Introduction to SAP

1. Introduction to SAP September 30, 2003

2. SAP R/3 System Overview SAP R/3 and Modules SAP Organization Structure SAP Master Data SAP Security SAP R/3 Module Overview and Master Data Sales and Distribution Materials Management and Finance & Controlling SAP R/3 System Benefits System Integration – Data Consistency Business Processes SAP Overview - Agenda

3. Provide an introduction to the SAP R/3 system Introduce and define SAP R/3 terms Explain the system’s functionality Explain the purpose and function of master data Introduce SAP R/3’s approach to business processes Presentation Objectives

4. SAP R/3 System Overview

5. SAP R/3 Overview: SAP R/3 • Systems, Applications and Products in Data Processing • German software company, founded in 1972 • Has been the market leader in ERP (Enterprise Resource Planning) software, technology and product development • R/3 indicates Real Time –3 Tier Architecture.

6. SAP R/3 Overview: SAP R/3 • The R/3 system was designed for use in open, or client/server environments. • R/3 works with a common database. This means information entered into the system by one part of the organization is immediately available to all other parts of the organization.

7. Sales Support • Inquiries • Quotations • Orders • Shipping • Invoicing • Sales Information • General Ledger • Accounts Receivable • Accounts Payable • Cash Management • Financial Controlling • Financial Assets Management • Consolidation • Foreign Currencies & Taxation SD Sales & Distribution FI Financial Accounting • Cost Element Accounting • Cost Center Accounting • Activity Based Cost Accounting • Activities and Services Costing • Order and Project Accounting MM Materials Mgmt. CO Controlling AM Fixed Assets Mgmt. PP Production Planning R/3 R/3 • Technical Asset Mgmt. • Investment Control • Traditional Asset Acct. • Investment Mgmt. QM Quality Mgmt. PS Project System PM Plant Maintenance • Quality Planning • Quality Inspection • Quality Control • Quality Documentation • Quality Information WF Workflow • Funds Management • Resource Management • Quality Control • Time Management HR Human Resources IS Industry Solutions • Automates Business Processes • Supports all modules • Payroll • Travel Expense Accounting • Benefits • Recruitment • Personnel Administration • Workforce Planning • Training Administration • Organization Mgmt. • Personnel Administration • Time Management • Result of the ICOE’s • Industry specific functionality SAP R/3 Overview: SAP R/3 Application Modules • MRP • Purchasing • Goods Movement • Invoice Verification • Inventory Management • Vendor Evaluation • Purchasing Information • Sales Planning • Production Planning • MRP / MRP II • Forecasting • Capacity Planning • Production Activity • Costing • Project Management • Maintenance & Inspection Planning • Processing of plant maintenance orders • Management of completion confirmations • History Management • Plant Maintenance Information

8. SD Sales & Distribution FI Financial Accounting MM Materials Mgmt. CO Controlling AM Fixed Assets Mgmt. PP Production Planning R/3 R/3 QM Quality Mgmt. PS Project System PM Plant Maintenance WF Workflow HR Human Resources IS Industry Solutions SAP R/3 Overview: SAP R/3 Application Modules • Real time processing • Data is entered once. Where it originates • GUI Icons, User friendly • Immediate checking, processing, and information availability • Integration • Common cross-department data basis (no redundancy indata storage) • Up-to-date information • Software development tools (for enhancements and own developments) • Usability • Convenient standardized user interface • Optional menu/command mode • Intelligent online documentation and error dialog • Catchword catalog (detailed explanation of typical terms • Search aids (matchcode) • Mutiple transactions simultaneously (alternatives session) • Long-running transactions in background processing • SAP is internet ready • The Multi’s • Multi-Company • Multi-Language • Multi-Currency

9. SAP R/3 Overview:System Wide Features • SAP Organization Structure • Master Data • Security

10. The fundamental data and functional architecture of the R/3 system... Defines the legal and organizational structure of a company from different points of view. Includes flexible organizational units for creating a comprehensive company structure. Links different application areas in the R/3 system to create an integrated company structure. SAP R/3 Overview: SAP Organizational Structure

11. Client Client is the highest level in SAP R/3. The data within one client may not be accessed while working in another, different client. Some data is managed at the client level because every one in the corporate group of companies will want to refer to exactly the same information. SAP R/3 Overview: SAP Organizational Structure Client Chart of Accounts Controlling Area A Controlling Area B Company C Company B Company A Plant 1 Plant 2 Plant 3 Sloc A Sloc B Sloc A Sloc A

12. Chart of Accounts Consists of an organized list of all General Ledger accounts for an organization Can be specific to a single Company Code or used across multiple Company Codes Can be used for one or multiple Controlling Areas Can be maintained in different languages SAP R/3 Overview: SAP Organizational Structure Client Chart of Accounts Controlling Area A Controlling Area B Company C Company A Company B Plant 1 Plant 3 Plant 2 Sloc A Sloc B Sloc A Sloc A

13. SAP R/3 Overview: SAP Organizational Structure Client Controlling Area • An organizational unit within a corporation in which the internal management of costs and profits can be performed Chart of Accounts Controlling Area A Controlling Area B Company C Company B Company A Plant 1 Plant 2 Plant 3 Sloc A Sloc B Sloc A Sloc A

14. Company Code The identification number of an independent accounting unit that can generate its own financial statement. It is a legal requirement that a group that operates in several countries must establish a separate company code unit for each country. SAP R/3 Overview: SAP Organizational Structure Client Chart of Accounts Controlling Area A Controlling Area B Company C Company A Company B Plant 1 Plant 3 Plant 2 Sloc A Sloc B Sloc A Sloc A

15. Plant A plant is the central organizational unit to the production planning and inventory management concept Typically represents a manufacturing location or distribution center A plant can be production site or a group of storage locations that share materials. SAP R/3 Overview: SAP Organizational Structure Client Chart of Accounts Controlling Area A Controlling Area B Company C Company A Company B Plant 1 Plant 2 Plant 3 Sloc A Sloc B Sloc A Sloc A

16. Storage Location A physical or “virtual” location that the system uses to manage inventory. Defines the location of materials within a Plant Inventory is managed in storage locations at the quantity level. May be a warehouse, storeroom, or a specific location within a warehouse or storeroom SAP R/3 Overview: SAP Organizational Structure Client Chart of Accounts Controlling Area A Controlling Area B Company C Company A Company B Plant 1 Plant 2 Plant 3 Sloc A Sloc B Sloc A Sloc A

17. Master Data refers to core information that is used by the various SAP modules. This information is typically entered only once, after which, the user will refer to the information to accomplish other tasks. The master data files can also be updated with new information so that its use as a reference is always accurate. SAP’s functional modules share and use the various master data records across multiple areas and processes. SAP R/3 Overview: Master Data Master Data MM PP SD FI/CO QM WM

18. G/L Account Master RFQ Purchasing ? Vendor Quotation Company Codes Client Chart of Accounts Chart of Accounts G/L Account BANK A B Bal sheet acct X Account group FIN. . . CC 0001 CC 0003 Currency CAD Currency USD Line item Line item Display X Display X . . . . SAP R/3 Overview: Master Data - Types of Master data • Sales and Distribution: • Material masters • Customer Masters • Customer Material lists • Customer Price records Customer Master • Purchasing: • Material masters • Vendor master • Info Records • Source Lists • Finance and Controlling: • Material masters • G/L Accounts • Cost Centers • Profit Centers • Inventory Management • Material masters • Plants • Storage locations Vendor Master

19. SAP R/3 Purchasing Invoice Verification Inventory Management SAP R/3 Overview: Master Data - Material Master Material Master Record Sales Order Processing • Central repository • of material data for • all areas within logistics: • Finished Products • Semi-finished products • Raw materials • Consumables • Marketing Materials

20. SAP R/3 Overview: Master Data - Key Data in the Material Master • Client level data • Description and texts • Units of measure, weights, volumes • Material type • Sales organization data • Sales organization, distribution channel, shipping points... • Inventory Management and Purchasing organization data • Purchasing group, receipt processing time, quality inspection indicator, storage location… • Planning data • Planning type, MRP controller, lot size data, forecast consumption data… • Finance and Controlling data • Material valuation, cost estimate data…

21. Material A generic term for any article, item or service that is subject to materials management. Material numbers are assigned internally by SAP or externally by the user. Record A collection of data pertaining to one item. View A view groups together on a screen all the data for an item that a particular department creates in a master record. Individual views can be processed separately. SAP R/3 Overview: Master Data - Terms and Concepts

22. Document A document contains text explaining components or functionalities in the SAP system. The document type distinguishes the business transactions to be posted. A document class explains the purpose of the document. Field The area on a screen where information is input or displayed. Extendable Master A master record in which a view has not yet been created. SAP R/3 Overview: Master Data - Terms and Concepts

23. Populate Filling in information for a field in a view or document. Maintaining The act of placing information into a view or document , or continuing to provide updated information into specific master records. Default The system automatically populates fields with pre-determined data, however, changes may still be input manually. SAP R/3 Overview: Master Data - Terms and Concepts

24. SAP R/3Security

25. Security Controls the authority to perform a particular action in the R/3 System. Profiles , Objects , Authorizations Each authorization refers to one authorization object and defines one or more permissible values for each authorization field listed in the authorization object. Authorizations are combined in profiles which are entered in a user's master record. SAP R/3 Overview: Security

26. An authorization profile gives users access to the system. A profile contains individual authorizations, which are identified by the authorization name and one or more authorization objects. If a profile is specified in a user master record, the user has all the authorizations defined in this profile. SAP R/3 Overview: Security - Profiles

27. Authorization objects allow you to define complex authorizations. An authorization object groups together up to 10 authorization fields in an AND relationship in order to check whether a user is allowed to perform a certain action. To pass an authorization test for an object, the user must satisfy the authorization check for each field in the object. SAP R/3 Overview: Security - Objects

28. This field contains the name of a program group that allows users to Execute programs Schedule jobs for background processing Maintain programs Maintain variants When creating a program, you can specify an authorization group as one of the program attributes. This allows you to group together programs for the purposes of authorization checking. SAP R/3 Overview: Security - Authorizations

29. Delivery of Goods / Services Customer Invoice Receipt of Goods / Services Vendor Invoice An Overview Typical Business Cycle VENDOR CUSTOMER USER COMPANY Controlling – Internal Reporting Sales Processing Sales Order Delivery* Billing Interface Profit Center Accounting Cost Center Accounting Financial Accounting – Legal Reporting FI – General Ledger FI Postings FI – Account Payable FI – Account Receivable Receipt of Payment Payment to Vendor Cost Element Accounting * Delivery – if materials are sold

30. Module Overview: Sales and Distribution(SD)

31. SAP R/3 Overview: SAP R/3 Application Modules Sales and Distribution (SD) • The SD application module helps to optimize all the tasks and activities carried out in sales, delivery, and billing

32. Customer Order Module Overview: SD Sales and Distribution (SD) • The process of taking orders, checking availability, delivering goods, invoicing customers, and receiving payment. • Its functionality includes the following: • Sales order processing • Delivery • Billing • Customer payment • Sales Information System (SIS)

33. The sales order is a legally binding agreement between a sales organization and a sold-to party concerning the delivery of materials or the provision of services. The sales order specifies prices, quantities and dates. The "Delivery" is the central shipping document. Delivery creation initiates shipping activities such as picking and delivery scheduling. The data generated during shipping processing is recorded. The invoiced payment process resolves discrepancies between the order, receipt, and invoice. Module Overview: SDSD Process Sales Order Processing Delivery Billing Customer Payment Quotes Planning, Reporting and Analysis

34. Billing and customer payment complete the sales and distribution process You can create billing documents with references to sales orders and deliveries. You can bill explicitly, process a billing due list or bill in batch. Module Overview: SDSD Process Sales Order Processing Delivery Billing Customer Payment Quotes Planning, Reporting and Analysis

35. Integrated Business Process Overview Sales Logistics FI G/L COS / Inventory AR Invoice / GL Revenue Customer Payment SD Quotes Sales Order Processing Billing Delivery Planning, Reporting and Analysis

36. 90 80 70 60 50 East 40 West 30 North 20 10 0 1st 2nd 3rd 4th Qtr Qtr Qtr Qtr Module Overview: SDSales Information System Standard analyses • These functions enable you to target specific key figures and to analyze them in detail. • You can specify the level of detail in which you wish to view the information. • The values for each list can also be viewed graphically. Flexible analyses • Enables you to group together and aggregate key figures yourself and easily create reports.

37. ่ Distribution Channel Usually the sales channels (i.e., Wholesale, Retail, Direct Sale, Merchandising, Mail Order, etc.) Module Overview: SDOrganization Structure Company B Company A Sales Org C Sales Org A Sales Org B Dist Channel 1 Dist Channel 2 Sales Organization • Logical selling unit • Geographical or other logical subdivision of Company Division a1 Division a2 Division a3 Division b1 Division a2 Plant 1000 Plant 2000 Plant 3000 Division • Combination of similar products • Often used to define Product Line

38. Module Overview: SDMaster Data • Sales and Distribution data elements are comprised of: • Material masters • Customer Masters • Customer Material lists • Customer Price records • Output • Business Partners • Sales Organization • Distribution Channel • Division • Sales Group • Sales Reps

39. Module Overview: Materials Management (MM)

40. SAP R/3 Overview: SAP R/3 Application Modules Material Management (MM) • The MM application module supports the procurement and inventory functions occurring in day-to-day business operations

41. Module Overview: MM Materials Management (MM) • Purchasing in SAP refers to the process of requisitioning, vendor sourcing, purchasing, receiving, and paying for materials and services used throughout the organization. • Inventory Management manages materials in a plant by material number. Inventory management is used to plan, enter, and check goods movements.

42. The SAP R/3 system supports procurement of materials through approved suppliers and materials. The business process begins with the buyer determining the source to fulfill the goods requirement and ends with vendor payment for goods. The invoiced payment process resolves discrepancies between the order, receipt, and invoice. Module Overview: MMPurchasing Requirement for Goods / Services Purchase Requisition Purchase Order Goods Receipt Invoice Verification Vendor Payment Planning, Reporting and Analysis

43. Integrated Business Process Overview Purchasing FI G/L Inventory / GRIR G/L GRIR/ Expense AP Invoice Vendor Payment MM Requirement for Goods / Services Purchase Order Goods Receipt Invoice Verification Planning, Reporting and Analysis

44. Purchasing Organization Responsible for procuring materials and services for one or more Plants Capable of spanning Companies to produce a central purchasing organization Negotiates prices and delivery conditions with the vendor Required for entry of all purchase orders Can be a central buying group responsible for company wide purchases Module Overview: MMPurchasing Organization Structure Company B Company A Purch Org C Purch Org A Purch Org B Purch Group 2 Purch Group 1 Purch Group 2 Plant 2000 Plant 3000 Plant 1000 Purchasing Group • Individual buyer per Plant • Group of buyers per Plant

45. Materials are managed on both a quantity and value basis. Work is managed at the plant and storage location levels. Inventory management is used for performing physical inventories and inventory counts within the SAP system. Module Overview: MMInventory Management Plant Storage locations Building 1 Building 2

46. Module Overview: MMMaster Data • Materials Management Master Data Elements are comprised of: • Material masters • Vendor master • Info Records

47. Module Overview: Financial Accounting and Controlling(FI/CO)

48. SAP R/3 Overview: SAP R/3 Application Modules Financial Accounting (FI) • The FI application module is designed for automated management and external reporting of general ledger, accounts receivable, accounts payable, and other sub-ledger accounts with a pre-defined chart of accounts

49. FI Module Overview: FI/COFinancial Accounting Financial Accounting (FI) • The central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. • Recording all business transactions in a fully integrated software system ensures that the accounting data is always complete and accurate.

50. Module Overview: FI/COFinancial Accounting Financial Accounting (FI) • SAP R/3 Financial Accounting applications in-scope include: • General Ledger Accounting • Accounts Payable • Accounts Receivable