SAPSAPLogistics ExecutionLogistics Execution

Ing.Ing. Andrea CampagnaAndrea Campagna

Corso di Sistemi Informativi AziendaliCorso di Sistemi Informativi AziendaliProf.Prof. Umberto NanniUmberto Nanni

UniversitUniversitàà degli Studi di Roma degli Studi di Roma ““La SapienzaLa Sapienza””Dipartimento Idraulica Trasporti e StradeDipartimento Idraulica Trasporti e Strade

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Contents

• The ERP systems• Overview of SAP• The SAP Logistics Execution System

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Enterprise Resource Planning

• Commercial software packages that promise the seamless integration of all the information flowing through the company – financial, accounting, human resources, supply chain and customer satisfaction (T. J. Davenport, 1988)

• ERP systems provide information management and analysis to organizations

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Benefits of ERPs

• on-line/real time information throughout allthe functional areas of an organization

• data standardization and accuracy across the enterprise

• "best-practices" included in the applications• the efficiency they force an organization to

undertake• the analysis and reporting that can be used

for long term planning

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ERPs’ impact on industry

• Lower total costs in complete supply chain • Shorten throughput times • Reduce stock to a minimum • Enlarge product assortment • Improve overall product quality • Increase reliability of delivery dates • Improve customer service• Coordinate demand, supply and production

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ERP market share 2002

Others51,1%

SAP AG25,1%

Oracle7,0%

PeopleSoft6,5%

SAGE5,4%

Microsoft 4,9%

Source: Gartner Dataquest (June 2003)

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An example of ERP: SAP

mySAP SCM

mySAP PLM

mySAP SRM

mySAP CRM

FinancialsHuman Resources

LogisticsCorporate Services

Operations

SAP NetWeaver

mySAP ERP (R/3)

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SAP R/3 architecture

Frontend

SAP GUI

Application

Database DB

router

processes

Software oriented view Hardware oriented view

… …scalability

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SAP R/3 functionalities

• Financials (AC)– Financial Accountin (FI)– Controlling (CO)– …

• Human Resources (HR)• Logistics (LO)

– Sales and Distribution (SD)– Materials Management (MM)– Logistics Execution (LE)– …

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Screenshot SAP R/3

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Logistics Execution System

• LE component maps a company’s logistics processes, covering the entire process chain– Vendor, internal warehouse, production site, and

distribution centre right through to the customers

• LE processes include:– Inbound process– Outbound process– Internal warehouse– Transportation process

12SAP LES integrated part of the Supply Chain

PLANNING AND OPTIMIZATION

Supply Network Planning ForecastingPlanning and

Simulation

Transportation SAP LES WarehouseManagement

BUSINESS PROCESSES

Purchasing SalesProduction

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Logistics Process

1. Sales order processing for goods issues– Handled mainly by Sales and Distribution (SD)

2. Ordering (purchase order processing) for goods receipts

– Handled mainly by Materials Management (MM)

3. Physically moving goods in the supply chain

• SAP LES is the link between 1 and 2

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Logistics overview

Inventory ManagementInvoice verification

Goods receipt

Postingchange

Goodsissue

Invoicereceipt

Presales activitySales order

MRP

Internal procurementProduction

External procurementProduction

Internal and externalaccounting

shipping billing

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Goods Receipt: procurement

Determination of requirements

Determination of Source of supply

Selection of vendor

Ordering

Purchase ordermonitoring

Goodsreceipt

Invoiceverification

Handling ofpayments

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Purchase ordersPurchasing

Purchaserequisition

RequestFor quotation

(inquiry)

Purchaseorder

Masterdata

External vendor

Other plant

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Purchasing / inventory management

Goods receipt for purchase order

Purchaseorder

External vendorOr other plant

Delivery ofMaterials ordered

Goods receiptposting

Accountingdocuments

Material document

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Goods issue: sales order processing

Presales activities Order processing Procurement

Shipping/Transportation/

Goods issueBillingPayment

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Sales and Distribution (SD)

Goods issue for sales order

Sold-to partySalesorder

Transfer order(pick order)

Goods issue

Accountingdocuments

ShipmentShip-to party

Bill-to party

Payer

Outbounddelivery

Materialdocument

Billingdocument

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The Shipping Process

Functions affecting shipping-Determination of shipping point-Determination of route-Scheduling

Salesorder

-Monitoring of shipping due to dates

-Create delivery

Shippingpoint

PickingPackingShippingdocumentsGoods issue

Warehouse

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Warehouse Management

Storage binmanagement

Planning andmonitoring

Warehouse controlRadio frequency(RF) connectionStock movements

Organizational Unitsand Master Data

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Business Scenario

• Master data and organizational units are required for mapping the IDES model company in the SAP System.

• Since you are the project team member responsible for this, you assign the necessary organizational units, and edit the appropriate master data.

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Organizational Units

• Company Code• Plant• Storage Location• Warehouse Number• Transportation Planning Point• Shipping Point

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The Company Code

• Legally independent unit with a self-contained set of accounts

• The following are created at the company code level:– Financial statements– Profit and loss statements

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The Plant

• A plant is an organizational unit in Logistics, and allows you to look at a company from the point of view of production, procurement, plant maintenance, and materials planning.

• A plant is a branch or division within a company.

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The Storage Location

• An organizational unit that enables you to distinguish between the various material stocks in a plant.

• Quantity-based inventory management data pertaining to the plant is summarized at the storage location level.

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The Warehouse Number

• An organizational unit that maps the company from a warehouse management perspective. A warehouse number corresponds to a warehouse complex containing different storage types that are organized differently.

• The physical conditions of the warehouse are mapped in the warehouse number.

29Organizational Units in a Warehouse Number

Warehouse Number 140

GoodsReceiving

Zone

Storage type902

Fixed bin storage

Picking area 1Picking area 2

Storage type005

ShippingArea

StagingArea 1

StagingArea 2

Storage type916

Pallet storage

Storage section 1Storage section 2

Storage type007

BulkStorage

Storage type004

Door 1

Door 2

Door 3

Door 4

Door 5

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The Transportation Planning Point

TransportationPlanning points

Planning, handling,And settlement of

shipments

1010Hamburg International

Ocean freight

1011Hamburg RailTransportation

1200Dresden TruckTransportation

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The Shipping Point

• A shipping point is an organizational unit that allows you to look at a company from the point of view of shipping, the shipping materials required, and the means of transportation required.

• On the goods receipt side of things, the goods receiving point corresponds to the shipping point.

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Organizational structure

Company

Plant 2

StorageLocation 2

Warehousenumber

Plant 1

StorageLocation 1

Plant n…

StorageLocation n…

Shippingpoints

TransportationPlanning points

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Storage bins and quants

• In Warehouse Management, the individual storage bins are defined within each storage type. A storage bin is the smallest geographical or organizational unit that can be addressed by the system.

• They can be mapped as coordinates: 02-04-09 aisle 02, stack 04, level 09

• Bin type P1 for upper bins, P2 for lower bins• The existence of a material (a value) in a bin

is referred to as a quant.

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Storage bins and quants

• Quants are defined by:– Material– (Batch)– Stock category– Special stock– Plant / storage location– (storage unit number)

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Information contained in a quant

Stock categorySpecial stockStorage unit

MaterialPlant/Storage locationBatch

Available StockPutaway/ Pick?Weight

Goods receipt dataGoods receipt numberLast movement

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Material Master

Accounting Data

…Sales and Distribution Data

Purchasing Data

Warehouse Management Data

Plant-specific Data

General Data

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Views in a Material Master Record

MaterialMaster

Basic Data

MRP

Stock in plantStorage loc.

Accounting

Storage

WarehouseManagement

Purchasing

SD

Workscheduling

QualityManagement

Forecast

Classification

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Customer Master

Valid for all organizational

units

Relevant to SD and

accounting

GeneralData

Valid for Company

Code

Relevant to accounting

Company Code Data

Valid for: sales organization

/ distribution channel / division

Relevant to SDSalesAreaData

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Vendor Master

Valid for all organizational

units

Relevant purchasing and

accounting

GeneralData

Valid for Company

Code

Relevant to accounting

Company Code Data

Valid for: purchasing

organization

Relevant to purchasing

Purchasing organizationdata

SAP IDESSAP IDES

Ing.Ing. Andrea CampagnaAndrea Campagna

Corso di Sistemi Informativi AziendaliCorso di Sistemi Informativi AziendaliProf.Prof. Umberto NanniUmberto Nanni

UniversitUniversitàà degli Studi di Roma degli Studi di Roma ““La SapienzaLa Sapienza””Dipartimento Idraulica Trasporti e StradeDipartimento Idraulica Trasporti e Strade

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Contents

• The IDES• Exercise

– Inbound deliveries and putaway in a WM Warehouse

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The IDES

• The "Internet Demonstration and EvaluationSystem" in the R/3 System, represents a model company.

• It consists of an international group withsubsidiaries in several countries.

• IDES contains application data for variousbusiness scenarios that can be run in the SAP System.

• The focal point of IDES is the business processes and their integration.

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Business areas

• Human Resources• Financial Accounting• Product Cost Planning • Overhead Management • Profitability Analysis• Planning • Sales and Distribution• Materials Management • Production• …

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The structure of the IDES group

IDES

North America Latin America Europe Asia

Company 1

Company 2

Company 3

Company 4

Company 5

Company 1

Company 2

Company 1Company 1

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Each company…

• has its own clearly defined business objectiveswithin the consolidated group and is organizedaccording to local business practices and legalrequirements.

• Consolidation takes place across the financialareas.

• Accounting and Human Resources for eachindividual company have been adapted tomeet the particular business objectives.

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For example…

• The French subsidiary operates solely as a salescompany.

• In Mexico, we represent high-inflation methods and the material ledger.

• The American and German subsidiaries produce goods, as well as carrying out purchasing and salesactivities.

• Germany and the United States have been set up touse flexible standard costing.

• The United Kingdom uses static standard costingbased on full costs.

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IDES Logistics

• A variety of products are manufactured and sold using the different organizational units within the Logistics area.

• IDES provides all the resources required forproduction and assigns them to the correspondingproducts through bills of materials (BOMs) and routings.

• Each product or product group represents a particular production type.

• IDES contains fully-integrated business processes forthe production or sale.

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Products

RetailFood / cosmeticsProcess industry, PharmaceuticalsTabletsProcess industry, ChemicalsPaints / solventsMass productionLighting productsRepetitive manufacturingPersonal computerMake-to-order productionPumps

Sales-order-based repetitive manufacturing

CarsMake-to-order productionMotorcyclesEngineer-to-orderElevators

Process TypeProduct

Exercise

Inbound deliveries and putaway in a Warehouse Management

warehouse

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The problem

The IDES Purchasing department orders goods for plant 1000 (Hamburg). The purchase order is to be confirmed by the vendor using a shipping notification. When the shipping notification is received, the data is transferred to an inbound delivery document within the Logistics Execution System. The putaway takes place in the central warehouse of plant 1000. Goods movements and inventory management in this central warehouse are supported by the Warehouse Management system (WM).

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Purchasing / Inventory management

The process scenario

Purchaseorder

External vendorOr other plant

Delivery ofMaterials ordered

Goods receiptposting

Accountingdocuments

Material document

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The process flow (1)

1. Creating a Purchase OrderAs an IDES purchasing employee, you place anorder for goods for plant 1000 (Hamburg).

2. Creating the Inbound Delivery The vendor confirms the delivery date in the shipping notification. In this case, however, it is a partial delivery. You enter this in an inbounddelivery document.

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The process flow (2)

3. Executing the PutawayWhen the ordered goods arrive, they are put intostock in the central warehouse. You use the delivery monitor to start and oversee the variousputaway steps.

4. Resetting the Starting SituationTo avoid exceeding the storage capacity in the warehouse by repeating this demo several times, you now start a CATT that clears the stocks you have just placed into storage.