ERP MODULES

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CHAPTER 5
ERP MODULES Alexis Leon
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ERP MODULES

• Finance
• Manufacturing and Production Planning
• Sales and Distribution
• Plant Maintenance
• Quality Management
• Materials Management

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Financial Module

• Financial Accounting (General Ledger, Accounts
  Receivable, Accounts Payable, Fixed Assets)
• Investement Management (Investment
  Planning/Budgeting/Controlling, Depreciation
  Forecast/Simulation/Calculation)
• Controlling (Overhead Cost Controlling, Activity
  Based Costing, Product Cost Accounting,
  Profitability Analysis)
• Treasury (Cash Management, Treasury Management,
  Market Risk Management, Funds Management)
• Enterprise Controlling (Executive Information
  System, Business Planning and Budgeting, Profit
  Center Accounting)

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FINANCIAL ACCOUNTING ? General Ledger

• General Ledger
• General Ledger produces the enterprises
  financial statements including the Balance Sheet,
  which shows the enterprises assets, liabilities
  and equity at a point in time, the Income
  Statement, which shows the enterprises income,
  expenses and net profit over a period of time,
  the Cash Flow Statement which shows sources and
  applications of cash, and associated financial
  reports such as the Trial Balance. The rest of
  the reports are there to track the numbers on the
  financial statements back to individual
  transactions. Most businesses prepare monthly
  statements. Every ERP package has a General
  Ledger module.
• General Ledger is unusual in that it receives
  transactions from many other modules. There are
  two ways to accomplish this Detail and
  Summarized. In the detail method, every invoice,
  check, or other such transaction creates a
  separate General Ledger transaction. The
  advantage of this is that the General Ledger is
  continuously updated in real time so the entire
  set of ERP tables is in sync. The disadvantage is
  that there are large numbers of transactions. In
  the summarized method, transactions are
  accumulated for some period (typically a day) and
  posted in summary. Instead of many small
  transactions, there is a few big ones. The
  advantage is that there are far fewer
  transactions. The disadvantage is that the
  General Ledger is out of sync with the rest of
  the ERP until the data is posted.

General Ledger has the following functions Maintain Chart of Accounts Maintain Budgets Maintain Recurring Transactions Print Financial Statements Print Trial Balance Allocate Transactions Consolidate Transactions Periodic Processing Maintain Module Information
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FINANCIAL ACCOUNTING ? General Ledger
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FINANCIAL ACCOUNTING ? Accounts Payable

• Every enterprise purchases goods, services,
  assets, or office supplies from its suppliers
  (also known as vendors). Accounts Payable pays
  these suppliers on time (taking advantage of
  payment discounts if possible) while avoiding
  duplicate payments and bank over-drafts. Accounts
  Payable is the last step in the supply chain
  where Purchasing is the first. Accounts Payable
  accepts invoices, selects invoices to be paid,
  generates checks and forecasts future cash
  requirements based on due dates. Some AP checks
  are issued to people or organizations that are
  not worth putting on file since they are likely
  to receive only one check. Some enterprises
  prepay part of the invoice amount because the
  supplier requires a deposit. Every ERP has an
  Accounts Payable module.
• Transactions
• The first transaction records a supplier invoice.
  This can be verified against the related purchase
  order if there is one and the receiving report
  that lists what goods were actually received. Not
  every enterprise uses the last two options.
• The second transaction pays supplier invoice(s).
  Each check can pay one or more supplier invoices.
  Invoices must be approved for payment before they
  can be paid.
• The vast majority of the module's transactions
  consist of the above two. The third fundamental
  transaction is that of adjustment when things go
  wrong.

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FINANCIAL ACCOUNTING ? Accounts Receivable

• Every business sells products and/or services to
  its customers. Order Entry creates invoices when
  a customer orders something and Accounts
  Receivable keeps track of what payments have been
  made to which invoices. Commonly, it also
  prepares a report ("Aged Analysis") which shows
  how long each invoice has been outstanding. Every
  ERP has an Accounts Receivable module.
• Collection
• If Accounts Receivable invoices become overdue,
  Collection initiates processes to collect the
  money. Usually this means a telephone call
  followed by a series of dunning letters of
  increasing severity. If these efforts fail, Legal
  may become involved or the invoice may be written
  off, or sold to a collection agency for a
  fraction of its face value. As part of CRM,
  details of each contact with the customer
  including date, employee, contact person, and
  activity are stored in Customer.
• Transactions
• The first transaction records an invoice. This is
  done by Order Entry/Invoicing rather than
  Accounts Receivable.
• The second transaction records a customer
  payment. One customer payment can pay one or more
  invoices. Payment can be in cash, by debit card,
  credit card, or check. Somethimes payments are
  received without information about what invoices
  are being paid.
• The vast majority of the module's transactions
  consist of the above two. The third fundamental
  transaction is that of adjustment when things go
  wrong.

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FINANCIAL ACCOUNTING ? Asset Accounting

• A "fixed asset" is something the enterprise has
  purchased that has a useful life of more than one
  year. Fixed Assets keeps track of all these
  objects and allocates part of their purchase
  price to each year of their life. There are a
  variety of ways in which this allocation can be
  done. For some assets, the allocation or
  "depreciation" is specified by law. Not all ERP
  packages have a Fixed Assets module.
• Fixed Assets has the following functions
• Maintain Asset Information
• Enter Transactions
• Generate Depreciation
• Maintain Module Information

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FINANCIAL MODULE-INVESTMENT MANAGEMENT
(Investment Planning/Budgeting/Controlling,
Depreciation Forecast/Simulation/Calculation)

• Every enterprise has a reserve of funds. As the
  enterprise grows larger, the total reserve
  becomes larger and larger. Eventually, it is
  large enough that it is prudent for the
  enterprise to invest part of it to gain a higher
  rate of return than would be possible in a
  checking account. These investments include GICs,
  mutual funds, stocks, bonds, and other investment
  options. Investment Manager keeps track of these
  investments. Only large ERP packages have an
  Investment Manager module.
• Investment Manager has the following functions
• Maintain Investment Information
• Enter Transactions
• Print Investment Summary
• Maintain Module Information

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FINANCIAL MODULE - CONTROLLING (Overhead Cost
Controlling, Activity Based Costing)

• Controlling
• The controlling system gathers the functions
  required for effective internal cost accounting.
  lt offers a versatile information system, with
  standard reports and analysis paths for the most
  common questions. In addition, there are features
  for creating custom reports to supplement
  standard reports.
• Overhead Cost Controlling
• Many organizations erience a signin t increase in
  the percentage of indirect costs, which cannot be
  directly assigned to either the products
  manufactured, or to the services rendered. While
  cost monitoring and optimisation may be quite
  advanced in production areas, transparency is
  often lacking in overhead cost areas. The
  Overhead Cost Controlling sub system focuses on
  monitoring and allocation of overheads.
• Cost Centre Accounting
• Cost centre accounting analyses where overheads
  occur within the organization. Costs are assigned
  to the sub-areas of the organization where they
  originated. The system offers a wide variety of
  methods for allocating posted amounts and
  quantities. In particular, activity accounting
  permits, the allocation of great many costs to
  products, based on cost sources and enabling
  assignments, which were not previously possible.

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FINANCIAL MODULE - CONTROLLING (Overhead Cost
Controlling, Activity Based Costing,

• Overhead Orders
• Overhead orders subsystem collects and analyses
  costs, based on individual internal measures.
  This system can monitor and automatically check
  budgets assigned to each measure.
• Activity-Based Costing
• The goals of the entire organization, should come
  before the goals of individual departments, when
  it comes to business process reengineering. The
  Activity-Based Costing module, is a response to
  the growing need for monitoring and controlling
  cross-departmental business processes. in
  addition to functions and products. Seeing costs
  from a new perspective, substantially enhances
  organizational transparency in overhead areas.
  The system automatically determines the
  utilisation of business processes by products,
  customers, and other cost objects based on the
  cost drivers taken from the integrated accounting
  environment. This, signiiicantly reduces the
  effort involved in maintaining a business process
  model in a separate system.
• Product Cost Controlling
• Product Cost Controlling module determines, the
  costs arising from manufacturing a product, or
  providing a service. Plan and standard values,
  serve in valuating warehouse stock and for
  contrasting revenues received with costs. In
  addition, the values in Product Cost Controlling.
  are crucial for determining the lowest price
  limit for which a product is profitable.
  Simulations illustrate the effects of changes in
  production methods on the cost of goods
  manufactured.
• Cost Object Controlling
• Cost object controlling helps you monitor
  manufacturing orders. Integration with the
  logistics components results in a logistical
  quantity flow, that provides instant information
  on actual cost object costs, allowing ongoing
  costing calculations at any time. Follow-up
  calculations determine and analyse the variances
  between actual manufacturing costs, and the plan
  costs resulting from Product Cost Planning.
• Profitability Analysis
• Profitability analysis subsystem examines the
  sources of returns. As part of sales controlling,
  Profitability Analysis is the last step in
  cost-based settlement, where revenues are
  assigned to costs according to the market
  segment. You can dehne any market
  segment-distinguishing, for example, between
  products, customers, orders, sales organizations,
  distribution channels and business areas-and
  evaluate it, according to contribution and
  revenue margins. information from Profitability
  Analysis, frames important decisions in areas
  such as determining prices, selecting customers,
  developing conditions and choosing distribution
  channels.

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FINANCIAL MODULETreasury (Cash Management,
Treasury Management)

• Cash Management
• To anlyse financial transactions for a give
  period. It also records future developments for
  purposes of financial budgeting.
• Treasury Management
• It offers functions for managing financial deals
  and positions, from trading to transferring data
  to Financial Accounting.

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FINANCIAL MODULETreasury (Market Risk
Management, Funds Management)

• Market Risk Management
• It acts as an integrated central risk control
  station with monitoring and management
  functions.s
• Funds Management
• It supports Funds Management Process from
  budgeting all the way through to payments,
  including monitoring expenditures, activities,
  resources and revenues.

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FINANCIAL MODULEEnterprise Controlling
(Executive Informaiton Systems, Business
Planning and Budgeting, and Profit Center
Accounting)

• Executive Information Systems
• It integrates data from Financial Components,
  other ERP Components, and non-ERP data sources
  both inside and outside the enterprise.
• Business Planning and Budgeting
• It supports Business Units and Groups in the
  calculation of business targets, such as return
  on investment. It also supports central
  investment planning, budget release and tracking.
• Profit Center Accounting
• All business transactions in Financial
  Accounting, Material Management, Asset
  Management, and Sales / Distribution, which
  affect profits, are automatically reflected in
  Profit Center Accounting

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SALES AND DISTRBUTION
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SALES AND DISTRBUTION
MAIN MODULES 1. Master Data Management 2. Order
Management 3. Warehouse Management 4. Shipping 5.
Billing 6. Pricing 7. Sales Support 8.
Transportation 9. Foreign Trade
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SALES AND DISTRBUTION Master Data Management
Master Data 1. Trading Community Architecture
Customer, Supplier, Employee 2. Products 3.
Salespersons 4. Sales Territory
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SALES AND DISTRBUTION Order Management Sales
Order Management
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SALES AND DISTRBUTION Order Management
Purchase Order Management
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SALES AND DISTRBUTION Warehouse Management
1. Inventory Planning 2. Inventory Handling 3.
Inventory Location, Assignment 4. Inventory
Reporting 5. Inventory Analysis 6. Lot Control 7.
Distribution Data Collection
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SALES AND DISTRBUTION Shipping
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SALES AND DISTRBUTION Billing
1. Invoice 2. Debit and Credit Memo 3. Proforma
Invoices 4. Rebates
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SALES AND DISTRBUTION Pricing
1. Price Quotations 2. Discounts (Quantity,
Payment Terms etc.)
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SALES AND DISTRBUTION Sales Support
1. Price Quotations 2. Discounts (Quantity,
Payment Terms etc.)
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SALES AND DISTRBUTION Transportation
1. Inward Outward Movement of Goods 2.
Transportation Planning and Processing
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MANUFACTURING
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MANUFACTURING Material and Capacity Planning
1. Material 2. Labor Resources 3. Plant
Machinery
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MANUFACTURING Shop Floor Control
1. Shop Orders 2. Work Orders 3. Backward and
Forward Scheduling
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MANUFACTURING Quality Management
1. Shop Orders 2. Work Orders 3. Backward and
Forward Scheduling
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MANUFACTURING Cost Management
1. Costing Methods a) Weighted Average b)
Standard c) LIFO d) FIFO 2. Product Cost
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MANUFACTURING Serialization/Lot Control
1. Lot Control / Batches 2. Serialization / LPN
(License Plate Number)
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HUMAN RESOURCES
1. Personnel Management (HR Master Data,
Personnel Administration, Recruitment, Travel
Management, Benefits administration, Salary
administration) 2. Organizational Management
(Organizational Structure, Staffing Schedules,
Job Descriptions, Planning Scenarios, Personnel
Cost Planning) 3. Payroll Accounting (Gross / net
Accounting, History Function, Multi-Currency
Capability, International Solutions) 4. Time
Management (Shift Planning, Work Schedules, Time
Recording, Absence Determination) 5. Personnel
Development (Career and Succession Planning,
Profile Comparisons, Qualifications Assessments,
Additional Training Determination, Training and
Event Management)
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HUMAN RESOURCES Personnel Management
Personnel Administration Shared Employee
Information HR Master Data Core HR Data a)
Job b) Position c) Grade d) Employee Master
Information Recruitment Automated Hiring
Process (Manage Open Positions, Applicant
Screening, Selection, Hiring, Correspondence,
Reporting, and Cost Analysis) eHiring Travel
Management Travel Approval to Travel Expense
Report Benefits administration Define Benefits,
Enroll Employees, Cost/Benefit Simulations Salary
administration Salary Review Process, Manpower
Costing
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HUMAN RESOURCES Organizational Management
Graphical Organization Charts Staffing
Schedules by headcount, percentage, and working
hours Work Center Descriptions Job Tasks and
Description
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HUMAN RESOURCES Payroll Accounting
Centralized / Decentralized Payroll Apply
Business Rules Country Specific Payroll
(Language, Currency, and Regulatory Requirements)
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HUMAN RESOURCES Time Management
Attendance System Leave System
Overtime/Late Sitting System Shift Planning
(Manage Staff Shortage and Excess)
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HUMAN RESOURCES Personnel Development
Comparison of Qualification and Profile
Training Need Analysis Training Schedules
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PLANT MAINTENANCE
Preventive Maintenance Control Equipment
Tracking Component Tracking Plant Maintenance
Calibration Tracking Plant Maintenance Warranty
Claims Tracking
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PLANT MAINTENANCEPreventive Maintenance Control
Planning, Scheduling, and Control of facilities
and Equipment Monitoring by a) Hours of
Operation b) Units of Production Produced c)
Gallons of Fuel Consumed d) Number of Days in
operation since the last service level
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PLANT MAINTENANCEEquipment Component Tracking
Acquisition and Utilization History Asset
Management Identification of Chronic Problems
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PLANT MAINTENANCEPlant Maintenance Warranty
Claims Tracking
Establish Type and Length of Warranty History
of Warranty Maintenance
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QUALITY MANAGEMENT
1. Quality Planning (Management of basic data
for quality planning and inspection planning,
Material Specifications, Inspection Planning) 2.
Quality Inspection (Trigger Inspections,
Inspection Processing with inspection plan
selection and sample calculation, Print shop
papers for sampling and inspection, record
results and defects, make the usage decision and
trigger follow-up actions) 3. Quality Control
(Dynamic sample determination on the basis of the
quality level history, application of statistical
process control techniques using quality control
charts, Quality Scores for inspection lots,
Quality notifications for processing internal or
external problems and initiating corrective
action to correct the problems, Inspection lot
processing and problem processing)
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QUALITY MANAGEMENTComputer Integrated Quality
Management (CIQ)
Material Management (Purchasing, Inventory
Management, Warehouse Management, Material
Requirements Planning) Production (Work
Scheduling, Shop Floor Control) Sales and
Distribution (Delivery, Creation of Quality
Certificates)
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MATERIALS MANAGEMENT

• Pre-Purchasing Activities
• Purchasing
• Vendor Evaluation
• Inventory Management
• Invoice Verification and Material Inspection

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MATERIALS MANAGEMENTPre-Purchasing Activities

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MATERIALS MANAGEMENTPurchasing Activities

• Purchasing Integration with other modules
• Cost Accounting System
• Financial Accounting System
• Sales and Distribution

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MATERIALS MANAGEMENTVendor Evaluation

1. Deliver Date, Prices etc. ? Purhcase Order
2. Quality Results ? Quality Management
3. Lead Times ? Material Planning

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MATERIALS MANAGEMENTInventory Management

1. Maintenance of Stock
2. Quantity
3. Value

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MATERIALS MANAGEMENTInvoice Verification and
Material Inspection

1. 2 Way ? PO Quantity
2. 3 Way ? PO Quantity Receive Quantity
3. 4 Way ? PO Quantity Receive Quantity
   Inspection Quantity