Video 1: Basics and Modules
Hello, my name is Michael Kaiser. In this tutorial, I'm going to talk about the SAP ERP system. This is about the concepts and not about how to handle the system. Anyway, we are already locked onto an SAP system to show you some examples later for the moment let's stay here, here, you see the areas. Covered by an SAP ERP system. You could as well say these are SAP modules and most of the world would say exactly that only SAP company doesn't use the term modules anymore. But since everybody else uses that term, we stayed with the term. Also for this tutorial, we have concentrated on the most widely used modules that you have at least with industrial companies. And these are the modules, sales, production, and material management. My trailer management also covers purchasing. We cannot talk about this modules only, and we cannot show you a process going through this modules only, without at least touching the modules, finance and controlling, because whenever you change the value or something in SAP, like you change the stock value by having a goods, receipt, or an goods issue, the system must post a financial document. To cover that change. And this is done automatically in the background. And so we have at least to look into that the rest of the modules are of no interest for this tutorial. So we graded out, you'll see, as you see, the modules are color coded and we stick with that colors throughout the rest of this presentation.
Video 2: Integrated Business Process
Okay, let's check the process that we are going to cover here. This process starts at the top of the screen and goes to the bottom. Um, the customer wants to have something from your current company. So the customer places, a sales order, or the customer asked for conditions of certain products. So please, uh, request for quotation that you can answer with a quotation. How that sales order is created. It depends on how your company is set up. You could enter that sales order manually because the customer calls you or sent something in via email or whatever, or the customer can create that sales order on his own by using an interface that you have agreed to with that customer, both could happen let's assume. And in our example, we do that. We create the sales order manually. While you create a sales order, a tiny availability check takes place to make sure that the customer requested delivery date can be met. The system checks information while doing that. And so for creation of a sales order, a customer master must exist and a material master must exist. And lots of information are in the material master and the customer master that are checked by the system to carry out availability, check for example. Additionally, a vulnerability check looks at the stock and the inventory management at the stock level. And so on. Once you have a sales order, material requirements, planning recognizes the demand coming from the sales order. Um, material requirements planning is there to make sure you have enough material to cover all that demands. In time for that demands. And this is done automatically with the usually nightly run of the MRP system. So you have MRP jobs running at night. So not to her, to the performance of your system too much. If the material that is planned, if the material that is sold in the sales order is a material that you produce on your own. It goes to the right path. If there's this a trading good that you purchase, it goes to the left path, which of it it is, is, uh, showing up in the material master. So material requirement knows that in our example, it will be a production material. It will be a finished good and not a trading. Good. And so the nightly job will create a plant order to have a plant order to create a plant order. The system requires more master data. There must be a bill of material describing all the components necessary for production and the system must have a routing describing all the steps, all the tasks that finally lead through to the finished products, the steps throughout production. Okay. If you have that plan audit is created automatically and in the morning, um, you can see that. You have that in your system, a plant audit is not yet a production order. It needs to be transferred or turned into a production order, which is one click kind of thing. It's not a big deal to do that. Um, the production order needs to be released and once it is, or at least you can issue components from the list of material components into production. Okay, then you can start working the working itself. Of course, it's not covered in SAP. You do that on your machinery. You do that in your work centers. And once a step of a routing is covered is finished. The person working there creates the confirmation for that confirms that that step has been done. Okay. Now, if all the components are issues and all the steps of the routing are confirmed, you have the finished goods. And so a goods receipt takes place into your inventory and you have it. If that were a trading good, or if some components are missing for production, um, Maybe purchasing is triggered to replenish that components or that trading good. So the nightly MRP run would create a purchase or acquisition, which then is turned into a purchase order. If you know the sauce, if you know that the vendor where to buy that from, if you do not know the vendor to buy that from, if there's something that you buy the first time, something that's new or so you can create requests for quotation in your system. Very similar to what we have seen up here in sales. Only now it works vice versa. You create requests for quotations to be sent to your vendors. The vendor will answer and you enter the quotations into the system where you can compare that quotations, and then you can select the best vendor for that case and place your purchase order. Usually in a standard business, you know, your vendors. So you don't have to do that all the time. The normal process is purchased. Acquisition will be turned into purchase order. And this is what we show you here. Once you have a purchase order, you can check that. Um, um, you can check whether the vendor has acknowledged that purchase order. It's optional. You don't have to do it. You can have your vendors sending advanced shipping notifications or something. Again, it's optional. You don't have to do it. In our example, we don't do that. Finally, the delivery takes place. And do you have a goods receipt? So, this is basically the same, like you have on the production side. The last step is a goods receipt that places the product into your inventory. Once you have that here in your inventory delivery can be started. Delivery is a complex process that finally leads to end goods issue. Once the goods are issues issued, now they are at the customer and you can create a bill. And then the process is done as you see, lots of steps of that process are covered by the finance, finance module, like component issues, like goods, receipts, goods, receipts, like goods issues, having to do with the delivery, like billing, of course, that all creates financial documents and the background, you don't necessarily see that documents, but you should know there are documents like that. Okay. And some places controlling is, um, assigned to that process, like for production, where you have internal costs that need to be covered. Okay. Good quality management can take place here in our tutorial. We do not go there.
Video 3: Organizational Levels of the SAP System
Next, let's talk about organizational structures, by the way, this is the cost content of this tutorial. And as you can see that follows more or less, the process we've already talked about now, next screen, organizational levels. And they, how they may be combined here. You see all that, um, uh, terms that terminology for the organizational levels. You cannot change that terminology. This is fixed in SAP. So each and every company using SAP anywhere in the world uses exactly that terminology. The uppermost level is the client. And what the client means. We will find out in the follow up following slides. The client is the highest level. It's the corporate group. It's all of a company. You look onto a client, for example, and then the system will never ask you again, which client you are with, because it knows that once you're locked on a client may be divided in different companies, legal entities, companies that have to present a balance sheet at the end of the year. Okay. There may be many company calls. You see that by this double arrow, but each company code is only assigned to one client. So it's a hierarchy and that hierarchy continues. A company code may have different locations called plant a plant is not necessarily a production plant. A plant is a well it's an entity that takes responsibility for its own material requirement planning. Each plant, since it's a location with a postal address may be subdivided into different storage locations. A storage location is the lowest, um, area, uh, the lowest level of that hierarchy. If you want to see the exact structure of your storage shelves in your warehouse, you have to utilize warehouse management. Inventory management stops with a level of storage location. And this is as far down as we go in this tutorial, if you would utilize warehouse management, you could go down to a single storage bin, which is only one bin in a hierarchy shelf or something like that. You have different other organizational units, like, you know, if a sales organization is responsible for sales combined to a company code because the company code is so the legal entity, and if you sell something, you take responsibility for what you sell. So there must be other legal entity in the background. Okay. So there's always one for a sales organization, but there could be multiple sales organizations. With a company coach you're completely free to, um, to define what a sales organization is, whether this is a regional unit like sales org, North and South or South, or whether this is a functional unit like sales org for spare parts and sales org for original equipment, original manufacturers equipment. Sorry. It all could be a sales organization may be subdivided into product divisions. If you have a company like that, there may be a product division for food and a product division for non-food. For example, um, a sales organization may be divided into different distribution channels, meaning that each and every distribution channel you have finds it, um, organizational unit here. So your web shop maybe. A different distribution channel from your standard, um, sales channel or your, um, sales through your own shop in your building, in your, in your factory, the factory shop or something like that. Um, these sub divisions of the sales organization are combined with a sales organization in a many to many ways. That means that each sets organization could use different distribution channels and each distribution channel may be used by different sales organizations. There must be some linkage to a plant because you have to start your delivery from somewhere. And that somewhere is a location and it is a plant because the plant is where material requirement for the planning takes place. So delivery starts at a plant and this plant may have multiple delivery points, at least one delivery point, um, which are the docs or the base or whatever, or harbors or train stations or what you have. Okay. As for the finance module, you see company code is assigned to finance while plant is assigned to production and to material, which meant, um, company code may also have, uh, may also be connected to other organizational units. Basically it's a controlling area that is of interest here controlling. It's your internal financial. Um, if you at your company, while finance is the legal view at your company with finance, you produce a balance sheet with a controlling area. You may, uh, create profitability analyzes and you have cost centers and so on. So this is an internal view. Now there may be reasons that you have multiple company codes in a certain area, and you want to handle them internally as one company. So you simply create a controlling area. That covers multiple company codes. You can do that. The usual way to do this is one-to-one one controlling area, one company code, but you're free to do that. Yeah. Otherwise only a company code can only be assigned to one controlling area. It's similar with the business areas, which is deep into the finance, uh, part. It's not a required unit. It's optional. You can create business areas and therefore you can cover multiple company codes in one visit in this area, purchasing organization. It has a link many to many to the plant, to the location. So different plants may be served by. Multiple purchasing organization and a single purchase organization may serve multiple plants. So again, you can combine that the way you want. You can do have a one-to-one, um, combination of plants and a purchasing organization, or you have any other type of assignment here as for the different organizational levels. A client is the group of companies. It is the company, the corporate as a corporate company. For example, if you look at a company like fault motors, that would be fault mode was worldwide or Zeeman's or buyer or something like that. That's the company you are working for. The company code is the smallest organizational unit of financial accounting. It's that one that has to create a balance sheet. It is a company, a legal company. The plant may be production, maybe some other location or a central distribution center. So meaning a warehouse or something like that. This is the basic organizational uni unit of logistics. Here. You handle material. Okay. Organizational levels and sales and distribution. We have already seen that it's linked to the company code. There may be a one-to-one, um, assignment company code to sales organizations. There may be multiple sales organizations to one company code these again. May be linked to different distribution channels. These may be linked to different divisions. What you see here, what you haven't seen in the, in the broader slide or the beginning is that you have to tell the system which combinations of sales organization, distribution channel and divisions are allowed. And each of that allowed combinations is called a sales area. So a sales area. Has this, uh, eight digit number four digits from the sales organizations to, from the distribution channel and two from the division. So that would be 1,201 zero one.