Supply

Chain
Systems
 Course structure
Supply chain
and Logistics
background

ERP system –
SAP

ERP –
Manufacturing
use case

SCM - Top 10
Technology
 Topics

•
 Background of :

• Logistics
• Inbound
• Outbound
• Supply chain
• Management
• SCM Vs Logistics
• Information system
• ERP
page 6
Logistics Types
Logistics Elements

page 8
page 10
What is the different between Supply
chain and Logistics?
 SCM vs Logistics

SCM:
The integration of key business processes from end user
through original suppliers, that provides products, services, and
information that add value for customers and other
stakeholders.

Logistics:
is a part of supply chain process that plans, implements
and controls the efficient, cost-effective flow and storage of
goods, services, and related information from point of origin to
point of consumption in order to meet customers’ requirements.
 What is the SCM ?

The integration of all activities through improved supply chain relationships to achieve a

sustainable competitive advantage.

Life cycle processes include physical , information , financial , and knowledge flows whose
purpose is to satisfy end-user requirements with products and service from multiple linked
suppliers.

Design, maintenance , and operation of supply chain processes for satisfaction of end user
needs.
page 15
A Digital Supply chain is a supply chain whose foundation is built on Web-enabled
capabilities. Many supply chains use a mix of paper-based and IT-enabled processes.

A true digital supply chain goes far beyond this hybrid model to fully capitalize on
connectivity, system integration and the information-producing capabilities of "smart"
components.
Digital Supply chain
 What is the E-SCM ?

Is the effective utilization of internet and business processes that

help in delivering goods, services and information from the supplier to

the consumer in an organized and efficient way.

Is a collaborative use of technology to improve the operations of

supply chain activities as well as the management of supply

chains.(Turban et al., 2012).

The merger of SCM and the Internet
 CHARACTERISTICS OF e-SCM

1)

2)

3)
Information Speed
1- Information in the supply chain.
 Example: Cisco E-SCM

Cisco Systems using the Internet to continuously reengineer processes to achieve a truly global networked

organization.

• Each node in Cisco’s supply chain, from Web- enabled order entry (50% of orders received) and customer

service to software distribution download, is executed through Internet based processes.

• Web-enabled Collaborative Planning, Forecasting, and Replenishment (CPFR) applications allow Cisco to

communicate demand changes with suppliers and distributors.

• Cisco’s e-procurement programs provide online access to purchasing / market places exchanges.

• Cost reduction by $560 million with a growth rate of 400% for the past 5 years.
 1- Information in the supply chain.

1.2 Supply Chain Event Management:

Agile and flexible supply chains occur when companies can effectively respond to both planned and

unexpected events.

The ability of e-information to extend visibility and a degree of control throughout the supply chain

has been facilitated.

• Supply chain process management (SCPM).

• Supply chain event management (SCEM).

Providing managers with a window into key events and metrics in time to make corrective action.
 1- Information in the supply chain.

1.3 “Real Options” Management:

E-information metrics provides “Real Options” for companies in the supply chain to use time-based

information to mitigate risks.

Strategically plan and deploy safety stocks, determine the optimal point for product postponement

and allocate capital.

E-information provides the bridge between company-level optimization planning and the global

demand pull of the entire business network.

 1- Information in the supply chain.

1.4 Supply Chain Systems Integration

The impact of e-SCM is measured by the depth of connectivity existing among channel

members.

E-Information provides companies with the real-time information and networks that ignore

channel inventory buffers and improve customer service.

Integrative IT tools

• XML, Java, Operating platforms, E-business applications, Wireless communications, …etc.

 1- Information in the supply chain.

1.5 Collaborative Relationships:

E-information provides for new way for the development of collaborative strategies and

networked business planning.

Facilitate channel collaboration on all levels, from product design to customer service.

Take advantage of real-time data through enter-enterprise Internet-enabled networks.

What is Management
 Management - An Art..!

➢ To make the things done with proper resource at

correct cost, place and schedule

➢ To direct resources (human or material) in order to

achieve certain goals

Elements of Management

Planning Organizing Directing Coordinating Controlling

page 30
 Levels of Management &
Information flow

Top Strategic

Middle Tactics

Operational
Operations
 What is information?
• Data are facts, events, and transactions which have been
recorded. They are basically the raw inputs which further get
processed to become information.
• When facts are filtered through one or more processes
(human or system), and are ready to give certain kind of
details… they are the information.
• Processed data when presented in some useful and
meaningful form, it is actually the information we are looking
at.
•
Appropriate Accurate Relevant
Data Information Decision
 Difference between data & information?

Data Information

Raw facts Processed facts

Dead stored facts Live presented facts

Inactive (only exists in the Active (being processed data for

backend) knowledge base)

Technology oriented Business oriented

Why do we require information?

To ensure effective & efficient decision making leading
to prosperity of the organization.
Classification of Information

By By
By Level By Time
Source Nature

By
By
By Use By Form Occurrence
Frequency
/ Frequency
page 36
 Characteristics of Perfect Information

✓ Relevant

Information
Vertical
✓ Accurate

✓ Complete

✓ Understandable
Horizontal
Information
What is System?
System is a functional unit, which involves set of
procedures/functions to produce certain outputs
by processing data/information given as input.
Input Process Output
 What is MIS?
• MIS is basically a software tool which gives a holistic
report of processed information based on which
management can take certain crucial decision on which
strategy and tactics could be figured out.

• MIS provides information that is needed to manage

organizations efficiently and effectively
Effectiveness And Efficiency
 The difference between effectiveness and
efficiency
Effective – Adequate to accomplish a purpose; producing the
intended or expected result.

Efficient – Performing or functioning in the best possible manner

with the least waste of time and effort.
 The Importance of Management Information
(MIS)
✓ Provide Useful information for management decisions.

✓ Comprises processed data (information), necessary for

making management decisions and generally gives
output in the form of tables, matrix, reports, dashboards,
graphs, trends, etc for logical and analytical
comparisons.

✓ Many Reports are available: (Market trend reports, sales

report, IT application usage reports, Management
dashboards, business information reports, research
reports, …etc.)
 Role of MIS?
• Effective decision making based upon:

1. Quality analysis

2. Cost & budget analysis

3. Risk analysis

4. Market analysis

5. Inventory analysis

6. SWOT analysis

7. Stakeholder analysis

8. Feedback analysis

9. Behavior analysis

• Report & Dashboard preparation.

Classification of Information Systems
 Types of MIS
➢ Management information systems (MIS):
produce fixed, regularly scheduled reports based on data extracted and summarized
from the firm’s underlying transaction processing systems to middle and operational
level managers to identify and inform structured and semi-structured decision
problems.

➢ Decision support systems (DSS) :

are computer program applications used by middle management to compile information
from a wide range of sources to support problem solving and decision making.

➢ Executive information systems (EIS):

is a reporting tool that provides quick access to summarized reports coming from all
company levels and departments such as accounting, human resources and operations.

➢ Marketing information systems:

are MIS designed specifically for managing the marketing aspects of the business.

➢ Office automation systems (OAS):

support communication and productivity in the enterprise by automating work flow and
eliminating bottlenecks. OAS may be implemented at any and all levels of management.
 Advantages of MIS

1. Companies are able to highlight their strengths and weaknesses due to

the presence of revenue reports, employees' performance record etc.
The identification of these aspects can help the company improve their
business processes and operations.

2. Giving an overall picture of the company and acting as a

communication and planning tool.

3. The availability of the customer data and feedback can help the
company to align their business processes according to the needs of
the customers. The effective management of customer data can help
the company to perform direct marketing and promotion activities.

4. Information is considered to be an important asset for any company in

the modern competitive world. The consumer buying trends and
behaviors can be predicted by the analysis of sales and revenue
reports from each operating region of the company.
 Outputs of MIS
➢ Scheduled reports
• Produced periodically, or on a schedule (daily, weekly,
monthly)
➢ Key-indicator report
• Summarizes the previous day’s critical activities
• Typically, available at the beginning of each day
➢ Demand report
• Gives certain information at a manager’s request
➢ Exception report
• Automatically produced when a situation is unusual or
requires management action
Types of reports
➢ Planning reports
➢ Operating reports
➢ Control reports
 Role of Information System in Current
Business Scenarios
1- Information systems are transforming
business:
▪ Increase in wireless technology use, Web sites.
▪ Shifts in media and advertising.
▪ New federal security and accounting laws.

2- Globalization opportunities:
▪ Internet has drastically reduced costs of operating on
global scale
▪ Presents both challenges and opportunities
 Role of Information System in Current
Business Scenarios

3- In the emerging, fully digital firm:

• Significant business relationships are digitally enabled and
mediated
• Core business processes are accomplished through digital
networks
• Key corporate assets are managed digitally

4- Digital firms offer greater flexibility in organization

and management:
• Time shifting, space shifting
 Role of Information System in Current
Business Scenarios
5- Growing interdependence between ability to use
information technology and ability to implement
corporate strategies and achieve corporate goals
6- Business firms invest heavily in information systems
to achieve six strategic business objectives:

Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival
Role of Information System in Current Business
Scenarios
7- Operational excellence:
• Improvement of efficiency to attain higher profitability
• Information systems, technology an important tool in achieving
greater efficiency and productivity
• Wal-Mart’s Retail Link system links suppliers to stores for
superior replenishment system

8- New products, services, and business models:

• Business model: describes how company produces, delivers, and
sells product or service to create wealth
• Information systems and technology a major enabling tool for
new products, services, business models
• Examples: Apple’s iPod, iTunes, and iPhone, Netflix’s Internet-
based DVD rentals
Role of Information System in Current Business Scenarios

9- Customer and supplier intimacy:

• Serving customers well leads to customers returning, which raises revenues and
profits
Example: High-end hotels that use computers to track customer preferences and use to
monitor and customize environment
• Intimacy with suppliers allows them to provide vital inputs, which lowers costs
Example: J.C.Penney’s information system which links sales records to contract
manufacturer
10- Improved decision making:
• Without accurate information, Managers must use forecasts, best guesses, luck
Leads to:
o Overproduction, underproduction of goods and services
o Misallocation of resources
o Poor response times
o Poor outcomes raise costs, lose customers
Example: Verizon’s Web-based digital dashboard to provide managers with real-time
data on customer complaints, network performance, line outages, etc
Role of Information System in Current Business Scenarios

11- Competitive advantage:

• Delivering better performance
• Charging less for superior products
• Responding to customers and suppliers in real time
Example: Toyota and TPS (Toyota Production System) enjoy a
considerable advantage over competitors – information systems
are critical to the implementation of TPS
12- Survival:
• Information technologies as necessity of business
• May be:
• Industry-level changes, e.g. Citibank’s introduction of ATMs
• Governmental regulations requiring record-keeping
Examples: Toxic Substances Control Act, Sarbanes-Oxley Act
 Overview of Information System Scope in supply chain

Internal External
Finance/Accounting Customers
Marketing IS Vendors
Logistics Carriers
Manufacturing Supply chain partners
Purchasing

Order Management
System Warehouse Management Transportation
• Contact with customer System Management System
• Stock availability •Stock level management •Shipment consolidation
• Crediting checking •Order picking •Routing and scheduling
• Invoicing •Picker routing •Claims
• Product allocation to •Picker assignments and •Tracking
customer work loading •Bill payment
• Fulfillment location •Product availability •Freight bill auditing
estimating
53
Order processing system Industry/external data
• Customer location • Market share
• Order history Operating data • Product offering
• Salesperson • Freight payment • Demographic trends
• Revenues • Transportation history • Economic trends
• Order status • Inventory
• Credit files
• Product movement
Management Company records
• Competitive reactions • Cost of capital
• Sales forecasts • Cost of logistics
• Future trends activities
• New markets • Standart costs

Application Database

Report generation • Product traking and

• Order performance forecasting
• Shipment performance • Performace and cost
• Damages and returns 54
reports
Functional areas of logistics

page 55
 What is ERP

Enterprise resource planning (ERP)

 ERP
Evolution
 First came into prominence in the 1970s.

It is a business software designed to improve

accuracy and efficiency in basic processes like
production scheduling and inventory
management. Its primary objective was to
precisely calculate for manufacturing companies
the materials needed, the times they were
MRP I needed and the ideal quantities of the materials.
In today’s world of manufacturing, MRP I is
considered limiting as it only offers basic material
requirements planning. For the most part, MRP II
is considered the official replacement of MRP I
given that it provides added functionality.
 By the time, the 1980s rolled around, MRP II was
being utilized.

It helped manufacturers with other important facets

of their companies. These included scheduling,
payroll, shop floor control, invoicing and detailed

MRP II capacity planning. As explained by VIENNA

Advantage, MRP II gave companies the ability to
compare forecasts with actual data and analyze
performance and improve processes to achieve
better efficiency.
 Enter the 1990s and ERP is conceived.

Coined by research and advisory company, Gartner, ERP

is a software that combines all the benefits of MRP II
with added applications for a variety of other operations.
They include Financial Management, HR & Payroll
management and Customer Relationship Management,
among others. Today, MRP II and ERP are generally used
in conjunction as opposed to having ERP serve as a
replacement for MRP II.
ERP ERP solutions are typically used by organizations to
collect, store, manage and interpret data from various
departments of the organization. “ERP solution
integrates the key areas of the business like purchases,
sales, manufacturing, human resources, services,
inventory, etc., and improves the business processes and
flow of information across the organization,” informs
VIENNA Advantage.
 Enterprise Resource Planning Systems
(ERP)
ERP systems is a set of integrated

software modules and a central

database that enables data to be

shared by many different business

processes and functional areas

throughout the enterprise.

page 62
ERP Types
Why ERP is Required
 Reasons for Implementing ERP Systems

❑Improve business performance. ❑Position the company for growth.

❑Make employee jobs easier. ❑Better serve customers.

❑Ensure reporting/regulatory ❑Standardize global business operations.

compliance. ❑Appease the parent

❑Better integrate systems across company/stakeholders.

locations. ❑Reduce working capital.

❑Replace an old ERP or legacy system.

Top ERP
Vendors
What is SAP
ERP?
page 69
Sample : Business Suite

page 70
What is SAP
 Solutions for all

Whether you have two or 200,000 employees, SAP has a comprehensive

portfolio of leading ERP cloud systems and tools to fit your needs. We
also provide dedicated support teams that are at your disposal 24/7.

Industry-leading technology

SAP has over 40 years of enterprise resource planning experience across

industries and business sizes. We use the latest technologies to build
future-proof cloud ERP tools, delivered via automatic updates.
Why SAP
Flexibility
ERP? SAP is dedicated to creating easy-to-use, adaptable cloud ERP
applications. Whether you want to customize processes, use the public or
private cloud, or pay only for what you need, flexibility is at the core of
our offerings.

Cloud security management

SAP Business Technology Platform is built on an advanced technology

infrastructure. We have teams of experts working on the management of
data protection and security threats.
 Intrdoucation to SAP S/4HANA
Next Generation Business Suite
SAP ERP History
 S = simple 4 = four (4th generation) HANA =

underlying database technology

S/4HANA is the successor of SAP ERP. S/4HANA is to

extend the existing ERP product. It will cover all daily

WHAT IS S/4HANA? processes of a company. Parts of the following industry

solutions are also included: SAP SRM, SAP CRM and

SAP SCM.

Other functions are available as LoB Solutions (Line of

Business Solutions). These solutions offer an additional

range of functions. However, they must be licensed and

installed separately.
 Fast Facts about SAP S/4HANA
Enterprise Resource Planning (SAP ERP)

• Enables a company to support and optimize its business

Buy
(MM) Track
(CO)
processes
Sell People
(SD) (HCM)
• Helps the organization run smoothly
Make Maintain
(PP) (EAM)
• Real-time environment, Scalable and flexible
Store
Track (WM)
(FI)
• Collections of logically related transactions within Projekt
(PS) Services
(CS)
identifiable business functions
 Organizational Master Transaction
Data Data Data
Fast Facts
about SAP Company Code Person Purchase Order

S/4HANA Plant Material Invoice

Storage Location Customer Quotation

Data Types in ERP
Distribution Channel Vendor Sales Order
Systems
Purchasing Organization Work Centre Transportation
Order
 Fast Facts - SAP S/4HANA
On-Premise vs. Cloud

Subscription Licensing
→ Deployment in the private cloud,
maintained by SAP
• SAP provides system and controls
maintenance
• Automatic participation in
quarterly innovation upgrades
• In-App extensibility with limited
ABAP
• Current release cycles
• SAP ERP embedded
Traditional licensing
→ Traditional licensing with customer
control of deployment and
maintenance
• Private control of deployment and
maintenance
• Hardware at companies’ location
• Privately controlled data
• Fewer release cycles
• Individual requirements possible
• Traditional ABAP extensibility up to
core modification
 Fast Facts about SAP S/4HANA
Digital Transformation - Why?

Changing the
way of life Empowered &
s
Informed Customer
Simulation Forecasting

Contact to the
Customer Research New
possibilities
companies by
social media
etc.
Drivers of
Change
IoT
Companies
Technology Cloud
New Changing
organization customer Mobility
Big
units expections
Data
 SAP MM (SAP Materials Management)

SAP MM (Materials Management) is a module in SAP ERP Central Component (ECC) that

provides companies with materials, inventory and warehouse management capabilities. The

primary goal of SAP MM is to make sure that materials are always kept in proper quantities and

without shortages or gaps in the organization's supply chain. It also helps supply chain

professionals and other SAP users complete the purchasing of goods in a timely and cost-

effective way and to be able to deal with day-to-day changes in these processes.

One of the critical modules in SAP ECC, SAP MM is part of SAP ECC's logistics function and

plays a vital role in a manufacturer's supply chain. It integrates with other ECC components like

Production Planning (PP), Sales and Distribution (SD), Plant Maintenance (PM), Quality

Management (QM), Finance and Controlling (FICO) and Human Capital Management (HCM).
 • Inventory Management

• Purchasing

• MRP

• Physical Inventory
SAP – MM • Valuation
Functionality
• Service Master

• Invoice Verification

• Product Catalogs
 • Internal Document instructing the purchasing
department to request a specific good or service
for a specified time

• Requisitions can be created two ways:

• Directly - Manually
• person creating determines what, how
Purchase much, and when
Requisition • Indirectly - Automatically
• MRP
• Production Orders
• Maintenance Orders
• Sales Orders
 Once the requisition has been assigned a source of
supply it can be released for processing

Internal Sourcing
Requirements
There are a variety of
ways that a purchasing
Requisition
department can Source List
Sourcing
process a requisition to
determine the
Outlined Agreement
appropriate Source of
Supply:
RFQ
Internal Sourcing

• The requisition for materials could be satisfied by sources within our

company.

• It is possible that a plant within your firm could represent a potential source of

supply for the material needed (centralized warehouse)

• If an internal source is identified the requirement is covered by an internal

procurement transaction (stock transport order)

 • A source list is a record that specifies the
allowed means for procuring a material for a
certain plant within a given time period.

• If the list contains a sole source the system will

assign the vendor to the requisition.
Source List
• If several options exist, the system will display a
list of vendors for you to choose from.

• If no source has been established the system will

revert to search information records and outline
agreements.
 •
•
Outline
Agreement
•
•

•
•

Inventory Management
MB24: Reservations for Material
MB51: Material Document List
MB52: List of Warehouse Stocks on Hand
MB53: Display Plant Stock Availability
MB54: Consignment Stocks
MB58: Consgmt and Ret. Packag. at Customer
MB59: Material Document List
MB5B: Stocks for Posting Date
MB5L: List of Stock Values: Balances
MB5S: Display List of GR/IR Balances
MB5W: List of Stock Values
MBGR: Display Material Document by
Movement Reason
MBSM: Display Cancelled Material Document
MMBE: Stock Overview
MR51: Material Line Items
MB5T: Stock in Transit CC
Most Popular SAP MM Reports
Purchasing – General
ME2O: SC Stock Monitoring (Vendor)
ME80: Purchasing Reporting
ME81: Analysis of Order Values
MKVZ: List of Vendors: Purchasing
ME80F: Purchasing Reporting: Purchase Orders
ME80FN : General Evaluations
Purchasing – Purchase Requisitions
ME5A:List Display of Purchase Requisitions
ME5K: Purchase Requisitions per Account Assignment
Purchasing – Purchase Order
ME2S: Services Per Purchase Orders
ME2B: Purchase Orders by Requirement Tracking Number
ME2C: Purchase Orders by Material Group
ME2K: Purchase Orders by Account Assignment
ME2L: Purchase Orders by Vendor
ME2M: Purchase Orders by Material
ME2N: Purchase Orders by PO Number
ME2W: Purchase Orders for Supplying Plant
Purchasing – Outline Purchase Agreements
ME3C: Outline Agreements by Material Group
ME3K: Outline Agreements by Account Assignmen
ME3L: Outline Agreements per Vendor
ME3M: Outline Agreement by Material
ME3N: Outline Agreements by Agreement No
Purchasing – Source List
ME06: Analyze Source List
ME0M: Source List for Material
Purchasing – Purchasing Info Records
ME1L: Info Records Per Vendor
ME1M: Info Record Per Material
ME1P: Purchase Order Price History
ME1W: Info Records Per Material Group
Purchasing – Quota Arrangement
MEQM: Quota Arrangement for Material
Purchasing – Purchasing Information System –
Material Pricing Group
MC$<: PURCHIS: MatGrp PurchVal Selection
MC$>: PURCHIS: MatGrp PurchQty Selection
MC$0: PURCHIS: MatGrp PurchVal Selection
Purchasing – Service Entry Sheet
ML84: List of Service Entry Sheets
MSRV3: Service List for Purchase Order
Logistics Basic Data – Material Master
MM50: List Extendable Materials
MM60: Materials List
Purchasing – Quota Arrangement
MEQM: Quota Arrangement for Material
Purchasing – Purchasing Information System –
Material Pricing Group
MC$<: PURCHIS: MatGrp PurchVal Selection
MC$>: PURCHIS: MatGrp PurchQty Selection
MC$0: PURCHIS: MatGrp PurchVal Selection
 • SAP Sales and Distribution (SAP SD) is a core functional
module in SAP ERP Central Component (ECC) that allows
organizations to store and manage customer- and product-
related data. Organizations use this data to manage all of the
sales ordering, shipping, billing, and invoicing of their goods
and services.

SAP – SD • Working in conjunction with the other modules, SAP SD

enables an order-to-cash cycle business process. SD handles
all the details in the sales and distribution part of the cycle,
Sales and Distribution
according to SAP. In a typical cycle, SD generates a sales
quote, and the customer then places a sales order, the goods
are picked from a warehouse or production facility and shipped
to the customer, an invoice is sent with the order and accounts
receivable settles the payment with the customer. Each step in
the process generates transactions in the SD module, which
then generate further transactions in the other ECC modules.
The backwards scheduling calculates a scheduled start that is in the past despite maximum

reduction. Forward scheduling then calculates the scheduled finish, starting at today's date and

using maximum reduction.

 SAP – SD Reports Sample

ts Name Description S_ALR_87012218 Credit master sheet C-A SIS: Sales Office Analysis: Returns
F.31 Credit Management Overview
VA15N Inquiries List MC-E SIS: Sales Office Analysis: Sales
FCV3 Credit Management Early warning list
VA25N Quotations List
MCTA SIS: Customer Analysis MC-I SIS: Sales Office Analysis: Credit
SDQ1 Expiring Quotations MCTC SIS: Material Analysis
memos
SDQ2 Expired Quotations MCTE SIS: Sales organization MC(Q SIS: Sales Employee Analysis:
SDQ3 Completed Quotations MCTK SIS: Shipping point Incoming orders

VA05N List of Sales Orders

MCTI SIS: Sales employee MC-M SIS: Sales Employee Analysis:
MCTG SIS: Sales office Returns
SDO1 Orders Within Time
Period MC(A SIS: Incoming orders MC-Q SIS: Sales Employee Analysis:
MC+A SIS: Returns Sales
V.02 Incomplete Orders
MC+E SIS: Customer Analysis: Invoiced
Sales
MC-U SIS: Sales Employee Analysis:
VA35N List of Scheduling
Agreements Credit memos
MC+I SIS: Customer Analysis: Credit
memos VC/2 Sales Summary (Customer Fact
VA45N List of Contracts
F.35 SIS: Credit master sheet Sheet)
SDV1 Expiring Contracts
MC(E SIS: Material Analysis: Incoming V/LD Pricing Reports
SDV2 Expired Contracts orders
MC+M SIS: Material Analysis: Returns VD59 List Customer Material Info
SDV3 Completed Contracts
MC+Q SIS: Material Analysis: Invoiced Sales VB35 Promotion List
VA14L Sales Documents
Blocked for Delivery MC+U SIS: Material Analysis: Credit memos VB25 List of Sales Deals
MC(I SIS: Sales Orgn Analysis: Incoming
V.23 Sales Documents orders
VC05 List of Sales Activities
Blocked for Billing
MC+Y SIS: Sales Orgn Analysis: Returns VB25 List of Sales Deals
VL06O Outbound Delivery MC+2 SIS: Sales Orgn Analysis: Sales VCUS Customer List
Monitor
MC+6 SIS: Sales Orgn Analysis: Credit T
VF05N List of Billing Documents memos
VA06 Sales order Monitor
MC(M SIS: Sales Office Analysis: Incoming
VB(8 List Rebate Agreements
orders SDD1 Duplicate Documents
 is the component of ERP Central Component (ECC) that helps businesses plan the
manufacturing, sale and distribution of goods. A part of SAP ECC's logistics function,
SAP PP plays a vital role in a manufacturer's supply chain and integrates with other
ECC components, including Materials Management (MM), Sales and Distribution
(SD), Plant Maintenance (PM), Quality Management (QM), Finance (FI), Controlling
(CO) and Human Resources (HR).
SAP PP activities include material requirements planning, bill of material, routings
and capacity planning. Everything in SAP PP revolves around master data that is
SAP – PP stored and manipulated in centralized master data tables. Master data types include
materials master, work center, BOM and routing. The master data is used to create
transactional data in SAP ECC, such as creating a production order in PP, a sales
Production Planning order in SD, or a purchase order in MM. For example, when a production order is
created in SAP PP, it uses master data from SAP MM about the raw materials
needed to produce the finished product, which will subsequently be used to create a
sales order in SAP SD.
SAP PP sub-modules include sales and operations planning (S&OP), long-term
planning (LTP), data management (DM), master production schedule/material
requirements planning (MPS/MRP), capacity requirements planning (CRP), shop
floor control and information systems.
 • Supply chain management focuses on the
management of the flow of goods and how the raw
materials are transformed into finished products.
Below are the key steps that are handled through
Production the production planning process in SAP:
Planning • Sales and Operations Planning (SOP)
Process in • Demand Management
SAP • Long-Term Planning

• Master Production Scheduling

• Material Requirement Planning

• Shop Floor Control

• Settlement
SAP – PP – Supply chain Planning
1 - Sales and Operations Planning

The Sales and Operation Planning (SOP) component in SAP manages sales, production,

and other supply chain targets of the organization. This is done through a planning tool that

uses historical and current data to set up the future supply chain targets in the system.

Information passed through sales and operations planning is passed into Master Production

Scheduling (MPS) and Material Requirement Planning (MRP). SOP is also connected with

profitability analysis, cost center accounting, and activity-based costing. There are two main

planning methods available in SOP and we can customize further methods based on the

requirement.

1.Consistent planning

2.Level-by-level planning
2 - Demand Management

Demand management in production planning is handled through the planning strategy.

Planning strategy determines the method in which a product is manufactured. The main

demand management method is planned independent requirements (PIR). The PIR creates

demand in the system, and it can be used in a make-to-stock (MTS) planning strategy.

A make-to-order (MTO) planning strategy is based on sales orders. Production does not start

until the customer sales orders are placed in the system. Production and inventory are

managed with the sales order link and the production process can be tracked using the sales

order.
3 - Long-Term Planning

Long-term planning is used to check the future demands of materials based on the bill of

material (BOM). Long-term planning can be carried out in simulation mode. It will check the

capacity availabilities, material forecast, and delivery timelines, and if the requirements can

be fulfilled, simulation can be transferred into an operational mode.

Long-term planning can be executed based on an existing production BOM. It is also

possible to define BOM and routing specifically for long-term planning.

4 - Master Production Scheduling

Master production scheduling (MPS) enables the planning of critical materials of an

organization with special tools. MPS increases material availability, reduces storage costs,

and increases planning stability. MPS materials are planned independently and will not be

considered in the regular MRP runs.

4 - Master Production Scheduling
Master production scheduling (MPS) enables the planning of critical materials of an
organization with special tools. MPS increases material availability, reduces storage
costs, and increases planning stability. MPS materials are planned independently and
will not be considered in the regular MRP runs.

5 - Material Requirement Planning

Material requirement planning (MRP) is the heart of the production planning process. MRP
matches the demand and the supply and proposes the best methods for executing the
production process. The output of the MRP run is the procurement proposals.
There are two main procurement proposals in SAP. These are the plan order and purchase
requisitions.
Plan order is generated through MRP for materials that are produced in-house. Plan orders
are converted into production orders when the manufacturing starts. The second
procurement proposal which MRP generates is the purchase requisitions. Purchase
requisitions are generated for materials that are procured from external parties. These
include mainly the raw materials. Purchase requisitions are converted into purchase orders.
6 - Shop Floor Control

Shop floor control in production planning is mainly about executing the production functions

within the shop floor. Shop floor control determines which materials need to be produced,

the quantities to be produced, and the locations in which the materials are to be produced.

Shop floor control uses production planning master data such as BOM, routing, work

center, and production versions when executing the shop floor activities.

Shop floor activities are based on a production order or a process order.

Production/process order has the quantities to be produced, scheduled dates, routing

sequence, work centers, and materials that are consumed during the production. Monitoring

and controlling the shop floor activities are essential for the supply chain management.
7 - Capacity Planning
Capacity planning is essential for the supply chain management process. Demand vs
supply capability is based on the available manufacturing capacity. The manufacturing
capacity is dependent on the capacity of the work centers. A work center can be a person,
a group of people, or a machine.
For each work center, individual capacities can be defined. Capacities are generally
defined in minutes or hours. Based on the work center capacity and the standard values of
the product, schedule dates will be determined for production. Scheduling determines
when the production can start and when it can end based on the work center capacity and
other defined constraints.
8 - Inventory Management

Inventory management deals with the management of material stocks on a quantity and

value basis. Documenting goods movements and carrying out physical inventory are also

important functions of inventory management.

Inventory management also provides the capability to handle special stocks like sales

order stocks and consignment stocks. When it comes to production planning, managing

the material stocks and executing goods movements are essential activities on the shop

floor. Therefore, inventory management is used throughout the production process.

9 - Settlement

Once the production is complete, settlement runs are carried out to identify and evaluate

the variances. Production orders will be technically completed, and this marks the

completion of the production planning process

 ERP – Manufacturing use case

Pain areas in Inventory and planning operations

1.1 Reorder Point

1.2 Min Max - ordered QTY calculation methodology

1.3 Dual Unit Items - conversation

ERP in Internal Purchasing Cycle

ERP – Manufacturing use case
Technological part
Digital as Enabler
Cloud Computing
EDI- Electronic data interchange

 What is EDI

Electronic Data Interchange (EDI) is the computer-to-computer exchange of

business documents in a standard electronic format between business partners.

What is EDI and what are its benefits
 RPA - Robotic process automation

Robotic process automation is the use of specialized computer programs, known as

software robots, to automate and standardize repeatable business processes

RPA : Robotic process automation
3D Printing

 The 3D printing process builds a three-dimensional object from a computer-

aided design (CAD) model, usually by successively adding material layer by

layer, which is why it is also called additive manufacturing

3D Printing
RFID
 Radio Frequency Identification: a technology that uses electronic tags

placed on objects, people, or animals to relay identifying information to

an electronic reader by means of radio waves.

RFID in Manufacturing
IoT
In simple words, Internet of Things (IoT) is an ecosystem of connected
physical objects that are accessible through the internet.
The Future of the world with IoT
IoT in Supply chain management
Barcode and QR-code
What is Artificial intelligence
Virtual and Augmented Reality

 Virtual reality (VR)

 Immersing users within virtual world
 Typically uses head-mounted display (HMD)

 Augmented reality (AR)

 Overlaying virtual objects over the real world, via mobile devices or HMDs
 Pokémon GO
Logistics with Augmented Reality
 182

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