10/11/2017 Chapter Overview - SAP MM Book by Mukesh Shukla

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

1.1 Materials Management Materials management is central to manufacturing and trading industry. Materials management forms the internal part of
complete supply chain. If we look at the IT framework of supply chain, it is evident that ERP is central to the supply chain. Material is sourced,
procured, stored, processed or produced, distributed and sold. This forms the core of any Supply Chain

From process point of view, logistics (goods movement) can be categorised into:

1. Inbound logistics (Procurement logistics)

2. Internal logistics (Store logistics)
3. Outbound logistics (Sale and Distribution Logistics)
As per product SAP scope of materials management module is sourcing, supply (procurement and procurement logistics) and inventory
management (includes internal logistics).

Materials management basically helps to answers following questions

1. What to buy
2. How much to buy
3. When to buy
4. From where to buy

1.2 Material Lets us understand the term Material. The meaning of the term Material is very vast in nature. A Material is a tangible matter. A
Material is an item, an article, a product, a chemical, a metal piece, a piece of cloth, a liquid, gas, anything which is tangible in nature and is a part
of business. All materials are not stocked. Some materials which are procured and consumed as soon as they are received, they are called as non-
stock material. Materials can also be categorised as raw material, semi-finished, finished, WIP (work-in progress) ET cetera. Henceforth, the term
Material shall be used for any kind of tangible matter.

1.3 Procurement Procurement consists of two functions Sourcing and Supply. Sourcing function deals with strategic and tactical activities and
Supply function deals with operational activities of procurement. Sourcing needs to be always proactive to ensure and secure, regular Supplies of
input materials to the business.

1.3.1 Sourcing Sourcing is strategic part of procurement. Sourcing is a different function in most of the big and global organizations but still in many
organizations sourcing and supply functions are managed by same set of people. This section discusses the sourcing function and its scope.

Sourcing is a process to find source(s) for the required material(s). Sourcing takes care of internal as well as external need of procurement. Internal
need of sourcing can be seen only in large global organizations spread in many countries. Sourcing is a strategic activity which has long term impact
on the organization in terms of saving, cost cutting, smooth operations and quality of finished goods (which affects sales). Sourcing is always
evaluating existing vendors, alternate and import vendors for getting competitive pricing, meeting marketing specification of finished goods,
securing supplies during climatic, political and other types of emergencies. Sourcing also evaluate packaging and handling of material. Packaging
and handling directly affects transportation and handling cost, transportation and handling damages and store space utilization.

During the development of new vendors or development of new material with the existing vendors samples are tested and trial lots are purchased for
trial run. Sourcing also evaluates that the specifications given by R&D team or marketing team is not over specified. Over specification leads to
higher cost of production and less number of sources who can meet the given specification. Lowering the specification to acceptable level reduces

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the cost of production and increases the number of sources available. Specification relates to material as well as its packing. If a new material needs
to be developed by the vendor on requirement, sourcing team can guarantee some minimum volume of purchase to offset the development and
production cost of the new material. Sourcing team can also ask for rebate (discount on the volume of purchase and calculated after the agreed
purchase cycle is complete) debited to vendor account.

Sourcing continuously need to look for new vendors to keep the prices competitive and keep them as alternate vendor. In case of foreign source
(which may be cheaper than local source because of local tax structure and local availability of the material), local sources are still to be located as
an alternate sources, if required. Alternate vendors should also be available for foreign source in another country. Any crisis in vendors country can
hamper the supply; hence alternate vendor in different country would help to maintain the supplies. Sourcing also need to consider the tax structure
applicable to various sources due to their specific location in different state, region, province, special economics zone and tax holiday if any granted
by the government.

In a big global MNCs having there presence in many countries they have there global sourcing team as well as local sourcing team. All of them are in
continuous coordination with each other. All of them work with one another and together to consolidate the requirement of materials at group level
and to locate vendors who can offer most competitive price. Each one them has the responsibility of informing other local and global sourcing team
if they spot any opportunity to save cost on procurement due to competitive cost, transportation, better quality material, alternative source during
emergencies. Sourcing team help one another to arrange logistical needs if the source is located near them or in their country.

In nut shell, sourcing needs to take all the possible proactive steps to ensure and secure supplies to the business.

In manufacturing industry sourcing requires to have knowledge about following aspects:

1. Understanding the function of the material

2. Its requirement in the organization
3. Metallurgical characteristics of the material
4. Chemical composition and nature of the material (safety aspect)
5. Manufacturing process of the material
6. Storage handling and packaging requirement of the material
7. Transportation handling of the material
8. Logistical requirement (transportation as well as legal documentation)
9. Costing of the material
However, in trading industry sourcing requires to have knowledge about following aspects:

1. Understanding the customer requirement

2. Understanding the function of the material
3. Understanding the comfort and safety with the material
4. Storage handling and packaging requirement of the material
5. Transportation handling of the material
6. Logistical requirement (transportation as well as legal documentation)
7. Costing of the material
So what is the process to find the source? It is an exhaustive process that requires many set of activities. Some of them are as follows:

1. Floating tender
2. Visiting various industry specific trade fairs, for example automotive trade fair, paper trade fair, consumer goods trade fair etc.
3. Going through directory of industry specific manufacturers and traders
4. Developing a vendor for a particular kind of required material
5. Strategic location of vendor
6. Receiving quotation and comparing them (for new requirement of material only)
7. Negotiation for pricing and volume of supply
8. Contract preparation with terms and conditions. Contract could be global as well as local
9. Handing over the contract to procurement team to take care of supply of material to business
10. Vendor evaluation and performance discussion with vendor

1.3.2 Supply Supply process is an operational part of procurement. Supply takes all the inputs from sourcing and material planner to carry out their
operations. Function of supply is to assure that business is receiving material from predetermined sources at the right time and in the right quantity.

Supply team receives the requirement and delivery schedule for a period from material planner and accordingly they communicate this information to
vendors (predetermined by sourcing team) using purchase order (either print format or PDF format). Supply team tackles all the operational issues
which come up during procurement process; quality problems, delivering required quantity by vendor as per delivery schedule, logistical document
arrangement, demurrages, duty payments to government offices, meeting custom officials, on time vendor payment, transportation arrangement,
dealing with any emergency requirement so arranging air transport rather than road transport, returning of material if that is found unfit to use or
expired et cetera. Procurement operational team also does certain sourcing function with existing vendors at plant level.

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Procurement team for machinery and spare parts, non-stock item, asset materials execute both the functions; sourcing and ensuring supplies.

Following are the set of activities done by supplying function:

1. Receiving aggregate requirement from material planner or marketing team

2. Receiving delivery schedule from material planner
3. Receiving quotation from vendor, if there is any change in pricing
4. Creation of purchase order
5. Release of purchase order
6. Messaging purchase order to vendor
7. Arrangement of procurement logistics
8. Follow up with vendor for timely delivery
9. Arranging logistical requirement (transportation as well as legal documentation)
10. Vendor evaluation and vendor monitoring
1.4 Inventory Management Function of Inventory management is to manage inventory in most cost effective manner without being into the situation
of stock out and inventory pile up.

Out of the four objectives of materials management first three objectives are met by Inventory Management.

1. What to buy
2. How much to buy
3. When to buy
Following are the set of activities done by store function of inventory management:

1. Receiving inbound material from vendor, supplying plant and customer (sales return)
2. Issuing outbound material to customer, storage warehouses, receiving plant and vendor (purchase return)
3. Warehouse management
4. Segregation of inventory (quality stock, unrestricted stock, damaged, scrap stock, block stock etc.)
5. Physical inventory process
6. Managing stock based on shelf life and perish-ability of the material
One of the major activities of inventory management is material requirement planning based on production, sales data and marketing forecasting.
And the data to do planning is received from marketing function and store function. Discussion on material requirement planning is out of scope of
this title.

1.5 SAP Materials Management SAP has some core functions and some central functions. Core functions are those which are specific to a specific
module, like purchasing is specific to MM module and sales is specific to SD module. Central functions are those functions which are common to
many modules, like batch management, configurable material; active ingredient etc. Focus of this title is primarily on core functions and somewhat
on central functions wherever it falls in the purview of MM module

SAP materials management module has provided following major functions:

1. Consumption-Based Planning
2. Purchasing
3. External Services Management
4. Inventory Management and Physical Inventory
5. Valuation and Account Assignment
6. Logistics Invoice Verification
This title has not covered each and everything of core functions of MM module. Scope of this book is up to the most widely used and applicable
functions of MM module.

1.5.1 Business Process From process point of view we have following business processes that are generally mapped in materials management
module of SAP :

Procurement

1. Domestic Procurement of raw material and packaging material

2. Import procurement
3. Inter-company stock transfer
4. Intra-company stock transfer
5. Procurement of Services (with service master)
6. Procurement of Non stock material
7. Procurement of engineering material and consumables
8. Subcontracting procurement

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9. Capital item procurement
10. Return Purchase order
11. Authorization of quotation, purchase requisition, purchase order, service entry sheet as per schedule of authority

Inventory Management

1. Goods receipt of raw material, packing material, engineering material and non-stock items
2. Service entry sheet
3. Return Delivery (vendor report just after the GR or Quality inspection report)
4. GR to blocked stock, batch split, storage location split
5. Transfer posting, storage location to storage location
6. Goods issue to subcontracting vendor, shop floor, asset, and cost center
7. Physical inventory process
8. Return of material from storage location, cost centers
9. Return purchase order goods receipt (return to vendor due to line rejection)
10. Goods issue to other plants
Logistics Invoice Verification

1. Verification of materials vendors invoice against goods receipt

2. Verification of delivery vendors invoice against goods receipt
3. Handling various variations or differences between vendor invoice and purchase order. Differences like quantity and rate variation, over invoicing,
under invoicing, unplanned invoices et cetra are few examples.
4. Credit Memo
5. Debit Memo
1.5.2 Operations Activities to execute Business Processes

To execute a business process users execute set of predefined activities (transactions) in SAP system. Activities (transaction) which can be
executed in SAP to execute Business processes are as follows:

Sourcing

1. Local Purchasing organization

2. Global Purchasing Organization (Reference Purchasing Organization)
3. Global and Local Contract Preparation (without plant specific pricing)
4. Global and Local Contract Preparation (Plant specific pricing)
5. Scheduling agreement
6. Request for Quotation
7. Quotation maintenance
8. Quotation Comparison
9. Purchasing info record updating
10. Source List
11. Quota arrangement of vendors for selective procurement
12. Vendor Evaluation
Supply

1. Purchase requisition
2. Request for Quotation
3. Quotation maintenance
4. Quotation Comparison
5. Purchasing info record maintenance
6. Purchase order
7. Delivery Schedule maintenance in scheduling agreement document. Delivery schedule can also be maintained in Purchase order .
8. Release procedure
9. Inbound shipping notification
10. Vendor evaluation
Inventory management

1. Inbound goods movement

2. Internal goods movement/consumption/adjustment/conversion
3. Outbound goods movement
4. Stock monitoring
5. Physical inventory
6. Material Requirement Planning

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Logistics Invoice Verification

1. Verification of materials vendors invoice against goods receipt

2. Verification of delivery vendors invoice against goods receipt
3. Invoice reduction process
4. Invoice blocking and release of blocked invoice for further payment to the vendor
5. subsequent Debit/Credit Process
6. Credit Memo
7. Debit Memo

1.6 Introduction to SAP System To understand the SAP System, we shall understand the term SAP and System differently and then, we shall
consolidate the two definitions to derive the definition of SAP system.

System can be understood as set of different people, parameters, and mechanism to perform a specific task, an activity or set of activities or a
process. Simplest example of system could be a personal computer (set of Keyboard, Monitor, CPU and UPS), to perform desired calculation by the
user, uninterrupted by power failure

Before understanding SAP, let us understand the concept of Enterprise resource Planning (ERP). An ERP is a system, which integrates the various
business processes of various functions of an organization, to deliver the product or service to their customer at the right time and to maximize their
profit. Apart from these major goals, there are various other objectives of ERP system, demand management, operations control and management,
financial management, human capital management etc.

SAP is an ERP product of SAP AG Germany, Stands for Real time 3 tier structures. Real time implies information is available immediately after event
is over. 3 tiers imply hardware structure of the system. SAP system or SAP system can be understood as an ERP system, which uses hardware and
software configuration either specified or designed by SAP AG and used by different users of the organization, which owns the system. SAP system
could also be understood as an Information Technology enabled System (ITeS), as it uses various information technologies to support and run the
ERP system.

SAP is arranged into distinct functional modules, covering the typical functions in place in an organization. Most widely used modules are financials
(FI/CO), purchasing (MM), sales (SD) and production (PP). Those modules as well as the additional components of SAP are detailed in the next
section (www.wikipedia.org).

Each module handles specific business tasks on its own, but is linked to the others where applicable. For instance, an invoice from the Billing
portion of Sales & Distribution will pass through to accounting, where it will appear in accounts receivable and cost of goods sold.

SAP has typically focused on best practice methodologies for driving its software processes, but has more recently expanded into vertical markets.
In these situations, SAP produces specialized modules geared toward a particular market segment, such as utilities or retail.

SAP is a client/server based application, utilizing a 3-tiered model. A presentation layer, or client, interfaces with the user. The application layer
houses all the business-specific logic, and the database layer records and stores all the information about the system, including transactional and
configuration data.

SAP functionality is structured using its own proprietary language called ABAP (Advanced Business Application Programming). ABAP, or ABAP/4 is
a fourth generation language (4GL), geared toward the creation of simple, yet powerful programs. also offers a complete development environment
where developers can either modify existing SAP code to modify existing functionality or develop their own functions, whether reports or complete
transactional systems within the SAP framework.

ABAP's main interaction with the database system is via open SQL statements. These statements allow a developer to query, update, or delete
information from the database. Advanced topics include GUI development and advanced integration with other systems.

The most difficult part of SAP is its implementation. Simply because SAP is never used the same way in any two places. For instance, Atlas Copco
can have a different implementation of SAP from Procter & Gamble and so forth. Two primary issues are the root of the complexity and of the
differences:

Customization configuration - within , there are hundreds of database tables that may be used to control how the application behaves. For instance,
each company will have its own accounting "Chart of Accounts" which reflects how its transactions flow together to represent its activity. That will
be specific to a given company. In general, the behavior (and appearance) of virtually every screen and transaction is controlled by configuration
tables. This gives the implementer great power to make the application behave differently for different environments. With that power comes
considerable complexity.
Extensions, Bolt-Ons. In any company, there will be a need to develop interface programs to communicate with other corporate information systems.
This generally involves developing ABAP/4 code, and considerable "systems integration" effort to either determine what data is to be drawn out of
or to interface into to load data into the system.

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Due to the complexity of implementation, these companies recruit highly skilled SAP consultants to do the job. The implementation must consider
the company's needs and resources. Some companies implement only a few modules of SAP while others may want numerous modules
(www.wikipedia.org).

SAP has several layers. The Basis System (BC) it include the ABAP programming language, it is the heart of the data operations and should not be
visible to higher level or managerial users. Other customizing and implementation tools exist also. The hearts of the system from a managers
viewpoint are the application modules. These modules may not all be implemented in a typical company but they are all related and are listed below:

FI Financial Accounting : Designed for automated management and external reporting of general ledger, accounts receivable, accounts payable and
other sub-ledger accounts with a user defined chart of accounts. As entries are made relating to sales production and payments journal entries are
automatically posted. This connection means that the "books" are designed to reflect the real situation.

The FI module has 8 sub modules:

FI-GL General Ledger Accounting

FI-LC Consolidation

FI-AP Accounts Payable

FI-AR Accounts Receivable

FI-BL Bank Accounting

FI-AA Asset Accounting

FI-SL Special Purpose Ledger

FI-FM Funds Management

CO Controlling : represents the company's flow of cost and revenue. It is a management instrument for organizational decisions. It too is
automatically updated as events occur.

The CO module has following sub modules:

CO-OM Overhead Costing (Cost Centers, Activity Based Costing, Internal Order Costing)

CO-PA Profitability Analysis

CO-PC Product Cost Controlling

AM Asset Management : Designed to manage and supervise individual aspects of fixed assets including purchase and sale of assets, depreciation
and investment management.

PS Project System : is designed to support the planning, control and monitoring of long-term, highly complex projects with defined goals.

WF Workflow : Links the integrated SAP application modules with cross-application technologies, tools and services.

IS Industry Solutions : Combine the SAP application modules and additional industry-specific functionality. Special techniques have been developed
for industries such as banking, oil and gas, pharmaceuticals, etc.
Following Industry Specific Solutions are supported by SAP:

IS-A Automotive

IS-ADEC Aerospace & Defense

IS-AFS Apparel and Footwear

IS-B Bank

IS-BEV Beverage

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IS-CWM Catch Weight Mgmnt

IS-DFS Defense & Security

IS-H Hospital

IS-HER Higher Education

IS-HSS Hospitality Managment

IS-HT High Tech

IS-M Media

IS-MIN Mining

IS-MP Mill Products

IS-OIL Oil

IS-PS Public Sector

IS-R Retail

IS-REA Recycling Admin

IS-SP Service Provider

IS-T Telecommunications

IS-U Utilities

HR Human Resources: is a complete integrated system for supporting the planning and control of personnel activities.

PM Plant Maintenance: `In a complex manufacturing process maintenance means more than sweeping the floors. Equipment must be serviced and
rebuilt. These tasks affect the production plans.

MM Materials Management: Supports the procurement and inventory functions occurring in day-to-day business operations such as purchasing,
inventory management, reorder point processing, etc.

QM Quality Management: is a quality control and information system supporting quality planning, inspection, and control for manufacturing and
procurement.

PP Production Planning : Is used to plan and control the manufacturing activities of a company. This module includes; bills of material, routings,
work centers, sales and operations planning, master production scheduling, material requirements planning, shop floor control, production orders,
product costing, etc.

SD Sales and Distribution : Helps to optimize all the tasks and activities carried out in sales, delivery and billing. Key elements are: pre-sales support,
inquiry processing, quotation processing, sales order processing, delivery processing, billing and sales information system.

WM Warehouse Management : Control of stock to a physical level down to a warehouse bin. Placement and removal rules can be configured, stock
counts can be done see SAP Business Information Warehouse.

HUM Handling Unit Management : This is used as a unique ID for each pallet of stock held in the warehouse.

Chapter 2 Business Processes in Procurement

2.1 Basics of Procurement Before moving on to main topic, let us discuss about organization structure and mapping of the organizations entity into
SAP.

2.1.1 Organization Structure Organization has many functions or department, like purchasing, stores, production planning, maintenance, finance,

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marketing, sales and distribution, logistics etc. There could be many site or locations of operations. Procurement could be centralized controlled or
controlled locally. Inventory is always controlled locally at site or location.

Client is the highest and technical organizational entity. All the data of a group of company is maintained at client. Company entity is next to client.
Company is the highest organization entity, which represents a group of company, and all the financial results are consolidated at company level.
Company code is next level of organizational entity.

Purchasing Organization is an entity in SAP, which represents the purchasing department controlling procurement at company level. Company Code
represents that legal entity at which balance sheet is made. A purchasing organization can procure for one company or for many companies
(centralized). A purchasing organization may be or may not be assigned to the company code/s, depending upon the scope of procurement.

Purchasing organization can procure for many sites of a single company code. These different sites of

company can be defined as a plant. Plant is that entity of SAP, where, any of

Chapter 3 Inventory Management, Valuation and Physical Inventory

3.1 Movement Type Movement type is the heart of the inventory management in SAP . Movement type is a three-digit numeral classification key
indicating the type of material movement (for example, goods receipt, goods issue, physical stock transfer). This classification has been done to
have clear distinction between various material movements in the manufacturing industry or trading business. Different types of material may go
through various types of different material movements. For example raw material is consumed or processed for finished product, a spare part/
engineering material is consumed at a cost center and a capital material is issued to an asset and is capitalized on the asset. Any material movement
type is characterized by stock update and value update or sometimes only stock update. In other words, the movement type enables the system to
find predefined posting rules determining how the accounts of the financial accounting system (stock and consumption accounts) are to be posted
and how the stock fields in the material master record are to be updated.

To have a better and deep understanding of material movement, we need to understand stock type also. Stock type is a classification of different
types of stock of the same material, which defines their state, usage and usability. Various types of stock types are, unrestricted stock, quality
inspection stock, restricted-use stock, block stock, GR block stock, subcontracting stock, project stock, consignment stock, sales order stock, stock
in transit etc. Transferring material from one stock type to another stock type is also characterized by movement type. Such material movement types
do not necessarily need a physical material movement. There may not be any material movement. If we transfer material from quality stock to
unrestricted stock, after quality test, there may not be any material movement, but there is a certification that, stock has been released for
unrestricted use from earlier quality stock. These kinds of stock type change are also recorded in the system using movement type.

When you enter a goods movement, you must always enter the movement type. The movement type has important control functions in Inventory
Management. It is essential for

Updating the quantity fields

Updating the stock and consumption accounts
Selection of the fields used for entering documents
Printing goods receipt/issue slips (sapevent:DOCU_LINK\DS:GLOS.3526C106AFAB52B9E10000009B38F974)

Chapter 4 Financial Accounting Integration with Materials Management

4.1 Automatic Account Determination (AAA) SAP is enterprise solution software. Its feature of integrating the various modules is of paramount.
Integration of various business processes with finance module is very strong in SAP ERP package. In this section, we would focus on integration of
purchase and inventory business process with finance accounting.

First, we shall consider inventory process. In manufacturing or trading organizations, there are various types of goods movements, which have
impacts on financial books. Various goods movements are as follows:

Goods receipt from vendor

Goods return to vendor

Goods issue to consumption

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Goods transfer from one valuation area to another valuation area of one company code or two different company codes. Valuation area
could be plant or company code.

Special stocks goods movement (for example project stock, subcontracting vendor stock, consignment stock and pipeline material)

Goods issue for sale

Goods receipt from customer (sales return)

There may be various variants of a goods movement also. For example, goods issue to consumption involves consumption for cost center,
production order, and maintenance order, goods movement of unrestricted stock or special stock.

As we discussed earlier that in SAP every goods movement is characterized by three character numerical code. These three character numerical
codes are known as movement type. Every movement type has various controls related with value and quantity updation, batch management, quality
activation, special stock indicators, and screen field controls. Those movement types, which have financial impact, are linked with transaction event
keys and account grouping code (or account modifiers or general modifier).

In automatic account determination process, valuation-grouping code (or valuation modifier) is another key to determine GL account. Valuation
grouping code is used to group different valuation areas from accounting point of view. Valuations areas under one valuation grouping code have
same accounts for the same type of posting.

Chapter 5 Logistics Invoice Verification

5.1 Logistics Invoice Verification LIV (logistics invoice verification) is the last step in procurement cycle. Transaction code is MIRO. LIV is done to
verify material quantity receipt during goods receipt and value of quantity receipt. Value is verified by verifying rate and taxes applicable multiply by
quantity. LIV is done separately for all the vendors involve in procurement cycle. Various vendors, which may be involved in procurement process,
are material supplier, freight vendor, customs house vendor, insurance vendor, and any other planned delivery cost vendor if any involve in the
process. An invoice document is made for a single vendor either for material or planned delivery cost.

As goods receipt is made against purchase order, LIV can also be made against purchase order. Purchase order is not the only reference document
against which LIV can be made. Other reference documents against which LIV can be made are scheduling agreement, delivery note number, bill of
lading, service entry sheet, and vendor code. LIV document serve as a documentary proof of verification for payment to vendors.

To start the process of LIV, let us understand how to do simple invoice verification in SAP . Later on, we would discuss various variants, controls and
features of logistics invoice verification. Transaction code is MIRO.

Chapter 6 Country India Version (CIN)

Country India Version of SAP deals with the, excise duty, service tax and VAT for India. Here we shall discuss the processes of mainly excise
treatment in India through SAP. Scope of CIN in this chapter is restricted to MM module transactions only.

Following business processes shall be discussed

1. Taxes in domestic procurement of raw material

2. Taxes in import procurement of raw material
3. Tax treatment in asset procurement
4. Tax treatment in stock transport order
5. Excise invoice capturing and posting
6. Service tax in service procurement
7. Capital Goods transfer of Goods
8. Utilization of excise duty
9. Excise JV (Journal Voucher)
Refer to SAP Note Number 542862 (For MM), 535616 (For SD) for SAP documentation on CIN, along with this chapter, in order to understand CIN
comprehensively,.

6.1 Excise Duty Excise duty is a duty which is levied on manufacturing of goods. Excise duty is also known as Central Excise Duty or CENVAT

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(Central value added tax). Any manufactured goods create a liability to pay taxes to central government of India. But for the ease of tax calculation
and keeping records tax is calculated at the time sale or stock transport from the manufacturing plant.

Chapter 7 Implementation Guide SAP is configured to use ERP software package. It is configured by SAP consultants in their respective domains
materials management, production planning, sales and distribution etc. Consultant use implementation guide to configure software as per the
business need. In this chapter configuration of materials management module is being explained in detail. Configurations of modules are
interdependent. There are precedence dependencies on many configurations of different modules. Configuration of the package starts with
organization structure in finance module, materials management module and other modules, respectively. Company and company codes are
configured in finance module, further to which organization structure of materials management is configured. Configuration details are explained as
below.

Annexure

ERP Implementation: A Process

Synopsis ERP, Enterprise Resource Planning is a discipline in which extensive research has been carried out and numerous methodologies churned
out. Enterprise Resource Planning is concept of automating and integrating the business process. The Information Technology has made a great
progress to realize the ERP from its concept in books. There are various software packages available to implement ERP in industry. But ERP is
incomplete without BPR (Business Process Reengineering). BPR could be done before, after or along with ERP. This is a debatable issue. But what
seems to be lacking is a structured approach.

The BPR methodology includes the five activities: Prepare for reengineering, Map and Analyze As-Is process, Design To-be process, Implement
reengineered process and Improve continuously.

The ERP methodology includes Title Preparation, Business process mapping and configuration design, Configuration and Development in
Development environment, Final preparation and Unit and Integration testing in Quality Server and finally Go-live and support.

Many application of ERP have been titled in the manufacturing sector. These sectors business processes have been studied and standardized. This
has made ERP implementation easier. In this title an attempt has been made to study the implementation of ERP/BPR with a case study in Agro
based industry. In Agro industry, though many issues are common to manufacturing sector, but it differs due to seasonality (3 months) purchase and
round the year sale, and hence huge inventory and material handling while purchasing raw material. Moreover, agro products require special;
handling due to their perishable nature and to fulfill the basic necessity of society.

This case study provides a review of ERP and BPR and present best of breed methodologies from contemporary literature and practice and
introduces a consolidated, systematic approach to the redesign of a business enterprise and implementing ERP. This is a case study of ERP (SAP)
and BPR implementation in Agro Industry.

Keywords: Enterprise Resource Planning, Business Process Reengineering, Methodology, Improvement, Implementation, Agro based industry, SAP

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