Martin Murray

Discover Logistics with SAP

®

Bonn � Boston

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 Contents at a Glance

PART I  Procurement and Logistics Execution

1 Introduction to Logistics with SAP . ............................. 25

2 Procurement . ............................................................... 39

3 Inventory Management ................................................ 67

4 Warehouse Management ............................................. 89

5 Inbound and Outbound Logistics . ............................. 109

PART II  Product Development and Manufacturing

6 Product Planning . ...................................................... 129

7 Manufacturing Operations ......................................... 153

8 Plant Maintenance ..................................................... 181

9 Quality Management ................................................. 209

PART III  Sales and Service

10 Sales Order Management . ......................................... 241

11 Customer Service ....................................................... 275

12 Transportation Management ...................................... 301

PART IV  Implementation and New Technologies

13 Implementation ......................................................... 327

14 New Technologies and Conclusion ............................. 351

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Acknowledgments........................................................................... 15
Preface............................................................................................ 17
Who This Book Is For ............................................................ 17
Navigational Tools for This Book ........................................... 18
Organization of This Book ..................................................... 18
Section 1 – Procurement and Logistics Execution.............. 19
Section 2 – Product Development and Manufacturing...... 20
Section 3 – Sales and Service............................................ 20
Section 4 – Implementation and New Technologies.......... 21

PART I  Procurement and Logistics Execution

  1 Introduction to Logistics with SAP ........................... 25

Origins of SAP . ..................................................................... 25

SAP and Logistics .................................................................. 28
Definition of Logistics....................................................... 28
Logistics Functionality ........................................................... 32
Procurement and Logistics Execution................................ 32
Product Development and Manufacturing........................ 34
Sales and Service.............................................................. 35
Conclusion ............................................................................ 37

  2 Procurement . ............................................................. 39

SAP Organization Structure ................................................... 39

Creating the Client Landscape........................................... 40
Company Code................................................................. 41
Plant................................................................................. 42
Storage Location............................................................... 43
Warehouse....................................................................... 45
Storage Type..................................................................... 46
Storage Section................................................................. 46
Storage Bin....................................................................... 48
Purchasing Organization Structure ........................................ 48

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Purchasing Organization................................................... 48
Purchasing Group............................................................. 51
Purchasing Process ................................................................ 53
Purchasing Best Practices.................................................. 53
Purchase Requisition........................................................ 55
Request for Quotation (RFQ)............................................ 57
Quotation......................................................................... 59
Purchase Order................................................................. 59
Accounts Payable .................................................................. 62
Invoice Verification........................................................... 62
Summary ............................................................................. 66

  3 Inventory Management ............................................. 67

Plant Structure ...................................................................... 68

Plant................................................................................. 68
Storage Location............................................................... 70
Goods Movements . .............................................................. 72
Goods Receipt.................................................................. 72
Goods Issue...................................................................... 73
Returns............................................................................. 74
Reservations..................................................................... 75
Stock Transfers and Transfer Postings................................ 76
Physical Inventory ................................................................. 82
Physical Inventory Procedures........................................... 83
Preparing for the Physical Count....................................... 83
Performing the Physical Count.......................................... 84
Count Discrepancies......................................................... 85
Completing the Physical Inventory.................................... 86
Summary . ............................................................................. 87

  4 Warehouse Management . ......................................... 89

Warehouse Structure . ........................................................... 90

Warehouse....................................................................... 91
Storage Types................................................................... 92
Storage Section................................................................. 93
Storage Bin....................................................................... 95
Quant............................................................................... 96

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Warehouse Movements ........................................................ 97

Movements Triggered by SAP Inventory Management...... 98
Transfer Requirement........................................................ 98
Transfer Order ............................................................... 101
Printing Transfer Orders.................................................. 105
Summary ............................................................................ 106

  5 Inbound and Outbound Logistics ............................ 109

Inbound Logistics . .............................................................. 110

Shipping Notification...................................................... 110
Manually Created Inbound Deliveries............................. 111
Delivery Monitor............................................................ 112
Goods Receipt................................................................ 114
Outbound Logistics ............................................................. 117
Outbound Delivery......................................................... 118
Picking........................................................................... 119
Packing Using Handling Units......................................... 121
Goods Issue.................................................................... 122
Proof of Delivery............................................................ 124
Summary ............................................................................ 124

PART II  Product Development and Manufacturing

  6 Product Planning ..................................................... 129

Sales and Operations Planning ............................................ 130

Standard Sales and Operations Planning......................... 130
Flexible Sales and Operations Planning........................... 132
Master Data in Sales and Operations Planning................ 132
Reporting....................................................................... 133
Demand Management ........................................................ 137
Make-to-Stock Strategy.................................................. 138
Make-to-Order Strategy................................................. 139
Strategy for Configurable Materials................................. 141
Planned Independent Requirements............................... 142
Customer Requirements................................................. 144
Materials Requirements Planning ....................................... 145
Planning with MRP......................................................... 146

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Executing the Planning Run............................................ 146

Summary ............................................................................ 150

  7 Manufacturing Operations ...................................... 153

Manufacturing Structure ..................................................... 154

Work Centers................................................................. 154
Bill of Materials.............................................................. 159
Routings......................................................................... 161
Routings for Configurable Materials................................ 162
Production Resources and Tools (PRT)............................ 163
Shop Floor Control . ............................................................ 164
Production Order........................................................... 165
Confirming a Production Order....................................... 170
Production Order Settlement.......................................... 173
Printing Shop Papers....................................................... 174
Order Info System.......................................................... 175
Product Costing .................................................................. 176
Cost Estimate with a Quantity Structure......................... 176
Cost Estimate without a Quantity Structure.................... 178
Summary ............................................................................ 179

  8 Plant Maintenance ................................................... 181

Maintenance Organization Structure ................................... 182

Functional Location........................................................ 182
Equipment...................................................................... 185
Preventive Maintenance . .................................................... 191
Maintenance Task List.................................................... 192
Maintenance Plans......................................................... 195
Maintenance Scheduling................................................. 197
Maintenance Processing . .................................................... 201
Maintenance Notifications.............................................. 201
Converting Notifications to Maintenance Orders............ 203
Maintenance Orders....................................................... 204
Summary ............................................................................ 208

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  9 Quality Management ............................................... 209

Quality Management Structure ........................................... 211

Catalog........................................................................... 211
Code Groups.................................................................. 211
Code.............................................................................. 211
Selected Set.................................................................... 212
Inspection Characteristic................................................. 213
Quality Planning ................................................................. 214
Material Specification..................................................... 215
Inspection Plan............................................................... 216
Quality Notifications ........................................................... 218
Customer Complaint....................................................... 218
Complaint Against a Vendor........................................... 220
Internal Problem Report................................................. 221
Notification Monitoring.................................................. 222
Quality Inspections ............................................................. 224
Inspection Lot................................................................ 224
Recording Results........................................................... 227
Defects Recording.......................................................... 229
Usage Decision............................................................... 230
Quality Certificates......................................................... 231
Reporting....................................................................... 233
Summary ............................................................................ 236

PART III  Sales and Service

  10 Sales Order Management ........................................ 241

Sales Structure .................................................................... 243

Sales Organization.......................................................... 243
Distribution Channel...................................................... 244
Sales Division................................................................. 246
Sales Office..................................................................... 247
Sales Group.................................................................... 248
Sales Ordering .................................................................... 250
Customer........................................................................ 250
Customer Inquiry............................................................ 254

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Customer Quotation....................................................... 255

Sales Order..................................................................... 256
Scheduling Agreements.................................................. 258
Contracts........................................................................ 258
Credit Memo.................................................................. 263
Shipping Processes .............................................................. 265
Packing........................................................................... 265
Outbound Delivery......................................................... 266
Goods Issue.................................................................... 267
Billing Function . ................................................................. 267
Billing Processes............................................................. 267
Creating Billing Documents............................................ 269
Reporting....................................................................... 271
Summary ............................................................................ 274

  11 Customer Service ..................................................... 275

Service Structure ................................................................. 277

Material......................................................................... 277
Equipment...................................................................... 278
Functional Location........................................................ 279
Installed Base................................................................. 281
Service Agreements . ........................................................... 282
Service Contract............................................................. 282
Warranties...................................................................... 288
Service Processing ............................................................... 290
Service Notification........................................................ 290
Activity Report............................................................... 292
Service Orders................................................................ 293
Repair Order................................................................... 295
Confirmations................................................................. 297
Billing............................................................................. 298
Summary ............................................................................ 299

  12 Transportation Management ................................... 301

Transportation Planning ...................................................... 302

Transportation Planning Point......................................... 303
Shipping Type................................................................. 304

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Routes and Stages.......................................................... 305

Forwarding Agent........................................................... 306
Shipment........................................................................ 308
Transportation Planning List............................................ 310
Shipment Status Monitor................................................ 312
Freight Costs ....................................................................... 313
Modes of Transportation................................................. 313
Shipping Rates................................................................ 316
Shipping Costs................................................................ 318
Transportation Execution .................................................... 320
Check-In List.................................................................. 320
Shipment Completion List.............................................. 321
Posting Goods Issue........................................................ 322
Summary ............................................................................ 323

PART IV  Implementation and New Technologies

  13 Implementation ....................................................... 327

SAP ERP Implementation ................................................... 327

Why Implement SAP?..................................................... 328
Implementation Methodologies...................................... 330
ASAP Methodology........................................................ 330
Project Preparation......................................................... 332
Business Blueprint.......................................................... 334
Realization...................................................................... 336
Final Preparation............................................................ 338
Go-Live and Support...................................................... 340
Total Cost of Ownership (TCO) . .......................................... 341
History of Total Cost of Ownership ................................ 342
Direct and Indirect Costs................................................ 342
Calculating the Total Cost of Ownership......................... 344
Return on Investment (ROI) ................................................ 345
Objective Measurements................................................ 346
Subjective Measurements............................................... 347
Summary ............................................................................ 348

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  14 New Technologies and Conclusion .......................... 351

SAP NetWeaver .................................................................. 351

Integration..................................................................... 352
Key Benefits................................................................... 352
Service-Orientated Architecture (SOA) ............................... 353
Services and SOA............................................................ 353
SOA with Enterprises...................................................... 355
Enterprise Services Bundles............................................. 356
SAP Supply Chain Management (SAP SCM) . ....................... 357
Flexibility in the Supply Chain......................................... 357
Phases for an Adaptive Supply Chain.............................. 357
SAP Supplier Relationship Management (SAP SRM) ............ 359
Core SRM Functionality.................................................. 360
Supplier Collaboration.................................................... 361
Supplier Base Management............................................ 361
Conclusion .......................................................................... 361
Lessons Learned............................................................. 361
Future Direction............................................................. 365

  Appendices

A  Bibliography............................................................................. 367

B  Glossary................................................................................... 369

Index............................................................................................. 379

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 2
Procurement

Every company has to purchase items, from the raw materials that
go into making a component in a finished product to the external
services needed to help in the manufacture of an item, the equipment
that is required to manufacture items, and even buildings to house
the manufacturing process. The science of purchasing has become
part of today’s efficient business operation. But before any purchasing
happens, the purchasing department has to research and negotiate
the best prices through policies and technology to ensure that your
company is getting the right materials at the best cost.

In this chapter, we’ll examine the organizational structure within SAP,

along with the organization of the purchasing department, the com-
ponents of the procurement process, and how accounts payable oper-
ates within the system.

SAP Organization Structure

Let’s briefly review some of the technical aspects of SAP software and
then examine the organizational structure that is defined in SAP.

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Creating the Client Landscape

SAP instance When your company purchases SAP software, you need to create your
SAP landscape by installing and configuring the software according to
your specific needs. In SAP terminology, this is called an instance. Your
company can have more than one SAP instance, but they’ll exist on dif-
ferent SAP systems. Within one SAP instance, a number of clients will be
created. A client is an organizational and legal entity in the SAP system.

What is master Master data is the detailed information stored in the SAP system that
data? describes the materials, vendors, and customers you use. Master data is
protected within the client, so it can’t be seen from outside. The data in a
client is only visible within that client and can’t be displayed or changed
from another client. For example, if your company has subsidiaries that
also use SAP applications, they can use your physical SAP software and
servers, but they use a different client. The subsidiaries would not have
access to your data, nor would your company have access to theirs.

Multiple clients SAP systems have multiple clients that each have a different objective
and represent a unique environment. Clients also have their own sets
of tables and user data.

After the SAP software has been installed, the technical team needs to
create a number of clients that reflect the customer needs. The general
client structure for an SAP implementation includes a development
client, training client, quality client, and production client.

Development client The development client is where all development work, such as the
setup of the plants, storage locations, and configuration work, should
take place. There may be more than one development client created.
For example, there may be a sandbox client, for general users to prac-
tice and test configuration. There may also be a clean or golden de-
velopment client where the specific configuration is made and from
which it’s then transported to the quality client for review before
moving to the production client.

Training client The training client usually reflects the current production system and
is used primarily for training project staff and end users. When con-
figuration is transported to the production client, it’s transported to
the training client at the same time. Although the training client is
useful for training, it isn’t necessity for a successful implementation.

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Other clients may be needed for SAP NetWeaver Business Intelli-

gence (SAP NetWeaver BI) and other SAP software, such as SAP Sup-
ply Chain Management (SAP SCM) or SAP Customer Relationship
Management (SAP CRM).

To successfully manage this client environment, you need strict pro-

cedures and security so that the integrity of the clients is maintained.

Company Code
The company code is defined in SAP as the smallest organizational unit Defining a company
for which a complete self-contained set of accounts can be drawn up. code

It’s important to be able provide data for generating balance sheets

and profit-loss statements. The company code represents legally in-
dependent companies. Using more than one company code allows a
customer to manage financial data for different independent compa-
nies at the same time. When a customer is deciding on its organiza-
tional structure, one or more company codes can be used.

Example
If an American company has components of its organization in Canada
and in Mexico, it may be appropriate to use three company codes instead
of one.

Figure 2.1 shows the data that is entered for a company code.

Figure 2.1 Company Code Data Screen

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Plant
Plants When you think of a plant, your mind probably goes to a manufactur-
ing site where equipment, warehousing, and offices are located. In
SAP terms, the definition of a plant can vary. From a logistics view, a
plant can be defined as a location that holds valuated stock or as an
organizational unit that is central to production planning. A plant can
also be defined as a location that contains customer service or main-
tenance facilities. The definition of a plant will vary depending on the
need of the customer. Figure 2.2 shows the data that is entered for a
plant.

Figure 2.2 Plant Data Screen

The organizational structure within SAP applications allows the plant

to be assigned to a company code. So a company code can have one

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or many plants associated with it. If you look at how your own com-
pany is structured, you can easily see which locations can be defined
as plants.

Tip
Carefully consider the plant structure before configuring the SAP system.
Although it’s easy to add plants in SAP software, you don’t want to spend
unnecessary time changing the structure.

In Figure 2.3, the plant 9002 is associated with company code 1299.

Figure 2.3 Plant Associated with a Company Code

Storage Location
A storage location is a section or area within a plant. It’s usually de- Storage locations
fined as a specific area where stock is physically kept within a plant.
There will always be at least one storage location defined for one
plant, but there can be more than one, depending on the setup. Fig-
ure 2.4 shows a number of storage locations defined for a single plant
in SAP.

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Figure 2.4 Storage Locations Associated with a Plant

There are no set rules or physical requirements for what a storage lo-
cation should look like. SAP customers have a variety of very specific
inventory-monitoring requirements. A physical storage location is an
area that contains inventory separated from other inventory. Depend-
ing on the physical size of the materials involved, this may be as small
as a 2-inch square bin or as large as an entire building. Storage loca-
tions can define areas of racking, shelves, plastic bins, refrigerators,
tool cages, safes, and so on.

Tip
Create only the number of storage locations that are needed to operate
an efficient inventory process. Unnecessary storage locations create un-
necessary movements and reduce efficiency.

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Warehouse
A warehouse is part of the SAP Warehouse Management (SAP WM) SAP Warehouse
functionality, which allows the customer to further specify locations Management

within a storage location. If you need to know more than just the
contents of a storage location, the WM functions can be configured.
Figure 2.5 shows a number of warehouses configured in SAP.

Figure 2.5 Warehouse Entries in SAP

The warehouse is a defined physical area assigned to a storage loca-

tion. Using a warehouse gives a company the ability to track items
down to a very low-level location, which is the storage bin. This can
be important if there are thousands of items in a single storage loca-
tion that are required to be moved, either in or out, with minimum
time. The warehouse can be divided into storage types, sections, and
bins.

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Warehouses The warehouse is assigned to a storage location or number of stor-

assigned to storage age locations in the SAP system. Figure 2.6 shows the assignment of
locations
warehouses to storage locations and plants.

Figure 2.6 Warehouse Associated with Storage Locations

Storage Type
Areas within a A storage type is an area of the warehouse that users can base searches
warehouse on. Common storage types in a warehouse can be areas such as cold
room, bulk storage, and high racking area. Search strategies can be
configured at the storage type level that allow different types of stock
placement and stock removal to be defined. Figure 2.7 shows storage
types created for a warehouse.

Storage Section
A storage section is an area of the storage type used to divide the stor-
age type further; for example, if the bulk storage area had two levels,
each level could be defined as a storage section. Figure 2.8 shows
storage sections for the storage types of Warehouse 276.

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Figure 2.7 Storage Types Defined for Warehouse 276

Figure 2.8 Storage Types Defined for Warehouse 276

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Storage Bin
Smallest location in A number of storage bins can be defined for each storage section. A
the warehouse storage bin is the lowest level of storage in the plant.

Now that you understand the organizational structure found in an

SAP system, the next section will review the purchasing organization
and how it integrates with the structure defined in this section.

Purchasing Organization Structure

Any purchasing function can range from simple to very complex. The
largest SAP customers may spend hundreds of millions of dollars in
purchasing each year and have a sophisticated purchasing department
that works at many different levels, from strategic global procurement
to low-level vendor relationships. SAP software can be defined to al-
low all purchasing departments to be accurately reflected.

Modernizing the Smaller SAP customers are working to eradicate requisition cards and
purchasing function create a modern purchasing department. Every purchasing depart-
ment is unique, but the organizational structure defined within the
SAP system allows your company to adopt best practices to maximize
the benefits SAP applications provide.

Purchasing Organization
A purchasing organization refers to a group of purchasing activities
a­ ssociated with all or a specific part of the enterprise.

Purchasing function For example, if a company has three plants; New York, Chicago, and
structure Houston, there can either be a single purchasing organization that
negotiates contracts for all three plants or a purchasing organization
at each plant that locally negotiates with vendors.

The number of purchasing organizations depends on a several factors.

For example, if the three plants all use the same materials from the
same vendors, then a single purchasing organization may be more
suitable; however, if the plants use different materials from local ven-
dors, then a purchasing organization for each plant may be more ap-

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propriate. The decision to adopt the use of more than one purchas-
ing organization may be more complex and requires a study of what
materials and services are purchased across the enterprise, how those
materials are purchased, and by whom.

Tip
The flexibility in the SAP system means that whatever purchasing struc-
ture your company has, it can be replicated in the system.

Figure 2.9 shows a number of purchasing organizations that have

been configured.

Figure 2.9 Purchasing Organizations in SAP

SAP systems provide a number of ways to configure the purchasing

organization.

Purchasing Across the Whole Organization

For large companies, procurement, which some companies call pur- Single purchasing
chasing, may take place at the highest level within an organization. organization

If a customer has a central purchasing department that coordinates

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purchasing for all companies within the enterprise, then the purchas-
ing organization can be configured in that manner. The purchasing
organization is defined in the SAP software and then assigned to all
companies. Companies such as General Motors and Coca-Cola negoti-
ate and procure materials and services on a global basis for the com-
panies within their organizations.

Purchasing at a Company Level

Different Some large companies don’t have a single business-wide purchasing
companies, different function and may have centralized purchasing for each company. This
purchasing
may be appropriate for companies with entities in various countries,
in which case, an enterprise purchasing department may not be pos-
sible. In this scenario, the purchasing organization is created and as-
signed for each company code. However, a purchasing organization
may cover several companies.

Example
A company that has a purchasing organization for Mexico may be as-
signed as the purchasing organization for the companies based in Belize,
Honduras, and Guatemala.

Figure 2.10 shows purchasing organizations in the SAP system that

have been assigned to a company code.

Figure 2.10 Purchase Organization Assigned to Company Code

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Purchasing at the Plant Level

In an enterprise that has companies with large autonomous plants; Local purchasing
the purchasing decisions may be made at a local level. A company function

may decide that assigning one purchasing organization to one com-

pany isn’t appropriate, and it would be a better business decision to
assign a purchasing organization at the plant. This scenario is advanta-
geous when the vendors are at a local level and few vendors supply
materials or services to more than one plant.

Example
In the oil industry, oil refineries are so large and geographically dispersed
that companies may not be able to use a company-wide purchasing de-
partment because the vendors are local to the refineries and therefore
require the purchasing organization to be at the plant level.

Figure 2.11 shows purchasing organizations that have been assigned

to a plant.

Figure 2.11 Purchasing Organization Assigned to a Plant

Purchasing Group
Your company can define its purchasing department below the level Organization of
of purchasing organization. The purchasing group can be defined as a purchasing staff

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person or group of people dealing with a certain material or group of

materials purchased through the purchasing organization. In larger
organizations, there are often groups of employees in the purchas-
ing department who work with certain vendors or certain types of
vendors.

Example
Large companies can assign each vendor a dedicated person within the
purchasing organization to be the point of contact. If the company uses
a vendor as a single source for a large number of materials or services—
for example, for scientific testing products, a company may use VWR,
Fischer Scientific, or Cambridge Scientific Products—then the purchasing
department may have a group of employees who are dedicated to that
one vendor.

Purchasing group for In smaller companies, one single purchasing department employee
multiple vendors may deal with a variety of vendors that fall under a specific area;
for example, in a chemical company, one purchasing department em-
ployee may be responsible for all vendors that supply organic com-
pounds. Figure 2.12 shows a number of purchasing groups that have
been configured in SAP.

Figure 2.12 Purchasing Groups

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Now that we’ve discussed the SAP purchasing organization, let’s go

on to examine the procurement processes that are used.

Purchasing Process

The SAP purchasing processes allow the purchasing department to

use the best practices that are found in world-class purchasing orga-
nizations.

Purchasing Best Practices

In the procurement of materials and services, the purchasing depart- Best practices
ment does more than just process orders. The modern purchasing improve efficiency,
reduce costs
department manages a process that ensures the items the company
purchases are of the highest quality, at the lowest cost, delivered in a
timely manner. The following subsections describe the best practices
used in world-class purchasing department.

Information Gathering
When a new product has been developed, design engineers often re-
quire materials or services to be procured that may be new to the
company. The purchasing department is responsible for searching for
suppliers who can satisfy the requirements. Purchasing departments
start with their current vendors who offer the best discounts to en-
sure that the new material or service is procured at the best possible
price.

Request for Quotation

If the material can’t be procured from contracted vendors, or the price RFQs create vendor
and quality aren’t acceptable, the purchasing department advertises competition

or sends potential vendors a request for quotation (RFQ), request for

proposals (RFP), request for information (RFI), or request for tender
(RFT). The purchasing department evaluates any reply based on a set
of defined criteria to obtain the best product at the best price.

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Tip
If your company is going to use RFQs, you should implement a set of
guidelines that will assist in the process. You probably don’t want to send
out an RFQ for every material or service that is purchased, so identifying
the relevant items is important.

Background Review
Vendor evaluation If a company has used a vendor before, the company will have in-
formation about that vendor within the system. SAP software has a
vendor evaluation function that uses objective and subjective analysis
to help in the evaluation of vendors. If the vendor hasn’t been used
before, the purchasing department requires references for the mate-
rial or service quality. The purchasing department also investigates
installation, maintenance, and warranty information. If the material
is to be used in the production process, the quality department may
examine samples and undertake trials of the material.

Negotiation
Produce significant The purchasing department is also responsible for entering into nego-
price reductions tiations with potential vendors. The agreement isn’t just about price
and discounts but also availability lead times and quality. The negotia-
tion of the terms of an agreement can be prolonged, but the purchas-
ing department must be fully aware of upcoming sales orders and
production lead times.

Contract Monitoring
Monitor your After the contract is signed, the purchasing department monitors the
contracts performance of the vendor based on the terms of the contract. The
purchasing department evaluates on-time delivery, checking that the
correct quantity arrived, ensuring that the quality of the material was
per the contract, and verifying that the invoicing was sent correctly
with the correct price, delivery charge, and appropriate discounts.

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Contract Renewal
After a specific time, determined by the contract, the purchasing de-
partment enters into contract renewal negotiations with the vendor.
The vendor’s performance with the material and other materials it
supplies will be considered and evaluated.

Example
If the vendor has a perfect record with one material but fails evaluation
constantly with other materials it supplies, contract renewal with the
vendor may not be considered.

Monitoring the vendor’s performance allows the purchasing depart-

ment to enter into negotiations with leverage that can produce a bet-
ter price for the material in subsequent contracts. If the purchasing
department or the production department doesn’t want to renew the
contract for the material or service, the purchasing department is re-
quired to start a new RFQ process to find a new vendor for the mate-
rial.

Purchase Requisition
The purchase requisition is the procedure by which users can request Purchase
the purchase of materials or services that require processing by the requisitions
shouldn’t specify
purchasing department. Companies can allow certain authorized us-
vendors
ers to enter purchase requisitions directly into the SAP system, but
in situations involving a particular dollar value or type of goods and
services, the company may request another method of informing the
purchasing department of the purchasing requisition, such as fax or
email. Figure 2.13 shows a purchase requisition that has been entered
into SAP. The purchase requisition includes the quantity, cost center,
and purchasing group responsible for the purchase. The purchasing
group monitors new requisitions and processes those for which they
are responsible.

55

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 Procurement
2

Figure 2.13 Purchase Requisition

Placing requisitions A growing number of companies have implemented a web-based

via intranet frontend to purchase requisitioning over their company intranets, and
authorized users can go to a URL and enter the material or services
they need instead of having direct access to the SAP system. Some
companies have purchased Internet requisition software, whereas
others have built their own applications in-house. The benefit of this
type of application is that it can allow any employee to create a requi-
sition without having to sign on to the SAP system or be an SAP user.
This can be beneficial because it requires less administration work for
your SAP security staff.

Figure 2.14 shows an example of an Internet-based purchase req-

uisition application. The user can add a vendor, items, and quanti-
ties, and, if the application accesses a vendor catalog, a price can be
shown.

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 Purchasing Process
2

Figure 2.14 Web-Based Purchase Requisition Application

After the purchase requisition has been created, it can be converted

to a purchase order (PO) or can be used as the basis for an RFQ if the
material or service isn’t currently purchased by the company.

Request for Quotation (RFQ)

When the purchasing department receives and reviews purchase req- RFQs give new
uisitions, there may be a material or service that requires the purchas- vendors
opportunities
ing department to offer an RFQ.

Many scenarios require the purchasing department to produce an RFQ:

› Material or service has not previously been purchased by the com-

pany.
› Previously used material or service has no valid vendor.
› Material or service requires a new vendor because the previous
vendor’s contract was not renewed.
› Material or service requires a new vendor to be found due to new
government regulations or laws.

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 Procurement
2

› Material or service requires a new vendor to be found due to logis-

tical issues.

The purchasing department either publishes an RFQ from which ven-

dors then send a quotation, or the purchasing department specifically
sends the RFQ to a number of vendors that have been preselected.
These vendors currently have a contract with the company, have been
identified by the person who entered the requisition, or have been
identified by the purchasing department after investigation.

Detailed RFQs The RFQ can contain as little or as much information as the purchas-
produce accurate ing department deems necessary for a competitive bid situation. If
vendor quotes
the material or service is low cost and has little strategic impact, then
the RFQ will be relatively simple. However, if the item or service is of
high value, it may not be a question of just cost but other factors that
determine which vendor offers the most competitive bid. In complex
RFQs, the purchasing department may require vendors to supply in-
formation on quantity discounts and rebates, detailed quality specifi-
cations, delivery and lead time requirements, period of warranty, de-
tailed drawings, and so on. Figure 2.15 shows an RFQ that has been
entered into the SAP software. The RFQ shows the required material,
quantity, delivery date, and the deadline date for a response.

Figure 2.15 Request for Quotation

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 Purchasing Process
2

The RFQ can be transmitted to the vendor by email or EDI (Electronic Transmitting an RFQ
Data Interchange), or it can be printed from the SAP system and then
faxed or sent. Each vendor sends back to the purchasing department
a quotation based on the contents of the RFQ.

Quotation
The vendor sends a quotation to the purchasing department via email, Vendor response
EDI, fax, or mail. Each vendor’s quotation is evaluated by the purchas- to RFQs

ing department to ensure that it abides by the stipulations of the RFQ

that was sent out. If the vendor failed to reply in the format required,
this may disqualify the vendor’s bid. The purchasing department may
enter into negotiations with one or more vendors before making a
decision on a primary and secondary vendor. After a final decision is
made, the details of the contract are entered into the SAP application,
so that the information is available when a PO is created.

Purchase Order
A purchase order (PO) is a commercial document issued by a purchas- PO equals vendor
ing department to the vendor. The PO specifies the material or service contract

required, the quantities, and the negotiated price that the vendor and
purchasing department have agreed upon.

You can create a PO from a purchase requisition that has been entered
into the SAP system. It can be created as a direct result of a quota-
tion from a vendor replying to an RFQ. In addition, you can enter a
PO directly into SAP without a requisition. Your company policies on
procurement determine the purchasing processes allowed.

Tip
Allowing staff to enter POs without any requisition is a valid purchasing
process, but it bypasses the requisition process and negates any possible
savings and efficiencies.

The PO can only be given to one vendor via email, fax, mail, or EDI. Submitting a PO
Figure 2.16 shows a PO that has been entered into SAP.

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2

Figure 2.16 Purchase Order Entered into SAP

Vendors can receive an acknowledgement of the PO via EDI.

Different types of Changes to the PO, such as additional items or quantities, can be
POs made and communicated to the vendor via either fax or EDI trans-
action number 860. A number of different POs can be created for a
variety of situations that occur within your company.

Outline Purchasing Agreement

Blanket PO An outline purchasing agreement is often referred to as a blanket PO
and is used between a company and a vendor where a set of terms
and conditions are agreed upon that covers a number of materials or
services that will be purchased over a period of time.

Example
A purchasing department sets up an outline purchase agreement with an
office supply company, and the office staff requisitions a variety of office
supplies from the vendor’s catalog. The purchasing department then pur-
chases these items against the existing outline purchasing agreement.

Scheduling Agreement
Purchased items A scheduling agreement is similar to an outline purchase agreement
required at regular because it’s created between a company and a vendor for items over
intervals

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 Purchasing Process
2

a given period based on agreed terms and conditions. However, a

scheduling agreement is used where the vendor is to supply the items
on a given schedule required by the company.

Example
A company that manufactures vacuum cleaners has determined its sales
forecast for the year and has put a production plan into place that manu-
factures 5,000 vacuums a week. This requires 20,000 feet of electrical
cord for each weekly run. The company creates a scheduling agreement
with the vendor of the electrical cord that will deliver 40,000 feet of
electrical cord every 2 weeks.

Quantity Contract
In some instances, the purchasing department and the vendor negoti- Contract for a
ate an agreement whereby the terms and agreement of the deal are specific quantity of
material from a
valid for a quantity of material or services over a given period of time.
vendor
This is called a quantity contract and is used when a company has a
specific requirement that has been identified.

Tip
A quantity contract can be used with new vendors when you guarantee
a minimum purchase. When the quantity in the contract has been ex-
ceeded, the purchasing staff can assess whether the contract should be
renewed.

Example
It the vacuum cleaner manufacturer has a special promotion that includes
a handheld cleaner with every full-size vacuum purchased, the purchas-
ing department can create a quantity contract with a vendor to provide
a service to create special packaging for the promotion. The company
has identified a specific quantity of vacuums that it wants to include in
the promotion, and the contract with the vendor is based on that given
quantity.

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2

Value Contract
Similar to the quantity contract, a value contract is an agreement with
a vendor in which the terms and agreement of the deal are valid for
a given period of time, but are based on value rather than quantity of
materials or services.

Example
If the vacuum manufacturer wants to analyze how consumers viewed its
special promotion, the company can hire a market research company to
perform in-store surveys. The sales department has a budget of $20,000
for this analysis, and the purchasing department negotiates a value con-
tract with the market research company to allow the sales staff to requisi-
tion services against that contract.

After the vendor has been notified of the company’s requirements

through the submission of a PO, the materials or services are sent or
provided. The vendor then invoices the company to get payment.

The next section examines the accounts payable processes in the SAP
system, which is where these vendor invoices are dealt with.

Accounts Payable
Paying vendors Accounts payable can be defined as the money that your company
owes to vendors for materials or services purchased on credit. The
items appear on your company’s balance sheet as a current liability.
When accounts payable are paid off, it represents a negative cash flow
for the company.

Let’s examine the accounts payables processes found in SAP.

Invoice Verification
Verifying invoices Invoice verification is part of the accounts payment process where
vendors are paid for materials or services that they have provided.
The verification of the invoice is important to both the vendor and
the purchaser because it ensures that the quantities and the pricing

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 Accounts Payable
2

are correct and that neither party has made an error. The standard
method of invoice verification is the three-way match.

Three-Way Match
Invoice verification using a three-way match takes the PO supplied to Invoice matching to
the vendor, the goods receipt or delivery note supplied by the vendor, PO and receipt

and the invoice sent to the customer from the vendor. In a success-
ful three-way match, the quantity and price of the three documents
match, and the payment to the vendor is sent via check or bank trans-
fer at a date defined by an agreement between the company and ven-
dor. Figure 2.17 shows the entry of an invoice into SAP.

Figure 2.17 Invoice Entered into SAP

Evaluated Receipt Settlement

Instead of the traditional three-way match, some companies are Two-way match
working with their vendors to allow payment without an invoice, so
they are performing a two-way match. This method was developed
by General Motors in 1994 and is called evaluated receipt settlement
(ERS). This process allows the purchasing department to electronically
match the goods receipt with the PO, and if there is no variance, a
payment is sent.

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 Procurement
2

Tip
ERS should only be considered with trusted vendors. By foregoing an
invoice, your company is committed to paying on receipt. However, this
is beneficial because it means that your company can take advantage of
any discounts.

Evaluated receipt The process works when a high level of communication and trust
settlement (ERS) exists between vendor and purchaser. The evaluated receipt process
usually includes the following elements:

›› As part of an ERS agreement, the vendor is usually required to keep

the purchaser informed of current prices at a more frequent period
than normally expected. This reduces any price variances issues
that normally arise.
›› The purchasing department uses the most recent pricing informa-
tion sent by the vendor when an order is placed. The PO is sent
to the vendor who usually acknowledges the PO by sending an
Advance Shipping Notification (ASN) to the purchasing company.
The ASN can be sent electronically via EDI 856, through a fax or
email.
›› The vendor ships the materials to the customer with an itemized
bill of lading or packing slip that references the PO.
›› The purchasing department matches the goods receipt, which can
be the vendor’s bill of lading or packing slip to the ASN, PO, or
contract, to validate accuracy.
›› Instead of receiving and paying against a vendor’s invoice, the pur-
chasing department calculates payment based on price information.
The type, quantity, and condition of the goods received are entered
into the SAP software, which calculates the payment amount with
respect to accrual or payment of tax. The goods receipt date is used
as the basis for taking discounts and determining the due date of
the payment. The payment to the vendor is made either by elec-
tronic funds transfer (EFT) or check.

The benefits of the ERS process are experienced by the purchasing

company and the vendor. The process reduces costs, reduces errors,

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 Accounts Payable
2

and eliminates activities that don’t add value as described in the fol-
lowing list:

›› Reduced costs
Less resources, equipment, and floor space are required thus re- ERS benefits
ducing costs. An automated process eliminates lost discounts and
eliminates the cost of printing invoices.
›› Reduced errors
Invoices don’t need to be entered, so there are fewer keying errors.
Other processes such as checking PO numbers, quantity and pric-
ing discounts become automated and further reduce errors.
›› Eliminating activities that don’t add value
The process eliminates manual activities such as invoice entry, in-
voice filing, and voucher payment preparation, as well as the cost
of mailing invoices.
›› More timely payments
By eliminating the vendor invoice, the process allows the vendor to
receive payment sooner.
›› Maximized discounts
ERS results in fewer errors to resolve, thus allowing purchasing
departments to take full advantage of payment discounts.

Case Study
In 2001, a major U.S. retailer was using the traditional invoice verification
process to match POs created in a standalone purchasing system, with
the goods receipt and invoices entered into its aging ERP system. The
errors matching the three documents caused the company to fail to pay
invoices on time and often incorrectly. This produced a growing number
of legal cases in which vendors filed suit against the retailer to reclaim
the money owed. That year, the retailer implemented SAP ERP, and as
part of the implementation, introduced ERS with a number of vendors,
some of which had been involved in legal action against the retailer. By
2004, the company reported that in the two years of operating the ERS
process under SAP, it had saved more than $2 million in legal costs and
reduced material spending by $200,000 due to implementing best prac-
tices, including taking advantages of discounts offered by vendors for
prompt payment.

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2

Your company may already use ERS with selected vendors and al-
ready receive some of the benefits outlined in this section. The ac-
counts payable process is important because it provides payment for
the vendor for the materials and services they have provided.

Summary

This chapter has given you an overview of the organizational structure that
is used by SAP software for the purchasing function, as well as introduced
you to the purchasing functions in SAP, such as purchase requisition, re-
quest for quotations (RFQs), purchase orders (POs), and accounts payable.

The SAP purchasing function is important in the logistics process be-

cause it ensures that the correct material is at the manufacturing site
at the lowest cost at the required time. Purchasing professionals can
reduce your raw material spend by using the functionality in the SAP
system. SAP purchasing functionality, such as RFQs, vendor evalua-
tion, and contract monitoring, gives your purchasing staff the tools to
negotiate with vendors and save your company money.

In this chapter, there are some key points that you should remember:

›› Whether your company purchases at the enterprise, company, or

plant level, SAP has the flexibility for any scenario.
›› SAP contains purchasing best practices such as RFQs, vendor evalu-
ation, and contract monitoring.
›› With SAP systems, company can use RFQs and requisitions, or if
your purchasing needs are simple, just POs can be used.
›› Quantity and value contracts, scheduling agreements, and purchase
agreements are available to your purchasing staff.
›› ERS, two-way match, can be used with trusted vendors to eliminate
the need to use vendor invoices.

The next chapter describes the SAP functions used in inventory man-
agement. You’ll be introduced to the logical structure of the plant as
well as the goods movements within the plant, and physical inven-
tory of material.

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 Index

A C
Account balances report, 272
Accounts, 41
Accounts receivable report, 271
Activity report, 292
Adaptive supply chain, 357
Adjustment, 85
Administrative element, 154
Air transportation, 314
ASAP implementation, 331
ASAP methodology, 330
Asset-based carriers, 314
ASUG, 26
Automatic goods receipt, 170, 172
Automatic reservation, 75
Availability check, 205
B Code group, 211, 212
Backflushing, 170, 171
Balance sheet, 41
Baseline result, 340
Batch management, 32
Best-of-breed, 26
Billing, 298
Automatic, 269
Documents, 269
Function, 267
Manual, 269
Manual conversion, 270
Process, 267
Bill of materials (BOM), 146, 154,
159, 160, 165, 363
Bins, 91
Blocked status, 83
Blocked stock, 116
Book quantity, 85
Budget, 335
Business blueprint, 331, 334, 336,
365
Business decision matrix, 296
Calibration order, 294
Call horizon, 198
Call object, 199
Capacity, 155
Capacity requirements, 165, 168
Cash flow, 130
Catalog, 211
Predefined, 211
Change management program, 333
Chart of accounts, 41
Check-in, 309
List, 320
Class rate, 316
Client, 40
Client/server enterprise, 25
Code, 211
Collective billing process, 268
Commission, 307
Company, 41, 50, 51, 114, 116
Company code, 50
Component item, 140
Configurable materials, 141
Confirmations, 170, 297
Collective, 297
Consignment stock, 83
Continuous inventory, 82
Contract rates, 318
Contracts, 258
Master contract, 259
Quantity contract, 260
Release orders, 263
Value contract, 262
Cost estimate, 176, 177, 178
Costing, 155
Department, 173
Information, 170
Cost of goods manufactured (COGM),
176
Cost of goods sold (COGS), 176
Cost receivers, 173

379

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 Index

Counter, 188 Evaluated receipt settlement (ERS),

Count procedure, 83 33, 362
Credit memo, 263 Evaluations, 144
Financial aspects, 263 Exception message, 146
Request, 264 Exception rate, 317
Customer, 63, 72
Customer defect report, 235 F
Customer inquiry, 254
Customer inspection, 225 Fast-moving stock, 82
Customer location, 83 Final preparation, 331, 338, 339, 365
Customer quotation, 255, 257 Finished goods, 83, 277
Customer record, 251 Flexible sales and operations plan-
Customer Relationship Management ning, 132
(SAP CRM), 328 Forecast accuracy, 130
Customer requirements, 144 Forwarding agent, 306
Customer satisfaction, 343 Freight charge, 319
Customer service (CS), 31, 36, 83, Freight costs, 313
130, 275 Freight forwarder, 306
Cycle counting, 82 Air, 314
Full truckload (FTL), 316
D Functional location, 182, 185, 194,
279
Defects recording, 229 Functional, 280
Delivery, 116 Hierarchy, 183
Delivery documentation, 124 Process related, 182, 280
Delivery information, 36 Spatial, 183, 280
Delivery note, 63 Task list, 194
Demand management, 129, 137, 145, Work center, 182
363
Digital signature, 228 G
Direct costs, 342, 344
Initial, 342 General maintenance task list, 192
Recurring, 343 Go-live and support, 331, 340, 365
Distinct sales area, 247 Good Manufacturing Practice (GMP),
Distribution center, 78 35
Distribution channel, 244 Goods issue, 73, 122, 123, 267, 322,
Distribution SIG, 26 323, 362
Goods movement, 362
E Goods receipt, 63, 72, 73, 114, 362
Gross freight
End load, 309 Rate, 319
Engineering change management, 32
Equipment, 185, 278 H
Master record, 186
Task list, 193 Handling unit, 121, 265
Equipment record, 185, 279 Management, 32
E-sourcing, 360 Helpdesk, 341

380

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I M
Implementation methodology, 330
Implementation strategy, 327
Inbound logistics, 33, 362
Indirect costs, 343, 344
Individual billing document, 267
Industry solutions, 329
Initial costs, 343
Initial stock creation, 73
Inspection, 169, 181
Characteristic, 211, 213, 217
Lot, 168, 224, 225, 226
Method, 211
Operations, 216
Plan, 214, 216
process, 237
Specification, 226
Instance, 40
Internal problem report, 221
Internal transfer, 72
International shipment, 303
Inventory, 83
Inventory differences, 85, 86
Inventory inaccuracies, 83
Inventory management, 33, 89, 98
Inventory sampling, 82
Inventory stock, 122
Inventory variance report, 82
Invoice, 63
Invoice split, 268
K 181, 209, 241
Key performance indicator (KPI), 348
L Materials production schedule (MPS),
Labor, 154
Legal entity, 40
Less-than-truckload (LTL), 315
Local rate, 317
Logistics, 28, 32
Definition, 28
Logistics execution, 361, 362
5257 BOOK.indb 381
Index
Maintenance notification, 201, 202
Maintenance order, 196, 203, 204,
206
Maintenance plan, 196
Scheduling, 197, 199, 200
Maintenance processing, 201
Maintenance tasks
List, 192
Operations, 192
Make-to-order strategy, 139
Make-to-stock strategy, 138
Manufacturing, 361, 363
Operations, 34, 153
Plant, 304
Structure, 154
Master contract, 259
Master data, 132
Master production scheduling (MPS),
34
Material, 56, 57, 59, 72, 75, 77, 78,
83, 85, 114, 116
Counts, 85
Discrepancies, 85
Material defect report, 233
Material master record, 138, 139
Material price, 177
Material requirements planning
(MRP), 34, 129, 145, 146, 363
Material routings, 154
Materials management (MM), 31,
Material specification, 214
Advantage, 215
Inspection characteristics, 215
135
Material usage report, 135
Measurement, 188
Measurement document, 190
Movement type, 116
381
11/26/08 3:08:31 PM
 Index

N PO
Number, 116
National Motor Freight Classification Prevention, 181
(NMFC), 317 Preventive maintenance, 191
Negotiated price, 59 Plan, 196
Nonasset-based companies, 314 Single-cycle, 196
Notification, 201, 335, 364 Pricing information, 36
Notification monitoring, 222 Process orders, 154
Procurement, 362
O Procurement SIG, 26
Product availability, 36
Objective measurement, 346 Product costing, 154, 158, 176, 180,
Offsetting adjustment, 85 363
Ongoing costs, 343 Product development, 361, 363
Operations, 83 Product group, 132
Order, 201 Breakdown, 133
Order fulfillment, 130 Usage, 134
Order Info System, 175 Production, 75, 83, 209
Organizational structure, 41 Production component, 181
Outbound delivery, 118, 266 Production line, 154
Document, 117, 121, 266 Production order, 75, 165, 167, 169,
Outbound Delivery Monitor, 119 174
Outbound logistics, 33, 117, 362 Confirmation, 170
Overseas shipment, 307 Settlement, 173
Production planning (PP), 31, 241
P Production process, 72
Production resources and tools (PRT),
Packing information, 121 163
Partner functions, 252, 253 Product planning, 34, 129
Periodic billing, 285 Project, 75
Permit, 186, 188 Project preparation, 331, 332, 334,
Physical elements, 154 365
Physical inventory, 82, 83, 85, 362 Proof of delivery, 124
Count sheet, 84 Purchase order, 59, 63
Picking, 119 Purchase order (PO), 114, 116
Picking status, 120 Purchase requisition, 55, 57, 165
Planned independent requirements, Purchasing department, 55, 57, 59
142, 143 Purchasing group, 51
Planning functionality, 142 Purchasing organization, 48, 50, 51,
Planning hierarchy, 132 52
Planning situation report, 135 Purchasing proposals, 146
Planning strategy, 138
Plant, 42, 43, 51, 72, 75, 77, 82, 83, Q
97
Plant maintenance (PM), 31, 35, 154, Quality certificate, 231
163, 181, 209, 363 Incoming, 231

382

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 Index

Outgoing, 232 Routing, 161, 165

Quality inspection, 83, 209, 224 Configurable materials, 162
Quality maintenance, 209 Routings, 363
Quality management (QM), 31, 35,
209, 364 S
Basic data elements, 214
Reports, 233 Sales, 248
Structure, 211 Sales agreement, 290
Quality notification, 209, 211, 218, Sales and distribution (SD), 31
237 Sales and operations planning, 137
Customer complaint, 218 Information structure, 131
Internal, 218 Sales and service, 35, 361
Report, 222 Sales division, 246
Quality planning, 209, 214, 236 Sales function, 246
Quant, 96 Sales group, 248
Quantity contract, 260 Sales office, 247, 248
Quantity structure, 176 Sales order, 118, 256
Queue time, 157 Sales order management, 36
Quotation, 255 Sales organization, 243
Sales structure, 243
R Sample size, 226
SAP, 25
R/2, 26 SAP Business Suite, 27
Radio frequency, 33 SAP Contract Lifecycle Management
Identification, 30 (SAP CLM), 360, 366
Rail transportation, 314 SAP Cost and Quotation Management
Raw material, 83 (SAP CQM), 360, 366
Realization, 331, 336, 338, 365 SAP Customer Relationship Manage-
Recording results, 227 ment (SAP CRM), 41
Recurring costs, 343 SAP Environment, Health & Safety
Released value rate, 317 (SAP EH&S), 32
Repair, 181 SAP ERP, 26, 27, 359
Repair order, 295 SAP Extended Warehouse Manage-
Reporting, 133 ment (SAP EWM), 30
Reports, 271 SAP Inventory Management (SAP IM),
Request for quotation, 362 90
Request for quotation (RFQ), 57 SAP Logistics Information System
Research and development, 329 (SAP LIS), 131
Reservation, 75, 165 SAP NetWeaver, 351
Resource use, 130 Components, 352
Return Material Authorization (RMA), SAP NetWeaver BI, 41
263 SAP Product Lifecycle Management
Return on investment (ROI), 327, 333, (SAP PLM), 27
345, 365 SAP sales and distribution (SD), 241
Returns, 362 SAP Sales and Operations Planning

383

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 Index
(SAP SOP), 34, 129, 363
Planning tools, 132
SAP Solution Manager, 331
SAP SRM, 359, 366
Core functionality, 360
SAP Supply Chain Management
(SCM), 27, 357, 359, 366
Flexibility, 357
SAP Transportation Management (SAP
TM), 365
SAP Warehouse Management (SAP
WM), 89, 362
Schedule performance, 130
Scheduling, 146, 155, 167, 205
Scheduling agreement, 258
Scheduling data, 157
Scheduling function, 199
Sections, 91
Selected set, 212
Serialized material, 277
Serial number, 277
Serviceable object, 277
Service agreement, 282, 290
Long-term, 282
Quotation, 283
Short-term, 282
Service contract, 282, 284, 285
Inquiry, 283
Quantity, 286
Service department, 290
Service notification, 290, 291
Service order, 287, 293
Service-oriented architecture (SOA),
353
Service Parts Management, 356
Service processing, 290
Services, 59
Service tasks, 292
Settlement rule, 173
Shipment, 308
Shipment completion, 309
Checklist, 320
List, 321
Shipment costs, 301
Shipment start, 309
Shipment status, 309
384
5257 BOOK.indb 384
Monitor, 312
Shipment type, 311
Shipped quantity, 122
Shipping, 98
Shipping assets, 306
Shipping costs, 318
Shipping notice, 362
Shipping process, 265
Shipping rates, 316, 318
Shipping route, 305
Shipping stages, 305
Shipping type, 304, 305, 308
Shop floor control, 164
Shop papers, 174
Single item MRP, 146
Single item planning, 148
Slow-moving stock, 78
SOA, 355
Environment, 355
Software services, 354
Special stock, 83
Spend analytics, 360
Standard price, 178
Start load, 309
Stock, 43
Stock level, 72, 83, 114
Stock/Requirements List, 144
Stock transfer, 72, 362
Stock valuation, 130
Storage bin, 48, 99, 100, 101, 102
Storage location, 43, 44, 72, 75, 77,
82, 89, 90, 97
Storage section, 93, 94
Storage type, 46, 94, 97
Strategy for configurable materials,
141
Strategy group, 139
Subjective measurement, 347
Supply chain, 30
Supply Chain Planning SIG, 26
T
Technical object, 182, 191
Three-way match, 63
Total cost of ownership
11/26/08 3:08:31 PM
 Index

Calculating, 344 Variance location, 85

History, 342 Variances, 82
Total cost of ownership (TCO), 327, Variant configuration, 32
341, 344, 365 Vendor, 48, 51, 63, 72, 116
Total planning, 147 Vendor defect report, 234
Transfer order, 98, 101
Confirmation, 103 W
Printing, 105
Transfer posting, 362 Warehouse, 46, 82
Transfer requirement, 107 Warehouse management (WM), 32
Transit time, 305 Warehouse movement, 97, 98
Transportation management, 36 Warehouse section, 83
Transportation options, 313 Warranty, 288
Transportation planning, 302 Warranty counter, 289, 290
List, 310, 311 Work center, 153, 154, 170, 216, 363
Point, 303, 308 Capacity, 155
Transportation SIG, 26 Costing, 158
Truck transportation, 315 Record, 157
Scheduling, 157
U
Y
Unrestricted, 83
Usage counter, 170 Yearly inventory, 82
Usage decision, 230

V
Value contract, 262
Variance, 83

385

5257 BOOK.indb 385 11/26/08 3:08:31 PM