Business Process Workshop

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SAP America, OS.PPT - 10/13/97, Slide 1

GOAL OF BUSINESS PROCESS WORKSHOP

Identify all of the business processes, at a high-level

Define the type of data (in a high-level) that will be maintained in the processes.

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AGENDA High Level Business Process Overview

Business Process

Project System

Production Planning

Financial Accounting

Controlling

Asset Management/Investment Management

Materials Management

Sales and Distribution

Human Resources

Define the Business Processes and data in SAP based on the Chico Creek Brewery’s Organizational Structure

Document the Company’s SAP Business Processes

Definition of Business ProcessesDefinition of Business Processes

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Project System - Business Processes Creating a project

Developing a project

Executing a project

Analyzing a project

Closing a project

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Project System - Components Project Definition – Stores master data for the entire project,

including overall start and end dates, project owner, project number, and description.

Work Breakdown Structure (WBS) – The hierarchy that the WBS elements are organized into. Breaks down processes into the smallest components or tasks.

WBS elements – The building blocks of the project. They represent different phases or parts of the project. Each WBS element is a cost object. All project costs are posted to WBS elements.

Network (optional) – The activities are linked together to create the network in the form of a PERT chart. SAP can determine the critical path from this.

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Project System - Features Cost Planning (via the WBS)

Date Planning and Scheduling

Link to Purchasing (Purchases made show up immediately as project costs)

On-line Reporting

Financial Control

Graphic Displays (Network, WBS, Gantt Charts)

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PP-Continuous Process Continuous Process Scenario overview:

manages the planning, execution, and control activities for our process-oriented manufacturing of beer.

4 Basic Steps that encompass our brewing process……..

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Step 1 of Continuous Process Begins with the Sales and Operation Planning

forecasting tool, ie. used to helps decide specific number of batches of each type of beer that should be made

Long-term production plan and Master Schedule are produced using SOP information

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Step 2 of Continuous Process The master flow is computed using the MRP and

capacity leveling.

Capacity leveling: is determined in step 1 and balances the master schedule and plant capacity

Material Requirements are passed to the procurement process

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Step 3 - Continuous Process The process order is created and manages the actual

production of the beer

process order transforms materials and processes used with the master recipe into actual information that is needed to brew the batches of beer

contains master recipe data and workflow instruction

master recipe: description of materials needed in one production run (grain, purified water, hops, fermented sugar, barley malt)

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Step 4 - Continuous Process

Actual production which is the completed scenario flow

Material is received, the resources are used, and the process order is completed and closed out

resources: production personnel needed for production (maintenance workers, forklift drivers, line workers, warehouse personnel)

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ExternalAccounting

Vendor Processing

OTAVendor

Processing

SpecialPurpose Ledgers

Processing

Consolidation CustomerProcessing

General Ledger

Processing

CreditSubsidiariesHead Office

Process

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General Ledger Processing Generates closing reports as required by law

Structure:

company code (CO)

business area (not applicable for the CCBC)

chart of accounts (each module will give input)

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General Ledger Processing Integrated with:

procurement (MM)

assets accounting (AM/IM)

controlling (CO)

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Vendor Invoice Processing Connects Purchasing to Accounting

Master Record consists of 3 parts

general data (addr, telephone, etc.)

company code data (payment terms, methods)

purchasing organization data (p.o., quotes)

most of this information comes from MM and is posted to G/L

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Vendor Invoice Processing Posted to one of two accounts:

current assets account

fixed assets account (will go to AM)

also posted to G/L

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Customer Processing Mgmt of transactions for standard customers

Credit Management (Sales)

closely linked to CO & cash forecasting

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Customer Processing Customer Master Record consists of 3 parts:

general data (addr, telephone, etc)

company code (form of payment, due dates)

sales data (shipping, invoicing, etc.

this info is mostly from the sales team

all the transactions are posted to the G/L

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Customer Processing Dunning procedures remind customer that the payment

is overdue

Info needed from SD:

level (# of days overdue)

text (strength of language)

vendor dunning

optional interest & charges

print-out of payment (due deadline)

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Functional Areas - COChico Creek Brewing Company

• Conventional cost center accounting typically structures costs by using the company’s organizational structure and areas of responsibility (e.g. functions). This shows where costs accrue in the company, but it does not specify what resources were used how.

Company

Personnel R & D Marketing Production

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Process-Oriented Structure

Functional Areas:

• SAP uses a process-oriented view that considers costs on the basis of process organization across functions. Costs are debited to a business process based on its resource usage.

• The business planning and controlling scenarios in R/3 provide conventional cost center accounting capabilities but supplement these by allocating cost center costs to business processes.

Personnel R & D Marketing Production

Business Processes:

Order Process

Product develop.

Customer service

FI Accounting

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Business Scenarios - COChico Creek Brewing Company

Business Planningand Controlling

CO Module

1. Cost Object Controlling

3. Profit CenterAccounting

4. OH Cost Management

2. Profitability Analysis

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1. Cost Object Controlling

• Cost object controlling is a part of product cost accounting that focuses on the economical creation of a product (called cost object).

• It supplies key information for planning and monitoring of product costs.

• Product cost controlling attributes the costs incurred in a company to its output units. (products, orders)

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2. Profitability Analysis

• Profitability analysis carries out a profit analysis. Costs are compared to revenues. This is the last step in the settlement process. • Profitability analysis takes an external viewpoint using actual data, by looking at market segments.

• We propose that CCBC’s profitability segments are based on product line. (Type of beer, pub, merchandise) Other options could be customers, activity, organization, geographical area, etc.

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3. Profit Center Accounting

• The goal here is to have a structure according to profit responsibility. • Profit centers can be seen as investment centers. • Shows operating results from a management standpoint. • It is a statistical package, pulling data from different modules. • Data is primarily transferred from FI, SD, AM, and MM.• Profit centers can be structured according to products, markets, or functions. We have chosen products.

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FI: Transfer of primary costs and revenues from customer invoice processingSD: Transfer of revenues and sales deductions (freight, discounts) as well as reserves (e.g. from rebate agreements) via invoice transfer.MM: Transfer of all costs from goods movements (consumption postings, materials receipt, invoice receipt, price changes/revaluation, inventory differences)AM: Availability of all profit-related data from the creation, utilization, and sale of capital goods

3. Profit Center Accounting, cont’d

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3. Profit Center Accounting, cont’d

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4. Overhead Cost Management

Overhead cost management plans, allocates, controls, and monitors indirect costs. All indirect costs are charged to the cost centers where they were incurred or to the jobs that led to their occurrence.

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CAPITAL ASSET

MANAGEMENT

Fixed AssetProcessing

Leased AssetProcessing

Planned Plant

Maintenance

PlantMaintenance

due to damage

Project-related plantmaintenance

Budgeting

CashManagement

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Fixed Asset Processing

Asset master record maintenance:

Create

Change

Retire

Settle AuC

Post Capitalization

Transfer Posting

Write-Up

Creation/Transfer of Reserves

Reports

Inventory

Year-End Closing

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AM - Depreciation Planned depreciation is calculated automatically

Can be recalculated or changed manually

Calculated in multiple depreciation areas (parallel valuation technique)

Depreciation values are transferred as planned and actual costs are allocated to cost centers (CO)

Depreciation simulation and forecasting available for individual asset or group of assets.

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Asset Master Record Data Elements of an Asset Master Record

Historical cost

Salvage value

Life

Insurance information

Cost center

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INVESTMENT MANAGEMENT SCENARIO Budget

Approval

BudgetDistribution

Measures

ReportingProgramStructure

ProjectPlanning

Roll-UpCorporatePlanning

Settlement & Capitalization

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IM - AuC to Asset

Capital Order(greater than

30 days)

Create AuC-Automaticallycreated wheninvestment

profile is enteredand order is

released

Settlement-Settles to

AuC

AuCDepreciation forecast

and simulationinterest calculation.

ASSET

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Treasury - TR

Cash Management (TR-CM)

Handle all cash related transactions and reporting activities.

Distinguishes between actual money and payments in transit

Integrated with G/L, A/R, and A/P systems and sales and procurement.

Funds Management (TR-FM)

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TR-CM

G/L

A/R A/P

RecurringEntries

•The basic elements needed for managing cash:•Where is our cash?

•What will we receive?

•What will we pay?

•What other predictable transactions will occur?

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Funds Management (Budgeting)

Functions:

Prepare budget

Monitor budget by tracking the achievement to targets in each of the budgets divisions

To perform these functions the following must be estimated:

Cash requirements for operations

Cash requirements for CI projects

Planned cash receipts

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Materials Management Processing Stock Material

Materials Requirement Planning

Reservation processing

reserve material

plan goods issue

Single item MRP

Entire MRP

Effects SD, QM, PP, FI

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Materials ManagementProcessing Stock Material

Requisition Processing to Stock Material

Requirement for material --> Purchase Requisition

Source of supply

Without a source of supply

Input Examples

Material

Purchasing Information

Purchasing Outline Agreement

Vendor

Effects SD, PP, QM

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Materials ManagementProcessing Stock MaterialProcessing of RFQ Issued to Vendor

- Communicates material/service requirements to potential suppliers - Input Examples

• Material • Purchasing Information • Vendor • Supply Source • Time • Effects SD, QM, PP, CO

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Materials ManagementProcessing Stock Material

Vendor Quotation Processing

- Occurs after vendors respond to quotation request- After Vendor information is submitted into system, price comparison is possible- A rejection notice is transferred if quotation is unselected

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Materials ManagementProcessing Stock MaterialPurchase Order Processing for Stock Material

- Vendor quotation processing and vendor RFQ processing trigger this step

- Input Examples Purchase Requisition Material

Internal Order Customer OrderCost Center

- A Purchase Order includes detailed data such as: type of material, quantity, delivery date and price

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Materials ManagementProcessing Stock MaterialProcessing Goods Receipt

- Begins with the arrival of materials and shipping notification

- Material is checked and storage is determined

- If order is accepted we adjust purchase order dates and select

a valuation type

-Effects FI, PP

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Sales and Distribution

Business Process Workflow

Scenario: Standard Order Handling

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Master Data

Business Partners

Customer

Vendor (Internal i.e. MM)

Beer for tap room, souvenirs

Employee in Company (salesperson)

Product Proposal

Grouping of items to make available for sale (I.e. By a pallet of Pale Ale)

If customer frequently purchases from a product proposal, this information can be assigned in Customer’s Master Data

Master Data for SD

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Product

Price

Documents (for shipping, billing, sales)

Sales support

Organizational Structure (shipping points, sales areas,etc.)

Master Data continued

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Pat’s Bar in Calgary Pat calls CCBC to inquire about products

Wants to buy two kegs of Pale Ale and one keg of Hefeweisen to be delivered weekly.

Sales Representative gets Pat’s company name, address, etc. to store in sales support master data. Also determines the distribution channel for his company for correct quotation.

Accesses inquiry processing to determine correct prices, a quotation process document is created and sent.

Pat agrees to the quotation. Next, standard order processing occurs with reference to the quotation.

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Billing Process Product is determined to be in-stock

A credit check occurs and passes resulting in Pat’s order being released

Delivery processing occurs in which is it determined that the delivery is relevant for billing and for shipping.

Billing

Process determines that the purchase is not relevant for a rebate

Billing document is sent

Export papers are created and sent

Billing document is not released for billing because:

Order confirmation is necessary to release billing document

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Shipping Process

Transportation planning occurs

Shipment route is determined (stored in Master Data for future reference)

From Chico Center to Chico train depot via truck

From Chico to Calgary via rail

From Calgary train depot to Calgary distribution center via truck

From distribution center to customer (Pat’s Bar is within 100 mile radius)

Transportation processing occurs

Shipping notification is generated and sent to customer

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Delivery of Goods Quality is checked (by PP, referenced by SD)

Order is sent to MM

Goods issue is posted

Truck is loaded from plant site and sent

Upon delivery to Pat’s Bar, it is determined that one keg of Pale Ale is damaged.

Pat signs invoice for acceptance of the one keg of Pale Ale and one keg of Hefeweisen.

To accommodate for damaged goods, CCBC will:

a) Offer to send Pat’s Bar a keg through a rush order with no extra cost. Delivery will be rushed

b) Offer to give Pat’s Bar a credit.

Signed invoice is given to FI for processing

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Packaging Returns Empty kegs picked up from Pat’s Bar upon next

delivery

Returnable packing pick-up process occurs

Shipping papers are created

Empty kegs loaded onto trailers

Trailers loaded onto train to be sent back to Chico center

MM processes goods receipt

Goods receipt is posted

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Conclusion Pat’s Bar is now CCBC’s business partner, thus is

located in our Master Data

CCBC can now call him as part of our sales activities or he can call on us.

If Pat’s Bar becomes a frequent customer, CCBC can assign material listing or product proposal to his account making transactions faster.

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Inquiry

Quotation

ReturnsStandard Sales

OrderDelivery Free

Of ChargeSchedulingAgreement

Sales

Delivery TransportShipping

Debit Memo Invoice Credit Memo

Financial Accounting

Materials

Mgmt

Billing

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Organizational Management Organizational Plan Processing

Job Description

Processing of Employee Status for Planning and Development

Staffing

Personnel Cost Planning

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Time Management Long Term Daily Work Schedule

Flexible Daily Work Schedule

Calculate Overtime

Incentive Wages

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Payroll Processing Multinational tax, benefit, and garnishment related laws

and regulations

Automate the workflow system and be flexible enough to adapt itself

Automatically transfers data to general ledger and cost accounting systems

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Salary Administration Compensation Structure

Structuring and Managing of salary and reward compensation packages

Can analyze the effects of salary increases and decreases

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Benefits Administration Administering human resource benefits

setting up each benefit plan

define cost and coverage options

eligibility rules established

Step-by-step guides for developing, defining, and maintaining benefit plans

Eligibility rules based on predetermined criteria defined and verified by the system