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Enterprise Resource Planning

In: Business and Management

Submitted By Protector1976
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CHAPTER 4
Planning process * First:Create a forecast (raw materials) MD61 * Used for MRP (material requirement planning) * MRP uses BOM (bill of materials) & independent requirements required for production * MRP automatically calculates purchase requisitions (external documents) for vendors * Second transaction: execute MRP (MD01)

MD04/MD07: View stock requirements

Procurement Process
Done by the purchasing dept. 4 transactions * Create purchase order * Post goods receipt * Post invoice * Post payment
Manages ordering receiving and payment for raw materials and packaging

Order RAW MATERIALS manually (ME51N)

* Purchase requisitions must be converted into purchase orders. ME59N is automatically converts

* Goods are received a good receipt must be completed (MIGO) by receiving clerk.
When you enter good receipts, SAP debits the raw material inventory account and credits GR/IR account

* MIRO: Posting vendor’s invoice – enter purchase order #. CREDITS accounts payable to the vendor and DEBITS GR/IR account. Invoices paid on receipt

* Payment is made from bank account which clears accounts payable. Transaction F-53

Production Process
2 Transactions
Directly create a planned production order in the system. Transaction MD11

* First transaction: MD07 taking planned order and converting it into a production order.
CO41: convert multiple planned orders into production orders.

* Second Transaction: CO15 Production order confirmation. Affects both inventory levels and general ledger accounts. Increases inventory level of finished goods and reduces the inventory levels of raw materials based on production quantity and BOM. SAP, CREDITS raw inventory account and DEBITS raw material consumption (financial and cost accounting) modules. Confirmation of the production triggers consumption of raw materials

COGI – Automatic goods receipt: Error handling

Sales Process
4 Transactions * VA01: Sales order: product, quantity requested, sales conditions, billing & shipping. Has no impact on FINANCIAL accounts.
UNTIL CONFIRMATION OF SHIPMENT OF PRODUCT RESULTS IN RECORDING OF CHANGES IN FINISHED GOODS INVENTORY. * VLO1N: Delivery document. Finished goods is CREDITED and decrease in inventory is DEBITED “Inventory Change” appears in P&L * VF01: Customer is BILLED. Invoicing customer generates financial posting. A/R is CREDITED and Sales Revenue is DEBITED. * F-28: Post Payment from Customer. CREDIT cash account and DEBIT A/R.
VISUALIZE sales process flow with transaction VA05. Click on “Display Document Flow”

A total of 12 OPERATIONAL transactions must be performed.

CHAPTER 5 – BUSINESS DECISIONS

ZCS02 – Change the product recipe by changing the Bill of Materials, Must match MMA guidelines.

Unit of measure of ingredients is kilograms (kg). and unit of measure for packaging is piece(ST).
Checks validity of recipe (that’s why transaction starts with ‘Z’). It will automatically change the description of the product in the master data. Helps you analyze the profitability of the product over time.

Production planning decisions
There are 2 ways to create planned orders. * Create a forecast (independent requirements) & run MRP. MRP calculations process will create requisitions needed to produce the production orders. * MD11: Then run MRP process

Procurement Decisions * Procurement process is automated by the system. Takes 3-5 days for Vendor to supply us the ordered materials.

* Simulator automatically post goods receipts of the material after this delay enter invoice received. * Invoice payment is automatic by the simulator 15 days later.

* We have to make the decision when to release the purchase order. Use transaction ME59N to convert purchase orders from requisitions.

Production Execution Decision * Large batch productions – It will reduce the number of setups and produce more finished products for a given time. It increases productivity and lower per-unit production costs.

This will also create less diverse range of products to offer and stock outs.

* Smaller Batches: Be able to react to changing markets. But will lose productivity because of frequent setups.

System will automatically execute production orders FIRST in / FIRST OUT.

Production order is released you cannot change or cancel it.

CO41: Transaction collective conversion of planned orders. Converts multiple planned orders into production orders.

Production Improvement Decision * Invest in lean manufacturing to reduce set up time * Procure extra capacity by upgrading production equipment.
THE MORE YOU REDUCE SETUP TIME, THE MORE EXPENSIVE IT IS TO MAKE FURTHER IMPROVEMENTS.
FB50: To invest in machinery and equipment account. Investment requires ASSET exchange for CASH which results in no net impact on retained earnings at time of transaction.
THE IMPACT ON RETAINED EARNINGS IS FROM DEPRECIATION EXPENSE FOR THE ASSET which occurs over time.

FB50: To reduce setup time. The impact to profit is direct and immediate.

Pricing Decisions * You can change prices anytime during the game. Price list is only sent to our customers once per day. * SMALL BOXES cannot be sold in the hypermarket distribution channel (DC10) * LARGE BOXES cannot be sold in Independent distribution channel (DC14) * VK32 – Change prices

Marketing Decisions * Can invest in Marketing anytime during the game * Impact of marketing is immediate and customers have no memory.

ZADS: Current daily plan for marketing.

Financial Decisions * Manage cash flows * Finance our operations while waiting receive payments from our customers and make necessary payments to suppliers. * If there is shortfall, CREDIT RATING will be reduced resulting in higher interest costs. * TOO MUCH CASH – Invest in business or repay the bank loan.

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