The SAP is a well-integrated Enterprise resource planning (ERP) tool that provides direct and in-depth reflection and mapping of business processes applied by companies in their industrial operations (Akhtar, 2016). SAP is an acronym for System Application Products. It utilizes the ERP software to carry out its functions. It is multi-module application software that integrates activities across business departments such as product planning, parts purchasing, inventory control, product sales and distribution, plant maintenance, and quality control (Junnarkar & Verma, 2017). The main aim of SAP is to enhance and ensure seamless internal business functions that may need re-engineering of existing business processes.
Importance of SAP ERP Tool
According to Junnarkar and Verma (2017), a lot of industries consider the use of SAP ERP tool due to the following reasons:
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Creates business visibility
It integrates the business functions of a company and gives reports on the different parts of the business. The integration improves the visibility of the business and the operational capacity of the business.
Aligns strategies with operations
SAP helps the top management alight their business strategies with their business operations, such as planning and optimal use of resources in various business functions.
Reduces business risks
It provides the necessary support to ensure a seamless transfer of data and information across different aspects of the business, thereby reducing business risks.
Improves financial management and enforces controls
The business transaction function in SAP is well-integrated and results in better financial control and results. SAP improves the organization of financial control documents that makes it easy to enforce required checks.
Improves efficiency and operational performance
It helps the business come up with and measure benchmarks for operational performance, which makes the business more efficient and economical.
Components of the SAP System
According to Junnarkar and Verma (2017), the structure of the SAP system is similar to that of a Management Information System (MIS) and comprises of the following components:
SAP software
The SAP is based on module-based ERP software. Each software module automates various business activities of different business functions within an organization.
Business processes
Business processes are classified into strategic planning, management control, and operational control. The SAP ERP streamlines business processes and integrates various functional departments.
SAP users
Employees of the organizations that implement the SAP ERP are the users of the system.
Hardware and operating systems
Many robust ERP systems are UNIX-based. Windows NT and Linux or other popular operating systems run the ERP software.
Organizational Structure of the SAP ERP Software
The following are the organizational units of production planning:
The client
The client is the highest element of the organizational structure and represents a company or a group of companies within which there are several independent company units. SAP ERP systems may have several clients contained in logical units. From the systems landscape perspective, there are three clients/systems: development (DEV), quality assurance (QAS), and production (PRD) (Akhtar, 2016). Configuration of the system occurs in the DEV system and is then transferred to the QAS system for testing and training. The final configuration is carried out in the PRD, where the business owners can make live entries.
Company code
This level reflects the level at which a company legally reports income statements and balance sheets, making it the organizational unit of SAP ERP financials (Akhtar, 2016) . One can have different codes for different lines of business or company functions that have operations in different countries
Plant
The plant is the organizational unit within the logistic components of production, maintenance, procurement, warehouse, and planning (Akhtar, 2016) . A plant can be different things depending on the company structure. It could be a manufacturing site, a head office, or a distribution center that organizes tasks for the production logistics. The following tasks are carried out at the plant level:
Inventory management
Evaluation and performance of physical inventory stocks
Demand management
Planning production
Execution and management of production
Material requirements planning
A company code is assigned to the plant after it has been created. Each plant has only one company code, but multiple plants can be assigned the same company code.
Storage location
This is the physical or virtual storage site for raw materials, returned goods, and components (Akhtar, 2016) . The SAP ERP system doesn’t have the provision to define the maximum storage capacity of an individual tank or silo (Akhtar, 2016). Several storage locations can be created within a plant, but only one storage location can be assigned to a plant.
Material Requirements Planning Controllers (MRP)
An MRP controller is responsible for attending to the requirements of materials (Akhtar, 2016) . The MRP controller must be based on responsibility, role, and working areas instead of individuals. It is usually assigned in the MRP 1 view of the material master. When running several reports, the MRP controller will be used as the selection criterion.
Capacity Planners
A capacity planner evaluates the existing work centers or resource capacity and performs capacity leveling when needed. When a new work center is created, you have to assign the person responsible in a specific field (Akhtar, 2016) . A capacity planner can also handle the role of the person responsible in a specific field. The capacity planners are assigned in the capacity header data of the work center.
Production Schedulers
Production schedulers are responsible for ensuring seamless production execution and operation take place according to the production plan (Akhtar, 2016) . They take immediate remedial action when necessary.
Production Planning in SAP ERP
SAP Production Planning is an ERP module that assists businesses in planning the manufacture, dispatch, and sale of goods. The process of production planning and control begins by forecasting a product’s need in the market and formulating a sales plan (Akhtar, 2016) . The sales plan is integrated with the production plan to take the project realities into account. The eventual production plan is the basis of MRP, which helps the production and the procurement planner know the right time to obtain and manufacture material for its availability and dispatch to the customer (Akhtar, 2016). The SAP PP helps in seamless production execution and quality checks in the production processes to ensure minimal customer returns or other rejections. SAP PP includes the following types and tools:
Master data
The master data consists of the material master, work centers, resources, production lines, bill of materials, master recipe, and rate routing, and a production version.
Sales and Operations Planning (S&OP)
SAP demand management aligns the sales planning with the customer requirements in line with the planning strategy and thus calculates the autonomous requirements for production.
Materials Requirements Planning (MRP)
MRP fulfills the standard and unique customers’ needs through the available planning and production methods.
Discrete Manufacturing or Shop Floor Control (SFC)
Production order processing, goods issuance and receipts, and confirmations used for complex manufacturing processes might require intermediate storage.
Process Manufacturing
The process order processing, process management, goods issuances and receipts, material quantity calculation, and confirmations are used in production processes of liquid-based or flow-based materials.
Repetitive Manufacturing (REM)
The SAP process adopts the lean manufacturing principle whereby the production process is made simple and consistent over time.
Capacity Requirements Planning (CRP)
The capacity evaluation shows the load and detects overload at work centers, while capacity leveling helps the planner optimize the production process.
Product Costing
This integrates with PP and accounts for all production-related costs, including overheads, variances, and work in process (WIP).
Detail Scheduling
Scheduling in SAP PP takes place with the help of the SAP Calendar that exists in the system. The calendar is assigned to the plant, which has to be defined in terms of the factory calendar, national holidays, and individual holidays (Akhtar, 2016). Also, a production scheduler ensures that product execution and operation take place as per the production plan. It takes immediate remedial action when necessary.
References
Akhtar, J. (2016). Production Planning and Control with SAP ERP, 2nd, Updated and Revised Edition 2016 (2nd ed.). Rheinwerk Publishing.
Junnarkar, A., & Verma, D. (2017). Study on System Application Product (SAP) -An Important Entreprise Resource Planning Tool For Achievement of Organizational Vision, Mission, and Operational Performance. International Research Journal of Engineering and Technology (IRJET) , 4 (2). Retrieved 26 April 2021, from.
