SAP Notions fondamentales Chapitre 1 et 2

1Copyright © 2006, Pierre-Majorique LÉGER, Jacques ROBERT, Gilbert BABIN and Robert PELLERIN, HEC Montréal. All rights reserved for all countries.

ERP Simulation Game with mySAP ERP

CHAPTER 1 - INTRODUCTION

1.1 Description of our new company

1.1.1 Introduction

As a participant in the HEC Montreal Simulation game, you’ve just earned a new job in the industry of pre-packaged mixes of Muesli.

Muesli is a popular breakfast dish. Dry muesli is a mixture of mainly rolled oats and wheat fl akes, with nuts and pieces of dried fruit.

According to Wikipedia, “Muesli was invented in 1900 by Swiss doctor Maximilian Bircher-Benner for patients in his hospital”. Muesli was

fi rst popularized in Germany and Switzerland. In the late 1980s, the company Kellogg marketed its brand Mueslix in North America.

Since then, an interest for its own local brand of muesli has developed. Today, dry muesli is widely available in the form of pre-packaged

mixes. It can be stored for many months and served mixed with yoghurt or milk and pieces of fresh fruit. Some like it in hot milk. Muesli

provides an excellent source of essential ingredients as it is rich in fi bre and essential trace elements. In the local market, about 2 million

boxes of local brands of muesli were sold in 2003.

Your new company is one of the local producing companies of pre-packaged muesli boxes. The market is surprisingly fragmented. This

could be explained by the fact that entry costs in the industry are relatively small. In 2003, there were six local companies competing in

this relatively small but competitive market. You are part of a small executive team leading this company. As member of the executive

team, you will have to make strategic decisions throughout the quarters. You will have to select the recipe for your products, perform

sale forecasting and production planning, make pricing decisions and determine advertising budgets for each distribution channel. Your

team will also be responsible for accounting functions, including reporting quarterly profi ts. Your new employer has been clear. Unethical

behaviour, such as falsifying fi nancial reports, not paying suppliers or the bank loan on time, and violating the industry regulations are

unacceptable and will be severely punished. Otherwise, the name of the game is to make the most profi t.

1.1.2 Make-to-stock business processes

Your muesli company is a make-to-stock manufacturer. It can only sell products that are held in inventory. Therefore, cereal boxes have

to be manufactured in advance. This determines some of the business processes that your company will need to perform.

Your executive team will need to forecast the number of products the fi rm intends to sell in the next period for each of its brands. Based

on this forecast, production is planned. Material requirements are met by purchasing raw materials from the appropriate suppliers.

Production is done in batch. Every product requires its own work center and manufacturing equipment. Further, purchasing raw material

requires liquidity. If you choose to produce any large number of boxes in advance, you will have to borrow the necessary funds from the

bank on which you will have to pay interest.



Because this is a small company, your team will also have to supervise almost all of the operations of the company and take active part in

some of day-to-day processes. There are tasks that you simply cannot delegate and the success of your company depends on your team.

Your responsibilities in operations include issuing product requisition and purchase orders for raw materials, receiving and producing

the receipts for raw materials, posting invoices and paying the suppliers, transferring the raw material and the fi nished products to the

relevant storage location, and issuing the production order.

We have provided a detailed description of the fi rm’s production cycle:

Forecasting Plants always need to produce a period worth of products in advance. Only product in stock at the beginning

of the period can be sold to retailers. Therefore, the sales manager needs to forecast demand for the next

period.

Production Planning Based on the forecasted sales unit for the next period, demand planning is transferred to production

planning. The planner then runs the materials requirements plan (MRP), which automatically generates the

raw materials purchase requisitions.

Purchase Order When a purchase requisition is received, the purchasing manager contacts the suppliers of the products

required. The purchasing manager chooses the vendor who offers the best price. He can either buy on the

spot or from a contract previously negotiated. After assigning the chosen vendor to the purchase requisition,

a formal purchase order is created.

Goods Receipts When the goods are received, the receiving clerk checks that the goods delivered correspond to the purchase

order. The invoice sent with the product is forwarded to accounting and posted by an accounting clerk.

Outgoing Payment Since the goods are payable upon reception, the accounting clerk carries out the transaction required to pay

the vendor. A cheque for the amount owing is issued and sent to the vendor.

Transfer Material The goods received are moved from the receiving dock to the raw materials’ storage shelves. Confi rmation of

this transfer is recorded in the system.

Production Order Once all the inputs required for production are available, a production order is created.

Transfer Material The raw materials required are then transferred from the storage to the production site. Confi rmation of this

transfer is also recorded in the system.

Finished Product

Transfer

Once manufacturing is completed, the fi nished products are transferred from the production site to the

warehouse. This transfer is again confi rmed in the system.



Fortunately for your management team, your sales representatives will take care of receiving and managing sale orders, managing the

shipping of fi nished products to the stores, and invoicing and receiving payment from clients. More precisely, they are responsible of

the following processes:

Sales Order Regularly, retailers ask the manufacturers for a quotation. The retailer sends the order to the manufacturer. The sales

representative records this order.

Shipping The fi nished products are then shipped to the customers. In addition to entering a shipping slip, the clerk must also

adjust the inventory of fi nished products (post goods issue).

Invoicing Accounting then sends an invoice to the customer.

Incoming

Payment

Upon reception of payment, the accounting clerk clears the customer account and records the deposit of the

payment.

Finally, there is a list of managerial and strategic activities that you will have to undertake. The strategic decisions involved price fi xing,

allocating advertising expenditures, and choosing the recipes for your product. You will also have to deal with your banker in order to

secure a credit line and issue quarterly fi nancial reports. This is hard and challenging work but this is why you accepted the job.

1.1.3 The ERP system

Considering all your responsibilities, your team will be kept pretty busy. Fortunately, the company has acquired a new ERP system:

mySAP ERP. Presumably, none of you has any practical experience with my SAP ERP or another ERP system, but you are entrepreneurial

and resourceful so you are looking to fully exploit the possibilities of the ERP system. You will quickly have to:

Become familiar with the enterprise resource planning (ERP) software.

Develop a practical understanding of the main concepts underlying an ERP software, and

Identify the benefi ts of intra-company integration.

An ERP software is an integrated information system that manages enterprise data, helps integrate business processes and provides data

for business intelligence. One of your fi rst tasks is to parameterize the system by entering what is called the master data (see chapter 2).

Next, you will have to learn how to perform the various operational tasks in order to plan production, order raw material, produce, insert

price lists and advertising budget, etc. (see chapter 3)

•

•

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1.1.4 Physical layout and logistics

On your fi rst day at your new job, the boss’s secretary, Ms. Christie, kindly proposes a visit of the factory. The main entrance leads to the

reception and to the offi ces of the executive team, which in turn, leads you to a large shop fl oor.

As you enter the shop fl oor, you begin to get a better understanding of your new business. Mr. Jack comes to greet you and begins to

explain how the machines work. You listen carefully. On the shop fl oor the production machines are lined up. On the right of the shop fl oor,

a door leads to the raw material warehouse. About twice a day, the raw materials are distributed in large receptacles. The raw materials

are then mixed by a calibrated machine that processes the programmed recipe. The machine can be quickly stopped and recalibrated

in order to produce a new recipe. Another machine inserts the plastic bags into the appropriate boxes. Finally, a third machine puts the

mixtures into the boxes and seals the plastic bags and boxes. The fi nished products are then bundled into large delivery boxes. Each

delivery box is identifi ed with the product name and stored in the fi nished product warehouse which can be accessed at the left of the

shop. By the shop fl oor, lie more offi ces. These offi ces belong to the salespeople, who are in charge of receiving the orders.

Further in the back, you visit the two warehouses. The one at the right is the raw material warehouse. The delivery truck stops at the

reception dock located at the back of the factory, where they unload the raw materials. The warehouse is actually quite large and

there is no major storage space problem. On the other side, you access the fi nished product warehouse. As the products are being

manufactured, they are stored in this warehouse. There are six different sections, one for each product in the company’s production line.

When an order has been sent by a client, the salespeople prepare a shipment order and a delivery truck comes to the expedition dock

to load the fi nished product boxes.

“Clearly,” Mr. Jack says, “you do not want to have a delivery truck come in when there is no product in stock, so as a rule we never produce

a shipment order if the desired product is out of stock. It happens from time to time. When it does we lose a sale. Once, an employee had

forgotten to put the fi nished products in the fi nished product warehouse and we lost a lot of money. The boss was really not happy.”

Your visit ends with the docks. The raw material comes in large batches measured in kilos. The delivery cost of cereals (wheat and oats) is

150 euros per trip. Usually, you are told, each delivery is relatively large, anywhere from 500 to 750 kilos. The delivery cost of dried fruits

(raisins, blueberries, strawberries and nuts) is 80 euros per delivery. A typical delivery is 5 to 15 bags. Unfortunately, delivery of each raw

material is done separately.



1.2 Description of the marketplace

1.2.1 Supply of raw materials and inputs

In order to produce a box of cereals, one can use up to six different ingredients: wheat, oats, nuts, raisins, strawberries and blueberries.

The compositions of the cereals are not predetermined; therefore each fi rm must select the composition of each of its products.

It is custom in the muesli industry to classify muesli cereal into six different categories depending on the composition of the product:

original, raisins, nuts, blueberries, strawberries and mixed fruits. Each of these categories corresponds to a well-regulated label since

consumers are looking for products associated with one of these appellations or labels. The regulation requires that a product referred

to as “Blueberry Müesli” contains only blueberries, wheat and oats with a minimum of 20% for each. The same applies for Nut, Strawberry,

and Raisin Müesli appellations. Product labelled as “Original recipe” must contain only oats and wheat with a minimum of 20% wheat

and 30% oats. Products labelled “mixed fruits” must contain all six ingredients with a total of at least 30% non-cereal ingredients. The

following table summarizes the labelling regulations.

Table 1.1 : Muesli Label Regulation

Ingredients

Labels Wheat Oats Blueberries Strawberries Raisins Nuts

Original Min 20% - Max 70% Min 30% - Max 80% No No No No

Blueberries Min 20% Min 20% Min 20% No No No

Strawberries Min 20% Min 20% No Min 20% No No

Raisins Min 20% Min 20% No No Min 20% No

Nuts Min 20% Min 20% No No No Min 20%

Mixed fruits Min 20% Min 20% Min 30%

Boxes come ine two sizes: 500 gr. or 1 kg boxes. Some distribution channels will sell only small boxes; others, only the larger boxes (see

the retail section). Packaging is comprised of two inputs: plastic bags and cardboard boxes.

All the ingredients going into the production of muesli cereals are produced within highly competitive markets. Wheat, oats, raisins,

strawberries, blueberries and nuts are all commodities whose prices are determined by the Global Commodities Market. Each individual

fi rm in the local muesli industry is too small to have any impact on the commodity market prices. Distribution of food products is

provided by a single distribution fi rm: FoodBrokers Inc.



Blueberries and strawberries are typically the more costly inputs while wheat and oats are the cheapest. The production variable cost

includes the cost of the raw materials, and the cost of the plastic bag and cardboard box. Raisins, blueberries and strawberries are

typically the more costly inputs while wheat and oats are cheapest. In 2003, a study performed by HEC Montréal calculated the average

cost of the raw materials included in dry muesli cereals.

Table 1.2: Input Cost 2003 (at low seasonal price)

Cost of inputs 2003 2004

Wheat 1.82 euros/kg 2.01 euros/kg

Oats 1.66 euros/kg 1.69 euros/kg

Raisins 5.18 euros/kg 3.28 euros/kg

Strawberries 6.62 euros/kg 7.02 euros/kg

Blueberries 8.52 euros/kg 8.32 euros/kg

Nuts 3.91 euros/kg 7.91 euros /kg

Packaging 0.5kg 0.80 euro 0.82 euro

Packaging 1kg 1.10 euros 1.19 euros

The study has shown that the cost of raw materials, in particular, strawberries and blueberries was seasonally determined. The prices

during the off season periods may be more than twice than during the harvest season. In 2004, the price of raisins was at an all time low

due to a price war between producing countries. In 2004, the price of nuts sharply increased because of the coup d’état and subsequent

civil war in Demientia, the world’s major producer of nuts. The price was expected to increase substantially in the future.

The next table presents some of characteristics of the commodity markets. Dates where the seasonal prices are at their highest and at

their lowest are also listed.



Table 1.3: Commodity Markets

Commodity Description of the market Dates of high prices Dates of low prices

Wheat Heavily traded market with low

volatility in the spot price.

Quarter 1: Day 10 to 20 Quarter 3: Day 4 to 55

Oats Large market with small volatility

in the spot price.


Nuts Volatile spot prices cause by

international sourcing risk.


Strawberries Seasonal market Quarter 1: Day 30 to 40 Quarter 3: Day 1 to 10

Blueberries Seasonal market Quarter 2: Day 25 to 35 Quarter 3: Day 25 to 35

Raisins Market control by the Dried

Raisins Cartel (DRC), but in 2003

the Cartel had great diffi culty in

controlling its members.


The plastic bags and the cardboard boxes used in the packaging are produced mainly by specialized printing companies. The companies

purchase the boxes from the cardboard producers and then print the brand logos according to specifi cations. The plastic bags are typically

sold by the same companies. There are a few companies in the local market capable and so the market remains quite competitive. The

main company that have been supplying your fi rm is Continental Printing Co.

1.2.2 Retail

There are three distribution channels for muesli cereal in the local market: the convenient stores, the traditional grocery stores and the

hypermarkets (large discount outlets).

Grocery stores

The grocery store is still the main distribution channel for the muesli industry. In 2003, 46.6% of total sales were through the traditional

grocery stores. Grocery stores offer their customers more variety than the other types of stores. A typical store would carry 4 or 5

different brands of muesli on their shelves and grocery store would sell both small and large boxes. In 2003, there were 58 grocery stores



in the local market.

Independent grocers

The independent grocers or convenient stores are small proximity stores. They sell a small variety of products: beverage, beer, dairy

product, candies and chips, newspapers and magazines, and some everyday non-perishable food products including muesli cereals.

Convenient stores will only sell 500gr boxes. Their consumers are less sensitive to prices, but more sensitive to brand names and

advertising. Convenient stores will typically order in small quantities and will stock the shelves only one or two brands. In 2003, the

estimated market shared served by the convenience stores was 22%. Prices are on average 10% to 15% higher in the convenient stores

than in traditional grocery stores. In 2003, there were 122 convenience stores in the local market.

Hypermarkets

The large discount stores or hypermarkets are a growing phenomenon. They not only sell food, they sell books, CDs, clothing, and

electronic appliances. These stores have managed to attract numbers of consumers looking for cheaper prices. In 2003, 28.3% of sales

were at hypermarkets, a major increase from the previous decade. Hypermarkets will only sell the large format and will offer a more

limited variety than the grocery stores. Only 1 kilo boxes are sold at the outlets. Many studies have shown that outlet consumers are

highly sensitive to price while less sensitive to advertising and branding. Typically, the products are sold at prices 5% to 10% lower than

in traditional grocery stores. In 2003, there were 12 outlets in the local market.



Table 1.4: Distribution Channels, 2003

Parameters Grocery stores Independent Grocers Hypermarkets

Nb of stores 58 122 12

Brands per store 4 or 5 2 3

Total per store

Sales per day (boxes) 49 12 118

Sales per day (euro) 257.25 euros 54.00 euros 708.00 euros

Sales per year (euro) 90 037.50 euros 18 900.00 euros 247 800.00 euros

Turn around (weeks) 3 weeks 5 weeks 2 weeks

Average Order (euro) 1 350.56 euros 945.00 euros 3 540.0 euros

Total per channel

Sales per year (euro) 5 222 K euros 2 305 K euros 2 973 K euros

Market share 49.7% 22.0% 28.3%

Nb of orders per quarter 851 537 185

Advertising sensitivity average high low

Price sensitivity average low highSource : HEC Montréal, The Müesli Industry, 2003

1.2.3 Consumers

In 2003, the total expenditure on the local brands of muesli was 10.5 million euros in 2003. While the total demand for ready-to-eat

cereal was relatively stable throughout the year with a slight or minor increase during the winter, the net sale of local brands of mueslis

was not. Traditional ready-to-eat cereal seems to offer a genuine competition to the local muesli brands. During the second quarter of

2003, a strike in one of the local plant substantially reduced the supply of muesli in the groceries, and consumers have substantially

increased their consumption of other kinds of ready-to-eat cereals.

As stated above, the muesli cereals are sold in six different appellations: original, raisins, nuts, blueberries, strawberries and mixed fruits.

The HEC Montréal study of the muesli industry published in 2003 produced data on the market share of each labels. These are presented

in Table 1.5. Note that there were no one-kilo boxes of blueberries in the market in 2003.



Table 1.5: Statistics on sales per label (2003)

Labels Label repartition

500g

Label repartition

1Kg

Original 8,4% 28,9%

Nuts 24,0% 23,9%

Strawberries 16,0% 12,8%

Blueberries 9.4% -

Raisins 18,8% 31.4%

Mixed Fruit 23.3% 2.8%

In Table 1.6, the average price for each label in each distribution channel and size are presented. Not surprisingly, consumers looking for

the high-end labels – blueberry, strawberry, raisin or mixed fruits – are willing to pay more for the cereal. Note that these numbers have

changed in the past and more up-to-date studies may be required to better assess the market for mueslis.

Table 1.6: Statistics on price per label, format and channel, 2003

Labels Hypermarkets Grocery stores Average 1kg Grocery stores I n d e p e n d e n t

Grocers

Average 500gr

Blueberries - - - 3.77 euros 4.05 euros 3.88 euros

Mixed Fruit 4.97 euros 5.23 euros 5.13 euros 3.24 euros 3.49 euros 3.35 euros

Nuts 5.45 euros 5.83 euros 5.62 euros 3.48 euros 3.79 euros 3.63 euros

Original 3.85 euros 4.05 euros 3.97 euros 2.73 euros 3.03 euros 2.88 euros

Raisins 4.30 euros 4.43 euros 4.37 euros 2.95 euros 3.25 euros 3.07 euros

Strawberries 4.51 euros 4.71 euros 4.59 euros 3.36 euros 3.67 euros 3.49 euros

Average 4.47 euros 4.58 euros 4.53 euros 3.25 euros 3.53 euros 3.37 euros

1.2.4 Banks

It may not come as a surprise to you but your company needs money in order to make money. You have to stock raw material and

produce fi nished goods ahead of schedule. In order to pay for inputs and production you will need liquid assets. Your company has had a

good relationship with the First Regional National Bank. The Bank currently offers you a good credit rate and extends a suffi ciently large

credit line. After each quarter, your company will have to produce a full fi nancial statement to your banker.



Your banker, a smart but rigid fellow named Gaston, does not like amateurs and cowboys. Your banker will extend you favourable credit

conditions only if your company keeps reimbursing its debt on time and with interest. He does not like companies that take too much

risk and have excess unsold merchandise. He dislikes managers that fail to pay bills on time – to their bank or suppliers. But most of all,

he dislikes managers that do not respect the law or fail to respect elementary ethical rules. One of the most fundamental rules that he

applies scrupulously is that his clients must produce accurate quarterly fi nancial reports. Failure to produce these reports or, worse, to

producing inaccurate reports can have major consequences. He has not hesitated in the past to reduce credit ratings whenever he felt

necessary, refuse to increase credit lines or simply cancel the one you already have.

As your boss often says: “I have worked hard to build my company’s reputation, do not damage it by bad management”.

HERE IS A TIP: Just in case you did not get the message already: produce your fi nancial reports accurately and on time.

The prime interest rate has been relatively stable during the last decade. A sound monetary and fi scal policy has kept infl ation down

and the interest rates (namely, the business prime rates of the chartered banks) were around 4% and 5%. For most companies what

really matters is their credit rating. The difference between a good credit rating and a bad one can lead up to an 8-point difference in the

interest rate charged by the bank. The following chart lists the risk premium for each credit rating.

Table 1.7: Premium on credit ratings

Credit ratings Risk Premium

AAA -

AA+ +0.5%

AA- +0.75%

A +1.25%

BBB+ +2.25%

BBB +3.0%

BBB- +3.5%

BB+ +5.25%

BB +6.25%

CC +8%

Currently your company has an A credit rating. This is the highest rating given for companies of your size.



1.3 Decision area

1.3.1 Products and recipes

In the HEC Montréal Simulation game, fi rms can produce up to six different brands. For each of these products, the fi rm must specify its

composition and the size of the box.

Each team must fi nd, according to its own strategy, the recipes that it wishes to produce and market. One of the strategic objectives is to

try to fi nd niches, i.e. recipes that are unique in the market and which are desired by a suffi ciently large share of consumers. One other

objective is to target appropriately the various distribution channels. One must recall that small boxes are only ordered by convenient

stores and groceries, large boxes are sold only to hypermarkets and groceries. Also, try to produce lower cost recipes for the more price

sensitive markets.

HERE IS A TIP: The market for mueslis is relatively segmented. Consumers have different preferences about mueslis and use different

suppliers. The key to success for fi rms competing in the market is to fi nd the right niches. If you are the only fi rm serving a particular

niche (say, small boxes of mixed fruit in grocery stores) you would be able to sell your product to this segment without fearing

competition form alternative local brands.

While a fi rm may choose to change the recipe of one of its products, it cannot do so when there are still units of that brand in stock. In

order to introduce a “new recipe”, one must fi rst clear its inventories for that product. The retailers use the description of your product in

order to make their purchase decision, if you advertise one recipe but deliver instead some old boxes based on another recipe not only

is it unethical but also illegal. If your company ever does so, you will be sued and it will damage seriously your reputation.

HERE IS A TIP: Because a fi rm cannot change the recipe of one of its products while there are still some units of stock, we recommend

that teams do not actively produce and market all six different brands at the beginning of the game but rather produce four or

fi ve different brands early in the game. This will allow teams to introduce easily one or more new recipes in the market during the

game.

Technically, a recipe must be specifi ed in the bill of materials in your ERP system. Your must enter into the information system the

percentage of each ingredient: wheat, oats, strawberries, blueberries, raisins and nuts. Percentages are measured in weight. It is very

important that the sum of percentages total 100%, also the percentage must respect the labelling guidelines presented in Table 4. The

food and drug administration is a serious organisation and it monitors product labelling carefully. Fines for violation of the labelling rule

are high. As your boss often says: “If you cannot add a few numbers and adhere to simple arithmetical rules, you should not be here.”



1.3.2 Forecasting, procurement and production

The next decision your executive team will have to make is how much and when to produce.

A manufacturer can only sell products that are held in inventory. Therefore, boxes of cereal have to be manufactured according to a

make-to-stock manufacturing strategy. Your executive team will need to forecast the number of products the fi rm intends to sell in

the next period for each of its brands. Production is done in batches but before producing you need to purchase the necessary inputs.

Recall that your executive team has many operational responsibilities: you must issue product requests and purchase orders for raw

materials, receive and produce the receipts for raw materials, send reception invoices and pay the suppliers, transfer the raw material to

the plant warehouse, and fi nally issue the product order. Further, purchasing raw material requires liquidity. If you choose to produce a

large number of boxes in advance, you will have to borrow the necessary funds from the bank on which you will have to pay interest.

All this requires careful planning.

As mentioned previously, the price of some raw materials (blueberries and strawberries) is highly seasonal. For those products it is

preferable to buy the raw materials when the price is low and stock for future production. Long term planning becomes even more

important in these cases.

HERE IS A TIP: Ideally you would want to order raw material and produce in small batches but do so more frequently. This allows

your company to be more responsive to the market and adjust quickly.

1.3.3 Pricing

Whenever it desires, a fi rm may choose to change it prices. Price selection is a key element of ones strategy. If one charges too much,

demand will be too low; if one charges too little, the profi t will not be enough to pay for the fi xed expenditures. Notice that the pricing

decisions need not be the same for all distribution channels. Because, convenient stores customers are less price sensitive, it is a smart

to charge these stores a higher price to these stores instead of than traditional grocery stores. Similarly, calculating the optimal price for

each product and distribution channel is a complex task. Business acumen is required to make the correct pricing decisions. Remember

that muesli consumption accounts for a small proportion of ready-to-eat cereal consumption. Consumers have other options. They can

buy something else if mueslis are out of their price range. Remember also that you have overheads, advertising expenditures, interest

payments and payments for the raw materials; you must price your product correctly so that you do not lose money. As your boss often

says, “We do not run a charity group down here”. You must make a profi t.

In April 2004, a business conference was organized by the Muesli industry. According to one of the panellists, Ms. Scarlet Red, the best

practice consists of charging a mark up of about 1.00 euro to 1.50 euros per box. Another industry expert, Professor Plum disagrees. It



is silly, he argues, to reduce pricing decisions based on one simple rule. Optimal pricing depends on many things: (i) the prices tendered

by competitors; (ii) the size and cost of the product; (iii) the distribution channel; and (iv) ultimately the strategy of the fi rms including

its advertising strategy.

1.3.4 Advertising

In each quarter, you must decide on how much to invest in marketing. You must determine a marketing budget for the current quarter

for each of your products (up to 6) and each of the distribution channels (up to 3). You will be able to increase your marketing budget

during a quarter. The money invested in marketing during a quarter will be spent equally among the remaining days of the quarter.

You will not able to be able to decrease your marketing budget during a quarter as some of the sum invested might already have been

spent.

HERE IS A TIP: Advertising is good but not always necessary. Do not spend all your margins on advertising; you will end up losing

money.

In the Muesli industry, marketing is persuasive. It seeks to convince consumers that your product is the one they should prefer. Globally,

it is like a zero-sum game. If a fi rm increases advertising for one of its products it attracts consumers away from other products.

HERE IS A TIP: Try to avoid spending a lot of advertising money for two different products in the same distribution channels. One

euro spent on a product hurts the sale of the other and vice versa.



CHAPTER 2 - SETTING UP THE SIMULATION COMPANIES

This chapter presents the required pre-confi guration every team needs to go through in preparation of the simulation game. Because

the teaching objective of this simulation is not to have the team confi gure the whole system in order to participate in the game, a

great deal of confi guration has already been done for you. Yet, some preparation has been intentionally left to the participants. The

participants will fi rst review how their company was modelled in the system using the different organizational elements available in

SAP. Then, each simulation company needs to create the master data that will be used in the game. Such a preparation should provide

the participants with a fi rst-hand contact of the system and help to appropriate the different building blocks of the information system

that support their company.

2.1 Organizational elements

The organizational elements represent the enterprise structure in the ERP system. They help to portray the specifi c organizational

structure of a business in the system. Each module of the ERP system has it own organizational elements. During the confi guration

phase of an ERP implementation, the company must be modeled into the system using the different accounting, logistics and human

resources organizational units.

The main purpose of organizational elements is to segment the transactional data that will be collected by the system. Some elements,

such as the company code, are required for legal fi nancial reporting as they are necessary to track of where revenues and costs are

incurred. Other elements will be used for internal corporate reporting and data segmentation.

It should be noted that these elements are logical, i.e. they can represent both physical and virtual concepts. For example, there may be

more than one storage location at a physical address to distinguish between stocks that require different valuation approaches. On the

other hand, stock in transit could be stored in a virtual storage location that would not have a physical address.

The following table presents the most important organizational elements available in SAP



Table 2.1: Defi nition of organizational elements

ModuleOrganizational

elementsDefi nition

Relations to other organizational

elements

Finance Company code The smallest organizational unit of Financial Accounting

for which a complete self-contained set of accounts can be

drawn up for purposes of external reporting.

At least one company code per country.

Charter of accounts A classifi cation scheme consisting of a group of general

ledger (G/L) accounts. A chart of accounts provides a

framework for the recording of values to ensure an orderly

rendering of accounting data.

A chart of accounts must be assigned to each

company code. Many company codes can use

the same operating charter of accounts.

Controling Controlling area An organizational unit within a company, used to represent

a closed system for cost accounting purposes.

A controlling area may include one or many

company code.

Logistics Plant The plant is an operating area or branch within a company.

This is a place where materials are produced, or goods and

services are provided.

A plant can be assigned to one or more

company and a company code can have more

than one plant.

Storage location An organizational unit allowing differentiation between the

various stocks of a material in a plant.

A storage location is assigned to a plant. A

plant can have many storage locations.

Purchasing

organization

The purchasing organization is responsible for all purchasing

activities.

A company code can have one or more

purchasing organizations and a plant can be

assigned to many purchasing organizations.

Sales and

distribution

Sales organization An organizational unit in Logistics that structures the

company according to its sales requirements. A sales

organization is responsible for selling materials and

services.

A sales organization can be assigned to only

one company code.

Distribution channel Channel through which saleable materials or services reach

customers.

Many distribution channels can be assigned

to a sales organization.

Division An organizational unit based on responsibility for sales or

profi ts from saleable materials or services.

Many divisions can be associated to a sales

organization.

Sales areas A sales area is for to group together sales organizational

elements to segment the sales conditition.

A sales area is a unique combination of a sales

organization, a division and a distribution

channel.



The following fi gure presents the data model of the main organizational elements used in the simulation game.

Figure 2.1 : Conceptual model of the main organizational elements

To speed up the preparation of the simulation, the organization elements that each team will be using in the game have been

predeveloped in the system. The following table presents the list of organizational elements of each simulation company as well as their

respective alphanumerical code. Note that ## corresponds to the two digits corresponding to the code of the simulation game and $

corresponds to the letter of your plant. For example, if the code of the simulation is 01 and your plant is A, than your company code is

Z01A. The same correspondence will be used across the document.



Table 2.2 : Alphanumeric codes of organizational elements

Organizational elements Keys

Company code Z##$

Controling area Z##$

Purchasing organization Z##$

Plant Z##$

Storage location for raw materials

and packaging material

0088

Storage location for fi nished products 0002

Sales organization Z##$

Distribution channel 10 10



Division 00

Sales area for Z##$ 10 00 Z##$ - 10 - 00

Sales area for Z##$ 12 00 Z##$ - 12 - 00

Sales area for Z##$ 14 00 Z##$ - 14 - 00



The next fi gure presents the organizational structure that was confi gured in the information system of each company.

Figure 2.2 Organization structure of a typical muesli company



2.2 Master data

Master data is one of the cornerstones of an ERP. This is data stored in the system’s central data base and used in a number of the

organization’s business processes. The master data is therefore available to all authorized users throughout the various application

modules.

To develop a good understanding of their master data, each team will have to create the various types of master data that will be needed

during the simulation game. Every participants of the simulation game should get a chance to create at least one master of each type.

Thus, the creation of the master data should be shared among the different team partners. Be careful not to create the same data twice!

In this simulation, each team needs to create the master data for fi nished products, raw materials, suppliers and customers as well as

master production and cost accounting master data. We also have to create a price list and info records to link the master data for raw

materials with their potential suppliers. The following fi gure presents the conceptual data model that interlinks all main master data

used in the simulation game.

Figure 2.3: Data model of the main master data used in the simulation game

The following table presents the defi nition of the main master data used in the simulation game.



Table 2.3: Defi nition of master data

Type of

master data

Master

dataDefi nition

Relationship with

organizational elements

Relationship with other

master data

Material

master

Finished

products

Type of material master that are

produced in-house. Since they

cannot be ordered by purchasing,

a material master record of this

material type does not contain

purchasing data.

A fi nished product is linked to

a plant, a storage location, a

sales organization and one or

more distribution channels.

The bill of material indicates

the composition of a fi nished

product.

Raw

materials

Raw materials are always procured

externally and then processed. A

material master record of this type

contains purchasing data, but not

sales data since they cannot be

sold.

A raw material is linked to a

plant and a storage location.

The raw materials are included

in the bill of material.

Packaging

material

Packaging materials are used

to transport goods and come

with the goods free of charge.

A material master record of this

material type is managed on both

a quantity basis and value basis.

A packaging material is linked

to a plant and a storage

location.

The packaging materials are

included in the bill of material.

Sales and

distribution

master data

Customers A business partner with whom

a business relationship exists,

involving the issue of goods or

services.

Customers are assigned to

one or more sales areas (sales

organization, division and

distribution channel)

Customers are assigned to a

price algorithm that includes

the price list.

Price list Set of price condition related to a

sales area.

A price list is valid to a sales

organization and a specifi c

distribution channel.

Price lists are linked to a

fi nished product



Type of

master data

Master

dataDefi nition

Relationship with



master data

Production

master data

Bill of

material

A complete, structured list of

the components that make up

an object. The list contains the

description, the quantity, and unit

of measure. The components are

known as BOM items.

The bill of material is a link to a

specifi c plant.

The bill of material linked

together the fi nished product

with the raw material and

packaging material required for

its production.

Work

centers

An organizational unit that defi nes

where and when an operation

must be performed. Work

centers can be machines, people,

production lines and groups of

craftsmen.

The work centers are located in

a specifi c plant.

Eatch routing is linked to one

work center.

Routings A routing type that defi nes one or

more sequences of operations for

the production of a material.

Routings are specifi c to a plant. Routing are related to fi nished

products, and work centers.

Purchasing

master data

Vendors A business partner from whom

materials or services can be

procured.

Vendors are attached to

a company code and a

purchasing organization.

Vendors are linked to their

respective raw and packaging

material through the info-

records.

Info-records The logical tie between a vendor

and its products.

Info records are valid for a

specifi c plant and purchasing

organization.

Info records create the links

between the vendors and each

of the material they provide.

Source list The source list records the

approved or blocked vendor for a

given material.

Source lists are specifi c to

a plant and a purchasing

organization.

Source lists tie together an

approved/blocked vendor to a

material. Info-records need to

be created beforehand.



Type of

master data

Master

dataDefi nition

Relationship with



master data

Financial

master data

Accounts A structure that records value

transactions within an accounting

unit. The account can refer to

an object to which the value

transactions are assigned.

Accounts are related to a

charter of accounts.

Account we linked to account

groups

Cost

controlling

master data

Profi ts

centers

An organizational unit in

accounting that refl ects a

management-oriented structure of

the organization for the purpose

of internal control.

Profi t centers are links to a

controlling area.

A profi t center may contain

many cost centers.

Cost centers An organizational unit within a

controlling area that represents

a defi ned location of cost

incurrence.

Cost centers are links to a

controlling area.

A cost center may be related to

one profi t center.



The following table presents a complete list of the data that needs to be created. Remember that ## corresponds to the two digits

corresponding to the code of the simulation game and $ corresponds to the letter of your plant.

Master data Alphanumeric codes

6 fi nished

products

Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06

6 raw materials Z##$whe Z##$str Z##$nut Z##$blu Z##$oat Z##$rai

4 packaging

materials

Z##$smbox Z##$lgbox Z##$smbag Z##$lgbag

2 vendors 8##$1 8##$2

6 bill of materials Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06

6 work centers Z##$WP01 Z##$WP02 Z##$WP03 Z##$WP04 Z##$WP05 Z##$WP06

6 routings Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06

3 x 6 price list (DC

10, 12 and 14)

Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06

6 info-records and

6 source lists for

raw materials

8##$1 8##$1 8##$1 8##$1 8##$1 8##$1

Z##$whe Z##$str Z##$nut Z##$blu Z##$oat Z##$rai

4 info-records

and 4 source lists

for packaging

8##$2 8##$2 8##$2 8##$2

z##$smbox Z##$lgbox Z##$smbag Z##$lgbag

8 profi ts centers Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06 Z##$-07 Z##$-08

8 cost centers Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06 Z##$-07 Z##$-08



The following fi gure illustrates the data model, one fi nished product and all their associated master data. The model includes the fi nished

product Z##$-01 and assumed that all raw materials are from the same vendor (8##$1) whereas the packaging materials are also from

a unique vendor (8##$3).

Figure 2.4 Data model of product Z##$-01



Before we start creating data in the system, it is recommended to set a default value for certain fi eld that would need to be entered over

and over again. To set a value to these fi eld, access the transaction SU03. ollowing program in the pull-down menu path: system/user

profi le/own data.

In the parameters tab, enter the following parameters ID and parameters value.

Fields Data to input

Parameter ID BUK VKO WRK EKO SPA FWS KPL SPR

Parameter value Z##$ 00 EUR INT EN

Click on to save.

2.1 Creating the material masters

The master record for the fi nished product is the most important master data in the system. This record is used by most of the R/3

modules. The centralization of all the information for each product on a single record prevents needless redundancies between different

departments. In a transaction, the system copies from the record only the information required for the current business document (for

example, the product description, weight, storage location, etc.). All the user has to enter is the information specifi c to each transaction

(i.e. the quantity ordered). In this simulation, the Material Master is used at nearly all stages of the business process. Two types of product

records must be created: one for fi nished products, and one for raw materials.

2.1.1. Finished products

Each fi rm has to defi ne its fi nished products. All teams need to create six fi nished products: Z##$-01, Z##$-02, Z##$-03, Z##$-04, Z##$-05

and Z##$-06, where ## corresponds to the two digits corresponding to the code of the simulation game and $ corresponds to the letter

of your plant.

The creating of the fi nished products requires specifying a set of parameters which indicate to SAP the business rules associated to this

master data. Based on the simulation requirements, here are the main parameters that are used in all your fi nished products:

Boxes of muesli cereal are retail products (Field Industry sector).

They are classifi ed in the system as food material (Field Material group). Material group is a grouping of materials and services

according to their characteristics.

Boxes are counted in pieces (Field Base Unit Measure) and are sold on pallets (Field Transport Group) and transported by a forklift

•

•

•

SU3

System / User profi le /Own data.

SU3

System / User profi le /Own data.

MMF1

Logistics / Materials Management / Material Master / Material / Create (Special) / Finished product

MMF1




(Field Loading Group).

These products are taxable (Field Tax Classifi cation) and are valued as fi nished products (Field Valuation Class) at the standard

price (Field Price control) of 3 euros (Field Standard Price).

The availability of this product must be checked daily (Field Availability Check).

The material is planned using an MRP run (Field MRP Type) in a make-to-stock production strategy (Field MRP Group). Plants

are using a lot-for-lot order quantity (Field Lot size), i.e. the system creates one large production lot from the independent

requirements. The MRP controller is the role of the person in charge of doing the planning run.

Because of the simulation constraints, in-house production is assumed to take 0 days (Field In-house production), and time

buffers are set to minimal delay (Field ShecdMargin Key).

Create the fi nished products

Each fi rm has to defi ne its fi nished products. All team need to defi ne 6 fi nished products.

On “Create Finished product (Initial Screen)”, enter the following information:


Material Z##$-%%

Industry sector Retail

where ## corresponds to the number of the simulation and $ corresponds to the name of your plant. For example, if the current simulation

is the fi rst, ## corresponds to 01. “$” corresponds to the letter of your plant (A to E). “%%” corresponds to the product number (01 to 06).

•

•

•

•



Views Fields Data to input

Basic Data 1 Description Z##$-%%

Base Unit of Measure PC (Pieces(s))

Material Group Z##$

Gross weight 1

Net weight 1

Basic Data 2 You have no data to enter here. (Press “enter”.)

Sales: Sales Org. Data 1 Tax Classifi cation 1 (Full tax)

Sales: Sales Org. Data 2 You have no data to enter here. (Press “enter”.)

Sales: General / Plant Data Availability check: 01 (Daily requirements)

Transport group 0001 (On pallets)

Loading group 0002 (Forklift)

Foreign Trade: Export Data You have no data to enter here. (Press “enter”.)

MRP1 MRP group 0010 (change from default 31)

MRP Type PD (MRP)

MRP Controller 101

Lot Size EX (Lot-for-lot order quantity)

MRP2 In-house production 0 days ( You can ignore it by pressing “enter”)

SchedMargin key 001

Prod. stor. location 0002

MRP3 Strategy group 10 (Make-to-stock production)

MRP4 You have no data to enter here. (Press “enter”.)

Work Scheduling You have no data to enter here. (Press “enter”.)

General Plant Data / Storage 1 You have no data to enter here. (Press “enter”.)

General Plant Data / Storage 2 You have no data to enter here. (Press “enter”.)

Accounting 1 Valuation class 7920 (Finished product)

Price control S (Standard price)

Standard price 3 EUR

Accounting 2 You have no data to enter here. (Press “enter”.)

Costing 1 Profi t center Z##$-01

Step 1 : Click on “Select View(s)” and highlight the following views of the muesli data. Then click on “Continue (Enter)“

STEP 2 : In the “Organization levels”, enter the following information:

STEP

3 :

The

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rd c

on

tain

s a

seri

es o

f m

and

ato

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ata

in t

he

vari

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of “

Mat

eria

l

Mas

ter”.

Pre

ssin

g “e

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tart

s an

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tom

atic

ch

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and

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th

e n

ext

tab.

Sales Org. Z##$

Distribution channel 10

Plant Z##$

Storage location 0002



Costing 2 You have no data to enter here. (Press “enter”.) Then, click “yes” to save the product.

Extend the fi nished products:

A message confi rms that the fi nished product was created in the system. However, the product has been only assigned to the distribution

channel 10. Because you will want the product to be available in the two other distribution channels, we need to extend the material

master to these other sales areas. By extending the master data, you will be able to reuse the information previously entered in other

segments of the organizational structure.

There are three distribution channels: 10 (Hypermarkets), 12 (Grocery chains) and 14 (independent grocers). Your materials were already

linked with the distribution channel 10. You have to extend your fi nished product with the distribution channel 12 and 14.


Material Z##$-%% (The material you want to extend)


Click on “Select View(s) and highlight the same views as the fi rst time you create your material. Then click on “Continue (Enter)”.

In the “Organization levels”, enter the following information:


Plant Z##$


Sales Org. Z##$


Click on “Continue (Enter)”.

A notice saying “The material already exists and will be extended “ appears.

Click on to save.

Repeat the same operations to link your material with the distibution channel 14.

Should you forget to input some data, you can go back in change mode (transaction MM02).

MMF1


MMF1


MM02

Logistics / Materials Management / Material Master / Material / Change / Immediately

MM02




2.1.2 Creating raw materials

Each fi rm has to defi ne all its raw materials. All teams need to create six raw materials: Z##$whe, Z##$str, Z##$nut, Z##$blu, Z##$oat and

Z##$rai, where ## corresponds to the two digits corresponding to the code of the simulation game and $ corresponds to the letter of

your plant.

The creating of the raw products requires specifying a set of parameters which indicate to SAP the business rules associated to this

master data. Based on the simulation requirements, here are the main parameters that are used in all your fi nished products:

Raw materials are retail products (Field Industry sector).

They are classifi ed in the system as food material (Field Material group).

Raw materials are counted in kilograms (Field Base Unit Measure).

The procurement of all raw materials is the responsibility of purchasing group 100. The purchasing group number is the key for

the group of buyers, who are responsible for certain purchasing activities.

The purchase orders of raw materials need to be generated automatically when purchase requisitions are converted into

purchase orders (Field Autom.PO).

No direct planning is needed for the raw materials (Field MRP Group). The dependent requirements for the raw material will be

generated by the MRP run (Field MRP Type) of their associated fi nished products.

Dependent requirements of raw materials are planned using a lot-for-lot order quantity (Field Lot size), i.e. the system creates one

large production lot from the independent requirements.

The dependent requirements issued from the forecast of the independent requirements are assumed to be constant (Field

Forecast model).

The MRP controller is the role of the person in charge of doing the planning run.

These products are valued as raw material (Field Valuation Class) and are valued using a moving average price (Field Moving

average price) of 1 euro per KG.

The availability of the products must be checked daily (Field Availability Check), and the planned delivery time is assumed to be

1 day (Field Plnd Delivery time). Time buffers are set to minimal delay (Field ShecdMargin Key).

•

•

•

•

•

•

•

•

•

•

•

MMR1

Logistics / Materials Management / Material Master / Material / Create (Special) / Raw Material

MMR1




The same raw material will be used for the different fi nished products. Therefore, the creation of these 6 raw materials needs to be shared

between the members of the team. You also have to create 4 markets data for the packaging support.

N.B. You have to follow the same process for all the material masters that you need to create. For example, your plant will have to create

component Z##$whe, then Z##$str and so on. Remember: ## corresponds to the number of the simulation and “$” correspond to the

letter of your plant. For example, if the current simulation is the fi rst and your plant is A, then Z##$ corresponds to Z01A.

On “Create Raw Material (Initial Screen)”, enter the following information:


Material Z##$whe Z##$str Z##$nut Z##$blu Z##$oat Z##$rai




Views Fields Z##$whe Z##$str Z##$nut Z##$blu Z##$oat Z##$rai

Basic Data 1 Description wheatstraw-berries

nuts blueberries oats Dried raisins

Base Unit of measure KG (Kilogram)

Material Group Z##$


Purchasing Purchasing group: 100

Autom. PO x

MRP1 MRP group 0000

MRP Type PD (MRP)

MRP Controller 101


MRP2 Plnd Delivery time: 1 day

SchedMargin key 001

Prod. stor location 0088

Backfl ush 2 (Work center decides whether to backfl ush)

MRP3 Availability check 01 (Daily requirements)


Forecasting Forecast model D (Constant model)

General Plant Data / Stor.

1

You have no data to enter here. (Press “enter”.)


2


Accounting 1 Valuation class 3000 (Raw material 1)

Price control V ( Moving average price)

Moving price 2 EUR 8 EUR 8 EUR 8 EUR 2 EUR 5 EUR


Costing 1 Profi t center Z##$-01

Costing 2 You have no data to enter here. (Press “enter”.). Then, click “yes” to save the product.

Step 1 : Click on “Select View(s)” and highlight the following views of the muesli data. Then click on “Continue (Enter)“


STEP

3 :

The

reco

rd c

on

tain

s a

seri

es o

f m

and

ato

ry d

ata

in t

he

vari

ou

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ews

of “

Mat

eria

l

Mas

ter”.

Pre

ssin

g “e

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tart

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tom

atic

ch

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and

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u g

o o

n to

th

e n

ext

tab.

Plant Z##$




Click on to save.

If you forget information, go back in change mode (transaction MM02)

2.1.3 Creating packaging materials

The creating of the packaging material requires specifying a set of parameters which indicate to SAP the business rules associated to this master data. Based on the simulation requirements, here are the main parameters that are used in all your fi nished products:

Packaging material are retail products (Field Industry sector).

They are classifi ed in the system as food material (Field Material group).

Raw material are counted in pieces (Field Base Unit Measure).

The procurement of all raw materials is the responsibility of purchasing group 100 (Field Purchasing group).

The purchasing group number is the key for the group of buyers, who are responsible for certain purchasing activities.

The purchase orders of raw material need to be generated automatically when purchase requisitions are converted into purchase

orders (Field Autom.PO).

No direct planning is needed for the raw materials (Field MRP Group).

The dependant requirements for the raw materials will be generated by the MRP run (Field MRP Type) of their associated fi nished

product.

Dependant requirements of raw materials are planned using a lot-for-lot order quantity (Field Lot size), i.e. the system creates one

large production lot from the independent requirements.

The dependant requirements issued from the forecast of the independent requirements are assumed to be constant (Field

Forecast model).

The MRP controller is the role of the person in charge of doing the planning run.

These products are valued as raw materials (Field Valuation Class) and are valued using a moving average price (Field Moving

average price) that varies according to the size of the packaging material.

The availability of this product must be checked daily (Field Availability Check), and the planned delivery time is assumed to be

1 day (Field Plnd Delivery time). Time buffers are set to minimal delay (Field ShecdMargin Key).

After creating all of the ingredients, you’ll have to create four other raw materials: small format box (0.5 kg), large format box (1 kg), a

•

•

•

•

•

•

•

•

•

•

•

•

•

MMR1


MMR1




small format plastic bag and a large format plastic bag.

N.B. You have to follow the same process for all the components that you need. For example, your plant will have to create component

Z##$smbox, then Z##$lgbox and so on. Remember: ## corresponds to the number of the simulation and “$” corresponds to the letter of

your plant. For example, if the current simulation is the fi rst and your plant is A, then Z##$ corresponds to Z01A.

On “Create Raw Material (Initial Screen)”, enter the following information:


Material Z##$smbox Z##$lgbox Z##$smbag Z##$lgbag




Views Fields Z##$smbox Z##$lgbox Z##$smbag Z##$lgbag

Basic Data 1 Description Small box 0.5kg

Large box 1kg

Small plastic bag 0.5kg

Large plastic bag 1kg

Base Unit of measure PC (piece (s))

Material Group Z##$


Purchasing Purchasing group: 100

Autom. PO x

MRP1 MRP group 0000

MRP Type PD (MRP)

MRP Controller 101


MRP2 Plnd Delivery time: 1 day

SchedMargin key 001

Prod. stor. location 0088

Backfl ush 2 (Work center decides whether to backfl ush)

MRP3 Availability check 01 (Daily requirements)


Forecasting Forecast model D (Constant model)


1



2


Accounting 1 Valuation class 3000 (Raw material 1)

Price control V ( Moving average price)

Moving price 0.5 EUR 0.75 EUR 0.25 EUR 0.35 EUR


Costing 1 You have no data to enter here. (Press “enter”.)

Costing 2 You have no data to enter here. (Press “enter”.), Then, click “yes” to save the product

Step 1 : Click on “Select View(s)” and highlight the following views of the muesli data. Then click on “Continue (Enter)


STEP

3 :

The

reco

rd c

on

tain

s a

seri

es o

f m

and

ato

ry d

ata

in t

he

vari

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of “

Mat

eria

l

Mas

ter”.

Pre

ssin

g “e

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tom

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ch

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and

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n to

th

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tab.

Plant Z##$




Click on to save.

Should you forget to input some data, you can go back in change mode (transaction MM02).MM02


MM02


37


Copyright © 2006, Pierre-Majorique LÉGER, Jacques ROBERT and Gilbert BABIN, HEC Montréal. All rights reserved for all countries.

2.2 Vendor master data

Vendors are the business partners from whom material or services can be procured. There are four vendors from which you can buy

the raw materials and packaging materials. Raw materials are bought from 2 specialized traders (FoodBroker Inc. and Alimentation

Distribution Co.) while packaging material can be acquired from two packaging manufacturers (Rap Big Company and Continental

Printing Co).

Each time you do business with a vendor, the information contained in the master data is reused. In pratice, you will have to introduce

much more data then we do here. You will certainly have to introduce adresses and phone numbers, name of contracts, etc. We skip

these data entries for the simulation. This speeds up all the transactions.

When creating vendors master records in the system, you will need to input several parameters. Here is the business logic underlying

these parameters:

The account group is a classifying feature that sets the required specifi cations for business partners master record. You must

choose the Vendor account group (Field Account Group). All vendors are based in Germany (Field Country).

Vendors apply the taxes on their invoice and you are charged in euros. Account payable must be pay immediately on reception

of the invoice (fi eld payment terms).

On the general ledger, the individual account payable are reconciled in the trade payable domestic account (fi eld rec.account)

and are managed with other domestic planning groups (fi eld cash managing group).

Purchase orders need to be created automatically from the purchase requisition (fi eld automatic pucharse order).

The following operation has to be repeated for each vendor. On “Create Vendor: Initial Screen”, enter the following information.

For the vendor number only, the ## corresponds to a unique number for the current number of the simulation. The “$”

corresponds to the number corresponding to the letter of your plant. For example the plant A corresponds to the number 1, the

plant B corresponds to the number 2 and so on.


Vendor 8##$1 8##$2

Company code Z ##$

Purchasing org. Z ##$

Account group 0001 (Vendor)

•

•

•

•

•

XK01

Logistics / Materials Management / Purchasing / Master Data / Vendor / Central / Create

38Copyright © 2006, Pierre-Majorique LÉGER, Jacques ROBERT and Gilbert BABIN, HEC Montréal. All rights reserved for all countries.


On the “Create Vendor: Address” screen, enter the following information:


Vendor 8##$1 8##$2

Title Company

Name FoodBroker Inc. Continental Printing Co.

Search term Raw materials Packaging

Country DE DE

Press “enter” to go on to the next screen.

Create Vendor screens : Press

enter navigate through the

screens.

Fields

Z #

#$0

1

Z #

#$0

2

Control Sales / pur.tax X

Payment Transactions Press “enter” to skip the screen

Accounting Information AccountingRec Account: 160000 (Trade Payables – domestic)

Cash mgmnt group A1 (Domestic)

Payment Transaction Accounting Payment terms 0001 (Payable immediately Due Net)

Correspondence Accounting Press “enter” to skip the screen

Purchasing DataOrder currency EUR (euro)

Automatic PO X

Partner Functions Press “enter” to skip the screen

Do not forget to save data on the vendors by click on the disk .

You must repeat this procedure for the other vendor.

Should you need to modify the vendor record subsequently you need to execute the transaction XK02 .XK02

Logistics / Materials Management / Purchasing / Master Data / Vendor / Central / Change

XK02

Logistics / Materials Management / Purchasing / Master Data / Vendor / Central / Change

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2.3 Customers master

A customer is a business partner with whom a business relationship exists involving the issue of goods or services. Each time a

customer issues an order, you do not want to reenter the relevant information. The customers data contains the information on

your customers that might be useful in futur transactions.

All customer are retailers located in Germany, they pay in euros.

Because of the important number of customer masters that need to be created in the system, they have already been created for

you. However, you can display them by distribution channel with the following report.

On the “CABAP:Execute Program” screen, enter the following information.

Field Data to input

Program RFDKVZ00

Click on

On the “Customer List” screen, enter the following information:


Company code Z##$

Search help ID S (Customers per sales group)

Should you wish to narrow the search for a specifi c distribution channel, click on the complex search help and enter the desired number

in the distribution channel fi eld and click on continue.

The Field « Communication with customer » in the « output control” fi eld in the bottom of the page needs to be empty.

Click on to execute the report.

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SA38

System menu > Services > Reporting

SA38

System menu > Services > Reporting



2.4 Production Master data

2.4.1 Bill of Material

In order to manufacture a fi nished product, you need to specify the raw material that is required. This information is used each time you

issue a production order and when you make your procurement planning. The quantities of raw materials required for the production

of a product is specifi ed in a BOM (Bill of Material). Each fi nished product must have its BOM. A BOM is a complete and structured list

of the components that make up the fi nished product. The list contains the description, the quantity and the unit of measure of each

component. The components of a BOM are known as BOM items.

In the context of the simulation game, the BOM represents the recipe of your muesli cereal boxes. Remember that you need to follow the

label guideline in developing your product (see chapter 1). The BOMs must be associated with a specifi c plant. A given BOM cannot be

used in two distinct plants. When a BOM is created, you must specify which plant will be used (fi eld plant). You must also specify in what

context the BOM will be used. In your case, it will be used in the production context (fi eld BOM usage).

You will be asked to enter a specifi c recipe for the BOM with your fi rst six products. The same recipe will used for all products of all teams

during the fi rst round (quarter) of the simulation. You will be allowed to change this recipe in future rounds. When you complete a BOM,

you will have to fi ll a table. Each row corresponds to a different component or BOM item. For each BOM item, you need to specify the

material number of the component (fi eld component), its quantity (fi eld quantity), its unit of measure and the category of the item (fi eld

Ict). The category of all BOM items is stock item. The unit of measure (fi eld Un) of the food products is in kilograms, the unit of packaging

product is in piece.

Here are the steps to create a bill-of-material in SAP. On “Create Material BOM: Initial Screen”, enter the following information. Remember

that ## corresponds to the simulation numboer and $ to the letter of your plant.

Fields Data to inputProduct Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06

Plant Z##$

BOM Usage 1 (Production)

CS01

Logistics / Production / Master Data/ Bills of Material / Bill of Material / Material BOM / Create

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Logistics / Production / Master Data/ Bills of Material / Bill of Material / Material BOM / Create

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On the “Create Material BOM: General Item Overview” screen, enter the following information:


ICT L (Stock Item)

Component Z##$whe Z##$str Z##$nut Z##$blu Z##$oat Z##$rai Z##$lgbag Z##$lgbox

Quantity 0,50 0,02 0,08 0,10 0,250 0,05 1 1

Click on to save your list of components.

Should you wish to change the recipe of a product during the simulation, you need to change its bill of material. Be careful, you are

not allowed to change a BOM if you still have inventory of the product. If you wish to radiate all inventories before changing your BOM,

you can use the transaction code MI10 and physically recount your inventories (thus removing out-of-date items). Should you want to

change the recipe of a product with inventories, you fi rst need ask to the administrator of the game to write-off these stocks for you.

CS02

Logistics / Production / Master Data/ Bills of Material / Bill of Material / Material BOM / Change

CS02

Logistics / Production / Master Data/ Bills of Material / Bill of Material / Material BOM / Change



2.4.2 Creating the work centers

Each product needs a specifi c work center. Each participant needs to create one work center.

A work center refers to a production unit that defi nes where an operation must be performed. Work centers can be machines,

people production lines and groups of craftsmen. Each work center is located in a specifi c plant. Each time you wish to produce

a fi nished product you must assign the production task to a work center.

In the simulation game, you will create a work center for every fi nished product. Each participant needs to create a work center.

Each work center will be dedicated to a unique fi nished product.

All your work centers are production lines (fi eld worker center cat.).

The work centers are confi gured to support all tasks (fi eld usage) for normal production (standard value key).

In the context of the simulation, we will not take into account the capacity of the work centers; nevertheless, we need to input

some fi ctitious parameters into the system.

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CR01

Logistics / Production / Master Data/ Work Centers / Work Center / Create

CR01

Logistics / Production / Master Data/ Work Centers / Work Center / Create

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On “Create Work Center: Initial Screen”, enter the following information:

Screens Fields Data to input

Initial Screen

Plant Z##$

Work Center Z##$WP01 Z##$WP02 Z##$WP03 Z##$WP04 Z##$WP05 Z##$WP06

Work Center category

group0011 (Production line)

Basic data

Insert a descriptionWork

center 1

Work

center 2

Work

center 3

Work

center 4

Work

center 5

Work

center 6

Person responsible 001

Usage 009 (All task list types)

Standard value key SAP1 (Normal production)

Backfl ush X

Capacities Capacity Category 002 (Labor)

Create work center

capacity : Header1

Capacity planner grp 101

Base unit of meas. H

Capacity utilization 100

No. of indiv. cap. 1

Start 08:00:00

Finish 16:00:00 Then, click on “enter”.

Scheduling Capacity Category 002

Costing Cost Center 3035

Click on to save your work center.

1: Click enter to access the ‘Create work center capacity: Header’ screen



2.4.3 Creating routings

Each product needs a routing. Routings correspond to the steps necessary to produce a fi nal product. Each participant needs to create

the routing of its product.

When you wish to produce a fi nished product, you must specify how to produce it and on which work centers to produce it. The routing

defi nes one sequence of one or more operations for the production of a material. A routing is specifi c to a fi nished product to be

manufactured (fi eld material).

In order to complete a routing, you must complete a table. Each operation corresponds to a row in the table. The fi rst row describes the

fi rst task or operation to be performed, the second row to the second task, etc. In the simulation game, we assume that there is only one

operation to in order to manufacture a muesli cereal box.

Each task or operation in the routing is attached to a specifi c work center (fi eld work center). Each time an operation in a routing is

performed a document will be created in order to confi rm the execution of the task. In the routing master data you must specify in

advance the type of the document that will be associated with the operation. In the case of the simulation, it is an in-house production

order that will be used (fi eld Control key).

Screens Fields Data to input

Initial ScreenMaterial Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06

Plant Z##$

Header detailsUsage 1 (Production)

Status 4 (Released (general))

Operations1Work center Z##$WP01 Z##$WP02 Z##$WP03 Z##$WP04 Z##$WP05 Z##$WP06

Control Key ZSIM

Click on “CompAlloc” at the top. This will confi rm the “Bill of material” for your product. Click on to save your routing.

1 : On the “Create Routing:Header Details” screen, click on “Operations”

CA01

Logistics / Production / Master Data/ Routings / Routings / Standard Routings / Create

CA01

Logistics / Production / Master Data/ Routings / Routings / Standard Routings / Create

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2.5 Sales price

2.5.1 Set the sales price

In SAP, the price-setting algorithms are saved in the conditions records. These conditions records are used to set prices automatically

based on the various conditions applicable when a product is sold. These conditions include the price list, discounts, surcharges,

transportation costs and taxes. You must specify a sale price and sale conditions for each fi nished product that you wish to sell to every

sales area (a unique combination of sales organization, division and distribution channel) Each of those prices is contained in a price list

together with the sales conditions.

You must specify prices (fi eld amount) in euros (fi eld unit) for each fi nished product (fi eld material) and channel (fi eld distribution

channel). For the system to interpret the amount introduced as a sales price, you must select the Condition type PR00 (fi eld Condition

type).

On the “Create Condition Records: Overview” screen, click on the icon and then enter the following information:


MaterialMaterial Z##$-01Z##$-01 Z##$-02Z##$-02 Z##$-03Z##$-03 Z##$-04Z##$-04 ##Z##$-05Z##$-05 Z##$-06Z##$-06



Price list 01

Document currency EUR

Condition type PR00Material Z##$-01 Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06Amount 3 if it’s a small box and 5 if it’s a large box

Unit EUR

Because you cannot alter the master data during the simulation and because you may not know in advance in which distribution

channels you will want to sell your product it is highly recommended to introduce a price for all three channels.

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Logistics / Sales and Distribution / Master Data / Conditions / Create / Prices / Price List

VK31

Logistics / Sales and Distribution / Master Data / Conditions / Create / Prices / Price List



Therefore, repeat the same operations for each product for the distribution channel 12 and 14.

2.5.2 Change the sale price

You will able to change these prices during the simulation by using the following instructions.

On “Price List with Release Status”, enter the following information:



Distribution channel 10, 12 or 14

Material number Z##$-%%

Click on

On “Change Condition Records: Overview”, enter the following information:

Field Data to input

Amount The new sale price of your material

Click on to save.

VK32

Logistics / Sales and Distribution / Master Data / Conditions / Change / Prices / Price List

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Logistics / Sales and Distribution / Master Data / Conditions / Change / Prices / Price List

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2.6 Info Records

2.6.1 Defi ne info records for raw material

An info record creates a link between the vendors and the raw materials. If a vendor sells a raw materials then an info record must be

created in order to stipulate the condition of the sale for this specifi c material by this specifi c vendor. Some of the conditions of sale will

have to change each time you order, However, default values must be introduced.

In each info record, you must set a plan delivery time of one day (fi eld plnd dely time), the purchasing unit in charge of the procurement

(fi eld purchasing organization), the standard quantity (Field Standard qty). The info records also contain the expected net price of this

product (Field Net price). The expected price and the freight cost in the info record will correspond to the average cost from the vendor.

This price will fl uctuate from one quarter to the other, so that you will need to change manually this price when processing the purchase

order. The “$” corresponds to the number corresponding of the letter of your plant. For example the plant A corresponds to the number

1, the plant B corresponds to the number 2 and so on.

Info Records are the logical link between raw materials and vendors. There are 6 info records to be created for raw materials.

ME11

Logistics / Materials Management / Purchasing / Master Data / Info Record / Create



On “Create Info Record: Initial Screen”, enter the following information:

ScreensScreens Fields Data to input

Initial screen

Vendor 8##$1 8##$1 8##$1 8##$1 8##$1 8##$1

Material Z##$whe Z##$str Z##$nut Z##$blu Z##$oat Z##$rai

Purch. org. Z##$

Plant Z##$

Purchase org. data 11

Plnd dely time 1

Purch group 100

Standard qty 100

Net price 3 10 6 10 3 6

1 : On the “Create Info Record: General Data” screen, click on “Purch. Org data 1”

Click on to save.

2.6.2 Defi ne info records for packaging

We must also establish a link between the packaging goods and their suppliers. If a vendor sells a package product an info record must

be created in order to specify the sale conditions. Your team needs to create four info-records. The packaging info record contains the

same information that those of the material info records.

For the vendor number only, the ## corresponds to a unique number for the current number of the simulation. The “$” corresponds to

the number corresponding of the letter of your plant. For exemple the plant A corresponds to the number 1, the plant B corresponds

to the number 2 and so on.

ME11


ME11


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On “Create Info Record: Initial Screen”, enter the following information:


Initial screen

Vendor 8##$2 8##$2 8##$2 8##$2

Material Z##$smbox Z##$lgbox Z##$smbag Z##$lgbag

Purch. org. Z##$

Plant Z##$

Purchase org.

data 11

Plnd dely time 1

Purch group 100

Standard qty 100

Net price 0,52 0,84 0,30 0,35

Conditions2Cnty FRB1

Amount 8 8 8 8

1 : On the “Create Info Record:General Data” screen, click on “Purch. Org data 1”

2: On the “Create Info Record: Purch.Organization data 1” screen click on “Conditions”.

Click on to save.

2.7 Source list

A source list used in the administration of sources of supply. It allows (or disallows) sources of a material for certain part of an organization.

The source list records the approved (or blocked) vendors for the specifi ed material. It is possible to defi ne a fi xed source of supply (fi eld

Fix) for a certain period of time (fi eld valid from and valid to) for a given purchase organization (fi eld Porg).

The source list is required to be able to convert automatically purchase requisitions into consolidated purchase orders. In addition, by

choosing a fi xed vendor for the source list, it is possible to set the MRP to assign automatically the source of supply when creating the

purchase requisition (fi eld MRP).

ME01

Logistics / Materials Management / Purchasing / Master Data / Source list / Create

ME01

Logistics / Materials Management / Purchasing / Master Data / Source list / Create



On the “Maintain Source List: Initial Screen”, enter the following information:


Material

Z##

$wh

e

Z##

$str

Z##

$nu

t

Z##

$blu

Z##

$oat

Z##

$rai

Z##

$sm

box

Z##

$lg

box

Z##

$sm

bag

Z##

$lg

bag

Plant Z##$

Press “enter” to go on to the next screen.

On the “Maintain Source List: Overview Screen”, enter the following information:


Material

Z##

$wh

e

Z##

$str

Z##

$nu

t

Z##

$blu

Z##

$oat

Z##

$rai

Z##

$sm

box

Z##

$lg

box

Z##

$sm

bag

Z##

$lg

bag

Valid from Today

Valid to One year from today

Vendor 8##$1 8##$2

Porg Z##$

Fix x

MRP 1 (Record relevant to MRP)

Click on to save.

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2.8 Controlling master data

The following paragraphs describe the creation of controlling master data.

2.8.1 Creating profi t center

If required, enter Controlling Area “Z##$”, then press Enter. Note that the fi rst profi t center was already been created for you (Z##$-01)

Enter the following information:


Profi t center Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06 Z##$-07 Z##$-08

Copy from Z##$-01

Co area Z##$, Then, press “enter”

Name Z##-$-02 Z##-$-03 Z##-$-04 Z##-$-05 Z##-$-06 Z##-$-07 Z##-$-08

Long text Z##-$-02 Z##-$-03 Z##-$-04 Z##-$-05 Z##-$-06 Z##-$-07 Z##-$-08

Person respons. Leave the default value in this fi eld.

Profi t Ctr Group H1

Click on to save.

A window will confi rm the creation of the profi t center. Press “enter” to continue, and then activate the profi t center by clicking on

activate (SHIFT+F1).

In the status bar, a message will confi rm the creation and activation of the profi t center.

KE51

Accounting / Controlling / Profi t Center Accounting / Master Data / Profi t Center /Individual Processing

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Accounting / Controlling / Profi t Center Accounting / Master Data / Profi t Center /Individual Processing



2.8.2 Creating cost centers

If required, enter Controlling Area “Z##$”, then press Enter

Tabs Fields Data to input

BasicData

Cost center Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06 Z##$-07 Z##$-08

Valid from Today

To Enter 31.12.9999, then press “enter”

Reference: Cost center Z##$-01

Controlling area Z##$-01, Then press “enter” to continue

Name Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06 Z##$-07 Z##$-08

Description Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06 Z##$-07 Z##$-08

Person respons. Leave the default value in this fi eld.

Department Corporate

Cost center category 1

Hierarchy area Z##$

Business area 1000

Functional area 0100

Profi t center Z##$-02 Z##$-03 Z##$-04 Z##$-05 Z##$-06 Z##$-07 Z##$-08

Click on to save

2.9.3 Displaying profi t and cost centers hierarchy

In the following screen, you will be able to see all the information regarding the profi t centers created under hierarchy H1 and the status

of these profi t centers (Active is represented with a green light).

In the following screen, you will be able to see all the information regarding the cost centers created under hierarchy H1 and the status

of these cost centers (Active is represented with a green light).

KS01

Accounting / Controlling / Cost Center Accounting / Master Data / Cost Center /Individual Processing

KS01

Accounting / Controlling / Cost Center Accounting / Master Data / Cost Center /Individual Processing

KCH6N

Accounting / Controlling / Profi t Center Accounting / Master Data / Standard Hierarchy / Display

KCH6N

Accounting / Controlling / Profi t Center Accounting / Master Data / Standard Hierarchy / Display

OKENN

Accounting / Controlling / Cost Center Accounting / Master Data / Standard Hierarchy / Display

OKENN

Accounting / Controlling / Cost Center Accounting / Master Data / Standard Hierarchy / Display

SAP Notions fondamentales Chapitre 1 et 2

Documents

Transcript of SAP Notions fondamentales Chapitre 1 et 2