Basics of SAP for noobs (dummies)

Application SAP for Materials Management VINAY.S

WHAT DO WE HAVE IN THIS PRESENTATION???? PHASE 1 BASICS OF SAP What is SAP? SAP the company Origin and Evolution of SAP Reasons why company implements SAP Benefits from SAP Failures of SAP Modules of SAP Markets of SAP

WHAT DO WE HAVE IN THIS PRESENTATION???? PHASE 2 : SAP MM- MODULE Material flow Production Planning and control Production Planning systems Master Production Schedule Material Requirement Planning Bill Of Material Purchasing Inventory Management Overview Of SAP MM - module

WHAT IS SAP????? SAP ( ess aay pee) stands for Systems, Applications , Products in Data Processing . SAP is an integrated business solution software comes under Enterprise Resource Planning. (E R P)

S A P INTRODUCTION……………. THE SAP SYSTEM IS A COLLECTION OF SOFTWARE THAT PERFORMS STANDARD BUSINESS FUNCTION. IT PROVIDES A COMPLETE SOLUTION TO STANDARD BUSINESS REQUIREMENTS. IT INCORPORATES CONCEPT OF ERP BUSINESS PROCESS PLANNING INTO AN INTEGRATED SOLUTION FOR BUSINESS APPLICATIONS .

THE COMPANY…….. SAP the company was founded in Germany in 1972 by five ex- IBM engineers . Being incorporated in Germany the full name of parent company is SAP AG , located in Walldorf , Germany . World’s Third largest independent software provider Serves more than 10 million global customers worldwide in more than 120 countries . Now 70 – 80 % top companies in their respective fields have implemented SAP.

HOW DID SAP EVOLVE ??? INVENTORY CONTROL 1960 MATERIAL REQUIREMENT PLANNING 1980 ENTERPRISE RESOURCE PLANNING 1990 SAP R/3 THE COMPANY PRODUCTS MODULES

SAP R/3 VERSION(R=Realtime,3=3tier) data 1 st tier PRESENTATION TIER 2 nd tier LOGIC TIER 3 rd tier DATA TIER

SAP UNIQUE ARCHITECTURE R/3 Application Database Dispatcher Work process Presentation SAPGUI Work process Terminal process Buffer Programs Tables DB

REASONS WHY A COMPANY IMPLEMENTS SAP. For better decision making. For strategic planning. For higher system performance. To gain competitive advantage. To meet key business goals. To gain increased solution flexibility. Enables a company to link its business functions. Ties together disseperate business processes. Enabling business change. Replacement of an outdated inefficient IT architecture.

BENEFITS FROM SAP Simultaneous visibility across whole enterprise Offers good understanding of current situation of company Offers high security and info consistency To choose best marketing strategy Offers co ordination across the company Enables to focus attention on core process.

GROWING COMPANIES NEED TO WORK SMART AND MOVE FAST TO BE SUCCESSFULL

FAILURES OF SAP TWO MAJOR FAILURES CLIENT FAILURE SYSTEM FAILURE

Client Failure: Incorrect application Of software. Poor analysis of cost and benefits. Lack of trained personnel Not enough systems or probably computers to handle.

System Failure Localization of software. Customization for different accounting systems and tax systems which changes from country to country.

SAP IS MADE FOR…>>> ALL RANGE OF COMPANIES DIFFERENT SUITE ARE AVAILABLE FOR DIFFERENT RANGE OF COMPANIES DESIGNED TO SATISFY THE INFORMATION NEEDS FOR ALL BUSINESS FUNCTIONS DIFFERENT MODULE SELECTION FOR DIFFERENT AREA OF BUSINESSES MULTILINGUISTIC, BASE INDEPENDENT- works on any operating systems.

WHAT IT TAKES TO IMPLEMENT SAP…… THREE MAJOR FACTORS cost…… timeframe…… hardware……

GENERAL AREAS OF APPLICATION OF SAP Financials Human Resource Customer Relationship Management Supplier Relationship Management. Product life Cycle Management Business Intelligence Supply Chain Management

Modules or Products of SAP F I Financial Accounting CO Controlling AM Asset Management PS Project Systems MM Materials Management QM Quality Management PP Production Planning SD Sales and Distribution PM Plant Maintenance

Markets of SAP…………. Manufacturing Chemicals Automotive Transportation and Tourism Consumer goods Government, Public administration Health Care and Hospitals Educational Institutions and Research

Ok Now we know Basics of SAP!! How does SAP helps me as an Mechanical OR Production engineer??

As a Mechanical or Production engineer areas where SAP applies PP - production planning MM- material management SD- sales and distribution PM- plant maintenance QM – quality management

AS A MECHANICAL ENGINEER AREAS WHERE SAP APPLIES……. PP - production planning MM- material management SD- sales and distribution PM- plant maintenance QM – quality management

GENERAL OVERVIEW OF MANUFACTURING INDUSTRY ADMIN FINANCE PURCHASE STORES PROD. SHOPS MAINTENANCE R&D / D&D SAP

The Integrated Supply Chain Supply Chain Management: The delivery of enhanced customer and economic value through management of the flow of physical goods and associated information. Information Flow Demand Product Flow Supplier Purchasing Production Distribution Retailing Customer Financial Control Human Resources

Material Flow Flow of materials used to convert raw materials to finished goods is material flow. Materials Management is a coordinating function responsible for planning and controlling materials flow. Its objectives are as follows: Maximize the use of firm’s resources. Provide the required level of customer service.

Materials Management MM – Materials management can reduce costs by being sure that the right materials are in the right place at the right time and the resources of the company are properly used. There are several ways of classifying this flow of materials. A very useful classification, Manufacturing Planning and Control, Physical Supply/ Distribution.

Manufacturing Planning And Control - MPCS Manufacturing planning and control is responsible for the planning and control of the flow of materials through the manufacturing process. The primary activities carried out are as follows: Production planning Implementation and control Inventory management All three works together for greater efficiency

Inputs Needed to MPCS Product description Bill of Material Process Specification components subassemblies Route sheet OPERATION REQUIRED SEQUENCE OF OPERATIONS Equipments & Accessories TIME REQUIRED Std. time needed Facilities needed Work center file Quantities MRP

Flow of inputs for release of materials. MATERIAL MASTER Basic purchasing MRP accounting stock costing Scheduling forecasting evaluation quality B O M Bill of materials ROUTING Standard cost estimate In house MAKING Outsourcing GOODS ISSUE TOOL ISSUE GOODS RECEIPT TOOL RECEIPT USED REWORK SCRAP

Physical supply and Distribution Involve all the activities from moving goods from supplier to customer. Activities are: Transportation Warehousing Packaging Materials Handling Order entry

The balancing Act -Priority vs. Capacity PRIORITY How many needed What are needed When are needed Marketplace Establishes Priorities Manufacturing Responsible To plan To meet requirements CAPACITY Capability To produce goods Machinery Labor Materials resources

Strategic business plan Shows what company wants to achieve in near future. It is based on long term forecasts and includes participation of marketing, finance, production and engineering plans. Financial plan Marketing plan Production plan Engineering plan Strategic Business plan

Production plan Given the objectives set by the strategic business plan, production management is concerned with the following: The Quantities of each product group that must be produced in each period. The Desired inventory levels. The resources of equipments, labor, material needed in each period. The Availability of resources needed. Production planners must device a plan to satisfy market demand within the resources available to the company. This will involve determining the resources needed to meet market demand, comparing the results to the resources available, devising a plan to balance requirements and availability.

After the production planning next step in the manufacturing planning and control process is to prepare a master production schedule (MPS). It forms the link between production planning and what manufacturing will actually build. It forms the basis for calculating the capacity and resources needed. The MPS drives the material requirement plan. As a schedule of items to be built. The MPS and bills of material determine what components are needed from manufacturing and purchasing. It keeps priorities valid. The MPS is priority plan for manufacturing. Master Production Schedule

Master Production Schedule Master Production schedule is plan for production of individual end items. The end items made by the company are assembled from component and subcomponent parts. These must be available in right quantities at the right time to support the master production schedule. The information needed to develop an MPS is provided by: The production plan. Forecasts for individual end items. Actual orders received from customers and stock replishment. Inventory levels for individual end items. Capacity restraints.

Material Requirement Plan The material requirement plan (MRP) is a plan for the production and purchase of the components used in making the items in the master production schedule. Material requirement planning is the system used to avoid missing parts. It establishes a schedule (priority plan) showing the components required at each level of the assembly and, based on lead times, calculates the time when these components will be needed.

MANUFACTURING PLANNING AND CONTROL SYSTEM Production plan Master Production Schedule MPS MATERIAL REQUIREMENT PLAN MRP Purchasing Production activity control

There are 3 inputs to MRP systems: Master production Schedule. Inventory records Bills of materials

Bill of materials . The bill of material is one of the most important documents in manufacturing company. Before we make something, we must know what components are needed to make it. To make any product list of components are needed. This is given by BOM. The American Production and Inventory Control Society (APICS) defines bill of material as “ a listing of all subassemblies intermediate, parts and raw materials that go into making the parent assembly showing the quantities of each required to make an assembly”. The bill of material shows the components that go into making the parent. It does not show steps or process used to make the parent or the components.

Purchasing Purchasing is process of buying. Purchasing is responsible for placing order and for ensuring that goods arrive on time at correct place. It has major responsibility of locating resources and negotiating prices.

PURCHASING…. REQUISITION PURCHASES FIXED VENDOR QUOTATION AVAIL A B VENDOR SELEC DATE SELEC AUTO PUR ORDER REQUEST FOR QUO ENTRY FOR QUO RELEASE FINANCE

Purchasing objectives Obtaining – goods- required quantity – quality. Obtaining – goods – at lowest cost. Ensure – good service and prompt delivery –from supplier. Developing - maintaining - good supplier relationship. Determining purchasing specifications – right time, right place and at price. Selecting right vendor.

Inventory management Inventories are materials and supplies that a business or institution carries either for sale or to provide inputs or supplies to the production process. They contribute 20 to 60 % of total assets. As they move on they are converted to cash and add value to company. Hence all the care should be taken to ensure good management is involved.

Flow of inventories SUPPLIER RAW MATERIALS PURCHASED PARTS WORK IN PROGRESS FINISHED GOODS WAREHOUSE CUSTOMER DEMAND

HOW DOES SAP VIEW MATERIALS MODULE (MM)???

Materials Management (MM) Overview The Materials Management (MM) module is aimed at managing procurement and receipt of materials & services. Materials management also involves storage, movement, valuation & consumption of materials.

CASE STUDY OF SAP -MM PROD. SHOP STORES PURCHASE MAINTAINENCE SAP –MM MODULE RAW AND TOOL MATERIALS FINISHED MATERIALS PURCHASE OF MATERIALS CONSUMABLE MATERIALS

MM Overview The SAP Materials Management (MM) Module provides a comprehensive solution for Materials Management within the integrated supply chain. Also, it supports other logistics functions such as plant maintenance and project management, which also require materials information. MM works as part of an on-line, real-time system for processing, maintaining and recording integrated transactions. Objectives: Provide a general overview of the Materials Management (MM) Module and the relevant sub-modules. Identify areas where MM and other SAP modules integrate.

PHASES OF MATERIAL MANAGEMENT MAINTAINING BASIC DATA MATERIALS PLANNING PURCHASING GOODS RECEIVING INVENTORY MANAGEMENT WAREHOUSE MANAGEMENT INVOICE VERIFICATION

MM Overview: Procurement Cycle Accounting Requirement Production (Internal Procurement) Material Requirements Planning Goods Issue Transfer Posting Purchasing (External Procurement) Goods Receipt Sales and Distribution Invoice Verification Invoice Inventory Management Warehouse Management Demand Stocks Forecast

SAP MM ------ MASTER DATA MAINTAINS BASIC DATA TO INITIATE PROCESS CONTAINS VENDOR, MATERIALS, AND DOCUMENTS THE BASE FOR MM MODULE

SAP MM ------MRP Material Requirement Planning Responds to the fundamental manufacturing equation: What are we going to make? Master production schedule. What does it take to make it? Bill of materials. What have we got? Inventory records. What do we have to get? Material Requirements plan: planned orders.

SAP MM----PUR Purchasing IT DOES STANDARD PURCHASING OPERATIONS BASIC PURCHASING FUNCTION, CONTRACTS, QUOTA ARRANGEMENTS, THIS IS INTEGRATION OF SD MODULE

SAP MM ---IS Purchasing Info Systems IF YOUR VENDOR ARE MORE MM—PUR WILL EVALUATE VENDORS COMPARES QUOTATIONS OPTS FOR BEST DEAL

SAP MM---WM Warehouse Management Performs Storage Unit. Storage unit management.

MM---IM INVENTORY MGT. GOODS RECEIPT INVENTORY CONTROLLING PHYSICAL INVENTORY

SAP MM Applied to tools release MATERIAL MASTER BOM ROUTING MAKING GOODS ISSUE 17 VIEWS SCE Standard Cost Estimate INHOUSE OR OUTSOURCE TOOLS ISSUE U R S

GENERAL SCREEN LAYOUT TRANSACTION WORK AREA SYSTEM MENUS TRANSACTION NAME TRANSACTION NAVIGATION TRANSACTION ICONS

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