SAP Story on Shiksha.com

What is SAP?

SAP stands for Systems, Applications and Products in Data Processing. It is a product of SAP AG, Walldorf, Germany. It is not easy to define SAP in a specific definition. It is a multidimensional product. It has to be viewed and understood through various angles and perspectives to understand it. SAP is a system, an ERP product, an IT Tool, an IT enabled System (ITeS), an enterprise application, to execute the business process through the various department of the business in an integrated manner. Examples of business processes are such as:-

1.      Procure to pay (material procurement process)

2.      Order to collection (material sales process)

Integrated process means that all the subsequent activities of the process are dependent on its predecessor. If the any activity gets blocked/stopped/unfinished, subsequent owner of next step cannot do anything. It is a natural tendency of employees to flout the rules of doing the process in the absence of any enforcement factor such as an ERP system. It ensures that employees follow the rules and predetermined set of activities to complete a process. It brings discipline in the employees to follow the defined process without any violation.

Integration also means that two departments are involved while executing a transaction and records for both the department has to be updated simultaneously to have accuracy and consistency in the transaction. Integration of financial accounting with all types of goods movement is suitable example and SAP does it automatically. In the absence of SAP, both of these departments have to work together and two employees from these two departments have to work together in tandem to complete the transaction.

SAP ERP is a transactional system while SAP BI is a reporting system (based on data from SAP ERP). SAP APO, BPC, TR are planning tool based on data from SAP ERP system.

From technological advancement point of view current version of SAP is ECC 6.0 with EP 7. ECC stands for Enterprise Central Component (i.e. ERP) and EP stands for Enhancement Pack. Having ECC 6.0 implemented is mandatory to run the business. Putting up the enhancement pack is optional but desirable to use latest features of SAP ERP system

What are its various applications across domains?

SAP an ERP product, consists of various modules, as given below:-

1.      Materials Management (MM)

2.      Sales and Distribution (SD)

3.      Plant Maintenance (PM)

4.      Project System (PS)

5.      Production Planning (PP)

6.      Quality Management (QM)

7.      Production Planning for Process Industry (PP-PI)

8.      Financial Accounting (FI)

9.      Controlling (CO)

There are other ways of defining the modules from business or process perspective:-

1.      Manage Financial Operation (MFO) – FI

2.      Manage Operation (MOP) – CO

3.      Manage Supply Sourcing (MSS) – MM

4.      Manage Logistic (MLO) – MM

5.      Fulfil Order (FOR) – SD

6.      Production Order (PRO) – PP

7.      Build and Maintain Infrastructure (BMI) – (it includes both PM and PS)

8.      Managing Total Quantity (MTQ) – QM

Advance modules of SAP (add on components) which sits on the ECC (ERP) are as follows)

1.      BI-Business Intelligence (MIS reporting system)

2.      APO – Advance Planning and optimizer (supply chain planning)

3.      TR – Treasury Module

4.      BPC – Business Planning and Consolidation

What is the eligibility to pursue a SAP course?‎

Eligibility to pursue SAP courses is not well defined but what market is looking forward is explained as follows. A fresher must have engineering degree (in mechanical, production or industrial engineering) with relevant work experience of minimum 2 years to take course in SAP MM, PM and PP module. Charted Accountant or MBA in finance is required for FI and CO module. For SD module any graduation with minimum 4 years of experience in sales and distribution or MBA in Marketing (may be combined with finance) with minimum 2 years of experience is required. PS, TR and BPC modules are suggested for experience consultant in FI&CO.

In spite of these specific qualifications, there are cases where engineers or commerce graduate are doing FICO and SD consulting. Formal education is one thing but work experience in a specific domain and inclination to learn and excel in other areas drives what module can be pursued by the individual. Moreover, one has to learn other modules during the course of SAP consulting to advance in the career. SAP career starts as Analyst, and advances as consultant, senior consultant, team lead, solution architect / principal consultant / project manager.

Hence, one may start in a specific module as per his/her qualification, work experience or inclination but end up in learning other modules as well.

What are the types of SAP courses and certifications (with the duration and fee range for each course)?

SAP courses are done for specific modules. Hence there are as many courses as the number of modules are there. Duration varies from 27 working days by SAP education partners to 60 working days by non-SAP education partners. Education partners charges hefty fees for the course and they are eligible for issuing certificates. ATOS, Lithium Genovate, NIIT, HCL and JK Technosoft, are some authorised SAP education partner. They may charge between 3-4 lakhs per module for the course and certification exam (online). Every year or two year they keep revising the fee.

Non-SAP education partner, like other institutes are spread across the metro and tire -II cities and IT HUBs like Pune, Chennai, Bangalore and Hyderabad. Comparatively they charge few thousands for the course but quality of education and learning is also doubtful. Credibility of such institute is very low and employers do not prefer such candidates. Such institutes are good for those who have the opportunity to work on SAP in their organization but in-house training is not good enough to make them a SAP consultant.

What is its career relevance, i.e. scope after pursuing a SAP (IT) course?

One should not directly take plunge into the field of SAP. It takes lot of planning, money and risk taking abilities to make career in this field.

Traditionally, SAP consultants have come from the projects. Either IT organization or the SAP client/customers groom their employees as SAP consultant. Either employees are sponsored for certified course and exam or they are trained in-house by the trainer. Such individuals are lucky to get into the field of SAP with the support of employer with hands on experience on implementation and support project without any risk.

But if someone does not get this opportunity by the employer and he/she wants to get into this field on their own then it involves lot of strategy, money and risk. One has to be very enterprising to go through the learning experience and then finding a suitable job.

To pursue the course in SAP full time one has to leave the current job. Part time courses are also there. One should be ready to do job with less pay package in small companies to gain hands on work experience. If the current job salary is very high then one can opt for certified course and exams. Certified consultants have better credibility in the job market and can be directly employed by tier-I company, but may be with less pay package than the current job.

Starting may be tough but journey is enjoyable. It may involve lot of travelling for implementation project but support projects are peaceful does not involve frequent travelling

Who should buy and why?

Mukesh Shukla has authored a book on SAP MM (Materials Management) module of SAP

SAP MM book has been written with perspective of giving deep conceptual and working insight into the MM module of SAP.  This book not only contains the SAP MM concepts and transactions but also case studies on SAP implementation project and implementation of SAP in an agro industry. Author has planned to include one more case study on SAP implementation under the environment of merger & acquisition and interview Q&A for SAP MM and CIN module, to make it more relevant to students of Engineering and MBA, working professionals and consultants.

This book is useful for engineering students who are specializing in IT (information Technology, for ERP specialization), Computer Science (ERP specialization), Mechanical, Production and Industrial Engineering. MBA students who are specializing in operations, supply chain management, IT and materials management should refer it. This will enable them to understand the ERP implementation and technicalities involved in implementation of SAP MM module. They will be better equipped for taking up job and new challenges on the job. They will amalgamate better with SAP MM module at work.

There are various process owners, user champion, core users and end users in service and manufacturing industries who wants to understand SAP MM module in more depth so that they can enhance the their productivity by understanding and using the SAP MM module effectively and efficiently. They can understand the process integration between MM and FI module. They can also understand integration among SAP MM sub modules; Purchase Management, Inventory Management, Physical inventory process and Logistics Invoice Verification (LIV) module. Many organizations maintain internal SAP Team to support SAP ERP system. Their internal consultant needs to support all functionalities of MM module and its integration with other modules. They can use this book as a reference book or handbook for understanding of issue and troubleshooting them. They also need to understand customization and do it whenever there is change in business process. This book explains them the customization changes and logic behind those customizations.

All those students and domain experienced people who want to come to the world of SAP as a SAP MM consultant must buy this book. Very soon this book will make them good SAP MM consultant. They would not have to struggle for understanding of concepts, usage and their customization. This book will boost their understanding and confidence as SAP MM module consultant.

Every SAP MM consultants do not get the opportunities to work across all the sub modules of MM. Everyone is not proficient in MM-FI integration and accounting entries. Such people should also buy this book to have comprehensive understanding of SAP MM module, so that they can provide end to end solution and SAP MM consultancy all the stakeholders of the process. For example, P2P (procure to pay) process has stakeholders from functions such as; planning, sourcing, purchasing, stores, quality and accounts. A SAP MM consultant should be able to design the process, explain it and have a meaningful discussion with all the stakeholders.

SAP MM Book - Synopsis

Synopsis

This title has been written with the perspective of giving its audience in depth insight into the application and usage of SAP ERP package ECC 6.0 in managing supply, sourcing, and inventory. 

SAP has dominated the world of ERP market and is being used in every other small or major organization. Success of SAP is attributed to its adherence to GMP (good manufacturing practice) and best business practice in every industry sector. SAP has standardized business and finance process and their integration worldwide due to its dominance.

This title covers all the business process and concept pertaining to purchase management, inventory management and vendor invoice verification to enable the audiences to use SAP MM (materials management) module effectively at the level of user, management and/ or as a consultant.

This title is divided in ten chapters, a section on interview Q&A and an annexure. Chapters are as given below:-

1.     Materials Management: Manage Sourcing, Supply and Inventory through SAP

2.     Business processes in procurement

3.     Inventory management, valuation and Physical inventory

4.     Financial Accounting Integration with Materials Management

5.     Logistics Invoice Verification

6.     Country India Version (CIN)

7.     MM & CIN Implementation Guide (CD)

8.     Materials Requirement Planning

9.     Materials Management and Quality Management Integration

10.  Supply Chain Management through SAP: An introduction

11.  Annexure: An Annexure at the end contains following case studies.

§  SAP Project Implementation

§  SAP Implementation in Agro Industry

§  Post Merger integration of SAP

First chapter outlines the functions of sourcing, supply and inventory management. It also covers scope of this book and coverage of SAP features in this title.

In the Second chapter, business process in procurement, organization structure, and creation of purchase order is explained in detail from the system perspective. Purchase orders for stock item, non-stock item and for service, have been explained. Master data, which is required before creation of any purchase order, like material master, and vendor master, is also discussed conceptually and from system point of view. This chapter also addresses the purchasing master data i.e. purchasing info record and source list, source of supply (contract, scheduling agreement, source list and purchasing info record) and source determination. Special procurement processes like subcontracting, purchase order creation, etc. have been explained in detail. Return purchase order has also been discussed. Lastly, release strategy procedure for purchase order has also been discussed conceptually and from system point of view.

In the Third chapter, inventory management, valuation and physical inventory processes have been discussed. Inventory management processes like goods receipt, goods issue, stock transfer, transfer posting, reservations, Subcontracting processes, which includes goods movement like issue of raw material to subcontracting vendor from own stock as well as from material supplier and receiving finished goods from subcontracting vendor, has been discussed from BOM creation to goods receipt, step by step. Special forms of inventory management like split-valuation and non-valuated material has been discussed from business need, accounting need, concept, and system point of view. Ad-hoc physical inventory process and cycle counting process has been discussed. A very strong use of SAP is its reporting power using transactional data, collected through various inventory transactions. Need of report from purchase, inventory and accounting point of view has been explained. Various transaction codes are also mentioned for reporting.

Chapter four addresses most important and critical feature of SAP i.e. materials management and finance integration. This chapter is divided in three parts, automatic account determination (AAA), pricing procedure and tax procedure. Automatic account determination is an automatic process of determining general ledger account during goods movement that involves accounting. AAA leads to automatic debit and credit entry in respective general ledger accounts. Pricing procedure and tax procedure are integrated with purchase order, goods receipt and vendor invoice verification. During the creation of purchase order, purchaser specifies the basic price of material, any discount, or surcharge, delivery cost like freight, custom duty etc. through pricing procedure and tax applicability like sales tax through tax procedure. From pricing procedure and tax procedure theses values flow to respective general ledger accounts, this helps accounts in vendor liability reconciliation and filing tax returns. Sometimes input sales tax is available for credit against the output sales tax. This is also accomplished through tax procedure.

Chapter five is about vendor invoice verification. In SAP, this process is known as LIV (logistics invoice verification). This is the third and the last step in the procurement process. After this step payment process to vendor goes to finance process. During LIV vendor is credited and clearing account is debited (which was credited during GR (goods receipt)). There are various types of invoices like material invoice from material supplier vendor, freight invoices from freight vendor, customs invoice from customs house and so on. By the time, accounts receive the invoice; due to market condition, actual price of material of freight might have changed. The basic price and the delivery cost like freight, which were mentioned in the purchase order, had been negotiated much before. LIV takes care of all the variation in prices and accordingly adjust the inventory value, which was posted during the goods receipt process. LIV also has the provision of subsequent credit and subsequent debit and credit memos towards the vendor.

Chapter six covers, CIN (Country India) Version, which covers treatment of India specific taxes like excise duty, service tax and VAT. CIN is integrated with every process of procurement (of raw material, capital goods, trading of finished goods etc) and inventory transfer between two excise groups. Chapter seven covers various business processes where these duties are applicable and need to be accounted for. Logical and sequential transactional flow and screen shots displaying details of tax treatment has been covered. Understanding of all the previous chapters is necessary to understand chapter seven and eight. Chapter eight covers implementation guide to configure CIN module.

Chapter seven explains the integration between MM and QM module. Integration between Materials Management and Quality Management (QM) gets reflected in Procurement Cycle and Inventory Management. At every step of procurement cycle (Purchase Order, Goods receipt and Logistic Invoice Verification), QM affects the process, from controlling source of supply, supply from approved manufacturer, creation of purchase order, goods receipt till the vendor is credited through LIV. Payment may be blocked based on the QM settings. Various goods movement also causes inspection lot to be generated. Batch status functionality is also controlled through QM module.

Chapter eight describes the process of material planning with SAP. The main function of material requirements planning is to guarantee material availability, that is, it is used to procure or produce the requirement quantities on time both for internal purposes and for sales and distribution. This process involves the monitoring of stocks and, in particular, the automatic creation of procurement proposals for purchasing and production. The role of material requirements planning is achieved by using various materials planning methods which each cover different procedures, to monitor stocks and, in particular, to automatically generate order proposals for purchasing and production (planned orders, purchase requisitions, or delivery schedules).Effective inventory management through SAP makes the base for material planning, which further improves the procurement and inventory management over the period of time. Material planning constitutes of demand management, stock balancing and material requirement planning.

This title comes with the Implementation guide (IMG) on a CD. IMG is meant for those who want to become consultant in SAP MM module. This chapter explains systematic process of configuring materials management module. Configurations of module are lengthy and integrated process. Every next step is heavily dependent on every previous step. Flow of configuration is as follows: definition and assignment of organization structure, master data configuration, definition of purchase documents, their number ranges, and their controls, creation of pricing procedure and their determination, creation of tax procedure and its determination, output message, inventory management, goods movement type, goods movement screen layout, automatic account determination, incoming invoices, tolerance limit, default tax code, purchase order text control during invoicing etc. Configuration of the system is always a tricky task and is done after business blueprint phase of the system implementation project.

Process Integration is the key because of which, SAP ECC has become the engine of supply chain management. It integrates all the stakeholders and fragmented sub processes and events, to deliver best to the customer. Chapter ten, (Supply chain management through SAP: An Introduction) briefly describes how supply chain is managed through SAP. Author has tried to dissect the various layers and components of supply chain and describes how the various modules of SAP fit into them to integrate and strengthen supply chain.

Annexure contains analysis paper (Comparative study of Agro and non-agro based industries) on challenges pose by Agro industries, a case studies on ERP Implementation in Agro-industry and Post merger integration of ERP.

In short, this title on Managing Supply, Sourcing, and Inventory would enrich all - users, management, and consultants.