This spreadsheet is at template for conducting a very thorough Business Process Master List (BPML) analysis. The first tab is the template itself. The second tab is an illustrative example of a. Traits of SAP Business Process Owner A business process owner needs to be an active decision maker. Given any environment, scenario and situation, their responsibility is to make decisions taking into account the best interests of the organization, the comfort of the users and the viability of executing the decision.
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Every organization acquires material or services to complete its business needs. The process of buying materials and obtaining services from vendors or dealers is called procurement. Procurement should be done in such a way that materials are ordered in correct quantity, with a proper value at the proper time. It is subdivided into following parts −
Basic Procurement
Basic procurement is a process of acquiring goods or services in the right quantity, at the right price, and at the right time. However it is critical to maintain a right balance between quantity, price, and time. Consider the following example −
Procurement Lifecycle
Procurement in most modern organizations follow some sequential steps which are described below −
Requirement and Information Gathering
Procurement process starts with gathering information about a product and its quantity. Then for the required products and services, it is necessary to look for suppliers who can satisfy the requirements.
Supplier Contact
After gathering the requirements, one looks for the suppliers who can fulfill those requirements. Based on that, quotation requests or information requests are sent to the suppliers or they are contacted directly.
Background Review
Once the supplier is known, the product/service quality is checked, and any necessities for services such as installation, warranty, and maintenance parameters are investigated. Some samples of the products can be obtained for quality examination.
Negotiation
Some negotiations with suppliers is made regarding the price, availability, and delivery schedule of the products/services. Thereafter, a contract is signed that is a binding legal document between the supplier and the ordering party. A contract will include all necessary information such as price and quantity of material, delivery date, etc.
Order Fulfillment
Ordered material is shipped, delivered to the ordering party, and the supplier is paid accordingly. Training and installation of product or services may also be included.
Consumption, Maintenance and Disposal
As the products/services are consumed, the performance of the products or services is evaluated and any follow-up service support, if required, is analyzed.
Contract Renewal
Once the products or services are consumed or the contract expires and needs to be renewed, or the product or service is to be re-ordered, the experience with the vendors and service providers is reviewed. If the products or services are to be re-ordered, the company decides whether to order from the previous supplier or think about new suppliers.
Basic Procurement Activities
The following figure illustrates the flow of basic procurement activities −
A brief introduction of the procurement activities is given below −
Type of Basic Procurement
There are two types of basic procurement −
Procurement for Stock vs Consumption
The following points show the difference of Procurement for Stock vs. Consumption −
External vs Internal Procurement![]()
The following points show the difference of External vs Internal Procurement −
Special Procurement
Special stocks are the stocks that are managed differently, as these stocks do not belong to the company. Special stocks are kept at some particular location. Special procurement and special stock types are divided into the following categories −
Consignment Stocks
Consignment stocks are those material that is available at our store premises, however it still belongs to the vendor (seller) of the material. If you utilize the material from consignment stocks, then you have to pay to the vendor.
Third-party Processing
In third-party processing, a company passes on a sales order to the associate external vendor (seller) who sends the goods directly to the customer. The sales order is not processed by the company, but by the vendor (seller). Third-party items can be entered in purchase requisitions, purchase orders, and sales orders.
Pipeline Handling
In pipeline handling, the company need not order or store the material involved. It is obtainable as and when required via a pipeline (for example, oil or water), or another style of cable (such as electricity). The material that is consumed is settled with the vendor (seller) on a regular basis.
Returnable Transport Stock
The company orders goods from a vendor (seller). The goods are delivered with returnable transport packaging (pallets, containers) that belongs to the vendor (seller) and is stored at the customer premises until they return it to the company.
Subcontracting
The vendor (the subcontractor) receives components from the ordering party with the help of which it produces a product. The product is ordered by your company through a purchase order. The components required by the vendor (seller) to manufacture the ordered product are listed in the purchase order and provided to the subcontractor.
Stock Transfer Using Stock Transport Order
Goods are procured and supplied within a company. One plant orders the goods internally from another plant (receiving plant/issuing plant). The goods are procured with a special type of purchase order – the stock transport order. You'll be able to request and monitor the transfer of goods with a stock transport order.
Every organization either provides services or sells product. In order to achieve this organization has to perform certain interrelated activities. This sequence of activities is called business process. Initiation of one activity may depend upon completion of previous activity or multiple activities may be performed in parallel.
Every organization has various departments (Human Resource, production, material, sales & distribution, finance etc.) Each department performs certain set of activities/ task.
Business performs various activities by making use of SAP for processing data & sharing information. Data & information generated at each activity is captured and well documented. SAP basically helps in keeping track of all the activities performed and streamlining activities to be performed by sharing up to date information.
Let’s take examples to understand the meaning of business process how SAP contributes in enabling the business process.
Company selling product to its wholesale customers
Company receives order for products from wholesale customer. Products is loaded on ship/truck and handed over to transporter for delivery. Company bills the customer and customer pays against the bill. Company has to pay transporter for service.
Now customer returns some of the goods due to quality issues. Quality check is performed on returned goods to decide if goods are to be scraped or rework is needed before adding it to inventory.
Business process is a well-defined set of activities to be performed to handle a particular business scenario.
Now how do we replicate above process in SAP. Below diagram explains how SAP can help in handling above business scenario.
When company receives order from customer a sales order is created in SAP SD module.
Goods are handed over to transporter and status of delivery is tracked throughout, a delivery document is created in SAP SD. Delivery document is used to track picking, packing and finally goods issue. Once goods are moved out of company, documents are posted in SAP MM which ensures that inventory is adjusted and financial impact is also recorded in SAP FI.
When company bills customer a billing document is generated in SAP SD. Since company expects money from customer for sale hence revenue is booked. Customer invoice is posted in SAP which books revenue and account receivable against the customer. This accounting entry is posted in SAP FI.
When customer pays à customer payment is recorded against customer invoice. Payment document is recorded in SAP FI which clears account receivable and adjusts amount in bank account.
Now if customer returns some of the goods a credit memo is issued to customer with reference to sales order to adjust financials. Credit memo is created in SAP SD. Credit memo post financial document to adjust financials in SAP FI. Goods returned back are issued to quality check and decision is taken either to scrap or rework. In case goods are taken back to inventory, a document is posted in SAP MM to update inventory.
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Company has to pay transporter for services. Since company has purchased transport service from transport vendor. Hence a service purchase order is created in SAP MM which has details of service agreement. When transport vendor produces bills to company, company is expected to pay hence a document is posted in SAP FI which shows accounts payable against the vendor.
When company pays the vendor, vendor payment is recorded against vendor invoice. . Payment document is recorded in SAP FI which clears account payable and adjusts amount in bank account.
Hence SAP is enabling the business process by recording and sharing data & information generated at each step. SAP is helping all departments (sales, material & finance) to coordinate and produce desired result.
Lets take another example to understand concept of business process
E commerce business e.g. Paytm
Above diagram depicts activities which are to be performed in sales process by Paytm. Since activities might require coordination between various departments hence organisation may deploy ERP (SAP). Data generated at each activity has to be recorded and information has to be shared between various departments.
It might happen that along with SAP few more software are being used in organization. Hence interface (data sharing) between SAP and other software might be required.
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