MIS 3383 Midterm

Business Processes

a set of tasks or activities that produce desired outcomes

Business Areas

internal divisions used to generate financial statements for external reporting

Steps in Production -- Make

((acquire needed materials internally)) (1) customer order triggers in-house production (2) warehouse notices insufficient inventory (3) warehouse sends production request (4) production department approves (or denies) request (5) that approval lets warehouse release the materials needed to complete production (6) warehouse places finished goods in storage

Steps in Fulfillment -- sell

((efficiently processing customer orders)) (1) triggered by a customer service order that is received by the sales department (2) sales validates order and creates a sales order (3) sales order communicates data related to order to other parts of the ORG, tracks progress of order (4) warehouse prepares and sends the shipment to the customer (5) once acct is notified of shipment, it creates an invoice and sends it to the customer (6) cust makes payment, acct records payment

Steps in Procurement -- Buy

(1) recognize the need to procure materials (perhaps due to low levels of inventory) (2) warehouse documents need in the form of a purchase requisition (3) send purchase requisition to the purchasing department (4) purchasing department identifies a suitable vendor (5) purchasing department creates a purchase order (6) purchase order is sent to vendor (7) vendor ships the materials, which are received in the warehouse (8) vendor sends an invoice, which is received by the accounting department (9) accounting sends payment to the vendor (completing the process)

Four key processes of financial accounting

(1) the general ledger (records the impacts of various process steps on a company's financial position), (2) accounts payable, (3) accounts receivable, (4) asset accounting (tracking financial data related to assets such as machinery and cars)

lifecycle management process

(design) supports the design and development of products from the initial product idea stage through the discontinuation of the product

procurement process

(buy) refers to all activities involved in buying or acquiring the materials used by the ORG, such as raw materials needed to make products

production process

(make) involves the actual creation of the products within the ORG; concerned with acquiring needed materials internally (by making them); concerned with obtaining needed materials externally

material planning process

(plan) uses historical data and sales forecasts to plan which materials will be procured and produced and in what quantities

fulfillment process

(sell) all the steps involved in selling and delivering the products to the org's customers

inventory warehouse management (IWM) process

(store) is used to store and track the materials

financial accounting (FI) processes

(track--external) track the financial impacts of process steps with the goal of meeting legal reporting requirements; outputs are the income statement of profit and loss statement and the balance sheet;

management account or controlling (CO) processes

(track--internal) focus on internal reporting to manage costs and revenues

Triggers for the Procurement (or Production) process

1. material planning process forecasts demand to procure materials 2. asset management or customer services process triggers procurement 3. a customer order (fulfillment process) triggers the need to buy something (e.g. raw materials, component parts)

4 main material types

1. raw materials (procurement and production) 2. semi-finished materials 3. finished goods (production and fulfillment) 4. trading goods ((5. other types))

Storage locations (from top to bottom

Client => Company code => Plant => Storage location

organizational data

Client => company codes => business area

ERP

Electronic Resource Planning integrated management of core business processes, in real time, and mediated by software and technology -among the most complex of technologies

Enterprise-level purchasing organization (or cross-company code purchasing org)

Most centralized model; only one purchasing org for the overall enterprise and all plants within enterprise; the purchasing org is assigned to each plant, but not to the company code

Goods Receipt

Triggers: delivery from vendor Data: organizational data, master data, transaction docs, user input Tasks: verify receipt of material, create goods document Outcomes: FI doc update on GL accounts, material doc, purchase order update, inspection lots

Invoice Verification

Triggers: invoice from vendor Data: master data, transaction docs Tasks: 3 way match Outcomes: FI Document, material master update

order processing

Triggers: purchase requisition, quotation, purchase order Data: transaction docs, master data, user input Tasks: create purchase order Outcomes: purchase order

Requirements Determination

Triggers: requirement from other processes Data: vendor master, org data, purchasing info rec., material master, user input Tasks: create requisition Outcomes: purchase requisition

Payment

Triggers: verified invoice Data: master date, transaction docs Tasks: ... Outcomes: payment (check/electronic), FI Document

application suite

a collection of computer programs -- usually application software or programming software -- of related functionality, often sharing a similar user interface and the ability to easily exchange data with each other; supply chain management, supplier relationship management, customer relationship management, product lifecycle management

Business suite

a set of business software functions enabling the core business and business support processes inside and beyond the boundaries of an org; app suite + ERP

Company-level purchasing organization (or cross-plant model)

a single purchasing org is responsible for multiple plants in one company code; less centralized than enterprise-level; purchasing org is assigned to both the plant and the company code, HOWEVER a purchasing org can be assigned to ONLY ONE COMPANY CODE

Purchasing organization

a unit within an enterprise that performs strategic activities related to purchasing for one or more plants; evaluates and identifies vendors, negotiates contracts and agreements, pricing, and other terms; an enterprise may have one or more --- (enterprise level, company level, and plant level); models range from highly centralized to highly decentralized

purchasing group

an individual or group of individuals who are responsible for purchasing activities for a material or a group of materials, such as planning, creating purchase requisitions, requesting quotations from vendors, and creating and monitoring purchase orders

Plant

an organizational element that performs multiple functions and is relevant to several processes; facility in which products and services are created, materials are stored and used for distribution, production and planning is carried out, and service maintenance is performed; can be a factory, a warehouse, a regional distribution center, a service center, or an office; just as a client can have multiple company codes (but a company code can only belong to one client), a company code can contain multiple plants, but a plant can belong to one and only one company code

cost center

associated with a location where costs are incurred; can be associated with departments, such as marketing and finance; something that absorbs costs that are generated when companies execute processes

Bank Ledger Accounting

bank transactions

Material Master

basic data, purchasing (purch. group, GR processing time, delivery tolerances), accounting, plant/storage

online analytic processing (OLAP)

creates detailed data analysis; systems use information structures to provide analytic capabilities

transaction data

data generated during execution of process steps requires: organizational&master data, situational data reflect the consequences of executing process steps, or transactions; e.g. dates, quantities, prices, and payment and delivery terms;

vendor master data

data needed to conduct business with a vendor and to execute transaction related to the purchasing process; grouped into segments: general data, accounting data, and purchasing data

Plant-level purchasing organization (or plant-specific purchasing org)

each plant has its own purchasing company; purchasing org is assigned to both the plant and its company code

reconciliation account

general ledger accounts that consolidate data from a group of related subledger accounts; e.g. accounts receivable for customers, accounts payable for vendors; not possible to add data directly into them, data must be posted to subledger accounts (at which point they are automatically posted to the corresponding reconciliation account as well

price control

identifies the method that is used to value the materials; two option for --- are average price and standard price

Functional Structure Benefits

grouping of skills/expertise easier accountability report to a single boss communication within a dept.

Client

highest organizational level in SAP ERP; repersents an enterprise consisting of many companies or subsidiaries

valuation class

identifies the general ledger accounts associated with the material (general ledger accounts are used to maintain the value of the inventory in stock and are updated as materials are purchased, sold, or used in production); allows the system to automatically make postings to appropriate stock or inventory accounts in the general ledger

Accounting data

includes tax-related data, bank data, and payment terms and methods; defined at the company code level; relevant for all purchasing transactions in the conmpany code

general data

includes the vendor's name, address, and communication info; consistent across all company codes and purchasing orgs; defined at the client level; common to purchasing and acct departments

purchasing data

includes various terms related to determining prices, creating and communicating purchase orders, verifying invoices, and other steps involved in executing purchases with the vendor; defined at the purchasing org level, applicable only to that org

transfer posting

indicates a change in a material's status or type; e.g. used to redefine a material from in quality inspection status to unrestricted use or to change material type from raw materials to finished goods

Chart of Accounts (COA)

listing of all financial accts used in the companys general ledger...used to keep track of all the accounts that can be used by companies for general ledger account processes

Master data

long-term data that's centrally stored, created once, updated rarely, and used across multiple processes; most used in the system; e.g. material and vendor master, purchasing info records, conditions

Material planning -- plan

match the supply of materials with the demand; a function of internal and external factors; outcome: development of strategic and operational plans that match supply with demand as closely as possible (excess supply = increased inventory storage costs)

SAP NetWeaver

operating system for entire company's business processes

third-party orders

orders sent directly to the customer; often employed for trading goods that they purchase and then resell to customers without performing any operations themselves (here, the company serves as a middle man, Dunder Mifflin)

Shipping points

physical location from which outbound deliveries are sent

Client Server Architecture

presentation layer, application layer, data layer

CO Docs

record impact on management accounting

Material Docs

record impact on material status (value, location)

FI Docs

record the impact of financial accounting

general ledger

records financial impact of business process steps T accounts, double entry (debits and credits)

output conditions

records provide instructions on how shipment documents should be processed

service-oriented architecture

technical capabilities that allow systems to connect with one another through standardized interfaces called web services

Company Code

represents a separate legal entity, the central organizational element in financial accounting; a client may have multiple ---, but a --- must belong to only one client

Organizational data

represents factory, warehouse, office, distribution center; includes clients, companies, and plants

Transaction Docs

requisition, purchase order, invoice, delivery doc

Distribution Channels

responsible for getting materials to customers used for: differentiate distribution strategies for approaches handle different pricing responsibilities whole sale sales, retail and internet sales DC's exist independently of sales orgs

Sales Organization

responsible for: distribution of goods and services, negotiating sales and conditions, product liability and rights of recourse

Credit control area

specify and control customer credit lines

Online transaction processing (OLTP)

the transactional environment of SAP ERD; designed to capture and store detailed transaction data; primary function of --- is to execute process steps quickly and efficiently; lacks computational power, only creates simple lists and reports

Distribution Chain

unique combo of a sales org and distribution channel some master data (material master, pricing conditions) maintained at this level

Sales Area

unique combo of sales org, distribution channel (or chains), and division

Division

used to consolidate materials and services with similar characteristics -different sales strategies, pricing agreements -statistics and reporting at the division level -associated w product lines - can be assigned to multiple sales orgs

stock transfer

used to move goods from one location to another within the organization; materials can be transferred btw storage locations, btw plants within the same company codes, and btw plants across company codes

consignment

when a company purchases materials, it pays the vendor only when it uses or sells the materials; no invoice receipt step

goods issue

when materials are removed from storage, in which case inventory is reduced; generated when a company (a) ships materials to a cust, (b) uses them for internal consumption, or (c) designates them for sampling or to scrap

Functional Structure Drawbacks

work might be monotonous funct'l areas may compete for resources poor communication across areas Silo effect employees' skills more narrow rigid, slow to adapt