Major Capabilities of the SAP Enterprise Resource System

Rosamond Zhe Chen Tingting Wang Liqing Fei

Executive Summary
This report aims to provide an overview of the major capabilities of SAP Enterprise Resource System. Due to the complexity of SAP software package, this report focus on three major capabilities of SAP including Sales and Distribution (SD), Maintenance (PM) and Quality Management (QM). The introduction explains what SAP is and what makes SAP different from traditional computer information system, the position of SAP in the current market. Meanwhile, the 12 major modules of SAP will also be introduced in this part. Sales and distribution (SD) in one of the major SAP modules which has been asked to integrated to its SAP ERP software package by many customers. In the report the six key functions in SD module are introduced. In addition, the interface between SD and other modules are also concerned. The SAP Plant Maintenance comprises of the following activities such as inspection, to measures and establishes the actual condition of a technical system, preventive maintenance to measures and maintains the ideal condition of a technical system, repair to measures and restores the ideal condition of a technical system and other measures that need to be taken using the maintenance organization. Finally, in the area of quality management, SAP can improve quality management in every step during the whole process from sales order to customer service. Not only can it automate quality-relevant information flow, but also can provide various methods in product controls. Because of the SAPs strict and scientific quality control system, quality management becomes more effective and efficient. Plant

Introduction Many key business applications are now implemented using comprehensive and complex Enterprise Resource Planning (ERP) software. ERP software facilitates the flow of information among all the processes of an organizations supply chain, from purchases to sales, including accounting and human resources. The ERP software market leader is SAP AG with the SAP R/3 System. (The full name for SAP is Systems, Applications and Products in Data Processing, but it is rarely used.) Use of this package makes it possible to track and manage, in real-time, sales, production, finance accounting and human resources in an enterprise. Traditional computer information systems used by many businesses today have been developed to accomplish some specific tasks and provide reports and analysis of events that have already taken place. A typical company has many separate systems to manage different processes like production, sales and accounting. Each of these systems has its own databases and seldom passes information to other systems in a timely manner. But SAP takes a different approach. There is only one information system in an enterprise, SAP. All applications access common data. Real events in the business initiate transactions. Accounting is done automatically by events in sales and production. Sales can see when products can be delivered. Production schedules are driven by sales. The whole system is designed to be real-time and not historical. The heart of the SAP system from a managers viewpoint is the application modules. These modules may not all be implemented in a typical company but they are all related and are listed below: Sales and Distribution (SD), Materials Management (MM), Production Planning (PP), Quality Management (QM), Plant Maintenance (PM), Human Resources (HR), Financial Accounting (FA), Controlling (CO), Asset Management (AM), Project System (PS), Workflow (WF), Industry Solutions (IS). Each of the modules may have sub-modules designed for specific tasks. In this report we will focus on the capabilities of SD, PM and QM modules of SAP.

Sales and Distribution (SD) Sales and distribution (SD) is one of the major SAP modules which active support of all sales activities with easy-to-use functions, ranging from first customer inquiry, over pricing and order processing to shipping and invoicing. There are six major functions involved in Customer Order Management cycle, which are pre-sales activity, order processing, inventory sourcing, shipping, billing and payment. Before receiving orders from a customer the sales have done a series of works on customer relationship maintenance, which involves creating and tracking customer contacts, answering customer questions and quoting. From the view of SAP application, although at this stage customer hasnt made orders the sales have already maintained the customer master data in the system. Once the customer decides to place an order, the sales can easily trace the customers trading history. The major task order processing function is entering order related master data into SAP system. However, the input of the relevant information doesnt mean definite acceptance of the order. Insufficient stock or urgent delivery time may both result in rejection of the order. While in the inventory sourcing stage stock availability check is mainly concerned. If the ordered goods are currently in stock, then we step into the next function, namely shipping. Having conducted these functions, the relevant billing document is issued. Plant Maintenance (PM) The Plant Maintenance (PM) provides planning, control, and processing of schedule maintenance, inspection, damage-related maintenance, to ensure availability of operational system, including plants and equipment delivered to customers. There are five major sub modules under module Plant Maintenance as following: Equipment and technical objects, Preventive Maintenance, Maintenance Order Management, Maintenance projects, Maintenance information system. Plant Maintenance (PM) provides functionality for managing work requests (work orders), equipment, and facilities (buildings and grounds). The PM implementation will bring about consistent methods for scheduling routine maintenance, repairs,
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preventive maintenance, and projects. Through integration with other modules (for example, Materials Management, Production, Sales and Distribution, Personnel Management, and Controlling) the data is always kept current and processes that are necessary for Plant Maintenance and Customer Service are automatically triggered in other areas (for example, a purchase requisition for non-stock material in the Materials Management/Purchasing area). Quality Management (QM) Quality management is defined as a quality control and information system supporting quality planning, inspection, and control for manufacturing and procurement. Quality management plays important role for a company in providing high-quality products and satisfying customers. SAP can make quality management become more effective and efficient. It can improve quality management in almost every step during the company process from sales order to customer service. In the SAPs quality management component, information is shared among different departments and information flow can be automated. For example, customer information and customer-specific inspection specifications are normally store in the sales order process. However, this information can be accessed by other departments and be regarded as standards during the different types of quality inspections. SAP provides very strict and scientific quality control system. When SAPs quality management component applied in production process, SAP can monitor and document the goods quality when they are produced. In addition, a number of tools of statistical process controls are available to identify and analyse the defects of the goods. To produce goods, companies require materials supplied by other vendors. SAP can use quality-related information for vendors and materials stored in the system to select vendors and manage supply relationships. Furthermore, in order to satisfy customer and improve product quality, customer complaints recorded and processed by using quality notifications and any defects of the products will be properly analysed and finally corrected.
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Reference Friederike Edelmann, 2006, SAP- Invest in Success, SAP AG SAP AG, 2001, LO150 Processes in Sales and Distribution SAP AG, 2001, LO170 Quality Management Turban, E., Leidner, D., Mclean, E., & Wetherbe, J. (2006). Information technology for management (5th Ed.). NJ: John Wiley &sons, Inc www.sap.com Retrieved 26 September 2006. www.thespot4sap.com Retrieved 27 September 2006. http://www.ryerson.ca/~ppille/sap/index.htm Retrieved 26 September 2006. http://academic.uofs.edu/faculty/gramborw/sap/saptutorial.htm Retrieved 27 September 2006.

Appendix

Figure 1 SAP R/3 Application Modules

Figure 2

Interface of SD to other modules

Figure 3 Quality Management in Company Processess