Universit degli Studi di Roma La Sapienza Dipartimento Idraulica Trasporti e Strade

SAP Logistics Execution

Ing. Andrea Campagna

Corso di Sistemi Informativi Aziendali Prof. Umberto Nanni

Contents
The ERP systems Overview of SAP The SAP Logistics Execution System

Enterprise Resource Planning

Commercial software packages that promise the seamless integration of all the information flowing through the company financial, accounting, human resources, supply chain and customer satisfaction (T. J. Davenport, 1988) ERP systems provide information management and analysis to organizations

Benefits of ERPs
on-line/real time information throughout all the functional areas of an organization data standardization and accuracy across the enterprise "best-practices" included in the applications the efficiency they force an organization to undertake the analysis and reporting that can be used for long term planning

ERPs impact on industry

Lower total costs in complete supply chain Shorten throughput times Reduce stock to a minimum Enlarge product assortment Improve overall product quality Increase reliability of delivery dates Improve customer service Coordinate demand, supply and production

ERP market share 2002

SAP AG 25,1% Oracle 7,0% Others 51,1%

Microsoft 4,9%

SAGE 5,4%

PeopleSoft 6,5%

Source: Gartner Dataquest (June 2003)

An example of ERP: SAP

mySAP PLM

mySAP ERP (R/3)

mySAP SRM
Financials Human Resources Logistics Corporate Services Operations

mySAP CRM

mySAP SCM SAP NetWeaver

SAP R/3 architecture

Software oriented view SAP GUI Frontend Hardware oriented view

router Application processes scalability

Database

DB

SAP R/3 functionalities

Financials (AC)
Financial Accountin (FI) Controlling (CO)

Human Resources (HR) Logistics (LO)

Sales and Distribution (SD) Materials Management (MM) Logistics Execution (LE)

Screenshot SAP R/3

10

Logistics Execution System

LE component maps a companys logistics processes, covering the entire process chain
Vendor, internal warehouse, production site, and distribution centre right through to the customers

11

LE processes include:
Inbound process Outbound process Internal warehouse Transportation process

SAP LES integrated part of the Supply Chain

PLANNING AND OPTIMIZATION Supply Network Planning Planning and Simulation Forecasting

12

Transportation

SAP LES

Warehouse Management

Purchasing

Production BUSINESS PROCESSES

Sales

Logistics Process
1. Sales order processing for goods issues
Handled mainly by Sales and Distribution (SD)

13

2. Ordering (purchase order processing) for goods receipts

Handled mainly by Materials Management (MM)

3. Physically moving goods in the supply chain SAP LES is the link between 1 and 2

Logistics overview
Sales order MRP External procurement Production Internal procurement Production Presales activity

14

Invoice verification

Inventory Management
Goods receipt Posting change Goods issue

Invoice receipt

Internal and external accounting

shipping

billing

Goods Receipt: procurement

Determination of requirements Determination of Source of supply Selection of vendor

15

Handling of payments

Ordering

Invoice verification

Goods receipt

Purchase order monitoring

Purchase orders
Purchasing

16

Purchase requisition

Purchase order

External vendor

Request For quotation (inquiry)

Other plant Master data

17

Goods receipt for purchase order

External vendor Or other plant Delivery of Materials ordered

Purchase order

Material document

Goods receipt posting

Accounting documents

Purchasing / inventory management

18

Goods issue: sales order processing

Presales activities

Order processing

Procurement

Payment

Billing

Shipping/ Transportation/ Goods issue

Goods issue for sales order

Sold-to party

19

Sales order

Outbound delivery Transfer order (pick order)

Ship-to party

Shipment

Bill-to party

Billing document Accounting documents

Goods issue

Payer

Sales and Distribution (SD)

Material document

The Shipping Process

Sales order Functions affecting shipping
-Determination of shipping point -Determination of route -Scheduling

20

Shipping point
-Monitoring of shipping due to dates -Create delivery

Warehouse
Goods issue Shipping documents Packing Picking

Warehouse Management
Storage bin management Planning and monitoring

21

Stock movements

Radio frequency (RF) connection

Warehouse control

Organizational Units and Master Data

Business Scenario
Master data and organizational units are required for mapping the IDES model company in the SAP System. Since you are the project team member responsible for this, you assign the necessary organizational units, and edit the appropriate master data.

23

Organizational Units
Company Code Plant Storage Location Warehouse Number Transportation Planning Point Shipping Point

24

The Company Code

Legally independent unit with a self-contained set of accounts The following are created at the company code level:
Financial statements Profit and loss statements

25

The Plant
A plant is an organizational unit in Logistics, and allows you to look at a company from the point of view of production, procurement, plant maintenance, and materials planning. A plant is a branch or division within a company.

26

The Storage Location

An organizational unit that enables you to distinguish between the various material stocks in a plant. Quantity-based inventory management data pertaining to the plant is summarized at the storage location level.

27

The Warehouse Number

28

An organizational unit that maps the company from a warehouse management perspective. A warehouse number corresponds to a warehouse complex containing different storage types that are organized differently. The physical conditions of the warehouse are mapped in the warehouse number.

Organizational Units in a Warehouse Number

Door 1 Door 2 Storage type 902

29

Goods Receiving Zone

Fixed bin storage Picking area 1 Picking area 2

Storage type 005

Shipping Area Staging Area 1 Staging Area 2

Storage type 916

Door 3 Door 4 Door 5

Bulk Storage
Storage type 004

Pallet storage Storage section 1 Storage section 2

Storage type 007

Warehouse Number 140

30

The Transportation Planning Point

Transportation Planning points
Planning, handling, And settlement of shipments

Hamburg International Ocean freight

1010

Hamburg Rail Transportation

1011

Dresden Truck Transportation

1200

The Shipping Point

31

A shipping point is an organizational unit that allows you to look at a company from the point of view of shipping, the shipping materials required, and the means of transportation required. On the goods receipt side of things, the goods receiving point corresponds to the shipping point.

Organizational structure
Company

32

Transportation Planning points

Plant 1

Plant 2

Plant n

Shipping points

Storage Location 1

Storage Location 2

Storage Location n

Warehouse number

Storage bins and quants

33

In Warehouse Management, the individual storage bins are defined within each storage type. A storage bin is the smallest geographical or organizational unit that can be addressed by the system. They can be mapped as coordinates: 02-04-09 aisle 02, stack 04, level 09 Bin type P1 for upper bins, P2 for lower bins The existence of a material (a value) in a bin is referred to as a quant.

Storage bins and quants

Quants are defined by:
Material (Batch) Stock category Special stock Plant / storage location (storage unit number)

34

35

Information contained in a quant

Material Stock category Plant/Storage location Special stock Batch Storage unit Available Stock Putaway/ Pick? Weight Goods receipt data Goods receipt number Last movement

Material Master
General Data Plant-specific Data Warehouse Management Data Purchasing Data Sales and Distribution Data Accounting Data

36

37

Views in a Material Master Record

Basic Data MRP Stock in plant Storage loc. Accounting Storage Warehouse Management Purchasing SD Work scheduling Quality Management Forecast Classification

Material Master

Customer Master
General Data Relevant to SD and accounting Relevant to accounting Valid for all organizational units Valid for Company Code
Valid for: sales organization / distribution channel / division

38

Company Code Data Sales Area Data

Relevant to SD

Vendor Master
General Data
Relevant purchasing and accounting

39

Valid for all organizational units Valid for Company Code

Valid for: purchasing organization

Company Code Data Purchasing organization data

Relevant to accounting

Relevant to purchasing

Universit degli Studi di Roma La Sapienza Dipartimento Idraulica Trasporti e Strade

SAP IDES
Ing. Andrea Campagna

Corso di Sistemi Informativi Aziendali Prof. Umberto Nanni

Contents
The IDES Exercise
Inbound deliveries and putaway in a WM Warehouse

41

The IDES
The "Internet Demonstration and Evaluation System" in the R/3 System, represents a model company. It consists of an international group with subsidiaries in several countries. IDES contains application data for various business scenarios that can be run in the SAP System. The focal point of IDES is the business processes and their integration.

42

Business areas
Human Resources Financial Accounting Product Cost Planning Overhead Management Profitability Analysis Planning Sales and Distribution Materials Management Production

43

The structure of the IDES group

IDES

44

North America Latin America

Company 1 Company 2 Company 1

Europe
Company 1 Company 2 Company 3 Company 4 Company 5

Asia
Company 1

Each company

45

has its own clearly defined business objectives within the consolidated group and is organized according to local business practices and legal requirements. Consolidation takes place across the financial areas. Accounting and Human Resources for each individual company have been adapted to meet the particular business objectives.

For example
The French subsidiary operates solely as a sales company. In Mexico, we represent high-inflation methods and the material ledger. The American and German subsidiaries produce goods, as well as carrying out purchasing and sales activities. Germany and the United States have been set up to use flexible standard costing. The United Kingdom uses static standard costing based on full costs.

46

IDES Logistics

47

A variety of products are manufactured and sold using the different organizational units within the Logistics area. IDES provides all the resources required for production and assigns them to the corresponding products through bills of materials (BOMs) and routings. Each product or product group represents a particular production type. IDES contains fully-integrated business processes for the production or sale.

Products
Product Elevators Motorcycles Cars Pumps Personal computer Lighting products Paints / solvents Tablets Food / cosmetics Process Type

48

Engineer-to-order Make-to-order production Sales-order-based repetitive manufacturing Make-to-order production Repetitive manufacturing Mass production Process industry, Chemicals Process industry, Pharmaceuticals Retail

Exercise
Inbound deliveries and putaway in a Warehouse Management warehouse

The problem

50

The IDES Purchasing department orders goods for plant 1000 (Hamburg). The purchase order is to be confirmed by the vendor using a shipping notification. When the shipping notification is received, the data is transferred to an inbound delivery document within the Logistics Execution System. The putaway takes place in the central warehouse of plant 1000. Goods movements and inventory management in this central warehouse are supported by the Warehouse Management system (WM).

The process scenario

External vendor Or other plant Delivery of Materials ordered

51

Purchase order

Material document

Goods receipt posting

Accounting documents

Purchasing / Inventory management

The process flow (1)

1. Creating a Purchase Order
As an IDES purchasing employee, you place an order for goods for plant 1000 (Hamburg).

52

2. Creating the Inbound Delivery

The vendor confirms the delivery date in the shipping notification. In this case, however, it is a partial delivery. You enter this in an inbound delivery document.

The process flow (2)

3. Executing the Putaway
When the ordered goods arrive, they are put into stock in the central warehouse. You use the delivery monitor to start and oversee the various putaway steps.

53

4. Resetting the Starting Situation

To avoid exceeding the storage capacity in the warehouse by repeating this demo several times, you now start a CATT that clears the stocks you have just placed into storage.