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Category: SAP Modules

  • Picking, Packing and PGI

    Preface – This post is part of the SAP SD series.

    Introduction

    We have learnt that pre-sales, sales and anything after sales is logistics. So logistics is where depending on the availability of goods you create the delivery.

    Delivery has three pieces to it or there are three sections to delivery.

    • Picking
    • Packing
    • PGI

    The first one is picking, the second is packing (this is optional), sometimes you do pack, sometimes you don’t need to do it for some materials. But picking is typically a process that’s followed for all physical deliverables, meaning physical goods, all tangible goods. And the last step is PGI, which is posting the issue of goods or post goods issue. The corresponding accounts are updated and the inventory is updated. This is the delivery.

     

    What is picking?

    Depending on what the customer needs, these products will be brought to a place called a staging area, where you can do all the packing and the processing. So you get all these goods in the staging area and the next step is to get these goods ready for packing.

     

    What is packing?

    Packing is just pulling those desktops, laptops, whatever the products are, into the proper packaging format requested by the customer, weighing them on your FedEx machine or EPS machine and keeping the box ready for the truck to come in. This is packing.

    After packing, when the truck comes in, the packed goods are loaded and the truck leaves. This is called picking.

     

    What is a post goods issue (PGI)?

    The goods that you have picked, packed and loaded are really no longer yours. They need to be accounted for in your inventory. All the details will be accounted for in your inventory.

    Meaning what is your inventory, in our case its desktop, what’s the total as of before the packing sets,  quantities, let’s say 2000. Now as part of this delivery, 500 has been reduced. So now it’s 1500. So, this process of reducing the inventory and making sure that the accounts are up to date is called the post goods issue.

     

    So, these are the three main steps that happen in the delivery.

    In the next article, we are going to actually create a delivery for the order that we have created previously and do the picking. And we’re not going to do the packing yet and we are just going to do the PGI and technically close that delivery.

  • Delivery

    Preface – This post is part of the SAP SD series.

    Introduction

    We have finished our pre-sales documents, inquiry, quotations and then Wal-Mart has placed an order, this is a sales document. So now we need to deliver the physical goods. This part is called logistics and this behaves differently than an order.

     

    What is the delivery?

    Most of the things in the delivery, again, are copied down from an order because we are trying to deliver the goods corresponding to the order that the customer has given us.

    Example

    In this case, the customer said he needs a desktop, quantity 100 and then there could be more line items. And each line item over here will have what is called a confirmed date.

    When creating the order, SAP has already done the availability check. An availability check confirms that these goods will be available or can be confirmed by this date, say, 14th of March or whatever. When you try to create this delivery, you should create it for that date, because if you try to create it before the system knows that the goods are not going to be it will not allow you to create a delivery. So make sure that the date you are trying to create the delivery, is the date the goods are confirmed. That’s called the delivery date.

    Once you get that, then you can create a delivery. Only the items that have that are to be delivered in the designed timeframe will be going to be delivered. Whenever the goods are available you can create a delivery document and all the goods that are confirmed by that date, the date when you’re creating the delivery will flow down from the order into the delivery.

     

    Pieces of Delivery

    Delivery essentially comprises three pieces.

    • Picking
    • Packing
    • PGI or post goods.

    There are other areas as well, but these are the main three key pieces or three key subprocesses in our delivery.

    We will understand picking, packing and PGI in our next article.

  • Sales Order

    Preface – This post is part of the SAP SD series.

    Introduction

    In the previous articles, we have learnt about an inquiry with an example. So we have Wal-Mart as our customer. We have a company, say, HP. Wal-Mart has inquired for some goods and an inquiry has been created in the system and sent out to Wal-Mart. Wal-Mart liked the inquiry and requested a formal call. This is a quote or an RFQ. A quotation was created in the system with reference to the inquiry.

    Up until this point, things are casual, meaning the customer is not promising to buy. The customer is just fooling around. Basically, it’s like you want to buy a car. You go to one dealer, another dealer, you go to five different dealers. You might just inquire for how long you want or you might get quotations from one, two, three, four different car sales guys or dealers. And you ultimately will end up buying from one. Typically, the quote that you like, you just confirm the quote and that’s when you go in and place an order for the car. But up until that point, it’s just called pre-sales term, because up until this point, there’s no sale.

    But after this, if the customer chooses to buy, then the customer will place what is called a purchase order.

    Steps to sales:

    • Inquiry
    • Quotation
    • Purchase order

     

    So from this point on, it becomes a sale. It’s almost exactly similar in terms of the data that it contains between an inquiry and a quotation. The customer does not change, nor does the quantities or the products that are desktops, laptops. So you can as well create it with reference and copy all the products and customers over to your subsequent document. In this case, the document is a sales order. And save it and generate a number for you, say 13409, and that is what you’re going to send as a purchase order, confirmation to the customer, Wal-Mart.

    Sales Order

    A sales order is a document generated in the system by the seller containing all the details related to the products or services requested by the customer. The details include prices, quantities, terms and conditions and much more information.

    Purchase order

    A purchase order is a fancy word for an order number generator in the system that confirms to the buyer that they have received the order. It is a document that a customer sends to the supplier that includes details like quantities, prices.

    It’s just like if you place an order at Amazon, you’ll get order confirmation. So here are the products you brought to get to know the prices, the total taxes and of course, you get additional details like when it’s going to ship by, and on what carrier, what tracking number and other information. That’s your purchase order number.

    Difference between purchase order and sales order

    When the customer is buying things, he’s actually purchasing things. Wal-Mart, the customer, calls it a purchase order. HP, on the other hand, is selling things. So it’s called the sales order, but both are the same in this case.

    And another point, just like the way quotation number and an inquiry number is generated, a purchase number is generated and sent to the customer, and that is called an order confirmation or a purchase order confirmation or sometimes it’s called sales order confirmation.

     

     

  • Quotation

    Preface – This post is part of the SAP SD series.

    Introduction

    Now that we have talked about the inquiry in the previous section, let’s start with the next step. We will continue with the example of Wal-Mart. Wal-Mart makes a decision that they like the inquiry, meaning that they like the prices or the product delivery date that HP has proposed. Or they don’t like it. If they like it, they like to continue their discussion further with HP in terms of how they would like to proceed further. The next step to an inquiry from a customer perspective needs to ask for a formal quote.

     

    What is a quote?

    The quotation process is going to look something like this: Wal-Mart is going to call or get in touch with HP and say, all right, with respect to our inquiry number 110120, we would like to continue further and want to ask you for a formal quote.

     

    A quote is very similar to an inquiry. But almost has the same set of details. From HP’s perspective, the quote is almost similar. So, we have the customer, Wal-Mart, and of course products, Desktop, laptop and the quantities, prices. That’s a quote.

    So why are they doing it again? If everything is similar between a quote and an inquiry, what’s the point in trying to do it again?  There are a couple of differences between the two.

     

    Inquiry and quotation

    An inquiry is very informal. Meaning, you go shopping at home for cars, you would go visit ten different dealerships. You’re not really sure which car you want. Maybe through the course of doing all these inquiries with different vendors, you find out that you might need a particular model of a car, say a Honda CRV. Now, you start to focus more on getting quotes from Honda CRV from different dealers that you’ve visited.

     

    Difference between Inquiry and Quotation

    The difference is, an inquiry is more informal. So HP does not need to stick to its stores or prizes, or variables. An inquiry has been made, we promised $500 per piece here, and if Walmart comes back 10 days from now and says I need the product, HP is not legally bound to deliver them at that price. But, a quotation on the other hand is more formal, which means the terms and conditions including prices, quantities, and deliverables need to be adhered to. Legally means, it’s more or less a formal legal quote, whereas inquiry is more informal, no terms, no promises.

     

    The clear difference is inquiry is more informal. So, it doesn’t have a set of days with which it’s valid. It’s informal anyway.

    The quotation, on the other hand, has a set of days within which it’s valid.

    Example of Inquiry and Quotation

    We can take an example, let’s continue the same car search.

    We’re searching for cars and you found a car, you’d like to get a quote on it. Let’s say the dealer has quoted $25,000. It’s not going to be valid forever, right? It’s going to be valid for, say, two weeks or a week at most. So this set of dates within which that quotation is valid is called validity dates. All quotations typically have a validity date. So the from date, and the to date is called the validity dates.

     

    You can grab some more differences between the inquiry and the quotation.

     

  • Order to Cash cycle- Inquiry

    Preface – This post is part of the SAP SD series.

    Introduction

    In this article, we will understand the sales order cycle. Every business will have a cycle. Let’s take an example of the finance business or the finance department. So, the finance department is responsible for looking at what the customer needs to pay and receiving the cash or receiving payments. That’s their business, they call it a report to record.

    Another example can be the procurement department. So, the procurement department is responsible for interacting with the vendors, getting the goods on time, so on. He is responsible for placing the purchase order with a vendor. For example, if Amul procurement department were to be taken as an example, they are responsible for dealing with the vendors that supply the goods. The procurement department will talk to all the different milk vendors. They’ll raise purchase orders, they’ll get the goods into the stock and they’ll pay the invoices, meaning pay the money to their vendors. This cycle is called procure to pay. So similarly, there are different business cycles followed by the different departments.

    Here, we will look into the sales department and different terms used in it. The sales department also follows a cycle, called the sales order cycle.

     

    What is Sales Order Cycle?

    The sales order cycle is a sequence of actions that a business follows to fulfil customer requirements.

     

    What is an RFI or an Inquiry?

    RFI is abbreviated as Request for Inquiry. It is a document requested by the company to gather information about the products and services from suppliers.

     

    What information’s are included in RFI?

    Every business can decide their own format for an RFI that they want to collect from the supplier. There is no particular way to write an RFI.

    Below are some details that can be included in an RFI.

    • Basic information about your company.
    • Request supplier to provide basic information about their organization
    • Confidentiality agreement to prevent the disclosure of information with a third party.
    • Statement for the reason of RFI.
    • Queries related to supplier experience in the relevant projects.

     

    Example

    The sales order cycle is best understood with an example. We will consider a B2B (business-to-business) scenario because SAP is built for more B2B scenarios.

    Let’s take two companies, one company say, a computer manufacturing company, HP or Dell. This is the company which is selling. So, we are looking at things from HP’s perspective. And there will be a buyer company.

    Let’s take the scenario of HP selling computers to the customer, Walmart. Wal-Mart is our customer. So, HP sells computers to Wal-Mart.

    How does the cycle start?

    Wal-Mart is looking for computers. It is inquiring about the different rates of HP, Dell and all the different computer manufacturers. Wal-Mart sends an RFI or Inquiry to HP. So, as soon as HP receive the request from Wal-Mart, they will capture the information in a document based on the customer’s RFI. This document is called an Inquiry.

    And as soon as this inquiry is saved in the system, you get an inquiry number. This inquiry number will be sent over to Walmart as a response to that inquiry.

     

  • Master Data

    Preface – This post is part of the SAP SD series.

    Introduction

    In this article, we are going to talk about master data. Master Data is everywhere. We see master data all around us. For example, if you go to Safeway, you go buy a bunch of products where you buy some soap and other stuff, and then you go to the billing counter, all your items are scanned and you’ll be asked if you have a reward card. So, this is a card that you’ll be given whereby your discounts will be cumulatively added and if you don’t have one, they’ll give one right away. What does the reward card have? A rewards card has your name, address and some of the personal details about you that they think are relevant for your purchase. This right here is Master Data. You can also call it customer master because you’re a customer in this case and Safeway is the company of the vendor which is selling you these products.

     

    What is Master data?

    Master Data is at its very fundamental level a collection of properties of an object. Objects could be customers, materials, vendors, assets, any of these. Typically, this kind of data is created only once, meaning you don’t create them again and again and again. For example, in the previous case when Best Buy was created as a customer, you don’t get BestBuy again and again and again. It’s created once, but it’s used again and again and again. And because it’s created once, you rarely change it. It’s changed occasionally. It is also the main source of data in transactions. You take any transaction sales order, delivery, billing, purchase, order, transfer order, posting to accounts, any kind of transaction typically has the bulk of the data coming in from the master data.

     

    Properties of Master data

    • Created once and used again and again.
    • Rarely changed.
    • Main Source of data in transactions.

     

    Types of master data

    Master Data in SAP

     

    Examples

    Let’s dig into some examples.

    Example 1

    Let’s say you go buy a piece of bread or buy a bottle of milk and then you go to the counter and these products are scanned. When they are scanned just one little scan can reveal a whole bunch of information about the product.

    What kind of information could that be? Some examples, of that information, could be:

    • Product name. For example, a particular model of bread is bread plain bread, milk break etc.
    • Product description
    • Price for that product and
    • Discounts they are given on that product
    • Cumulative discounts that are given on

     

    Here, Product Name and Product Description are master data. This is called data related to the material. And so it’s called material master data. Whereas, Price, Discounts and Cumulative discounts can be called pricing master data.

     

    Example 2

    Take another example of Amazon. You go to Amazon and you go log in, right? So, you have your username and password as soon as you log in. You can go to your account any time you want. So, when you go to your account you will have details like names, addresses. You can have multiple addresses like one address in Delhi, India one of those in Texas, US, you can store all your different addresses and you can store your credit cards or debit cards details and also different debit cards and credit cards. All of these are master data. And in this case, you are the customer, so you can call it customer master data. All these are common examples of master data that you typically see in a B2C environment all along.

     

    Example 3

    Say, HP is a company that is implementing SAP and a company buying from HP say Best Buy. Now, Best Buy places an order for, let’s say computers or whatever products that HP sells and HP creates an order. The order contains a header and has line items. Let’s say one, two, three, however many.

     

    On the header, what kind of information does it have?

    • Customer information: It has customer information of course and that’s Best Buy in this case,
    • Tax: The next thing is a tax classification
    • Corporate/Government: What kind of a customer is he, a corporate customer or is he a government customer or any other. In this case, he is a corporate customer or retail customer.
    • Ship: Can we ship all the goods together, yes or no? In this case, being a customer it’s an option that Best Buy gives, right?
    • Address: address to which we need to ship the goods.
    • Phone number: If there are issues which phone number to call to.
    • Payer: Who will be paying for this transaction.
    • Billing address: Where should the bill be sent?

    These are all the things that are captured, at the header level.

     

    Now, similarly, at the line-item level, what do we have?

    • Material: We have details like material that say it’s a computer model one on one
    • Weight: Say, 5 lbs
    • Volume
    • Plant: Which plant is it going to send the goods out of? Let’s say it’s sent out to the Bangalore plant.
    • Tax classification: Sometimes some goods, some materials are taxable and some materials are not.

    Looking back to header data, we have data related to customers and line-item data has data related to the material. So basically, master data in this case is a bunch of properties related to a customer or a material.

  • SAP Ariba Reporting Options

    Preface – This post is part of the SAP Ariba series.

    Introduction

    SAP Ariba provides reporting options and feature that is included with all modules and also includes upstream, downstream, sourcing, procure-to-order, procure-to-pay and others. In this article we will explore more about SAP Ariba Reporting Options.

    In earlier days we need to perform SQL quires to retrieve the required data, however now through the easy interface for reporting, the need to write SQL queries is abolished.

    This enables the users to run pre-packaged reports commonly known as standard reports as well as custom reports on the Ariba solution. Below are the lists of the reports supported in Ariba System:

    • Pre-packaged reports
    • Custom reports
    • Multi-fact reports
    • Compound reports
    • Exporting reports

    To create a custom report in Ariba Solution:

    • Login to the Ariba system and click on create.
    • Then click Analytical Report

    Permission to create custom reports is given to specific groups

    The users with the basic permissions are able to access pre-packaged reports and public reports as read-only users under manage in Ariba Solution. The public reports are the custom reports which are saved publicly for all to use. Under pre-packaged reports, there are various documents from different modules such as sourcing, contacting, P2P (Procure-to-pay) and many others. Also, Ariba Reporting allows adding the reports to your Ariba Solution accounts dashboard based on your requirement and reporting purposes.

    As the pre-packaged reports are the standard reports by Ariba we cannot modify them however, you can adjust it by specifying filters. You can also specify the report properties though integration events by modifying the CSV file that pulls report data. The integration events that can be used are:

    • ReportQueryPull Integration Event: The ReportQueryPull event is used to define Ariba Queries API queries associated with each report.

    In default configuration ReportQueryPull Integration Event reads from below path:

    BuyerServerRoot/variant/data/ReportQuery.csv

    • ReportMetaPull Integration Event: This event defines the visual appearance and properties of reports. ReportMetaPull Integration Event reads data of following CSV files from BuyerServerRoot/variant/data:
      • csv: Describes the attribute that applies to the entire report.
      • csv File: Describes how to restrict access to reports.
      • csv File: Describes attribute of a particular column.

  • SAP Ariba Supplier Membership Fees

    Preface – This post is part of the SAP Ariba series.

    Introduction

    As we know that Ariba Network is globally recognized as the digital platform for connecting the organizations with suppliers for trading purposes, it offers the option of membership fee to help the suppliers to gain the maximum benefit provided by the Ariba Network, this comes under the Supplier Membership Program (SME). In this article we will explore more about SAP Ariba Supplier Membership Fees.

    Supplier Membership Program has two components:

    • The subscription packages
    • The network transaction services

    Subscription Package

    The subscription package includes the plans which charge the fees based on the number documents transacts annually with the customers as well as it is based on the technology usage. The subscription plans provided by SAP Ariba are:

    • Ariba Network Standard: This is designed for the low-level suppliers or we can say for the new suppliers in Ariba Network. It includes the fundamental functionalities that are needed for the procurement process.
    • Ariba Network Select: This subscription enables the suppliers to build the additional collaborative commerce capabilities that will act as an add-on to deal better with the customers.
    • Ariba Network Premier: The premier subscription enables the suppliers to enhance collaborative commerce capabilities through integration and provide technical support to automate the procurement processes.
    • Ariba Network Enterprise: The enterprise subscription enables the suppliers to enhance collaborative commerce capabilities through Ariba Integration Connector, to enable the connectivity to back-end system, program management services and validation services.
    • Ariba Network Enterprise Plus: It includes the enterprise subscription plan as well as it delivers the services that can be needed to make collaborative commerce a competitive advantage.

    SAP Ariba Supplier Membership Fees

    Below table shows the plans, their monthly charges and transaction threshold:

    Plan Monthly Charges Transaction Threshold
    Standard account Free $50,000 to $250,000
    Select $50 $50,000 to $250,000
    Premier $495 $250,000 to $1,000,000
    Enterprise $2495 $1,000,000 to $10,000,000
    Enterprise Plus $7495 $10,000,000 or more

    Note: To get the latest and updated information regarding the SAP Ariba Pricing, you can visit here.

    The subscription fee for standard plan if free of cost until the supplier has reached the limit of five transaction or crosses the chargeable transaction volume threshold.

    SAP Ariba also provides five paid subscriptions levels which depend on the number of annual transactions of documents based on currency. The five levels are:

    • Premium: The premium plan includes unlimited access to portal, catalogs, customer support, reporting and supply chain collaboration.
    • Bronze: It includes all the features of the premium plan as well as the benefit of eCommerce consult team, Ariba achievement badges and free discovery RFI/RFQ responses.
    • Silver: It includes all the features of the bronze plan as well as provides the cXml and EDI integration, technical support and express integration support.
    • Gold: It includes all the features of the silver plan and additionally it provides unlimited responses to sales opportunities, eCommerce consultation services and priority support.
    • Platinum: It includes all the features of gold plan as well as it includes Ariba Live pass and extended Ariba Integration Support.

    Network Transaction Services

    The NTS enables the supplier to collaborate with the customers during the different procurement processes like order process, invoice and other related documents as well as managing the catalog in Ariba Network. The NTS fee is based on the volume of documents transacted annually with the customers.

     

  • SAP Ariba Integration with S/4 Hana

    Preface – This post is part of the SAP Ariba series.

    Introduction

    Ariba Network is a digital platform where buyers and suppliers connect for business transactions and to explore new business opportunities. Integration of Ariba Network with S/4 HANA on-premise and cloud follows two different methodologies. In this article we will explore more about SAP Ariba Integration with S/4 Hana.

    Types of Integration

    On-premise Integration

    On-premise S/4 HANA integration follows the same connectivity method which is followed for ECC system connectivity (by using BAPI or Intermediate Document).

    Cloud Integration

    For cloud integration of S/4 HANA with SAP Ariba the communication arrangement is set up in Communication Management of HANA system. Services like oData and SOAP must be configured in communication arrangements of the S/4 HANA system.

    The integration with SAP S/4 HANA cloud allows process:

    • Discount Management
    • Invoice Collaboration
    • Payment
    • Purchase Order Collaboration
    • Service Procurement

    Ways to connect SAP S/4 HANA with SAP Ariba system

    There are three ways to connect SAP S/4 HANA with SAP Ariba system:

    • Direct Connectivity: Ariba provides direct connectivity option under account settings. The Direct Connectivity method does not use any middleware for the integration of the SAP Ariba Network system and HANA.
    • Mediated connectivity using HCL: For the integration using HCL. a system connection is established between Ariba Network and S/4 HANA using SAP HANA Cloud Integration
    • Mediate connectivity using PI: For the integration using PI, middleware is used to establish a connection between SAP Ariba and SAP S/4 HANA.

    Advantages

    By digitalizing and integrating the end-to-end process, promotes the organization to achieve some objectives. The benefits are:

    • Lower total cost of ownership: You can avoid third party integration, maintenance and also the middle-ware cost.
    • Rapid ROI: An organization can achieve a fast return of investment compared to capital invested.
    • Quick and smooth deployment: SAP Ariba native, pre-built integration provides easy deployment with fewer risks.
    • Compliance: The ease to use of software’s increases the service quality provided by users which results in higher compliance.
    • Efficiency: The use of a standard interface across all the applications will eventually result in higher efficiency by adapting the changes quickly and resulting in fewer errors.
    • Effectiveness: The integration produces optimized data providing transparent and complete visibility, stronger collaboration and reliable KPI.

  • SAP Ariba Best Practices for Integration

    Preface – This post is part of the SAP Ariba series.

    Introduction

    The best practices optimized for S/4 HANA provides ready to run digitalized logistic and operational business processes that cover the fundamental business process as well as the integration and migration fundamentals to be performed in an organization, delivered through SAP Activate. Now looking into what is SAP Activate? SAP Activate is a combination of SAP best practices, methodologies, guided configuration which simplifies the use of SAP S/4 HANA. In this article we will explore more about SAP Ariba Best Practices for Integration.

    SAP Ariba Best Practices for Integration

    The best practices for SAP S/4 HANA provide quarterly updates regarding the latest innovation in your solution or we can conclude that the main goal is to enable the users to take the advantages of the potentials through S/4 HANA fitting in your business needs.

    The SAP Best Practice for SAP S/4 HANA Cloud can enable the organization to improve the finance, sourcing and procurement, supply chain, sales, services, application platform and infrastructure, SAP S/4 HANA Cloud integration, SAP S/4 HANA Cloud Extensibility and many more business areas.

    Steps to follow to check best practices

    • Open https://rapid.sap.com/bp/ and log in with valid username and password
    • Navigate to SAP S/4 HANA and then click on Integration
    • To get the brief idea of the best practices, follow the link under best practices page

    SAP Ariba Developer Responsibilities

    The role of SAP Ariba Developer requires expertise in the following mentioned areas:

    • Experience of Ariba Integration with SAP ERP system.
    • Technical knowledge of Ariba as well as the knowledge of Ariba products
    • Experience of Ariba On-Demand Implementation.
    • Experience in SAP Ariba Procurement solutions including SAP Ariba Guided Buying, SAP Ariba Buying and Invoicing, SAP Ariba Catalog Management, SAP Ariba Invoice Management.
    • Knowledge of SAP Ariba Payables and Supply Chain Collaborations.
    • Knowledge of SAP Ariba integration with SAP S/4 HANA.
    • Experience of implementing NOTES.
    • Knowledge of implementing best practices for integration.
    • Knowledge of customizing the solution as per the business requirements.