Group Members: Faisal Rahman Joe McBride Gordon Tobias Jason Jackson

1. SAP ERP for ABC Baking Group Members: Faisal Rahman Joe McBride Gordon Tobias Jason Jackson

2. SAP History From Start-Up Software Vendor to Global Market Leader • Over the course of three decades, SAP has evolved from a small, regional enterprise into a world-class international company. Today, SAP is the global market leader in collaborative, inter-enterprise business solutions. • The company now employs more than 47,598 people, whose commitment and innovative spirit pace our future success. The 1970s: A Real-Time Vision • In 1972, five former IBM employees – DietmarHopp, Hans-Werner Hector, HassoPlattner, Klaus Tschira, and Claus Wellenreuther – launch a company called Systems Applications and Products in Data Processing in Mannheim, Germany. Their vision: to develop standard application software for real-time business processing. The 1980s: Rapid Growth • By the middle of the decade, SAP founds its first sales organization outside Germany, in Austria.. Revenues reach DM 100 million (around $52 million) • With the founding of subsidiaries in Denmark, Sweden, Italy, and the United States, SAP's international expansion takes a leap forward. The 1990s: A New Approach to Software and Solutions • By 1996, the company has earned 1,089 new SAP R/3 customers. At the end of the year, SAP R/3 has been installed in more than 9,000 systems worldwide. The 2000s: Innovation for the New Millennium • With the Internet, the user becomes the focus of software applications. SAP develops SAP Workplace and paves the way for the idea of an enterprise portal and role-specific access to information. • Currently, more than 12 million users work each day with SAP solutions. There are now 140,000 installations worldwide, More than 2,400 certified partners, over 25 industry-specific business solutions, and more than 75,000 customers in 120 countries. SAP is the world's third-largest independent software vendor.

3. With broader insight, improved efficiency, and greater flexibility, companies can become more. • Transparent and accountable • Lean and agile • Customer centric and collaborative How Does SAP for Consumer Products Drive Business Improvements? • SAP's comprehensive suite of applications, integrated with leading business support and analytical software, enables you to optimize key end-to-end business processes – and achieve key business goals. To achieve clarity and transparency. • The best-run businesses are using SAP solutions to help close the gap between strategy and execution – optimizing the performance of the business as well as the business network. • SAP solutions, along with services and a wealth of extended value from the SAP customer-focused ecosystem, help customers become clear enterprises by providing insight for improved performance, efficiency for optimized operations, and flexibility to quickly adapt to changing circumstances. You can optimize core manufacturing processes. • Manufacturing, respond to demand with shorter lead times with improved collaboration and visibility across your network of plants and suppliers. • Drive efficiency and quality in plant operations – improving product availability while balancing inventory and manufacturing costs. • Product and safety traceability, ensure quality, safety, and traceability with process integration across your supply chain. • Facilitate compliance with product and food safety requirements, reducing costs and protecting brand equity. • Manufacturing and fulfillment Improve operating efficiency from sheep to shop, while increasing customer service and operational responsiveness for growth.

4. SAP for Consumer Products supports key industry sales and service processes that deliver superior customer value With SAP solutions, you can optimize: • Customer service/call center management, operate your customer service organization more efficiently. • Manage interactions with customers seamlessly to improve satisfaction and drive additional revenue and market share • Direct store delivery, sell and distribute goods directly to the customer's stores and gain direct contact to the point of sale to improve customer retention, realize additional sales opportunities, and increase market and consumer intimacy. • Sales execution, manage your sales force cost effectively while increasing sales and driving customer service quality by connecting territory and visit planning with in-store sales, marketing and merchandising execution. SAP for Consumer Products supports your key marketing processes. • Brand management, develop brand plans to manage brand equity, drive market share, and enhance brand performance and profitability. • Program and campaign management, align programs with brand strategies, improve program and campaign execution efficiency, and capture and manage total go-to-market costs by ensuring that programs and campaigns are aligned with trade promotion plans. To profitably differentiate your operations and offerings from those of your key competitors. • You must integrate end-to-end visibility into all your activities – establishing an organizational culture of operational excellence by dismantling and preventing silos, assimilating and obeying legal and industry regulations, outlining and instilling ethical practices, and introducing and instituting a holistic view of enterprise operations.

5. Functional Areas of ERP ERP contains numerous modules and functional area within its integrated system. • All areas can access the central database to share data • Additional modules can be added/purchased at any point 1) Sales and Distribution Utilizes the Sales and Distribution module 2) Supply Chain Management: Utilizes the following modules 3) Accounting and Finance: Utilizes the following modules Human Resources: Utilizes the Human Resources module

6. Functional Areas of ERP cont… Examples of functional areas of importance to ABC Baking include: • Sales and Distribution • Customer information is recorded and stored in this module. Customer information is called Master Data in ERP • Records sales orders • Schedules deliveries to clients • Supply Chain Management • A) Production Planning Module : • Records and maintains production activities. • Uses sales information to plan and schedule product production schedules B) Purchasing Module: • Manages the purchase and handling of raw materials, sub assemblies and supplies used to manufacture finished goods Accounting and Finance A) Financial Accounting Module: • Records and maintain general ledger transactions. • Responsible for generating financial statements B) Controlling Account Module: • Used for internal management accounting and decision making • Assigns costs • Human Resources • Manages employee recruiting, hiring, training, compensation, benefits and government compliance

7. Sales Order Process • Ordered series of steps required to complete a customer sale in an ERP system • Utilizes Sales and Distribution module Sales Order Delivery Invoice Customer Payment Sales Inquiry STEP 1: Pre sales Activities/ Inquiry • New Customer: Collect customer data (name, address, etc.) and record in ERP system. This data become the customer master data (remains fairly stable) available for later access and retrieval • Returning Customer: retrieve master data from ERP database • Add/update additional data: pricing, relevant dates, quantities • Uses coded data key fields as opposed to full names STEP 2: Sales Order: • Turn inquiry into a sales and purchase order, made easier because data is already stored within the ERP database • Beginning of a series of documents/documents numbers recording and tracing the sale. These documents will be available and used by numerous module and areas within the ERP system • Sales order: for salesperson , supply chain and production • Purchase order: for customer

8. Sales Order Process cont... Sales Order Delivery Invoice Customer Payment Sales Inquiry STEP 3: Delivery: • Pick, pack and ship customer ordered product/s • Goods issue generated: actual point after shipment where inventory levels are reduced STEP 4: Invoice: • Invoice sent to customer for products shipped • Account receivable created in accounting module- adjusts available credit for customer STEP 5: Payment: • Payment received from customer • Adjustment made in customer credit to reflect payment

9. Supply Chain Management • Production Planning • Production planning: process of ordering raw materials to satisfy master scheduling plan. Goal is to schedule production as economically as possible • Utilizes Production planning module • Several MRP methods can be used. Method utilizes based upon product/s, company and business environment Consumption Based MRP • Uses no master production schedule in determining raw material orders • Materials purchased based upon re-order points • Re-order point: pre-defined inventory level, recorded in the Materials master. When inventory levels fall below the re-order point, a requisition is initiated • When re-order point is reached, either manual or automatic triggering of purchase requisitions takes place Demand Management Sales Forecast/ Historical demand Sales and Operations Consumption-based MRP Production Scheduling Inventory Reorder Point Production Purchase Requisition

10. Example of Consumption Based MRP for ABC Baking • Raw material item: Bread crates. Since bread crates are not used for every order shipped, this raw material item is a perfect fit for Consumption based MRP • Re-order point: 30 units • Starting inventory: 300 units Order processed Using 135 crates Order processed using no crates Order processed Using 150 crates Starting inventory: 300 crates Inventory of crates remains at 150 Inventory of crates Reduced to 15 units inventory count In ERP: 300 units Inventory of crates reduced by 150 300 crates purchased Inventory count: 150 units Re-order point of 30 units has been reached triggering a purchase requisition Inventory count: 150 units Inventory count: 315 units Inventory count: 15 units

11. Purchasing Process • Purchasing: Utilizes Materials Requirement Planning methods to control raw material purchases as efficiently as possible • Purchasing Process Flow: • Ordered series of steps required in order to purchase raw materials, sub-assemblies or supplies from a vendor with an ERP system • Utilizes Purchasing module Purchase Order Goods Received Invoice Payment Purchase Requisition STEP 1: Purchase requisition: • Request to purchase. Most be approved by management or designated buyer • Can be generated manually or automatically by the ERP system • Uses Master Materials Data, raw materials version of Customer Master data. STEP 2: Sales Order: • Requisition becomes a purchase order • Series of documents/documents numbers recording and tracing the sale. These documents will be available and used by numerous module and areas within the ERP system STEP 3: Delivery: • Materials received, processed and recorded into ERP system • Goods Receipt generated: increases inventory level based upon materials received

12. Purchasing Process cont… • Purchasing: Utilizes Materials Requirement Planning methods to control raw material purchases as efficiently as possible • Purchasing Process Flow: • Ordered series of steps required in order to purchase raw materials, sub-assemblies or supplies from a vendor with an ERP system • Utilizes Purchasing module Purchase Order Goods Received Invoice Payment Purchase Requisition STEP 4: Invoice: • Invoice sent to customer for products shipped • Account payable created in accounting module STEP 5: Payment: • Payment made to vendor • Accounts payable entity adjusted to reflect payment

13. Accounting With an ERP system, accounting data is integrated with other functional areas ensuring data is complete, accurate and up to date. Control Accounting Module: used for internal corporate accounting, used by management for decision making, reporting and allocating costs • Captures previously identified expenses from FI module. These expenses are called primary cost elements • Records Secondary cost elements which are used only for CO transactions and have no corresponding General Ledger account. Used for allocation and settlement transferring costs from one cost center to another, used • Cost centers: used to distribute costs within an organization. Use a hierarchy system to structure cost centers • Costs are incurred and recorded in the General Ledger of the FI module and broken down and distributed in the Control Accounting module Financial Accounting Module: contains general ledger for posting/re-posting of expenses and payments • General Ledger: complete record of all business transactions • General ledger accounting: used for reporting transaction that have a financial impact on the organization • Automatic and simultaneous posting/updating. Allows for real time evaluation of data and reports • Broken into three groups: 1) Balance Sheet: shows assets: company owned items, liabilities: company owed items, debt and equity: net value of company sum of assets and liabilities 2) Profit and loss accounts: shows Revenue accounts: revenues from selling goods and Expense accounts: money spent to produce goods 3) Reconciliation accounts: tracks changes made to general ledger/sub-ledger. Automatically updated when a posting is made • General Ledger Master Record: uses Master data which remains fairly stable over time and is kept within the ERP system and Transactional data: data that frequently changes and is removed and archived within the ERP system

14. Accounting Example for ABC Baking using ERP Monthly electrical expense for ABC baking distributed to four divisions based on percentage Electric invoice for month is recorded in general ledger of Financial module Account payable for electricity Electric account in control module General ledger expense account for electricity Electrical expense posted to a single cost center called a sender cost center Electricity expense previously assigned as a primary cost element in the control account module Sender cost center distributed into receiver cost centers Cost Center A % Cost Center B % Cost Center C % Monthly electrical expense distributed by percentage between sender cost center and receiver cost centers

15. Human Resources • Responsible for managing the human capital of an organization • HR duties range from recruitment and hiring to training and termination • There is an immense amount of data and information related to each employee. Some of this information is needed by other departments and individuals. • Additionally, there are compliance issues and government regulations related to personnel that must be maintained and documented • An integrated ERP Human Resource system would allows for more efficient access to employee data and better management of a employee workforce Human Resource module • Integrates all human resource functions into a single module. • Provides easier access and retrieval of employee information. Reduces paper load, human error and delays • Provides greater detail than non-electronic systems. Distinguishes between task, job, position and person • Information in database is available to any individual with proper authorization • Complete and accurate human resource data simplifies a manages job • Data from HR module can be used to make better management decisions • Includes tools for recruiting, hiring, defining company roles and responsibilities, managing employee personal information, payroll, time management, training and more

16. Human Resources cont… • Examples include: A)Payroll: most important HR function B) Time management: attribute an employees time to a particular job C)Travel management: maintains travel data for each employee D)Training and development: supports the planning and implementation of training programs • Examples of additional tools include: 1) Mobile time management 2) family and medical leave 3) domestic partner support 4) management of long term incentives 5) personnel cost planning 6) global employee support including payroll

17. What Are the Benefits? Improved on-shelf availability • Forecast accuracy to capture spontaneous customer demand Improved global cost management • Faster response to market changes and operational events, such as shifts in demand and supply chain disruptions resulting in better customer service and satisfaction Flexibility • Exploit opportunities for growth through mergers and acquisitions, geographic expansion, or new business models or channels Reduced inventory cycle times • Corresponding reductions in inventory levels, sell-offs, write offs, scrap, loss, or supply disruptions • Financial management • Increase working capital, improve profits, and achieve corporate governance. Customer relationship management, • Acquire new customers, retain them, and develop long-term, profitable relationships. Supply chain management • Effectively and efficiently source materials, manufacture products, and deliver orders. • Gain control over performance, improve visibility, and adjust plans to maximize results. • Gain agility to implement superior business models and profit from market opportunities. • Strengthen partnerships and collaboration internally and externally. Have real-time insight • Across your entire extended enterprise, improve efficiency across global operations, and enter new markets.