SAP

SYSTEM APPLICATION AND PRODUCT IN

DATA PROCESSING
 Topic: Overview of SAP and ERP
 Overview of ERP and SAP

 Navigation

 Procure to Pay Process

 Order to Cash Process

 Plan to Produce Process

 Hire to Retire Process

 Overview of SAP and ERP
 SAP stands for Systems Applications and Products in Data
Processing. SAP, by definition, is also the name of the ERP
(Enterprise Resource Planning) software as well as the name
of the company.

 SAP was founded by five former IBM employees, in 1972, to

develop a standard ERP business application software, with
the goal of processing business information in real-time. The
company, SAP, was started in Germany.
 Overview of SAP and ERP
 During 1973, SAP released its first financial accounting software, ‘R1’(the
letter ‘R’ stands for ‘Real-Time Processing).’
 In the late 1970s, SAP ‘R/2’ was released with IBM’s database and a
dialogue-oriented business application.
 R/2 was further stabilized during the early 1980s and the company came
out with a version capable of processing business transactions in several
languages and currencies to meet the needs of its international client.
 SAP became SAP AG in 1988. Later on, the company established
subsidiaries in countries such as the United States, Sweden, Denmark,
and Italy.
 The 1990s saw the introduction of SAP ‘R/3,’ with client-server
architecture and GUI, which ran on almost any database, and on most
operating systems. SAP R/3 heralded a new era in enterprise computing,
moving from a ‘mainframe’ to a 3-tier architecture (Database-
>Application->User interface), which became the new industry standard.
 Overview of SAP and ERP
 SAP continues to evolve and innovate, bringing cutting-edge
technologies to business information processing. SAP has already
introduced SAP NetWeaver, which is based on Enterprise Services
Architecture (ESS) with application integration across diverse
platforms for providing one-stop end-to-end business processing.
With NetWeaver, companies can now integrate people, information,
and processes.

 What is Enterprise Resource Planning (ERP)?

Enterprise resource planning – more commonly referred to as ERP –
is a software system used to manage and maintain the functions of
a business. The tasks are typically done in real-time.
ERP attempts to integrate all department and functions across a
company onto a single computer system that can serve all those
different departments particular needs.
 Overview of SAP and ERP
 Enterprise resource planning (ERP) is software designed to help
companies store, manage, and use data regarding their daily and
regular processes.
 ERP keeps track of a wealth of information, including payroll, raw
materials, business commitments, purchase orders, and capacity for
production.
 ERP software is part of the IT sector, and because of its usefulness
and success, it is now considered a multi-billion-dollar industry.
 ERP’s primary goal is to manage the various resources within the
company to make sure they are being utilized in a cost-effective way.
It is also designed to make sure that all resources are being used
properly.
 ERP works particularly well for tracking and managing things such
as a company’s capacity for production, cash levels, raw materials at
its disposal, payroll information, and purchase orders.
Overview of SAP and ERP
 Overview of SAP and ERP
 Integration of business processes
 Standardization of system across locations
 For overall control of organisation
 Better controlling of different business processes
 Better reporting system
 Best utilization of resources i.e. man, material, machine and
Money.
 SAP Navigation
In order to be able to log into the SAP system you should have the
following icon on your desktop.

Clicking on this desktop icon will cause the following pop-up

window to appear:
 SAP Navigation
To enter the production (real live data) environment, highlight the
PRD line; then double-click or click the Log On button. The
following window will then appear:

Enter your User ID and Password in the appropriate named

fields. Then click the green Checkmark or hit enter.
 SAP Navigation
The first time you logon to the system you will immediately be prompted for a
new password. Passwords must be 7 characters long, they cannot begin with the
first 3 digits of your User ID, and they must be changed every 30 days. When
changing your password, you may not use the last 5 passwords you utilized
previously.

This will then take you to the following screen which is the first SAP
window from where you can navigate to the various SAP transactions.

 
SAP Navigation
 SAP Navigation
How to Log Off?
Click on System and then select Log Off.

You may also click on the small X in the right corner of

your screen.
 SAP Navigation
 The SAP window is the user interface to the SAP System. The
elements of a typical SAP window are shown below:

Menu Bar

Screen
Header
Standard Toolbar

Title Bar
Application
Toolbar

Screen
Body
SAP Navigation (Button)
SAP Navigation (Button)
 Procure to Pay (P2P)
Procure to pay is the process of requisitioning, purchasing, receiving,
paying for and accounting for goods and services. It gets its name from
the ordered sequence of procurement and financial processes, starting
with the first steps of procuring a good or service to the final steps
involved in paying for it.

The procure to pay process

The main steps in procure to pay, starting with the procurement side,
include, first, a requisition order -- essentially, an internal request to
purchase something -- which starts the ordering process during which a 
purchase order (PO) is created. The next steps involve receiving the good;
common documents created in this phase include an 
advanced shipping notice (ASN) and order confirmation. Finally, there is
the payment side, which typically includes creating an invoice, arranging
to pay suppliers and recording the transaction in the accounting system.
Procure to Pay (P2P)
 Procure to Pay (P2P)
 Purchase requisition:
A purchase requisition is a document that an employee within
your organization creates to request a purchase of goods or
services. A typical purchase requisition form used to secure
internal approval for a purchase request.
A purchase requisition is an internal document used by
employees to inform department managers about the resources
they need. This document is then used by department managers
to notify the purchasing department that they can start the
purchasing process.
The finance department also uses the purchase requisition to
coordinate reporting procedures with the accounting department.
 Procure to Pay (P2P)

 The contents of the purchase requisition form vary

depending on the organization and the products requested,
but the template should contain these basic elements:

 The name of the requestor

 The date of the request
 The items, actions or services requested for
 The date of delivery
 The location of the delivery
 The department in charge of making deliveries
 The signature of the requestor, etc.
 Procure to Pay (P2P)
SAP Transaction code for Purchase requisition: ME51N
 Procure to Pay (P2P)

 Purchase order:
A purchase order (PO) is an official document that buyers send to
sellers to document the sale of products and services to be
delivered at a date.
This allows buyers to place orders with suppliers without
immediately making payment. The seller uses POs as a way to
offer buyers credit without risk because the buyer is legally
obligated to pay for products and services when they’ve been
delivered.
Each PO has its own unique number, known as the purchase order
number, to assist both buyer and seller in tracking delivery and
payment. Blanket purchase orders are used to commit buyers to
purchase products or services on an ongoing basis until a certain
threshold is reached.
 Procure to Pay (P2P)
Purchase orders are sent by the buyer to the vendor first, and they
outline exactly what the order should contain and when it should
arrive. It'll include things like quantity of items, detailed
descriptions of the items, the price, date of purchase, and payment
terms.

Purchase orders are sent by the buyer to the vendor first, and they
outline exactly what the order should contain and when it should
arrive. It’ll include things like quantity of items, detailed
descriptions of the items, the price, date of purchase, and payment
terms.
 Procure to Pay (P2P)
The elements included in this example are:

 PO number
 Purchase order date

 Vendor name and billing address

 Buyer name and shipping address

 Additional contact information, such as phone numbers and email addresses

 Delivery date

 Shipping method

 Shipping terms

 Item name

 Item description and technical information

 Item quantity

 Item unit cost

 Line total

 Taxes

 Total price

 Payment terms, etc.

 Procure to Pay (P2P)
SAP Transaction code for Purchase Order: ME21N
 Procure to Pay (P2P)
 Goods Receipt:
After issuing Purchase order to vendor for goods or service, then vendor
will delivered goods or services to you.
MIGO is part of procure to pay cycle where MIGO means a Goods
Receipt, here your stock will be increased and an entry will be passed to
intermediate GRIR (Goods receipt/ Invoice receipt) account.

 Goods Receipt (MIGO) element:

 Purchase order
 Delivery note quantity
 Posting Date, etc.
 Procure to Pay (P2P)
SAP Transaction code for Goods Receipt: MIGO
 Procure to Pay (P2P)
 Vendor Invoice processing (MIRO)
MIRO means an Invoice Receipt, here liability is created against the
vendor. PO based vendor invoice are processed in MIRO. Once Goods or
services received from vendor then we can process vendor invoice MIRO.

 MIRO Element:
 Purchase order number.
 Invoice date
 Reference Number
 Invoice amount (including Tax), etc.
 Procure to Pay (P2P)
PO invoice Processing MIRO
 Procure to Pay (P2P)
Payment to vendor (F110) (Automatic payment)
Goods and services which are procured from vendor, Same
vendor invoice need to process for payment before due date of
invoice to avoid late payment charges.
We can process multiple vendors invoice in one payment
program.

 F110 element:
 Run date and identification
 Company code and payment method
 Vendor
 Vendor invoice
 House bank and account ID, etc.
 Procure to Pay (P2P)
Automatic payment F110.
 Order to Cash (O2C)
Order to cash is a set of business processes that involve receiving
and fulfilling customer requests for goods or services.

Order to Cash also known as O2C or OTC is the business process

that covers the entirety of the order processing system right from
receiving the order to up until the point the payment is made and
an entry is logged in your accounting books.

These processes are at the heart of all businesses and unless they
are managed efficiently and accurately, organizations would not
only face financial problems, but also reputational issues. Every
department in a given company is affected either directly or
indirectly by the Order to Cash system.
Order to Cash (O2C)
 Order to Cash (O2C)
The Order to Cash Cycle:

 Order Management: The order to cash cycle kicks at the moment

the system receives an order from the customer. The order can
have multiple forms, it could be an online order from the
customer directly on your website, or through your sales team
over an email, however, the best practice is to automate your
order management for an efficient order to cash process.

 Order Fulfillment and Shipping: The next step in the cycle is

order fulfillment and shipping. This part of the cycle largely
applies to businesses dealing with physical goods where the
inventory personnel should be notified with the accurate details of
the order to proceed with fulfillment and shipping.
 Order to Cash (O2C)
 Invoice Generation and Payment: The third step in the cycle is
invoice generation and payment. The customer should receive an
invoice for the order that includes all the details about the order as
individual line items along with additional information such as
taxes and discounts if applicable. The customer should also have
the means to make the payment for the invoice raised. The best
practice is to provide multiple payment options to minimize
delays and payment failures.

 Account Receivables and Reporting: The cycle is completed once

the payment is logged in your accounting books as part of the
accounts receivable against the raised order.
 Order to Cash (O2C)
 Sales Order:
A sales order is an document that captures and records your customer´s
request for goods or services. The sales order contains all pertinent
information to process the customer´s request throughout the whole
process cycle. You can enter a sales order with many items in a single
screen.

 Sales order (VA01) element:

Sales organization,
distribution channel,
division,
Sales Office,
Sales Group,
Sold to party & Ship to party,
PO Number,
Quantity and Delivery Date. Etc.
 Order to Cash (O2C)
Sales Order (VA01)
 Order to Cash (O2C)
 Order fulfillment and Shipping (Delivery)(VL01N)
The first step in the shipping process is to create an outbound delivery document. To do this,
we'll enter transaction code vl01n, and press Enter. This brings us to our create outbound
delivery with order reference screen.
If we did not have a sales order to reference, we could click the without order reference
button, and that takes us into a different transaction. In our situation, we do have an order, so
the first field we need to enter is shipping point. Shipping point is the physical location from
where the items will ship. 

 Elements of Outbound delivery (VL01N)

Shipping point,
Delivery Type,
Sales organization,
Distribution channel,
Ship to party,
Planned GI (Goods Issue),
Material and material quantity,
Material value and packing. Etc.
 Order to Cash (O2C)
Outbound Delivery (VL01N)
 Order to Cash (O2C)
 Billing (VF01)
VF01 is a transaction code used for Create Billing Document in SAP. It
comes under the package VF. When we execute this transaction code,
SAPMV60A is the normal standard SAP program that is being executed in
background.
In SAP Sales and Distribution module, billing is known as the final
stage for executing business transactions. When an order is processed
and delivery is made, billing information is available at each stage of
this order processing.
Element of Billing (VF01)
Billing Type,
Billing Date,
Billing Value,
Material,
Quantity and price, etc.
 Order to Cash (O2C)
Billing (VF01)
 Order to Cash (O2C)
 Payment from Customer (F-28)
A billing method determines whether you have to create an invoice for
every delivery or you want to send an invoice to the customer each
month.
You can use the following billing method types −
Individual Billing per sales document.
Collective Billing method for multiple sales document.
In Individual Billing method, you can make the setting in system to create
single billing document for each sales document.
Element of F-28.
Document Date,
Company code, Currency,
Amount (Received from customer),
Bank Account,
Customer Account, etc.
 Order to Cash (O2C)
Incoming Payment from customer (F-28)
 Plan to Produce Process
 Plan to Produce, is a vital process in SAP ERP, wherein the
company coordinates customer demand with the organization's
manufacturing capacity in order to create schedules
for production and procurement of materials and finished
products.

 Production Planning is the process of aligning demand with

manufacturing capacity to create production and procurement
schedules for finished products and component materials. SAP PP
is an important module of SAP. It tracks and makes a record of the
manufacturing process flows, for example, the planned and actual
costs. Also, goods movements from the conversion of raw
material to semi-finished goods.
 Plan to Produce Process
Plan to Produce Process

Plan to
Produce
 Plan to Produce Process
 Key Steps in Plan to Produce
Following are the key steps in executing a production order. It
starts with a planned order and ends with goods receipt against a
Production order.

 Convert Planned Order to Production Order:

The first step is to convert a planned order to production order.
When you create a production order, type is defined in SAP PP
system. You use this function to partially convert a planned order
to one or more production order(s), with an option to retain the
planned order with accordingly reduced quantities.
 Plan to Produce Process

Convert Planned Order to Production Order:

The planner can use this function to:
 Convert the planned order from the stock/requirements list
 Create production order with reference to planned order.
1st step is to create Planned order (MD11)
Important element of MD11
 Material
 MRP Area
 Order Quantity
 Dates/Time
 Production Plant
 Storage location
 Plan to Produce Process
Planned order MD11
 Plan to Produce Process
2nd step is to create Production order.
A Production order is used to define the material to be produced, plant
location where production has to be done, date and time of production,
quantity of goods required. A Production Order also defines which
components and sequence of operations are to be used and how the
order costs are to be settled.

Following are the key steps involved in Production Order confirmation

−
 First step is to convert a planned order to production order. When you
create a Production Order, type is defined in SAP PP system.
 To start the production process, it is necessary to issue Production
order. Until a production order is not released, execution of production
process is not started.
 Issuing goods is required for providing the goods to execute the
Production order. Once goods are issues, document number can be
updated in the system.
 Plan to Produce Process
 Production Order by converting Planned Order (MD16)
Planned orders are the result of MRP run and should be converted
to production order for further execution process.
You cannot directly declare production using planned orders and,
therefore, it needs to be converted to Production Order.
Once, planned order is converted to production order, planned
order gets deleted from the system and is no longer available to be
considered in MRP (Material Requirement Planning).

Elements of MD16
Plant,
MRP Controller,
End selection Date.
 Plan to Produce Process
Production Order by converting Planned Order (MD16)
After entering all details in First screen below screen will appear.
 Plan to Produce Process
 Issue the Production Order (CO01)
To start the production process, it is necessary to issue production
order. Till a production order is released, execution of the
production process cannot start.
A production order specifies which material is to be produced,
where it is to be produced, which operations are required to do
this and on which date production is to take place. It also defines
how the order costs are to be settled.

Element of Production order (CO01)

Material,
Production Planning,
Planning Plant,
Order type,
Order.
 Plan to Produce Process
Production order (CO01)
 Plan to Produce Process
 Issue Goods for Production Order
To execute the production order, goods need to be issued. Once goods
are issued, the document number can be updated in the system. Goods
issue is done when raw material is consumed to produce material as per
Production order. When goods are issued, system decreases the
inventory of components at the storage location in Production Planning
system.
Movement type 261 is used for goods issue.
Elements of Issue Goods (MB1A)
Movement type,
Plant,
Storage Location,
Select To Order and enter following details
Order number and Material,
Required quantity and Unit of Measure, etc.
 Plan to Produce Process
Elements of Issue Goods (MB1A)
 Plan to Produce Process
 Production Order Confirmation
All the sub processes are executed in accordance with the required
operations to confirm the production as per the production order.

To confirm Production Order, use T-code: CO15

You can perform following activities −

 Generate confirmation document

 Consume raw materials or semi-finished goods
 Good receipt of finished goods or semi-finished goods
 Plan to Produce Process
Enter production order (CO15)
 Plan to Produce Process
Enter production order (CO15)
 Plan to Produce Process
 Good Receipts w.r.t Production Order
Once the execution of production order is complete, goods
produced w.r.t production order are received and placed in the
storage area.
 Plan to Produce Process
Good Receipts w.r.t Production Order
 Hire To Retire
Hire to retire (H2R) is a human resources process that includes
everything that needs to be done over the course of an employee's
career with a company. Human resources are the people who
work in an organization.

Hire to retired business platform is an integrated solution for

managing the end to end processes across the Hire to retired
process.

Hire to retired is human resources process that include everything

that need to be done over the course of an employees career with a
company.
 Hire To Retire
 Following are high level process steps.

 Human resource planning: Human resource management

planning such as work design.
 Recruiting: Recruiting process such as relationship building,
employer building, job posting, job fairs and interviewing.
 Employee Management: Everything that is required to manage an
employee such as on boarding, performance management,
training & development and benefits & compensation processes.
 Redeploy: The process related to an employee being redeploy as
foreign work assignment.
 Payroll: Control and delivery of payroll.
 Retire: The process related to an employee leaving such as exit
interviews and retirement benefits.
 Hire To Retire
Hire to Retired.

Change
Hiring in
Position action Hiring
Action

Confir Retire to
mation separate
 Hire To Retire
 Position:
This process supports the creating of a new position along with
the business attributes for that position. The process consists of
the following steps:

 The Requesting Manager enters the Name, Description and

vacancy details for the new position and sends the request to the
HR Administrator.

 The HR Administrator reviews the data entered by manager

and enters the business attributes for the position.
 Hire To Retire
 Position (PP01):
 Hire To Retire
 Hiring Action & Confirmation (PA40):
PA40 Actions as the means for connecting a person (employee) to
a specific position. Because of the built-in relationships, the
position is tied to a specific employee group and subgroup and is
described by a job. The position has a relationship with a
particular organizational unit.
Regardless of the Action selected, the user will follow a general
process or pattern for PA40. Actions are carried out through a
series of Infotypes, screens that display for user review and data
entry. These Infotypes appear in a logical order, prompting the
user to enter and save data as required.
Infotypes that appear in Actions cover personal data, payroll
data, organizational assignments, dates, work schedules, and
address information. Additional Infotypes are included for faculty
members and hospital hires. Other background Infotypes are
created in the Actions process.
 Hire To Retire
 Hiring Action (PA40):
 Hire To Retire
 Edit hiring action (PA30):
PA30 transaction is a transaction in which you are updating a
employee data by way of Infotype (different areas) in HR. 
PA30 is HR Master Data Maintenance. 
 Hire To Retire
 Retired or separate (PA30): The actions are the activities of the
employees during his/her tenure in the organizations. It comes
like Hiring-Transfer/Promotion-Resignation-Withdrawal
-Separation. Termination is nothing but force retirement or
retrenchment. Action reason will be separate for the both.