Procure-to-Pay Business Process in SAP Business
ByDesign
Table of Contents 1
Introduction ......................................................................................................................... 3 1.1
Tenant ......................................................................................................................................3
1.2
Reference System ................................................ ...................................................... .....................................................................3 ...............3
2
Introduction to Business Process Management .................................................. ................ 4 2.1
Overall Objectives ....................................................................................................................4
2.2
Roles and Segregation of Duties ..............................................................................................4
2.3
Specific Information .................................................................................................................5
2.4
Master and Organizational Data ..................................................... ..............................................................................................5 .........................................5
Master Data for the Business Scenario Scenario ...........................................................................................7 .................................................. .........................................7 Approval Limits ................................................................................................................................7 3
Business Scenario: Procurement (Procure-to-Pay).............................................................. 7 3.1
Objectives .................................................................................................................................8
3.2
Overview of Business Tasks T asks.................................................... ......................................................................................................9 ..................................................9
3.3
Login .........................................................................................................................................9
3.4
Create Sales Order..................................................................................................................10
3.5
Planning and Release Purchase Proposal................................................. Proposal...............................................................................11 ..............................11
3.6
Process Purchase Request and Order ...................................................... ....................................................................................13 ..............................13
3.7
Approve Purchase Order ............................................... ..................................................... .........................................................15 ....15
3.8
Post Goods Receipt ................................................................................................................16
3.9
Check the General Ledger Entries (optional) .........................................................................17
3.10
Post Supplier Invoice ..............................................................................................................18
3.11
Approve Supplier Invoice .......................................................................................................19
3.12
Select Items and Make Payment..................................................... ............................................................................................20 .......................................20
3.13
Additional Optional Tasks ......................................................................................................22
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1
Introduction
This assignment was originally developed by Nitin Kale` from University of Southern California and has gone through multiple iterations and alterations. Thank you to Nitin for pioneering the effort. In addition, the full assignment includes procure-to-pay and sales-to-cash along with some analytical exercises. Due to time constraints here at the conference, we will complete only the procure-to-pay assignment. This assignment will introduce you to business transactions recorded in a fully-integrated system called an ERP (enterprise resource planning) system.
1.1 Tenant “On-demand” customers want to focus on their business, not on running software. They expect no
upfront investment in hardware, predictable costs, and immediate access paired with rapid deployment. The SAP Business ByDesign on-demand (SaaS) solution is initially setup by SAP shortly after the customer requests it. The system is fully managed by SAP with high availability and highest data security. For SAP Business ByDesign at least a 1 MBit/s internet connection is recommended. SAP Business ByDesign is a web-based application and therefore only needs a standard web browser. The Tenant Provisioning service encompasses the following elements: Tenant Set Up: SAP sets up the tenant ready for implementation and enables a smooth Go Live of
SAP Business ByDesign in full operative mode. Tenant Operation: SAP manages the availability of the network-centered application and monitors
all the components of SAP Business ByDesign to see if they are up and running. It also checks the traffic load on essential components in order to forecast delays and to invoke additional pr ocesses to handle the overload. Storage Operation: SAP takes care of the administration of all storage-related tasks with regard to
SAP Business ByDesign operations. Application Management: For tenant operations, SAP takes care of monitoring and maintenance of
the SAP Business ByDesign application. This includes versioning, security, backups and system health checks.
1.2 Reference System A reference system is a system that is preconfigured and loaded with realistic users and sample data. The users and sample data are based on the model company Almika Inc. By following the stepby-step instructions in this hand-out, you will assume the identity of Almika users and use the builtin sample data to carry out each of the business process tasks.
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2
Introduction to Business Process Management
The full set of exercises includes the procure-to-pay and the order-to-cash business transactions. In section 2, we will focus on the procure-to-pay process.
2.1 Overall Objectives 1. You will assume various roles and work within a medium-sized enterprise using an ondemand information system (SAP Business ByDesign) o
To understand and execute various business processes and their variants
o
Perform different roles within the company and understand the responsibility and authorization for each role
o
To perform business tasks necessary to achieve the business process outcomes
o
Experience the end-to-end integration of SAP Business ByDesign
o
Learn to trouble shoot process issues within an ERP system
2. Describe the advantages of an on-demand solution for a small/medium sized enterprise
2.2 Roles and Segregation of Duties Normally, a company is run by people with different skill sets who perform different functions within the organization. Often these individuals are grouped according to their functions or roles within the company. For instance, there may be a sales department, an accounting department, production, and so on. A person’s function may be further refined within his functional area. For example, the sales department might have sales managers, sales reps, telemarketers, and so on. Typically an individual is allowed access to information, company assets, and given certain authority based on his or her role and denied access to other information, assets, and authorizations which he or she does not need to perform the tasks within the assigned role. This access limitation within the company is called segregation of duties (SOD). SOD along with other internal controls can help the company reduce the risk of fraud and errors. Let’s look at an example: Almika Company makes and sells solar heating systems. The sales reps are
allowed to negotiate prices with their customers. The sales rep enters the order for the heating system into Almika’s integrated ERP system, Business ByDesign. The warehouse delivers the heater to the customer and the engineer installs the system. The billing clerk bills for the heating system once it is installed at the customer’s site and the accounts receivable clerk collects the money from
the customer. If the sales rep did all of these tasks, he could enter a sales order for one amount, bill the customer a higher amount and pocket the difference when payment came in. He could hide this fraud by adjusting the customer’s invoice to reflect the original sales order; or, he could remove the heater from the warehouse and deliver it anywhere, even his own home. By segregating these duties or functions, Almika is reducing the likelihood that a single employee could commit such frauds. Just telling an employee that he is not allowed to do certain tasks or access information is usually insufficient to prevent people from doing so. A well-designed integrated ERP system such as Business ByDesign allows users to access the functions they need to fulfill their given tasks and responsibilities within their roles, but prevents them from accessing areas within the system which
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are not needed to complete their job responsibilities. We will experience this system-enforced segregation of duties in this exercise. You will be asked to assume various roles as you complete each business transaction. Try to imagine yourself actually handing over a task to another employee within the company as you change roles. Business roles within SAP Business ByDesign give each employee access to various work centers based upon their authorization. Therefore, as you progress through the exercises, you will have to logout and log back in as a different role to access different work centers. This reflects the real life situation where employees are given different roles, responsibilities and authorizations dictated by legal and functional objectives.
2.3 Specific Information The roles in the procure-to-pay business cycle transactions for this assignment are listed below: SAP Business ByDesign User ID
Password
Role
SALES02P
Welcome1
SALES01P
Welcome1
Sales Representative Sales Manager
SUPPLYPLANNER01P
Welcome1
WAREHOUSE02P
Welcome1
WAREHOUSE01P
Welcome1
FINANCIAL01
Welcome1
FINANCIAL02
Welcome1
PURCHASE02
Welcome1
Production Manager Warehouse Operator Warehouse Manager Chief Financial Officer Financial Accountant Purchaser
Employee Employee Last First Name Name Jacob Kate
Menson
Bob
Stone
Richard
Smith
Mark
Loblanski
Luther
Black
Edward
Green
Iris
Warner
Bill
Student Name
2.4 Master and Organizational Data Each SAP Business ByDesign reference system contains essential master and organizational data, which reflect the typical organizational structure of a mid-size company of a specific industry and allow you to run the industry-specific processes using the appropriate master data; for example, materials, vendors, or customers. The following graphic gives you a high-level overview of the organizational structure of ALMIKA.
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Master Data for the Business Scenario The following table shows the specific master data you will use for this section. Master/Org. Data Type Customer Product Supplier Target Logistic Area Freight-Forwarder Ship-from-Location Logistics Area
Name and Value Silverstar Wholesale Corp. (CP100110) Cylinder customized Trade (P100710) AMS Inc. (S100200) Warehouse (P1100-20) ABC Cargo Worldwide (S100800) Almika Heating Cleveland (P1100) Warehouse (P1100-20)
Usage Sales Procurement (driven by Sales Demand) Procurement Procurement (stock) Sales - delivery Sales - delivery Internal warehouse
Approval Limits The following table shows some of the controls that have been put into the reference company to simulate a real business environment. Approval Type Shopping Cart Approval Purchase Order Approval Supplier Invoice Approval Incoming Payment Approval Outgoing Payment Approval Payment Deduction Approval (Incoming) Expense and Reimbursement Approval
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Limit $500 3,500 5,000 none 10,000 50
Currency USD USD USD USD USD USD
500
USD
Business Scenario: Procurement (Procure-to-Pay)
You will execute the business scenario for Procure-to-Pay. The demand for procurement will be generated from a sales order. You will start by creating a Sales Order for Material P100710, “Cylinder customized Trade”. This material is purchased from a vendor and resold to customers
through two sales organizations – P1110 Sales Heating and 2100 BR Columbus. The distribution channel is Direct Sales. There is no in-house production for this material. The purpose of creating the Sales Order is to generate demand that will trigger the procure-to-pay business process. At the end of this procurement process you will end up with inventory of the material P100710, Cylinder customized Trade.
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3.1 Objectives 1. Perform different roles within the company and understand the responsibility and authorization for each role within the business process. 2. Experience the end-to-end integration of SAP Business ByDesign o
Generate demand for a product that Almika sells to its customers by creating a sales order
o
Use supply planning to generate a purchase proposal for the shortfall of inventory to satisfy the demand
o
Explore and assign a source of supply for a purchase proposal
o
Understand why a purchase approval is important in the procurement process
o
Receive goods into inventory
o
Learn how to process supplier invoices including appropriate approvals for payment
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3.2 Overview of Business Tasks Here is an overview of business tasks and the roles that will perform those tasks.
Roles
Business Tasks
Sales Representative
Create a Sales Order (generates demand)
Supply Planner
Create a Purchase Proposal to satisfy demand
Supply Planner
Release Purchase Proposal to Purchase Request
Purchaser
Convert Purchase Request to Purchase Order
CFO
Approve Purchase Order
Warehouse Manager
Post Goods Receipt
Financial Accountant
Create Supplier Invoice
CFO
Approve Supplier Invoice
Financial Accountant
Make payment
3.3 Login We will be using the following tenant for this workshop.
https://my106203.sapbydesign.com During this assignment, you will be logging in with different login IDs depending on your role within the business process. The roles and passwords are given in section 2.3 of this document.
If at any point during these exercises, your web browser warns you that the Cache limit has been reached, click yes to increase the limit and continue.
IMPORTANT NOTE: Since we are “sharing” login information, if y ou do make a mistake
logging in and lock a user for any reason, notify your instructor IMMEDIATELY so that the login is not blocked for other students.
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Whenever the assignment asks you to enter your participant ID#, use the number given you in the front of these printed materials. Since all of us are logging in with the same login information, your ID# will help us follow your work within the system.
3.4 Create Sales Order Logon and Work Center Information Logon ID / Role
Work Center / View
SALES02P
Sales Representative / Kate Jacob
Sales Orders
Common Tasks
Data to Enter
Activity / Button / Comment
Procedure Field Name Common Tasks list
Click New Sales Order . (Account) Name
CP100110 (Silverstar
Press Enter or Tab
Wholesale Corp.) External Reference
Your participant ID#
Requested Date
< current date plus 7 days >
Items table Product ID
P100710 (Cylinder customized Trade)
Quantity
100 ea
You may use the calculator icon to enter this number. Click Submit, and choose Send Order Confirmation to Account .
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Write down the Sales Order Number (at bottom of screen) Log off, Click Yes on the message window. Restart Application (You will do this each time a new role becomes responsible for a step in the process.)
3.5 Planning and Release Purchase Proposal Logon and Work Center Information Logon ID / Role
Work Center / View
SUPPLYPLANNER01P
Supply Planner / Richard Stone
Supply Planning
Products
Data to Enter
Activity / Button / Comment
Procedure Field Name Products view Show list
All Products by Selection
and Find
P100710
Click Go. Select the line item. (Select the line with an
ProductID
P100710 (Cylinder customized Trade)
Exception) Click the left most column in a
row to select a row. (Clicking on the Product ID or Description takes you to its master data.) Click Open.
Product Planning Details screen Supply and Demand List
Write down the Available Stock
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Select your Sales Order Number row by scrolling down and looking at the Document ID column. Make sure that the Quantity is 100. Write down the Projected Stock
Click New Planning Proposal. ( You may need to scroll to the top of the frame to view this option.) A new row is created at the bottom of the list. A warning will occur “enter a quantity greater than zero”. This prevents you from creating a zero order. In the new row, enter 100, the quantity of your Sales Order. Click Enter. Write down your purchase proposal document ID number.
Supply and Demand List You’ll see that a purchase proposal was
generated with the quantity you have proposed. (The row may be moved up.) Change the Date on the proposal to one week from today. Enter Product Planning Details screen
Click Save.
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Select the line with your purchase proposal document ID. Click Release. The Purchase Proposal converts to a Purchase Request and the line will be selected. Click Save.
Write down the Purchase Request ID (Document ID) If the Document ID does not appear, click Save again. Note: The document ID may be at the very bottom of the list.
Click Save and Close .
3.6 Process Purchase Request and Order Logon and Work Center Information Logon ID / Role
Work Center / View
PURCHASE02
Purchase Requests and Orders
Purchaser / Bill Warner
Purchase Requests
Procedure Field Name
Data to Enter
Activity / Button / Comment
Purchase Requests view
Show list
Unassigned
Select the line item for your purchase request ID from the
Purchase
previous step. Make sure you select your own Purchase
Requests
Request ID.
Click Assign Source of Supply Product ID
P100710
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Product
Cylinder
Description
customized Trade
This value is set by the system.
Open
This should be the same quantity as your Purchase Request
Quantity
and Sales Order
Gross Price
$85 Supplier IDs may appear in the Available Source of Supply table
Supplier
S100200 (AMS
list (scroll down). Select the Supplier and click Assign to
Inc.)
Selected Purchase Request.
Otherwise enter the supplier in the purchase request row. Save and Close Purchase Requests view
Show list
Assigned
Click Go. Your Purchase Request now has AMS Inc. as the
Purchase
Supplier.
Requests Select the row of your purchase request and click Edit.
Purchase Request:### view Notes
Your participant
(you may have to click view all to see the notes tab), Add a row
ID#
and choose internal comment for the type of comment. Type your participant ID in the details. Click Save. Click Close.
Purchase Requests view
Show list
Assigned
The system will automatically take you to this view. Select the
Purchase
row of your purchase request, for which the purchase order is
Requests
to be created, and click Quick Order. Write down the Purchase Order ID that is created automatically (see bottom of the screen).
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Click Close.
3.7 Approve Purchase Order Logon and Work Center Information Logon ID / Role
Work Center / View
FINANCIAL01
Chief Financial Officer / Edward Black
Managing My Area
Approvals
Data to Enter
Activity / Button / Comment
Open tasks
Select your Purchase Order approval line
Procedure Field Name Approvals view Show List
item. Read the Business Task description. Click Approve. Click Refresh. The approval list does not show that your Purchase Order is in need of approval anymore. It has been approved.
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3.8 Post Goods Receipt Logon and Work Center Information Logon ID / Role
WAREHOUSE01P
Warehouse Manager / Luther Loblanski
Work Center / View
Inbound Logistics
Purchase Orders
Data to Enter
Activity / Button / Comment
Procedure Field Name Purchase Orders view Show list
Open Purchase Orders Select your purchase order row, and click
Purchase Order ID
Post Goods Receipt .
Create Inbound Delivery and Goods Receipt screen Delivery Notification
Your participant ID#
supplier / freight forwarder.
ID Actual Delivery Date(Date / Time / Time Zone)
This is the delivery notification ID of the
For example,
/ 12:00 / EST
Use default by the system as the actual date.
Click Propose Quantities . This should be 100.
Actual Quantity
Click Propose Logistics Unit . Target Logistic Area
P1100-20 (Warehouse)
This is set by the system. Click Save and Close .
Write down your Inbound Delivery number (at the bottom of the screen)
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Common Tasks, Stock Overview Show List
Identified Stock
Product ID
Select P100710
(Customized Cylinder Trade)
Storage Location ID
P1100
Click Go
On-Hand Stock
You will see that the stock quantity increased by the goods receipt amount Create a print screen showing the stock available Close
3.9 Check the General Ledger Entries (optional) Note: This is only one of many ways to obtain this information. Logon and Work Center Information Logon ID / Role
Work Center / View
FINANCIAL02
Financial Accountant / Iris Green
Inventory Valuation
Reports
Data to Enter
Activity / Button / Comment
By report category
Financials Line Item Reports(3)
Procedure Field Name Reports List view Show list
Click on Purchasing Documents Line Items Selection
ByDesign initial
Click Go Find your PO in the list
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Click on the right hand corner of the journal entry field to expand your options. Choose view journal entry List the journal entry below. Show the general ledger accounts, the debits and credits, and amounts.
Click Close.
3.10 Post Supplier Invoice Logon ID / Role
Work Center / View
FINANCIAL02
Financial Accountant / Iris Green
Supplier Invoicing
Invoice Entry
Data to Enter
Activity / Button / Comment
All Orders to Be
Select your Purchase Order from the step
Invoiced
before. Be sure to use only your own PO.
Procedure Field Name Invoice Entry view Show list
Click New Invoice. New Invoice screen Supplier External Document ID Invoice Date
S100200 (AMS Inc.)
Your Participant ID#
This is set by the system based on your purchase order. Supplier’s invoice number
< current date >
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Receipt Date
< current date >
Default by the system based on the date from the goods receipt Default by the system, data from the
Total Gross Value
purchase order Default by the system, data from the
Total Tax amount
purchase order Invoice Description
< no entry >
Additional financial data, any entry possible.
Payment Terms
14 days 3%, 30 days
Default by the system, data from the
2%, 60 days due net
purchase order.
< no entry >
Additional financial data, any entry possible.
Payment Reason
Default by the system calculated from the
Due date
credit terms.
Posting Date
< current date >
Invoice Entry
Net Click Check. A message should appear at the bottom of the screen indicating no errors. Click Post.
Write down your Supplier Invoice number from the bottom of the screen.
3.11 Approve Supplier Invoice Logon and Work Center Information Logon ID / Role
Work Center / View
FINANCIAL01
Chief Financial Officer / Edward Black
Managing My Area
Approvals
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Procedure Field Name
Data to Enter
Activity / Button / Comment
Open tasks
Select the invoice from the previous step.
Approvals view Show List
Read the Business Task description Click Approve. You should receive a message “supplier invoice: approved executed ”
3.12 Select Items and Make Payment Logon and Work Center Information Logon ID / Role
Work Center / View
FINANCIAL02
Financial Accountant / Iris Green
Payables
Suppliers
Data to Enter
Activity / Button / Comment
Procedure Field Name
Supplier Accounts View Show List: Suppliers
Select the supplier row for AMS Inc.
with account
(S100200)
movement
Click View.
Supplier Account Monitor screen, Trade
Payables Tab, Invoice/Payments Show List: Open Items
Your document ID
Select the row where the Document ID matches your Supplier invoice number Notice that the invoice amount is shown as a negative amount. Thinking back on your financial accounting class, why would it make sense for the supplier invoice to be shown as
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a negative? Write your answer to question 3.13.6. Click Pay Manually By > Outgoing Check. Default by system chosen sequentially from
Check Number Payment Amount
the check register
Default by system based on the invoice
Amount – Cash
amount and credit terms
Discount> USD Bank Account ID
1100062588
Memo
Your participant ID# Click Complete Bank Data . Click Post. Write down the check number
Click Close. Supplier Accounts View Refresh the screen
Select the line with your check number. Click on the journal entry on the line with your check. Write down the general ledger accounts and the amounts below. Click Close.
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Now, use the role of Chief Financial officer to approve this payment. Hint: Refer to step 3.11 for information on how to do this.
Once the payment is approved, return to the Financial Accountant role. Field Name
Data to Enter
Activity / Button / Comment
Payables Work Center, Payment Clearing Show List
Completed Payment Clearings
Click Go
Payment Clearing screen Payee Name
Sort the Payee Name column Find AMS Inc. Confirm that your payment by check is completed. (Match the check number from the previous step with the external reference field)
This concludes the Procure-to-pay exercises!
3.13 Additional Optional Tasks 1. Display the inventory of the product you have procured 2. What is the status of your sales order? 3. What is the Net Value of purchases from AMS Inc.? 4. Display the Balance Sheet for Almika. 5. Display the purchase history of the product you have bought. 6. Thinking back on your financial accounting class, why would it make sense for the supplier invoice to be shown as a negative?
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