’ once ready for
production.
4 SAP B1: Raw A check is done to see whether
Materials there are raw materials on the
Available? production floor
5 SAP B1: Material If there is no stock on the
Request (Draft) production floor, the production
department will request for
stock.
6 SAP B1: Material The materials request will be
Request Approval approved in the system.
7 SAP B1: Material The materials request This will be the stock transfer
Request (Final) document will be added once request document in SAP B1.
approved.
7A SAP B1: Print The materials request
Materials Request document will be printed from
the system if required
8 SAP B1: Alert to An alert will go to the store
Stores keeper on the list of approved
materials request.
9 SAP B1: Stocks The store keeper will raise a
Transfer stock transfer in the system as
he issues the items.
10 Outside SAP The physical production process
B1: Extrusion will continue.
Production
Process
11 Outside SAP A check will be done to see if
B1: Extrusion production is complete.
Process
Complete?
12 SAP B1: Issue Once the production process is Journal Entry:
for Production complete. The production order Debit: WIP Stocks
(Components) will be handed over to the Credit: Stocks (Raw Materials
production clerk indicating the components)
actual quantity issued for the
components.

13 SAP B1: Receipt The production clerk will Journal Entry:
from Production receive the semi-finished or the Debit: Stocks (Semi finished)
(Semi finished or finished goods. E.g. Plain PP Credit: WIP Stocks
SKU) Reel
Any rejects will also be
received in a different reject
warehouse and they will be
indicated as rejected items.
14 Outside SAP Once the issues and receipt has WIP Variance will be posted to
B1: Close been finalised, then the the cost of sales in case the
Production Order production will be closed. system detects quantity or value
variance.
15 Outside SAP A check is done to see whether
B1: Printing the reel requires to be printed
Required?
Production Order Printing Production Process. production orders will be planned.
Planned (Printing
Process) N/B: The start and end time The status of the production
will be entered for the order will be changed to ‘release’
production run. Information once ready for production.
such as the shift and the
operator details will be
captured.
B1: Printing will continue.
Production
Process
B1: Printing the production process is
Production complete.
Complete?
(Components) will be handed over to the Credit: Stocks (Semi Finished)
production clerk indicating the
components.
from Production receive the semi-finished Debit: Stocks (Semi finished)
(Semi finished or goods. e.g. Printed PP Reel Credit: WIP Stocks
SKU)

B1: Close been finalised, then the printed the cost of sales in case the
Production Order board production order will be system detects quantity or value
closed. variance.
22 SAP B1: Bag A check is done to see if the If yes, the bag making process
Making Process? reel will be used to make the begins.
plastic bag.
Production Order Printed Board Creation. production orders will be planned.
Planned (Printed Information such as the shift and
Board The status of the production the operator details will be
Production) order will be changed to captured.
‘release’ once ready for N/B: The start and end time will
production. be entered for the production
run.
B1: Printed will continue.
Board Production
B1: Printed the production process is
Board Production complete.
Complete?
components.
(Semi finished or goods. E.g. Printed Board Credit: WIP Stocks
SKU)
closed. variance.
29 SAP B1: Transfer The finished goods items will be
to Dispatch Store transferred from the production
Warehouse floor to the dispatch store
warehouse.

29A SAP B1: Print If required a stock transfer
Stock Transfer print out will be printed from
the system.
5.3.11 PROCESS FLOW – SAP B1 PAPER BAG PRODUCTION PROCESS
Order Confirmation
1
Printing
Required?
2
YES
Production Order Release Material

Inline Raw Materials Material Request
Planned (Inline Production Request
Printing? YES Available? NO (Draft)
Printing Process) Order Approval
3 6 7
4 5 8
YES
Issue Inline Printing Alert to Material

Inline Printing Stocks Transfer
Components YES Process Stores Request (Final)
Process Complete? 11
14 12 10 9
13
NO
NO
Close Production
Receipt from
Order
Production
16
15
NO
Production Order Release Material
Raw Materials Material Request Material
Planned (Plain Production Request
Available? NO (Draft) Request (Final)
Printing Process) Order Approval
19 20 22
17 18 21
YES
Print Material
Printing Request
Receipt from Issue Alert to 22A
Printing Production Production Stocks Transfer
Production Components YES Stores
Process Complete? Process 24
28 27 23
26 25
Close Production
Order NO
29
Production Order Bag

Bag Making Bag Making Making Production Issue Receipt from
Planned (Bag
Required? YES Production Complete? YES Components Production
Making Production)
30 32 33 34 35
31
NO NO
Close Production
Order
36
Transfer to Dispatch
Print Stock Transfer
Store Warehouse
37A
37

5.3.12 FUNCTIONAL SPECIFICATION – SAP B1 PAPER PRODUCTION PROCESS

1 SAP B1: Order Based on the demand of
Confirmation finished goods or receiving of
the order confirmation, the
manufacturing process will be
triggered.
2 SAP B1: Printing A check will be done to see if
Required? the bags being manufactured
require printing.
3 SAP B1: Inline A check will be done to see if
Printing? the machine being used will be
for inline printing.
4 SAP B1: Create a Production Order for Standard production orders will
Production Order Inline Printing Production be created in SAP B1.
Planned (Inline Process.
Printing Process) The default status of the
Inline Printing process will have production orders will be planned.
printing and bag making being Information such as the shift and
done concurrently. the operator details will be
captured.
Multi-level production order can The start and end time will be
be created for Semi-finished filled for the production run.
and SKU’s.
production.
Available? production floor.
stock.
8A SAP B1: Material The materials request This will be the stock transfer
approved.
9 SAP B1: Print The materials request
materials request.

B1: Inline will continue.
Printing Process
B1: Inline production is complete.
Printing Process
Complete?
components.
(Semi finished or finished goods. E.g. Printed Credit: WIP Stocks
SKU) ArtCaffe bags.
variance.
The items will then be required
to be transferred to the
dispatch warehouse.
17 SAP B1: If inline printing is not being Standard production orders will
Production Order used, the process will originate be created in SAP B1.
Planned (Plain here.
Printing Process) The default status of the
Create a Production Order for production orders will be planned.
Plain Printing Production Information such as the shift and
Process. the operator details will be
Multi-level production order can captured.
be created for Semi-finished The start and end time will be
and SKU’s. filled for the production run.

production.

Available? production floor
stock.
22 SAP B1: Material The materials request This will be the stock transfer
approved.
22A SAP B1: Print The materials request
materials request.
B1: Plain Printing will continue.
Production
Process
B1: Plain Printing production is complete.
Production
Process
Complete?
components.
(Semi finished or finished goods. E.g. Printed Credit: WIP Stocks
SKU) Paper Reel

variance.
30 Outside SAP A check is done to see whether
B1: Bag Making the reel requires to be
Required? converted into a bag.
Production Order Bag Making Production Process. production orders will be planned.
Planned (bag
Making Process) N/B: The start and end time The status of the production
will be entered for the order will be changed to ‘release’
production run. Information once ready for production.
such as the shift and the
operator details will be
captured.
B1: Bag Making will continue.
Production
Process
B1: Bag Making the production process is
Production complete.
Process
Complete?
components.
(Semi finished or goods. e.g. Printed paper bag Credit: WIP Stocks
SKU)
closed. variance.

37 SAP B1: Transfer The finished goods items will be
to Dispatch Store transferred from the production
Warehouse floor to the dispatch store
warehouse.
37A SAP B1: Print If required a stock transfer

Stock Transfer print out will be printed from
the system.
5.3.13 PROCESS FLOW – PRODUCTION REWORK SAP B1 PROCESS
End Production Order

2A
NO
Special Production Release Special Production

Rework Order Production Order
Start Required? YES (Planned) Order (Released)
1 2 3 4
Transfer to Main Receipt from Issue for Production

End Store Warehouse Production 5
7 6
5.3.14 FUNCTIONAL SPECIFICATIONS – PRODUCTION REWORK SAP B1 PROCESS
1 SAP B1: Rework The rejected items can be An item code will be created in
Required? reworked into waste paper the system for the waste
and sold in bulk. The rework paper/ black granules as the
can originate from the reworked item.
dispatch store warehouse or
from the production floor.
2 SAP B1: Special A special production will be The status of the special
Production Order created in SAP B1 convert production will be planned
Planned the primary item to a rework when created in SAP B1.
item in SAP B1.
In this case the component
The rework item will bear all issue method will be defined
the costs of the reworking as backflush.
process.
2A SAP B1: The Production Order will be

Production Order printed from SAP B1 if
required.

3 SAP B1: Release The production order will be

Production order released if approval for
rework is granted.
4 SAP B1: Special The special production order

Production Order status will change to
released once release is
(Released) done.
5 SAP B1: Issue An issue for production will Journal Entry

for Production be done to reduce the
Debit: WIP Stocks
inventory of the rejected
items. Credit: Finished Goods Stocks
Control
6 SAP B1: Receipt Receipt for production will be Journal Entry

from Production executed on the special
Debit: Waste Paper/ Black
production order to convert
Granules Stock Control
the primary item to a rework
item. Credit: WIP Stocks
The production order will be

closed after this.
7 SAP B1: Transfer Once the items have been

to Main Store converted into waste paper/
Warehouse undergone recycling, this will
be transferred to the
dispatch store for selling.
5.4 PRODUCTION PROCESS APPROVAL
Approval:
Concurrence:

5.5 SAP STANDARD SALES MODULE
5.5.1 SALES PROCESS OBJECTIVE
 Perform basic sales process steps in SAP B1 for items.

 Explain the consequences of each step on inventory and accounting.
 Keep customer history and prices.
5.5.2 SALES CONFIGURATION
 The following are key documents involved in a standard SAP B1 sales process:
o Sales Blanket Agreement:

 Sales Blanket agreements are long-term arrangements between a sales
organization and a customer, for the supply of items or provision of
services over a period of time based on predefined terms and conditions.
 In SAP Business One, you can have two types of blanket agreements:
 General blanket agreements: Are used to track fulfilment of terms
to obtain a special bonus at year end, for example, for selling or
purchasing a certain quantity of an item or for achieving a defined
turnover.
 Specific blanket agreements: Are used to track fulfilment of terms
to obtain a special discount for the individual sales or purchasing
transaction. They are also used to determine a delivery schedule,
for example, by defining at which intervals which quantity of
goods should be delivered.
 If a valid blanket agreement exists with a customer, SAP Business One
automatically links sales documents to the blanket agreement. This way,
the prices agreed upon with the business partners can be copied directly
into the sales documents.

o Sales Quotation:
 You create the sales quotation document as an offer or proposal that you
send either to a customer, or to a lead.
 The sales quotation, as it is displayed in SAP Business One, is not a
legally binding document. It is generally used for information purposes
only, and can be the first link in the sales process chain.
 Entering a quotation does not result in any posting that alters quantities
or values in inventory management or accounting.
o Sales Order:
 The sales order is a commitment from a customer or lead to buy a
product or service. The document serves as a foundation for planning
production or purchase orders.
 Your line of business determines whether or not a sales order is a legally
binding document -your company may not manufacture products or ship
items before a sales order has been created.
 Creating sales orders does not post value-related changes in the
accounting system. However, if the sales order is created for items, the
ordered quantities are listed in Inventory Management as reserved for
the customer. You can view the ordered quantities in various reports,
such as the Inventory Status report, as well as other windows in SAP
Business One.
o Delivery Note:
 The Delivery is a legally binding document indicating that the shipment of
goods or the delivery of services has occurred.
 When you create a delivery, the corresponding goods issue is also
posted. The goods leave the warehouse and the relevant inventory
changes are posted. When the inventory is changed, the values in the
accounting system change as well (only when you use perpetual
inventory).
o Return:
 For legal reasons, you cannot delete a delivery or invoice that you enter
in SAP Business One, or change accounting-relevant data in these
documents. However, the customer might send the goods back for
various reasons, or you might have made a mistake when you entered
the documents. In such situations, create a return document.
 When you enter a return document, you can reverse the posting of a
delivery. When you create the return, the system corrects the inventory
quantities.
 If your company runs a perpetual inventory, creating a return
automatically generates a journal entry that updates the inventory value.
 The return is the clearing document for a delivery. Therefore, if an A/R
invoice has not yet been created for the delivery you want to reverse, use
the return document. If you have already recorded an invoice, use the
A/R Credit Memo function to correct values and quantities for the
transaction in SAP Business One.
o AR Downpayment Invoice:

 When your company needs to create a down payment invoice for a
customer, use the A/R down payment invoice to document this payment.
 The A/R down payment invoice is an invoice that is cleared by an
incoming payment. Unlike the A/R invoice, the A/R down payment invoice
creates a posting in the accounting system but has no influence on
inventory accounting values and quantities.
o AR Reserve Invoice:
 The A/R reserve invoice allows you to issue invoices for warehouse items
without deducting the items from the inventory. If you create a reserve
invoice, SAP Business One creates an accounting journal entry without
creating an inventory entry.
 SAP Business One enables you to create an A/R reserve invoice with a
zero amount. You can do this when delivering items without a charge, for
example, items that are part of a promotion or covered by a service
contract.
 Like an ordinary invoice, a reserve invoice is closed against an incoming
payment. However, inventory closure takes place in the delivery.
o AR Invoice:
 The invoice is a legally binding document. When an invoice is received,
the posting is made to the related customer accounts in the accounting
system. If a delivery did not precede the invoice and you sell the
warehouse items, inventory quantities are also updated accordingly when
you issue the invoice.
 If you create an invoice without reference to the delivery, the system
automatically posts changes to the inventory. In other words, if a
delivery already exists for the transaction and you create an invoice
without reference to this delivery, errors can occur in inventory
management because the delivery quantity is posted twice in the system.
 SAP Business One enables you to create an A/R invoice with a zero
amount. You can do this when delivering items without a charge, for
example, items that are part of a promotion or covered by a service
contract.
o AR Credit Memo:
 For legal reasons, you cannot delete a delivery or invoice that you enter
in SAP Business One or change accounting-relevant data in these
documents.
 However, the customer might send the goods back for various reasons,
or you may have made a mistake when you entered the documents.
 If a sales transaction for which you record an accounting and an
inventory posting has been completely or partially reversed, you must
enter a corresponding sales document to clear it.
 This document reverses the changes in terms of inventory quantities and
monetary values.
 The credit memo is the clearing document for the invoice and for the
returns.
 If the goods were delivered to the customer and an invoice has already
been created, you can partially or completely reverse the transaction by
creating a credit memo. With the credit memo you correct both the

quantities and the monetary values. The system increases the inventory
of the credited items by the amount specified in the credit memo.
 The credit memo credits the value in the customer account in the
accounting system and amends the revenue account by the same
amount. The system corrects the tax amounts automatically.
 SAP Business One enables you to create an A/R credit memo with a zero
amount. You can do this when you clear A/R invoices for items delivered
without a charge, for example, items that are part of a promotion or
covered by a service contract.
5.5.3 SALES PROCESS OVERVIEW

Title Description
Traceability Generate and manage AR Invoice & Credit Notes
Responsible Sales
Stores/Dispatch
Finance
Triggers Orders from customers
Notes - Cash Sale Customer will be created
- Credit limit alert to trigger on sales order form
Document Numbering:
Default SAP numbering series will be used for sales
documents except for the following documents:
o Invoices
o Delivery notes
o Credit notes
- The above documents will continue with their current
numbering series
Alternative Flow Export Sales
Call Off Sales
Business Rules Alerts:
- Credit Limit violation alert.
Approvals
- Sales Quotation (PFI)
- Sales Order
- Invoice Approval
- Credit Note Approval
Validations:
- Customer Ref. No is mandatory while capturing a sales
order
- Block oversupply/undersupply of 10% of the total
quantity on the sales order
Query:
- List of credit notes raised with reasons
Documents -Sales Quotation (PFI)
-Sales Order
-Delivery Note
-Invoice
-Credit Note

Glossary N/A
Current System
Key Measurement of Accurate and timely processing;
Success for Process
Legislative Requirements Correct VAT allocation
Sales documents to be generated in Customer’s currency
Policies and Procedures N/A
Main Master Data Objects Customer Master Data
Sales Items Master Data
o Open Item List
o Document Drafts Report
o Sales Analysis
o Locate Exceptional Discount in invoice
o Monthly Customer Status
o Annual Sales Analysis(By Quarter)
o VAT on Sales: SAP Tax Report.
Customised Reports
o
Stationeries Standard Stationeries
o Sales Quotation
o Sales Orders
o Pick List
o Delivery
o Returns
o A/R Invoice
o A/R credit Note
Customised Stationeries:
o Delivery Note
o AR Invoice
o Sales Quotation
Test Scenarios Invoicing Process
Debtors Ageing
Data Migration Open AR Invoices, AR Credit Notes and Receipts
Questions for Business to
Clarify Process
5.5.1 CURRENT SALES PROCESS
The sales process at Polythene Industries Limited is divided into the following:
 Local Sales
 Export Sales
 Cash Sales
 Call off Sale

5.5.1.1 Local Sales
The sales process at Polythene Industries Limited begins with a client raising a request on
email or by phone. A sales quotation is then raised and sent to the client based on their
requirements.
After negotiations are complete, the customer sends an LPO or confirms verbally to confirm
the order. A sales order is then raised based on the LPO of the customer. An advance payment
may be made by the customer before goods can be delivered and later reconciliation is done.
An order confirmation is printed out and sent to the stores department to load the products. If
the item is not available, the order confirmation is sent to the production department. The
sales order number will be attached to the production order. Once the items undergo
production and are received into the dispatch warehouse, a delivery note is raised and printed
in 4 copies; customer copy, gate pass, delivery note and Polythene’s copy. The goods are then
loaded for delivery. A sales invoice is also raised and printed.
In case a customer returns a product, this will come with a goods return document from
customer. The goods returned could undergo different scenarios:
 Goods returned & reworked
 Goods returned & not affecting stock
 Credit note after 6 months where the raised transaction cannot be edited
5.5.1.2 Export Sales

The export sales process is similar to the local sales process up until the delivery note where
additional fields are required. The only difference is that any sales returns will not affect
Polythene Industries Limited’s stock levels. A credit note will be raised to rectify the customer’s
account balance only.
5.5.1.3 Cash Sales

Polythene Industries Limited may have walk-in customers who would like to procure items.
They currently have a cash sale customer who pays for the products and then leaves with the
products. A receipt is then given to the customer after payment. The amount is received into
the cash in hand account. In SAP B1, this will be handled using the AR Invoice + Payment
document where payment will be mandatory before the document is added to move the stocks
from the warehouse. BP reference number will be used to capture the name of the person
being sold to, if required.
5.5.1.4 Call off Sale

The Call off sales process is similar to the local sales process. A bulk sales order is raised for
deliveries that need to be done within a specified period. Several delivery notes will then be
raised based on the customer’s instruction on the delivery frequency. Polythene Industries Ltd
have requested that the overall quantity of deliveries done has an allowance of 10%. Any
oversupply or undersupply above this allowance should be blocked.
A sales invoice will then be raised for the delivery done.
5.5.1.5 Internal Job Work

Polythene Industries Ltd may outsource some work to a third party supplier for some of their
finished goods. To achieve this, they usually sell the raw materials to the suppliers. This is
done through the normal sales cycle. The supplier works on the raw material and once done,
the product is sold back to Polythene Industries Ltd with the new cost. This is received into

stock and if required, may undergo an additional production process. Any additional costs
incurred will affect the overall item cost of the finished goods product.
The item is then sold accordingly and the cost of the product will hit the cost of sale account at
this point.
5.5.2 SAP B1 SALES PROCESS
5.5.2.1 Local Sales

The process will start with a Sales Quotation being raised in the system. This will then be sent
to the customer for confirmation.
After the customer confirms and send an LPO, a sales order will be created by copying the
details from the sales quotation. An order confirmation will then be printed from the system
and given to the respective department head i.e. stores department or production department.
If the goods are not in stock, the production department will manufacture the goods. After
production, a delivery note will be raised by copying from the sales order. The raised delivery
note will then be copied to the AR invoice and print outs of the AR Invoice, Delivery Note and
Gate Pass will be generated.
The customer credit limits will be defined in SAP Business One for respective customers. This
will be triggered at the sales order level.
In case an item is returned or a credit note is required, this will be raised in SAP Business One
with reasons to be indicated. Reasons for return will be set as a mandatory field. Polythene
Industries Limited would like a system query report to be generated that displays the number
of credit notes passed with reasons. This will be achieved through a query.
5.5.2.2 Export Sales

This will be similar to local sales as follows: Sales Quotation >> Sales Order >> Delivery Note
>> AR Invoice. The delivery note will contain additional fields as defined in export process.
5.5.2.3 Call of Sales

Sales Orders will be raised and delivery will be done on an instalment basis as required by the
customer. They require the total loading order quantity blocked from being different from the
total delivery notes. An over/under supply by +-10% and on a quotation to have a +-10%
clause.
5.5.2.4 Cash Sales

The process will be as follows: AR Invoice + Payment. BP reference number to be used to
capture the name of the customer.

5.5.3 PROCESS FLOW: SAP B1 LOCAL/ EXPORT SALES “TO BE” PROCESS
Sales Sales Sales

Document
Quotation Quotation Quotation Cash or Credit
Start Approval Approved
(Draft) Approval (Final) Customer?
3
1 2 4 5
AR Invoice/ Delivery Rejected CASH

Note/ Gate Pass PFI
12A 4A Incoming Payment CREDIT
Process
6
Load
AR Invoice Delivery Note Are Goods Sales Order
Shipment/
12 11 YES Available? 7
Services
10 8
NO
AR Credit Note AR Credit Note Order
Credit Note
YES 14 14A Confirmation
Required? Production Process 7A
13 9
NO
Incoming Payment
Process
15
End
5.5.4 FUNCTIONAL SPECIFICATION: SAP B1 LOCAL/ EXPORT SALES “TO BE”

PROCESS

1 SAP B1: Sales A sales quotation will be
Quotation/PFI(Draft) raised for a customer once
a request comes in.
2 SAP B1: Sales The sales quotation will
Quotation Approval undergo approval based on
the sales matrix defined
3 SAP B1: Document The document will either be
Approval approved or rejected by
the approver
4 SAP B1: Sales The approved sales
Quotation quotation will then be
(Final) added in the system and
(Optional) given a unique number.
4A SAP B1: PFI You can print the sales
quotation and send it to the
client.
5 SAP B1: Cash or A check will be done to If the customer is a cash
Credit confirm if the customer has customer, a down payment
a credit limit. will be required.

6 SAP B1: Incoming If advance payment is
Payment being made, an incoming
payment on account will be
raised in the system.
7 SAP B1: Sales A sales order will then be
Order created in SAP based on
the sales quotation.
7A SAP B1: Order The order confirmation will This will be customised
Confirmation be printed from the stationary.
system.
8 SAP B1: Are Goods A decision is made on For cash customers, generic
Available? whether the items are in cartons may be in stock
stock. For common
customers, the stock may
not be in place as most
orders trigger a production
process (made to order).
9 SAP B1: Production If there are no goods in Refer to the production
Process store, the production process flow.
process kicks in.
The order confirmation
number is attached to the
production order.
10 Outside SAP B1: The goods are loaded for
Load Shipment the client.
/Services
11 SAP B1: Delivery A delivery note is raised in Journal Entry:
Note SAP to book the movement Debit: Cost of Goods Sold
of these items. Ledger
Credit: Inventory Ledger
12 SAP B1: Customer An invoice is then raised in Journal Entry:
AR Invoice the system based on the Debit: Customer Ledger
delivery note. Credit: Revenue Ledger
12A SAP B1: AR An AR invoice is then This will be a pre-printed
Invoice/ Delivery printed from the system stationary that will replicate
Note/ Gate Pass and given to the client. the information on delivery
note and gate pass print out.
13 SAP B1: Credit A check is done to see This may be due to goods
Note Required? whether a credit note is being returned by the
required. customer.

14 SAP B1: AR Credit A credit is raised in SAP Journal Entry:
Note based on the AR Invoice, if Debit: Revenue Ledger
a credit note is required. Debit: Inventory Ledger
Credit: Customer Ledger

Credit: Cost of Goods Sold
Ledger
14A SAP B1: AR Credit An AR Credit note is

Note printed from the system
and given to the client.
15 SAP B1: Payment All due invoices are paid in Journal Entry:
Process the system once the Debit: Bank Account Ledger
customer pays for them. Credit: Customer Ledger
END
5.5.5 SALES PROCESS APPROVAL
Approval:
Concurrence:

5.6 BANKING
5.6.1 INCOMING AND OUTGOING PAYMENTS
 In SAP Business One, the functionality and reporting associated with processing
payments are accessed through the Banking module.
 When processing payments you should select the transactions to be closed by the
payment, either fully or partially. If there is no prior transaction to select, or you are
unsure which transaction applies, you can enter a Payment on Account.
5.6.1.1 INCOMING PAYMENT
 Incoming payments can be received in four ways: cash, checks, credit cards, and bank
transfers.
 SAP Business One handles all of them in basically the same way—either by making a
payment against a specific A/R invoice or by making a payment to a customer against
two or more A/R invoices.
 Once the incoming payment document is added, the following actions are taken:
o Journal entries credit the customer’s accounts receivable control account and
debit the bank account or a clearing account.
o The payment is applied to the invoice.

o The paid invoices are closed and no longer appear in the Open Items List,
Documents for Payment table and in the customer’s receivable aging report.
o When a partial payment is processed, the selected invoice remains open for the
balance due amount.
o When a full payment is processed, the invoice and the payment are internally
reconciled and closed.
o If the payment is made by check, cash or credit card, the payment is posted to a
clearing account, and a deposit document must be processed in order to transfer
the funds from the clearing account to the house bank account. For Polythene
Industries Ltd, this will hit the bank account directly.
5.6.1.2 OUTGOING PAYMENT
 Just as with incoming payments, there are, generally speaking, four ways of sending
outgoing payments: cash, checks, credit cards, and bank transfers. You can perform
the following activities:
o Create outgoing payments for business partners and accounts using various
payment means.
o Print and void checks for a payment for various purposes, including employee
bonuses.
o Create, trace, and process drafts of outgoing payment documents and drafts of
checks for payment.
o Generate a Check Register Report
 The main difference between incoming and outgoing payments is the need to define an
account for the different payment means. For example if you create an outgoing
payment with cash, you must select the outgoing cash account for the transaction. In
this case, it can be y our house bank account or a petty cash account.
5.6.1.3 PAYMENT WIZARD
 SAP Business One provides a payment wizard that allows you to create outgoing
payments in batches for checks and bank transfers, and to batch process incoming
payments by bank transfers.
 The payments are created according to your selection criteria and payment methods.
5.6.2 OVERVIEW
Title Description
Traceability Reconciled bank and cash accounts
Process Goal Accurate cash book and cash flow management
Responsible Accounts Receivable & Payables
Triggers Due Invoices
Receipt of Payment
Outgoing Payments
Petty Cash Requests
Notes User-Defined Fields:
- Payment Type
o Supplier Payment

Title Description
o Petty Cash
Cash In Hand Accounts will be available for cash sale

Business Rules Outgoing Payments Approval
Documents Incoming payment
Outgoing payment
Bank reconciliation
Glossary N/A
Current System
Key Measurement of Bank reconciliation and cash flow management
Success for Process
Legislative Requirements Withholding Tax
Withholding VAT
Main Master Data Objects House Banks
Implementation Notes Approvals:
- Outgoing Payment
Alerts:
- Payment not allocated to an Invoice 7 days after
receiving the payments. – Saturdays 09.00 AM

- Check Register Report
- Payment Drafts Report
- Checks for payment in Date Cross section Report
- BP Bank Accounts Query
- House Banks Accounts Query
- Locate Reconciliation in Bank statement by Row
Number
- Locate Reconciliation/Row in Bank statements by
exact amount
- External Reconciliation by Due Date
- External Reconciliation by Exact Sum
- External Reconciliation by Sum(FC)
- External Reconciliation by Trans. Number
- Bank Reconciliation Report
Customised Reports:
- Bank Interest Calculation Report
- Loan Repayment Schedule Report
-
Stationeries - Outgoing Payment
- Receipt
Customised Stationaries
 Remittance Advice

Title Description
Test Scenarios Incoming and outgoing payment
Petty Cash Process
Data Migration Unreconciled cash book entries
Open Receipts
Open Payments
Business to Clarify
5.6.3 ACCOUNTS PAYABLES
5.6.3.1 PROCESS FLOW: SUPPLIER PAYMENT TO BE SAP B1 PROCESS
A/P
Receive Supplier A/P Invoice A/P Invoice
Invoice Alert
Invoice (Draft) Approved (Approved)
Approval 8
1 2 7
3
Rejected
Edit Supplier Ageing

Edit A/P Invoice Process End
YES Document? NO Report
6 5
4 9
Make Payment Outgoing

Outgoing Payment Outgoing Payment
(Cheque or Online Payment
(Approved) Approved (Draft)
Transfer) Approval
15 10
16 11
Remittance advise
15A Rejected
Edit Edit Outgoing

Process End
NO Document? YES Payment
13
12 14
5.6.3.2 FUNCTIONAL SPECIFICATION: SUPPLIER PAYMENT TO-BE SAP B1

PROCESS
1 OUTSIDE SAP B1: Supplier Invoice will be
Receive Supplier received from the supplier.
Invoice

2 SAP B1: A/P Invoice An A/P Invoice will be posted
(Draft) in SAP B1, based on GRN or
standalone where the GRN is
not required.
The A/P Invoice can be routed
for approval.
3 SAP B1: A/P Invoice The approver will be notified On the alert the approver will
Approval via the standard SAP B1 make a decision i.e. approve or
message alert to approve the reject the A/P Invoice.
A/P Invoice.
4 DECISION: Edit Once the document is
Document? rejected it can either be
edited and resubmitted for
approval or closed.
5 SAP B1: Process In case the document cannot
End be edited the draft will be
closed in SAP B1 and process
halted.
6 SAP B1: Edit A/P In case the document can be
Invoice edited once rejected, the
editing will be done by the
initiator and resubmitted
again for approval.
7 SAP B1: A/P Invoice Once the A/P Invoice is Journal Entry:
(Approved) approved, standard SAP B1 Debit: Expense
message alert will notify the Credit: Supplier
initiator of the document and
he/she will add the A/P
Invoice in SAP B1.
8 SAP B1: Alert An alert can be developed in
SAP B1 to notify the finance
team of all due invoices in
SAP B1.
9 SAP B1: Supplier The supplier ageing report
Ageing Report will be generated in SAP B1.
10 SAP B1: Outgoing Once the finance team
Payment determine the suppliers to
(Draft) pay, an outgoing payment
can be raised in SAP B1 via
outgoing payment module.
The outgoing payment will be

routed for approval based on
Polythene Industries Limited’s
approval matrix and policy.

11 SAP B1: Outgoing The approver will be notified On the alert the approver will
Payment Approval via the standard SAP B1 make a decision i.e. approve or
message alert to approve the reject the outgoing payment.
outgoing payment.
12 DECISION: Edit Once the document is
Document? rejected it can either be
edited and resubmitted for
approval or closed.
13 SAP B1: Process In case the document cannot
End be edited the draft will be
closed in SAP B1 and process
halted.
14 SAP B1: Edit In case the document can be
Outgoing Payment edited, the editing will be
done by the initiator and
resubmitted again for
approval.
15 SAP B1: Outgoing Once the Outgoing payment Journal Entry:
Payment (Approved) is approved, standard SAP B1 Debit: Supplier
message alert will notify the Credit: Bank
initiator of the document and
he/she will add the outgoing
payment in SAP B1.
15A SAP B1: Remittance The Remittance advice will be
Advise printed if required.
16 OUTSIDE SAP B1: Supplier will be paid via a
Make Payment cheque or online transfer.
(Cheque or Online
Transfer)
5.6.4 ACCOUNTS RECEIVABLE
5.6.4.1 PROCESS FLOW: CLIENT PAYMENTS RECEIPT TO-BE SAP B1 PROCESS

Generate Customer
Statements and Send Client
Invoicing Process to Clients Makes Incoming Payment
1 1B Payment? 4
2
Customer Ageing Print Receipt

Report Process End 4A
1A 3

5.6.4.2 PROCESS FLOW: CLIENT PAYMENTS RECEIPT TO-BE SAP B1 PROCESS

1 SAP B1: Invoicing The client will be invoiced as An A/R Invoice will be posted in
Process per the invoicing process SAP B1.
described in the sales process
section.
1A SAP B1: Customer Customer ageing report will SAP B1 comes with standard
Ageing Report be generated to determine customer ageing report.
the invoices due.
1B SAP B1: Generate A customer statement will be SAP B1 comes with standard
Customer generated and sent to the customer statement.
Statements and client.
Send to Clients
2 OUTSIDE SAP B1: The customer will make
Client Makes payment to Polythene
Payment Industries Limited based on
the due invoice(s).
3 OUTSIDE SAP B1: If customer doesn’t make
Process End payments then the process
will end.
4 SAP B1: Incoming Incoming payments will be Journal Entry:
Payment used to receive the Debit: Bank
customer’s payments and the Credit: Debtors account
paid invoices will be allocated
to the payment. Partial payment is also
supported by the system.
Payment on account will be

used to receive payment for
advance payment or in case the
invoice being paid is not known.
4A SAP B1: Print A receipt will be printed and
Receipt sent to the client if required.
5.6.5 PETTY CASH PROCESS OVERVIEW
5.6.5.1 PETTY CASH GENERAL EXPENSES PROCESS

- For other petty cash expenses whereby the procurement process is not followed or
supplier invoice is not received.
- Cash requests will continue to be done manually i.e. verbally or on email to the finance
team.
- In the system this type of transactions will be booked on account as an outgoing
payment and the expense account impacted in this i.e.
o Debit: Expense
o Credit: Petty Cash

5.6.5.2 PETTY CASH REIMBURSEMENT PROCESS
- Petty cash minimum limits will be defined in SAP B1. For Polythene Industries Ltd, their
limit will be defined as KES 500,000.
- Once the petty cash accounts approaches the defined limit, the finance assistant will be
notified in SAP B1 via a system alert to start the process of requesting for
reimbursement.
- An outgoing payment on account transaction will be done from the bank to the petty
cash.
o Debit: Petty Cash
o Credit: Bank
5.6.5.3 PROCESS FLOW: PETTY CASH GENERAL EXPENSES SAP B1 PROCESS
Submit Receipts
Petty Cash Purchase &
Petty Cash Voucher to Finance Assistant
Request Obtain Receipt
2 for filing
1 3
4
Print Petty Cash

Voucher
2A
5.6.5.4 FUNCTIONAL SPECIFICATION: PETTY CASH GENERAL EXPENSES SAP B1

PROCESS
1 OUTSIDE SAP B1: Request for petty cash will
Petty Cash Request come through to the finance
assistant.
2 SAP B1: Petty Cash The finance assistant will Journal Entry:
Voucher raise a petty cash voucher in Debit: Expense
SAP B1 (Account outgoing Credit: Petty Cash
payment)
2A SAP B1: Print Petty The petty cash voucher will
Cash Voucher be printed and signed by the
recipient and money will be
issued.
3 OUTSIDE SAP B1: The purchase will be made
Purchase & Obtain and receipts obtained.
Receipt
4 OUTSIDE SAP B1: The receipts will be submitted
Submit Receipts to finance assistant for filing.
to Finance Assistant
for filing

5.6.6 STAFF IMPREST PROCESS OVERVIEW:
- Staff imprest transactions will be maintained in the system, this will involve setting up
of the staff as business partner (customers) and linking the staff to the staff imprest
account.
- When staff are issued with money in advance to spend it will impact their account. Once
they spend, obtain receipts and submit the claim the amount will be transferred from
their account to expense via a manual journal entry.
5.6.6.1 PROCESS FLOW: STAFF IMPREST “TO-BE” SAP B1 PROCESS
User Outgoing Petty Cash

Department Outgoing Payment Outgoing Payment
Payment Voucher
Request (Draft) YES Approved
Approval 4A
1 2 4
3
NO
Spend the Money

5
Obtain and Submit

Receipt
6
Incoming Payment Balance Journal entry

YES YES
9 8 7
End NO
5.6.6.2 FUNCTIONAL SPECIFICATION: STAFF IMPREST SAP B1 PROCESS

1 OUTSIDE SAP B1: The staff will request for petty
Petty Cash Request cash via emails or verbally.
2 SAP B1: Petty Cash The finance assistant will Debit: Staff Imprest Account
Voucher raise a petty cash voucher on Credit: Petty Cash
the account of the staff.
2A SAP B1: Print Petty The petty cash voucher will
Cash Voucher be printed and signed by the
recipient.
3 OUTSIDE SAP B1: The staff will purchase or
Purchase & Obtain incur expenses and obtain the
Receipt receipts.
4 OUTSIDE SAP B1: Once the staff returns to the
Submit Receipts office they will submit the
to the Finance receipts to the finance
Assistant. assistant.

5 SAP B1: Journal A journal voucher will be
Voucher posted to account for the
expense.
6 SAP B1: Approve The journal voucher will be
Journal Voucher checked by the finance
manager or finance
controller.
7 SAP B1: Post The approval of the journal Debit: Expense
Journal Entry will be posting the journal Credit: Staff Imprest Account
voucher as a journal entry.
8 SAP B1: Balance? Sometimes the staff will have
a balance i.e. the deficit
between the money issued
and claim submitted.
9 SAP B1: Incoming The staff will return the Journal Entry:
Payment balance to the accountant will Debit: Cash Account
raise an incoming payment. Credit: Staff Imprest Account
It’s important to ensure the

staff account is reconciled
regularly via internal
reconciliation.
END
5.6.7 INTER-BANK FUND TRANSFER OVERVIEW
- Inter Bank fund transfer will be achieved via account type outgoing payment and
incoming payment. An intermediary account (Forex Clearing Account) will be created in
the chart of accounts where it will be maintained in multi-currency which will transition
the process of inter-bank fund transfer.
- In the event there is a difference in the rate used between 2 currencies the value will
remain in the forex clearing account and a manual journal entry has to be raised to
move the exchange differences from the forex clearing account to the respective
realized exchange rate difference account i.e. gain or loss.
5.6.8 MANUAL BANK RECONCILIATION
With all Polythene Industries Limited banks configured as house bank in SAP B1, bank
reconciliation will be executed via standard SAP B1 manual bank reconciliation. The
external/bank statement can be uploaded in SAP b1 by using the copy/paste functionality and
reconciled manually with the cashbook transactions. If an entry is to be added to the bank GL
account, the normal process will be followed in capturing the transaction in SAP B1 system
manually e.g. Bank charges. The bank reconciliation will be done daily. Once the bank
reconciliation is executed in SAP B1 a standard bank reconciliation report will be generated in
SAP B1 system, reviewed and signed off by the Finance Controller and filed for audits.

5.6.9 BANK INTEREST CALCULATION
Polythene Industries Limited would like for a customised form to be created for them to
capture the dates, different interests calculated, cleared balance and the bank charged. An
example of how this information is currently captured has been shown below.
This will be captured using a user-defined form created in SAP B1. The report will then be
created to pull this information.
5.6.10 BANKING PROCESS APPROVAL
Approval:
Concurrence:

5.7 FINANCE
5.7.1 FINANCE CONFIGURATION
5.7.1.1 CHART OF ACCOUNTS
Accounts are organized hierarchically according to drawers, titles, and active accounts. The
organization of the chart of accounts follows IFRS in which there is a separate “drawer” for
accounts representing assets, liabilities, equity, revenues, cost of sales, expenses, financing,
and other revenues and expenses (see level 1 in the figure below).
Within each drawer, you organize your accounts by level in a logical way appropriate to your
financial accounting processes & financial statement.
Drawers are the organizational unit on the top level. The Chart of Accounts Level Structure will
be as follows:
Balance Sheet
 Assets

 Liabilities
 Capital & Reserves
Income Statement
 Turnover
 COS
 Operating Costs
 Non-Operating income & Expenses
 Taxation & Extra Ordinary items
Every G/L account is defined as either a title account or an active (postable) account. A title
account groups together all of the active/posting accounts. In financial reports, a title
summarizes all the balances of each title/active account below it. Active accounts contain
postings of transactions. From the posting account you will be able to drill down to the
transactions for more analysis if required. All active accounts will be set to level 5, and will be
able to roll up into the Title Account in a hierarchy on all financial reports.
5.7.1.2 COA – Set Up

Chart of accounts will be set up as a standard Chart of Accounts. Thus no segmentation will be
used in the chart of accounts. This will streamline maintenance of the Chart of Account.
Cost Centres will be used in conjunction with the standard Chart of Account. Thus the Income
Statement will be able to be produced in Standard SAP by cost centre.
Dimension 1 : Lines of Business

 Trading
 Conversion
Dimension 2: Product Type
 Paper
 Plastics
Dimension 3: Job Type
 Printed
 Plain
Dimension 4 : Department
 Administration
 Extrusion
 Printing
 Bag Making
 Recycling
Dimension 5 : Vehicles
5.7.2 OVERVIEW
Title Description
Traceability Journal Entries generated in Finance Module
Process Goal Generate timely and accurate management reports
Responsible Financial Manager
Accounts
Triggers Various documents created in Sales, Purchasing, and
Bank Modules

Title Description
Notes None
Business Rules None
Documents None
Glossary N/A
Current System
Key Measurement of Accurate and timely management reports

Success for Process
Legislative Requirements VAT requirements;
Monthly foreign exchange revaluations
Main Master Data Objects Chart of accounts
Profit / cost centres
Implementation Notes Validation:

All journal entries posting the fuel and truck maintenance
accounts must be linked to a truck or machine as defined
in dimension 1.
1) G/L Accounts and Business Partners
2) General Ledger
3) Customer Receivables Aging
4) Vendor Liabilities Aging
5) Transaction Journal Report
6) Transaction Report by Projects
7) Locate Journal Transaction by Amount Range
8) Locate Journal transaction by FC amount range
9) Transaction Received from Voucher Report
10) Document Journal
11) Tax Report
12) Withholding Tax Report
13) Tax Reconciliation Report
14) Tax Declaration Box Report
15) Customer Open Document List
16) Balance Sheet
17) Trial Balance
18) Profit and Loss Statement
19) Cash Flow
20) Statement of cash flows
21) Cash Flow reference report
22) Balance Sheet Comparison
23) Trial Balance Comparison
24) Profit and Loss statement comparison
25) Budget Report
26) Balance sheet budget report

Title Description
27) Trial Balance Budget report
28) Profit and Loss statement Budget report
Customised Financial Reports:

o Customised Customer Statement – Terms and
Credit Limits to be added
Test Scenarios Reconcile control accounts to modules
Data Migration Capture:
Trial Balance as at a cut-off date.
Questions for Business to
Clarify Process
Realised Exchange Rate gains/loss is a Standard SAP B1 functionality. The realised gain/loss
will be posted automatically in SAP B1 when there is a difference in exchange rate between 2
related transactions e.g. Invoice exchange rate defined as 100 KES/TZS/UGX/RWF to 1 USD
and payment exchange rate defined as 105 KES to 1 USD. In this case realised exchange
gain/loss will be realised and posted by SAP B1 system when the invoice is paid.
Unrealised gain/loss (account(s) revaluations) for accounts maintained in foreign currency e.g.
Supplier, customers and bank accounts i.e. as defined by IFRS will be posted using a financial
posting tool known as “Exchange Rate Differences” in SAP B1. The unrealised gain/loss can be
posted on monthly, quarterly, half year or annually. Polythene Industries Limited will post
unrealised gain/loss, on a monthly basis.
5.7.3 FINANCE MODULE APPROVAL
Approval:
Concurrence:

5.8 FIXED ASSETS
5.8.1 OVERVIEW
SAP B1 Fixed Assets Module will be implemented as part of Phase II of this project. Polythene
Industries Limited will be responsible of cleaning up of their fixed asset master data before
its uploaded in SAP B1 i.e. ensure all the existing Assets have been tagged and able to know
the assets capitalization date, accumulated depreciation so far and remaining asset life.
The following setup has to be done:-

1) Account Determination per asset group.
2) Define the Depreciation Types: In SAP B1, Deprecation method will be Straight Line for
all the Asset class on pro-rata basis. The depreciation calculation will be done on a
monthly basis.
3) Depreciation Areas
4) Asset Classes – linked to the depreciation areas, account determination, depreciation
types e.g. Motor Vehicles, Computer Equipment, Fixture & Fittings, office Equipment
etc.
The Assets will be fully depreciated and no residual value will be left. The assets will then be
created in the asset master and then attached to the asset classes. Any related asset
information will be captured at this point.
In SAP B1, we will maintain all the assets with below information:
o Asset Code
o Asset Name
o Asset Group
o Asset Class
o Asset Attribute
o Asset Serial Number
o Capitalization Date
o Retirement Date
o Depreciation Start Date
o Useful life
o Remaining Life
o Location of the Asset
5.8.2 ASSET PROCUREMENT – ASSET CAPITALIZATION:

The default SAP Business A/P Procurement Process will be used for the procurement of Assets.
When an Asset Invoice is created it will also create the Assets in the Asset Register for the
purchased Assets. In SAP B1 standard when an A/P Invoice is posted in SAP B1 the fixed
Assets gets capitalised.

ASSET ADDITION (DIRECT CAPITALIZATION)
If an Asset is not purchased with an actual A/P Invoice, this mechanism provides for the
addition of the Asset to the Asset Register.
5.8.3 ASSET REGISTER
The Asset Register is the central management mechanism for all Assets in the SBO Company.
Asset can be viewed through various filters and the following Management Operations can be
performed on each individual Asset:
• Update of Remaining Life and/or Gross Asset Value
• Asset Transfers
• Disposals
• Sales
5.8.4 ASSET SALE
An Asset can be sold to an existing Business Partner of the SBO Company. In a Sale
Transaction, the Asset will be disposed of and an Invoice will be raised against the selected
Business Partner for the value defined for the Transaction
5.8.5 ASSET DISPOSAL
An Asset can be disposed, creating a SBO Journal to render the Asset valueless.
To Dispose the Asset
- Select Unit if applicable
- Tick the Dispose of Asset Tick Box
If a disposal is run for a Master Asset, all the Sub Assets linked to the particular Asset will be
disposed together with the Master Asset (Expensed Assets will be marked as disposed, but will
have no disposal journal)
5.8.6 DEPRECIATION RUN
The system will calculate daily depreciation values, and can be run on any specific date if
required. The depreciation run (that posts accumulated depreciation) is executed by Asset
Group, and can be run multiple times as required, and each time it is run it will only depreciate
assets to the date selected.
**All assets will use straight line depreciation method.
5.8.7 FIXED REPORT

SBO Standard Asset reports will be used. In case specific reports will be required they will be
scoped and developed upon agreeing the budget. Below is the list of standard fixed assets
reports available in SAP B1:
- Asset Depreciation Forecast Report

- Asset History Sheet
- Asset Status Report
- Asset Transaction Report

5.8.8 FIXED ASSETS MODULE APPROVAL
Approval:
Concurrence:

6 REPORTING
6.1 LIST OF SAP B1 STANDARD REPORTS MODULE-WISE
Module Report Name

Purchasing 1) Open Items List
2) Document Drafts Report
3) Purchase Analysis
4) Purchase Request Report
5) Purchase Quotation Comparison Report
6) Locate Exceptional Discount in Invoice
7) Blanket Agreement Fulfilment Report
Business Partners 1) My Activities
2) Activities Overview
3) Inactive Customers
4) Dunning history report
5) Customer receivables by customer cross -section
6) Customer Credit Limit Deviation
9) Internal Reconciliation by Due date
10) Internal Reconciliation by Exact amount
11) Internal Reconciliation by Trans Number
12) Campaigns List
Sales Opportunities 1) Opportunities Forecast Report
2) Opportunities forecast over time report
3) Opportunities Statistics report
4) Opportunities Report
5) Stage Analysis
6) Information Source Distribution Over time Report
7) Won Opportunities Report
8) Lost Opportunities Report
9) My Open Opportunities Report
10) My Closed Opportunities Report
11) Opportunities Pipeline
Sales A/R 1) Open Item List
3) Sales Analysis
4) Backorder
5) Locate Exceptional Discount in invoice
6) SP Commission by invoices in Posting Date Cross-
Section
7) Blanket Agreement Fulfilment Report
8) Monthly Customer Status
9) Annual Sales Analysis(By Quarter)
Inventory 1) Item List
2) Open Item List

Module Report Name
4) Last Prices Report
5) Inactive items
6) Inventory Posting List
7) Inventory Status
8) Inventory in Warehouse Report
9) Inventory Audit Report
10) Batches and Serials Inventory Audit Report
11) Inventory Valuation Simulation Report
12) Serial Number Transaction Report
13) Batch Number Transaction Report
14) Bin Location List
15) Bin Location Content List
16) Price Report
17) Discount Group Report
18) Inventory Counting transactions Report
19) Stock Turnover Analysis
20) Stock valuation Method Report
Production 1) Bill of Materials report
2) Open Item List
MRP 1) Order Recommendation Report
Service 1) Service Calls
2) Service Calls by Queue
3) Response Time by assigned to
4) Average Closure time
5) Service Contracts
6) Customer Equipment Card Report
7) Service Monitor
8) My Service Calls
9) My Open Service Calls
10) My Overdue Service Calls
Human Resources 1) Employee List
2) Absence Report
3) Phone Book
Banking 4) Check Register Report
5) Payment Drafts Report
6) Checks for payment in Date Cross section Report
7) BP Bank Accounts Query
8) House Banks Accounts Query
9) Locate Reconciliation in Bank statement by Row
Number
10) Locate Reconciliation/Row in Bank statements by
exact amount
11) External Reconciliation by Due Date
12) External Reconciliation by Exact Sum
13) External Reconciliation by Sum(FC)
14) External Reconciliation by Trans. Number
15) Bank Reconciliation Report

Module Report Name
16) Payment Orders Report by Business Partner
17) Payment Orders Report by Payment Run
Fixed Assets 1) Asset Depreciation Forecast Report
2) Asset History Sheet
3) Asset Status Report
4) Asset Transaction Report
Financial Reports 1) G/L Accounts and Business Partners
2) General Ledger
5) Transaction Journal Report
6) Transaction Report by Projects
7) Locate Journal Transaction by Amount Range
8) Locate Journal transaction by FC amount range
9) Transaction Received from Voucher Report
10) Document Journal
11) Tax Report
12) Withholding Tax Report
13) Tax Reconciliation Report
14) Tax Declaration Box Report
15) Customer Open Document List
16) Balance Sheet
17) Trial Balance
18) Profit and Loss Statement
19) Cash Flow
20) Statement of cash flows
21) Cash Flow reference report
22) Balance Sheet Comparison
23) Trial Balance Comparison
24) Profit and Loss statement comparison
25) Budget Report
26) Balance sheet budget report
27) Trial Balance Budget report
28) Profit and Loss statement Budget report
6.2 LIST OF STATIONERIES IDENTIFIED TO BE CUSTOMISED
SAP MODULE STATIONERY NAME PRINTER TYPE NOTES

Purchasing Marine Cover Note LaserJet Based on a UDO
Application
Sales Sales Quotation LaserJet
Sales Delivery Note Dot Matrix
Sales AR Invoice Dot Matrix
Banking Remittance Advice LaserJet
Banking Cheque Printing LaserJet

6.3 LIST OF REPORTS IDENTIFIED TO BE CUSTOMISED
SAP MODULE REPORT NAME PRINTER TYPE NOTES

Financial Applicable on principal &
Loan Repayment interest
Schedule (Group Report)
Financials Dr's & Cr's Control (Group Report)
Accounts customization
Reconciliation
Financials Terms and Credit Limits
Customised Customer to be added
Statement (Group Report)
Banking Bank Overdraft Report
Banking Bank Interest
Calculation
Stock Management Stock Ageing Report (Group Report)
- They should be able to
filter based on item
groups
Stock Management Tonnage Turnover (Group Report)
Report
Sales/Purchasing Credit Notes Summary SAP Query
- Reason - Category - (Group Report)
unit wise
Blueprint Key Notes:

- Master Data will not be imported in SAP B1 before approval from the key stakeholders
on the completeness of the master data. Any re-import of the master data will be
billable as extra.
- Stationeries will not be developed before approval from key stake holders. 1 day will
also be used to train a super user on how to edit the stationeries so that they can be
responsible of editing the stationeries moving forward.
- Mock go-live must be completed and signed off before go-live. It is recommended mock
go-live is done a month before actual go-live. Test go-live is an important phase of the
project lifecycle.
- Opening balances will comprise of the following
o Debtors
 Open invoices
 Open Credit Notes
 Open Receipts
o Creditors
 Open invoices
 Open Credit Notes
 Open Payments
o Trial Balance:
 Trial Balance as at cut-off date.
- Historical transactions will not be imported in SAP B1.

Polythene Sap b1 v1.2

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Polythene Sap b1 v1.2

Uploaded by

Copyright:

Available Formats

FUNCTIONAL & TECHNICAL BUSINESS BLUEPRINT

Prepared For: Polythene Industries Limited

Author: Daisy Ndanyi

Jan Larsen CEO (Plexus)

Polythene Industries Limited Page 2 of 114

1.1 ABBREVIATIONS .................................................................................................. 6

2.1 PURPOSE ............................................................................................................. 7

2.2 COMPANY PROFILE .............................................................................................. 7

2.3 DATABASE SETUP ................................................................................................ 7

2.4 SCOPE .................................................................................................................. 7

2.5 STANDARD SAP B1 FUNCTIONALITY .................................................................... 8

2.6 PROCESS FLOW LEGEND .................................................................................... 10

3 SAP BUSINESS ONE CONFIGURATION ............................................................... 11

3.1 SYSTEM INITIALIZATION .................................................................................. 11

3.2 VAT SET UP ........................................................................................................ 21

3.3 WITHHOLDING TAX SETUP: ............................................................................... 22

3.4 USER SET UP & SAP LICENSING ......................................................................... 22

3.5 DEFINE HOUSE BANK: ........................................................................................ 23

3.6 DEFINE SALES EMPLOYEES/BUYERS .................................................................. 23

3.7 DEFINE WAREHOUSES ....................................................................................... 24

3.8 DEFINE SUPPLIER GROUP .................................................................................. 24

3.9 DEFINE CUSTOMER GROUP ................................................................................ 25

3.10 SYSTEM CONFIGURATION DATA APPROVAL ................................................... 25

4 MASTER DATA CONFIGURATIONS ...................................................................... 26

4.1 BUSINESS PARTNER MASTER DATA CONFIGURATION ....................................... 26

Polythene Industries Limited Page 3 of 114

4.2 MASTER DATA CONFIGURATION APPROVAL ...................................................... 32

5 STANDARD SAP B1 PROCESSES ......................................................................... 33

5.1 SAP STANDARD PURCHASING PROCESS ............................................................ 33

5.2 SAP STANDARD STOCKS MANAGEMENT MODULE ............................................... 46

5.3 SAP STANDARD PRODUCTION MODULE ............................................................. 59

5.4 PRODUCTION PROCESS APPROVAL .................................................................... 82

5.5 SAP STANDARD SALES MODULE ......................................................................... 83

5.6 BANKING ........................................................................................................... 93

Polythene Industries Limited Page 4 of 114

5.7 FINANCE .......................................................................................................... 104

5.8 FIXED ASSETS .................................................................................................. 108

6 REPORTING ..................................................................................................... 111

6.1 LIST OF SAP B1 STANDARD REPORTS MODULE-WISE ...................................... 111

6.2 LIST OF STATIONERIES IDENTIFIED TO BE CUSTOMISED ............................... 113

6.3 LIST OF REPORTS IDENTIFIED TO BE CUSTOMISED......................................... 114

Polythene Industries Limited Page 5 of 114

Polythene Industries Limited Page 6 of 114

2.2 COMPANY PROFILE

2.3 DATABASE SETUP

DB Code Entity Name

Polythene Industries Limited Page 7 of 114

The following standard SAP B1 functionality will be implemented/used by Polythene Industries

Polythene Industries Limited Page 8 of 114

Polythene Industries Limited Page 9 of 114

Polythene Industries Limited Page 10 of 114

3.1.1 COMPANY DETAILS

Polythene Industries Limited Page 11 of 114

Permit more than one  Yes

Polythene Industries Limited Page 12 of 114

Note: Setting cannot be

Polythene Industries Limited Page 13 of 114

Allow stock release without  Yes

Description: Permits items to

3.1.2 DOCUMENT SETTINGS

Configuration Data Value Remarks

Polythene Industries Limited Page 14 of 114

Polythene Industries Limited Page 15 of 114

 Block deviations from