Sales and Distribution in Erp Final

8/4/2019 Sales and Distribution in Erp Final

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SALES AND DISTRIBUTION IN

ERPPrepared By:Abhaya Singh.(19001)Arnab Chatterjee. (19008)

Ashok Kumar. (19010)Praveen Narayanan. (19025)Sai Manoj. (19032)Vaishali Agarwal.(19045)


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Efficient, integrated information systems are very important forcompanies to be competitive

An Enterprise Resource Planning (ERP) system can help integratea companys operations

Acts as a company-wide computing environment Includes a database that is shared by all functional areas

Can deliver consistent data across all business functions in realtime

Introduction


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The Evolution ofInformation Systems

Silos

Information systems configuration used until recently

Companies had un-integrated information systems thatsupported only the activities of individual business functionalareas

Current ERP systems evolved as a result of:

Advancement of hardware and software technology

Development of a vision of integrated information systems Reengineering of companies to shift from a functional focus to a

business process focus.


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WHY SAP

To keep pace with rapid changes in the business world,companies need an integrated and flexible enterprisesystem that supports all aspects of their business withstate-of-the-art functionality. This innovative solution

should upgrade effortlessly and interface easily withthird-party applications as well as have the ability toincorporate existing systems while extending its reach tothe Internet and e-commerce.

Here, increased efficiency in sales and distributionis a key factor to ensure that companies retain a

competitive edge and improve both profit margins

and customer service. In helping business to 'beat


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ERP system is tightly integrated with the Sales and Distributionmodule. This integration enables the mapping and supply of single-site or multi-site organizations. Developing precise logistics planningfor just-in-time deliveries, this system can also generatereplenishment orders by using defined warehouse requirements.

The following are the sales related business transactions:

Sales queries, such as inquiries and quotations

Sales orders Outline agreements, such as contracts and

scheduling agreements

Delivery/Shipment

Invoicing/billing

WHY SAP


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WHY SAP

During sales order-processing the following basic functions arecarried out:

Inquiry handling

Quotation preparation and processing Contracts and contact management (order management)

Monitoring the sales transaction

Checking for availability

Transferring requirements to materials planning (MRP)

Scheduling the delivery

Calculating pricing and taxes

Checking credit limits


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WHY SAP

Depending on how your particular system is configured,these functions may be completely automated. The data

that results from these basic functions is stored in thesystem where it can be displayed. ERPs Sales andDistribution module very actively interacts with thematerial management and financial accounting module fordelivery and billing.


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EARLIER STAGES OF ERP


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New Directions in ERP

Late 1990s: Year 2000 (or Y2K)problem motivated many companiesto move to ERP systems

By 2000, SAP AG had 22,000employees in 50 countries and 10million users at 30,000 installations

around the world By 2000, SAPs competition in the

ERP market:

Oracle


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New Directions in ERP(contd.)

SAP ERP

Latest versions of ERP systems by SAP and other

companies allow:

All business areas to access the same database

Elimination of redundant data and communications lags

Data to be entered once and then used throughout theorganization


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New Directions in ERP(contd.)


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Customer RelationshipManagement

For accomplishing desired success,organizations continuously strive for increasedsales performance, superior customer service

and enhanced customer relationshipmanagement.

To achieve these objectives you need solutionsthat provide rapid access to centralizedcustomer information. You should also be ableto access detailed and up-to-date

communication history to foster customer and


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Customer Relationship Management

Benefits at a glance Interaction with other areas of the system, gives you a

'clear' view of the customer

Maximizing opportunities and retaining high valuecustomers enhances revenue and profit.

Provides value-added services enable you to stay aheadof your competitors.

Improves product development and service deliveryprocesses

Prepare your personnel with in-depth knowledge of thecustomer's needs


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Customer Relationship Management

Successfulcustomer interaction

The ERP CRM module helps you knowyour customer better and includes many

features such as activities, history, relatedcontacts, addresses of your customersand their relations with your competitors.The flexible database structures enablesyou whatever information you would like to


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ERP VS CRM

For an entrepreneur who is planning to expand, these terms oftentrouble him. They seem to require a great deal of softwareknowledge which, I believe, majority of entrepreneurs (especiallynon-IT folks) wont have. More than entrepreneurs, students inB-Schoolslose the bigger picture and take ERP as a painful

punishment.

What is ERP (Enterprise Resource Planning) and CRM (CustomerRelationship Management) and how are they different? Is there anyrelation between them? How are they useful to my business andshould I implement them?

when you send a courier through any logistics company like DHL,FedEx, DTDC etc they give you a receipt with an alphanumeric
http://trak.in/tags/business/2007/07/09/best-top-business-schools-management-institutes-in-india/http://trak.in/tags/business/2007/07/09/best-top-business-schools-management-institutes-in-india/


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ERP VS CRM

ERP (Enterprise Resource Planning) Plans the resources of an organization and hence is

Organization-oriented. This is a software tool to keep a track ofvarious departments of an organization at a central database.With expansion of a business, an owners biggest concern is tomanage the chaos happening around and this gives acomplete picture of whats happening. Its a multi-module toolthat maintains information about finance, accounting,procurement, inventory, payments, delivery, support, payroll,human resource, and the list is endless.

You handover the parcel to the shop owner, he enters thedetails into his ERP-UI at his desktop along with the trackingcode. The moment parcels of the day are loaded on to the


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ERP VS CRM

Information about the payment received from customer goes to thefinance department, which also captures other information like costto company, salaries due and other operations costs. If its amanufacturing company, information of procurement and productionare also captured by respective departments. For the time being, you

may call this, capturing of this information at all levels and analyzingit later for business benefits, as Analytics.

CRM (Customer Relationship Management)

CRM is Customer-oriented and managed by marketing and salesdepartment which often represents organization to the world. Just

like ERP manages information inside organization, CRM managesinformation about existing and potential customers so as to buildbetter relations with them.

The objective of CRM is to make marketing and sales departmentcapture maximum information about customers to offer them better


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ERP VS CRM


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ERP VS CRM

Is there a connection between the two? Definitely yes

They do have a little overlap in the operations. Moreover, a CRM canbe clubbed with ERP at the central database level and both can

interact easily.

Maintaining leads via website is an integral part of CRM. An onlinestore of any product needs to interact with inventory managementmodule of ERP to check the availability of a product before it isdisplayed on the website. Along with this, the supply chain module

should interact with CRM so that customers can be promised aspecific delivery date and time.


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ERP VS CRM

Not every B2C business model can keep detailed information aboutits customers. Therefore, a provision is made where you enter yourcourier code through website; it interacts with concerned ERPmodule and gives you desired information about delivery status ofparcel. To bring a smile on customers face, CRM can shoot mails to

customers informing them about confirmed delivery along withname of the person who received it.

With time, CRM is becoming a vital part of ERP, which was not trueuntil early years of this decade. However, the requirements andpossibilities of implementation depend from business to business. Ifyou (or your IT department) are smart enough, you can tweak themodel of the combination favoring your business.


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SAP ARCHITECURE

SAP based the architecture of R/3 on a three-tier client/server

Presentation Server(GUI)

Application Server

Database Server

SAP allows the IT supported processing of a multitude of tasks,accruing in a typical company or bank. SAP ERP is differingfrom R/3 mainly because it is based on SAP Net Weaver, core

components can be implemented in Java and new functionalareas are mostly no longer created as part of the previous ERPsystem, with closely interconnected constituents, but as self-

contained components or even systems.
http://en.wikipedia.org/wiki/NetWeaverhttp://en.wikipedia.org/wiki/Java_(software_platform)http://en.wikipedia.org/wiki/Java_(software_platform)http://en.wikipedia.org/wiki/NetWeaver


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SAP ARCHITECURE

Application Server

An application server is a collection of

executable s that collectively interpret theABAP/4 (Advanced Business ApplicationProgramming / 4th Generation) programsand manage the input and output for them.

When an application server is started,these executables all start at the sametime.

When an application server is stopped,


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SAP ARCHITECURE

The Application layer consists of one ormore application servers and a messageserver. Each application server contains aset of services used to run the R/3 system.

Not practical, only one application serveris needed to run an R/3 system.

But in practice, the services aredistributed across more than oneapplication server. This means that not all

application servers will provide the full


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SAP ARCHITECURE

Database Server

The database server handles the user's request

for addition, retrieval and modifications in thedata.

Security

Server-to-server communications can beencrypted with the SAP cryptographic library.


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SAP METHODOLOGY

Five Phases of ASAPmethodology. Phase 1: Project Preparation - The purpose of this phase

is to provide initial planning and preparation for your SAPproject.

Phase 2: Business Blueprint - The purpose of this phase

is to achieve a common understanding of how thecompany intends to run its business within the SAPSystem. The result is the Business Blueprint, a detaileddocumentation of the results gathered duringrequirements workshops. The Business Blueprintdocument represents the business process requirements


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SAP METHODOLOGY

Phase 3:Realization - The purpose of this phase is toimplement all the business process requirements based on theBusiness Blueprint. The system configuration methodology isprovided in two work packages: Baseline (major scope); and

Final configuration (remaining scope).

Phase 4:Final Preparation - The purpose of this phase isto complete the final preparation (including testing, end user

training, system management and cutover activities) to finalizeyour readiness to go live. The Final Preparation phase alsoserves to resolve all critical open issues. On successfulcompletion of this phase, you are ready to run your business inyour live SAP System.


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SAP METHODOLOGY

Some additional Information on ASAP methodology,

Phase 1-Project Preparation

Change Charter - Goals and objectives of OrganizationProject Plan - This is a first cut focusing on milestones and WorkPackages, details to come.Scope - Sets the initial definition of then project; input from salescycle.Project Team Organization - Sets the whole of the project:

Standards & Procedures - Sets the why and how of the project.

Phase 2-Business Blueprint - Requirements reviewed for eachSAP Reference Structure item and defined using CI Templates.

Business Blueprint - This is the output is the key document forPhase 3.


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SAP METHODOLOGY

Phase 3- Realization - Master Lists - Define business scenariosand R/3 transactions to be realized in the system. BPP - BusinessProcess Procedures representing R/3 transactions; used for unittesting & documentation. Planning - Defines how the configurationwill be done and how it will be tested. Development Programs -Provides details of the external programming requirements. EUTraining Material - End User training material and processdocumentation.

Phase 4-Final Preparation Stress & Volume Tests - Plans forconfirming the production hardware's capabilitiesCutover Plan - The details of how to move to the productionenvironment and go liveConduct End User Training - Delivery of the necessary levels of R/3End User training prior to going live


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SAP METHODOLOGY

Phase 5- Go Live & Support:Ensuring system performancethrough SAP monitoring and

feedback.


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PROCESS

Customer Order Process: A customer inquires about the goods or services it intends to

purchase from the Supplying Company by raising a RFQ (Requestfor Quotation).On receipt of RFQ the supplying company submits thequotation. If all the terms and conditions are agreed upon by both the

companies, the ordering company would raise Purchase Order tothe supplying plant based on which a Sales Order is created by theSupplying Plant.

Once the order is ready for delivery, the goods are shipped to theordering company(Ship TO Party), and invoice is sent to bill to party.

On receiving of the goods the customer would do the quality checkand if found ok would accept them. The payer would pay theinvoiced amount to the supplying company.


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PROCESS

Rush Order: The customer picks up the goods immediately, or you deliver them

on the same day as when the order was created. When you savethe rush order, a delivery is automatically created in the standard

system. Billing the rush order takes place as normal, after thedelivery.

In the standard system, sales document type RO is saved for rushorders with immediate delivery type LF. Once the goods have beenremoved from storage, the goods are picked, and goods issue is

posted.

Once the billing documents are created (for example, in collectiveprocessing), invoice papers are printed and sent to the customer.


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PROCESS

Cash sales: We can process an order for when the customer orders the goods,

picks them up, and pays for them immediately. The delivery isprocessed at the same time as when the order is created and acash invoice is printed immediately: billing is therefore related to theorder, unlike rush and standard orders.

Receivables are not created for the customer, as they are for rushand standard orders because the amount in the invoice isimmediately posted to a cash account. In the standard system,sales document type BV (CS) is saved for cash sales withimmediate delivery.

When the sales employee creates a cash sale, the systemautomatically proposes the current date as the date for delivery andbilling. Once the order has been posted, a delivery


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PROCESS

. Make-to-orderProcess

Make-to-order production is a process in

which a product is individuallymanufactured for a particular customer. Incontrast to mass production for an

unspecified market where a material ismanufactured many times, in make-to-order production a material is created onlyonce though the same or a similar

production process might be repeated at a


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PROCESS

a) Make to order using sales order(b) Make to order using project system (not relevant for SDapplication

For make to order production using the sales order, all costs

and revenues involved for an order item are held collectively atthat item. A particular rule is used that can be changedmanually to transfer costs to profitability analysis.

Make to order production is largely a production planningconfiguration. It is also controlled by the requirements type.

Make-to-order production is controlled by the requirementstype. The requirements type is determined on the basis of theMRP group (MRP1) and the strategy group (MRP3) in thematerial master record. In addition, a plant must be assigned

for make-to-order items in the sales order.


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PROCESS

Text Determination

In Sales process (quotation, contracts, sales order for example) ,sometimes we need to maintain instructions or information about theprocess, like, terms of payment, warranties, header notes, deliveryinstructions, shipping instructions .

a es an


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a es anDistribution (SAP SD)

The Sales and Distribution (SAP SD) consists of allmaster data, system configuration, and transactions tocomplete the Order to Cash process. It includes thefollowing information and processes:

Customer Master and Material Master data

Sales Orders

Deliveries

Pricing

Billing

Credit Management

SAP S l d


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SAP Sales andDistribution (SAP SD)

Order to Cash business process associated with the SAP SDmodule:


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Distribution (SAP SD)

Subcomponents of the SAP Sales andDistribution

(SAP SD) Module:

Master Data

Sales Support

Pendulum List Indirect Sales

Sales

Shipping and Transportation

Sales and Distribution


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Sales and DistributionManagement

This Module comprises of Contact Management and Sales Order

Processing Management. It is an integrated solution comprising ofmarketing and sales activities. Organization can act immediately to

improve sales, service and marketing effectiveness by using thisModule. Sales Management module is all about retainingcustomers, improving customer loyalty and gaining customerinsight.

This module also help to you getting your customer ordermanagement easier day by day. Whether it is maintaining customerinformation, quickly creating a quote or migrating them to salesorder or being responsive to your customers, we provide you rightsolution and efficient flow of information.

S l d Di t ib ti


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Sales and DistributionManagement

Sales Territory Marketing Script Customer information

Sales Forecast Price List Sales Channel

Partner Program Contact Management Salesmen

Sales Targets Campaign Sales Person Management

Customer Item Relation Recurring Order Call Plan

Feedback Recording Inquiry Sales Reporting

Service Call Support Order Tracking Quotation-PO

Sales Order ATP Dates Stock Transfer

Confirmation of Order Credit Check PO Acknowledgement

Export Invoice Excise Invoice Domestic Invoice

Warranty Reminders SLA Service Agreements Warranty Order

Bill of Lading Customer Self Service

Barcode based retail sales

Field Salesmen Self Service

a es an s r u on


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a es an s r u onManagement

REPORTSCustomer Reports Sales Enquiry Report Sales Enquiry Conversion Report

Ship To Report Price Matrix Report Sales Contract Report

Excise Report Customer Item Report Sales Person Analysis Report

Target V/s Actual Sales Achieved Report

Sales Variance Report SO Gross Profit Report

Sales Order History Report Export Sales Report Local Sales Report

Sales Register Sales Commission Report Sales Order by Customer

Sales Analysis Report Invoices Sales Order by Item Report

Commission Payable Report Shipment Overdue Report

a es an s r u on


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a es an s r u onManagement Sales

Promotion Campaign

Ad t f th SAP


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Advantages of the SAP

ApproachArchitecture

SAP SEM is built on state-of-the-art computing technologies based onthe Business Framework architecture - capable of processing hugevolumes of information and supporting rapid decision-making. Unlike

other solutions on the market, SAPs implementation offers high levelsof data integration by ensuring synchronization of information betweenSAP SEM and the underlying business execution systems. This openconnectivity allows business components to interact with multiplebusiness systems.

Componentization

As with other SAP solutions, the Business Framework architecture letsou de lo AP EM com onents incrementall as ou need them.


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Advantages of the SAP Approach

Functionality

Building on existing SAP R/3 functionality, SAP SEM includesfunctionality for advanced Business Consolidation andBusiness Information Collection, which links internal

information with automated collection of relevant externalinformation through the Internet. SAP SEM also supportsadvanced Business Planning and Simulation, based on bothinternal and external information - allowing you to model risksand rewards, and more effectively manage the uncertainties of

the future. The Corporate Performance Monitor, including theManagement. And the Stakeholder Relationship Managementcomponent facilitates communication with investors and otherkey stakeholder groups.

Ad t f th SAP


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Advantages of the SAPApproach

Improve alignment of strategies andoperations

Run your enterprise in accordance with strategy and plans,accessing the right information in real time to identifyconcerns early.

Pursue opportunities proactively.

Achieve corporate objectives by aligning workforce andorganizational objectives.

Find the best people and leverage their talent in the right job atthe right time.

Reduce costs through increased


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Disadvantages of the SAP Approach

Expensive This entails software, hardware, implementation, consultants,

training, etc. Or you can hire a programmer or two as anemployee and only buy business consulting from an outsidesource, do all customization and end-user training inside. Thatcan be cost-effective.

Not very flexible

It depends. SAP can be configured to almost anything. InNavision one can develop almost anything in days. Othersoftware may not be flexible.


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Advantages of CRM System

Provide Better Customer Service CRM systems give businesses many strategic advantages such as

the ability to personalize relationships with customers regardless ofwhich employee is service them.

CRM also helps the organization to easily adjust the level of service

to reflect the customer's importance or status.

Using CRM data, marketing campaigns can be co-ordinate moreeffectively by ensuring that promotions do not target customers whohave already purchased that particular products.

CRM systems facilitate cross-selling (offering customerscomplimentary products based on their previous purchases) and up-selling (offering customers premium products in the same category).

Help Sales Staff Close Deals Faster


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CRM Systems

Record Loss Some CRM applications use remote Internet connections to

save customer records. Sales force is a popular CRMapplication provided through an Internet connection on thecompany's domain. The disadvantage of this type of CRM is that

the company does not have control of the data, and if the remoteCRM system has an outage, the company is unable to retrieverecords. If the company chooses a small CRM application that isnot stable, it can mean several thousands of dollars in lostrevenue. When using a remote CRM application hosted byanother company, use local backups to avoid record loss.

Training

If the company is small, training issues may be a smalldisadvantage. Large corporations need to roll out

training schedules for all their employees. For large-


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GAIL (India) Limited

GAIL (India) Limited (Company) was incorporated in 1984 as aprincipal gas transmission and marketing company of India and hassince expanded its activities into gas processing, petrochemicals,and telecommunications.

The computerization in the Company began in 1986 with theinstallation of minicomputers and implementation of in-housedeveloped payroll and financial accounting systems. Asrecommended by the consultant M/s Arthur Anderson (presentlyknown as M/s Accenture) SAP was found to be the best ERP to

meet the Companys requirements. The Board of Directors (Board),however, after a lapse of four years approved SAP-ERP project in2002 with revalidated recommendation from the same consultant atan estimated cost of Rs.55 crore. The SAP implementation workwas awarded to M/s IBM in November 2003 with a scheduledcompletion by December 2005.The project was completed in August

2005 at a cost of Rs.63.98 crore.

The implementation of


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The implementation ofERP aimed to

Enable GAIL to leverage informationfor competitive advantage in aderegulated and highly competitive

market scenario. Move up the value chain.

Achieve higher customer service andsatisfaction;

Improve operational efficiency andproductivity; and


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Non-mapping and non-usage of availablefunctionalities

Sales & Distribution module:

Two of the three business activities namely

Natural Gas and Telecommunication businesses of theCompany were not fully mapped in SAP. The module was beingused only for invoice generation for the two business segments.The Company was using Gas Management System (GMS), a

stand-alone package for capturing information relating to supply ofNatural Gas.


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Sales and distribution module

The module is primarily meant for monitoringmarket demand of the products of the Company,to keep record of the Company clientele, theircredit worthiness and keeping track of ordersand deliveries, and planning, controlling andmonitoring sales and relatedactivities/transactions. Audit analysis revealedthe following deficiencies in customizing and

input and validation controls in the module.

N Customization of the


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Non- Customization of thesystem

Customization of the system was insufficient and could not meet thefollowing business requirements.

The Marketing offices of the Company communicate potential

demand of polymers to Petrochemical Marketing Group (PMG),which after considering reasonableness of demands and materialavailability allocates the material to marketing office. The Marketingoffice based on the allocated material, confirm indents ofconsignment stockiest/customers as sales orders. A review of thissales process revealed that.

The basis (source data) of projection of product-wise potentialdemand was not captured and maintained in the system.

N Customization of the


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There was no reporting on actual demands of consignmentstockiest made through indents and their comparison with actualsales order and dispatched quantity.

There was no report available to compare the actual sales orderquantities raised by the Marketing offices and actual dispatchesthere against to assess the performance of Marketing offices.

Further, no records were maintained relating tocancellation/modification of the unexecuted/ partially delivered salesorders by the supplying plant in the event of price revision,production or logistics constraints.

Non Customization of the


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Thus, it was evident that the system did not capture completesequence of events from indenting to dispatch of material inabsence of which the potential demand for polymers, loss ofbusiness due to cancellation/modification of sales orders and thebusiness secured could not be ascertained in the system.

The Management while accepting the Audit observation (August2007) added that dispatched quantity indicated performance ofMarketing offices and the Plant. It may be stated however, that thedispatched quantity is indicative of performance of the plant

whereas the performance of Marketing office depends on the salesorders confirmed by them.



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The customers are to be charged interest for delayed payments.However, interest calculation on delayed payments was not mappedin the system and the same was done manually indicating underutilization of the system. The Management accepted the auditfinding and stated (July 2007) that due to staggered rate of interest,

the controls were not inbuilt in the system. The reply was notconvincing as the interest could be calculated through a conditionaltable in the system.

The Company maintained credit data of its customers including

credit limit prescribed and actual credit extended there against, inthe system. Review of credit data available revealed that.

The central credit data was not available for 4788 customers out of

9865 customers. There was an outstanding balance of Rs.459.36crore as on 9 Jul 2007 a ainst 376 customers for whom central



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The credit limit for 5103 customers out of 5121 customers wasdefined as zero. Despite a zero credit limit, 156 customers wereextended credit of Rs.140.03 crore (9 July 2007) and one customerwas extended credit of Rs.0.23 crore against a credit limit of Rs.0.20crore.

Lack of validation controls resulted in credit sales exceeding the thedefined credit limits.

The Management accepted the audit observation and stated(August 2007) that credit data was not maintained in respect ofcustomers receiving material through consignment stockiest and forNatural Gas customers. It further added that the system wasconfigured to disallow any excess credit. The reply was not

acceptable as credits in excess of limit were allowed by the system.

Deficient problem


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Deficient problemsolving mechanism

The SAP solution has a centralized helpdesk in place toredress the problems faced by users in SAP environment.Review of complaints/requests handled by the helpdeskduring April 2006 to April 2007 revealed that out of 7385

issues raised by the users, 5529 took three to 199 days tobe resolved. Further, out of 35 unresolved issues, 29issues were pending for a period more than three days toup to 161 days. It is evident that control mechanism hasnot been defined to resolve the problems of users at the

earliest.

C l i


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Conclusion

Non-mapping of certain vital business requirements andfunctionalities, lack of customization and lack of utilizationof all available features led to underutilization of the ERPSAP solution. The system further suffered from lack ofinput controls and validation checks. These inadequacies

resulted in incompatibility of the system to meet allbusiness requirements, created risk of defective/ delayedMIS reporting and decision-making leading to manualintervention and thus making database unreliable. Theunderutilization of the system compromised the basic

objectives of leveraging information for competitiveadvantage in the market, improving operational efficiency,productivity, achieving higher customer service andsatisfaction.


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Recommendation

The Management should consider the following measures forimplementation to optimize the benefits from the ERP system.

Ensure customization and usage of the ERP solution as perbusiness requirement, statutory requirements and guidelines

of the Government and policies of the Company. A time boundreview of all the modules should be conducted to ensurecompliance with applicable business rules.

All the available functionalities of the ERP system

should be customized to the meet the businessrequirements. To derive optimal benefits from theERP system, different modules should beintegrated.


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Recommendation

Ensure that input controls and validation checks are inbuiltin the system and are applied to data entered in thesystem to strengthen internal control procedures

The Master Data needs to be revisited/reviewedperiodically for ensuring veracity of the data andauthorization thereof.

In the areas of input control and business continuity plan,the Company should evolve suitable security policies withclearly defined procedures and responsibilities.

Documents

Sales and Distribution in Erp Final