But first you need to get an perspective on what is on the forefront and on the horizon.

Cash is as vital for any business as the blood that flows through your body. And ensuring there is always a positive cash flow will eventually lead to a profitable enterprise. So only start a business when you have a clear idea what you customer wants at which price. And that is why the focus of the Sandbox Tycoon® will be on sales.
Any registered customer order will trigger the need for stock, replenishment and planning activities. Obviously your company wants to optimise supply and demand to keep the costs low while meeting customer expectations. So this requires an integrated system that allows proper planning and execution of logistical processes, which is also referred to as Supply Chain Management [SCM].

Your SCM network consists of:

• customers,
• vendors,
• manufactiruing facilities,
• warehouses and
• distribution centres.

Typical SCM business processes relate to:

• replenishment (push vs pull)
• stock control (either in-house or outsourced),
• delivery (direct shipments, third-party delivery, cross docking)
• modes of transport (truck loads vs individual parcels by road, rail, sea or air)
• transportation control (either in-house, using a carrier or outsourced)

As CEO you want to know how efficient your SCM has been implemented. The SCM key performance indicator is referred to as On Time In Full [OTIF] and covers the following queries:

• are we able to deliver the quantities ordered by customers?
• are we able to deliver these quantities ordered on the day requested by the customer?
• are we able to deliver the ordered goods with zero defects?
• are we able to invoice the ordered goods based on the agreed price arrangements?

You notice that SCM does cover a wide range of disciplines. Information, goods and money flows throughout the entire company. Any unexpected incident can be dealt with without disrupting the delivery to the customer. It also requires a strong trustworthy relationship with any supplier of goods and services.

A streamlined SCM operation will ensure customer satisfaction, low stock levels, high stock rotation, predictable cash flows and reliable information. Management intervention on the business processes will be a rare occurrance as the departments can cope with high volumes of data easily.

Only a integrated planning, replenishment, sales and distribution system can achieve this level of excellence. Only an Enterprise Resource Planning [ERP] system is able to control all business process, of which SCM is just one of the vital components. The SAP ERP Central Component [SAP ECC] has been selected by most multinational enterprises as their preferred ERP solution. SAP ECC is able to cover the majority of required SCM processes. It is important to know what is standard available. It allows your business to implement and maintain the system at a low cost. It allows your business to remain agile when embracing new functionality based on the industry best practice.

Whether your company is contemplating to purchase a SAP ECC as ERP system or preparing to upgrade SAP ECC, you might like to know what the latest version has to offer.
Maybe you are a consultant who wants to prepare for SAP ECC SCM certification or just want to refresh your SAP knowledge, you may want to experiment  in your own system.

No Tie Generation® developed a Sandbox Tycoon® prototype emulating SCM business processes commonly used in the chemical, food and pharmaceutical industries.
Isard Haasakker is able to demonstrate this prototype at your office. Alternatively, he can provide instructions how to build your own prototype quickly.

I want to know more about Isard Haasakker…

When starting to build a prototype system in SAP ECC, it is important to get ‘the bigger picture’ on the company’s main purpose for existence. Do not be surprised that it always boils down to the same answer, irrespective of the company in question: A company has to make a profit. And in order to do so, it needs to focus on customer satisfaction, innovation and risk aversion.
Customer satisfaction seems very obvious, as without consuming customers the company will have no inbound cash flow to pay for all the costs.
Innovation is important because the company needs to react to the ever changing surroundings. A satisfied customer today does not automatically result in a satisfied customer tomorrow.
Finally risk aversion is even more vital for long term success, especially because it tends to be neglected. A company has to comply with the laws and regulations, needs to insure against potential financial claims that cannot be paid from its cash reserves and focus on diversifying the product range.

Now that we know WHY a company exists, Supply Chain Management takes a closer look on HOW to achieve customer satisfaction by a) supplying a high quality product or service and b) deliver what has been requested ‘in full’ and ‘on time’.
Immediately it triggers the need for forecasting, manufacturing, storage and transportation strategies. These strategic decisions need to fit in an overall management of the associated information, goods and money flows.
Whatever is decided, keeping the overall costs as low as possible while remaining flexible within changing environment is the core challenge linked to Supply Chain Management.

Let’s take a closer look on the various Supply Chain Management strategies.

The forecasting strategy is dependent on the type of product or service that the company is offering. Is there a trend in demand identified? Does demand have a seasonal influence? Is the trigger for buying linked to a marketed hype? Which product has reached which phase in the product life cycle? Are there any new products in the pipeline? Does a competitor aggressively gain market share?
It is obvious that forecasting requires a special skill to understand the current positioning of the company and to predict the future.
Of course you can also choose not to forecast and be totally responsive to received customer orders only. But that might be too much of a risk. Therefore it is important to know the manufacturing strategy.

The manufacturing strategy is primarily linked to the time a customer is willing to wait to get the finished product or service delivered. When you want to buy comfortable running shoes, you expect it to be available in the local sports store immediately. But when you order a brand new car, then it depends on your specific wishes whether to accept one available in the showroom or wait for your desired model to be manufactured and shipped to the dealer. Of course you are prepared to wait much longer when ordering a plane. It is important for the company to have an idea of the acceptable lead time between ordering and delivering.
An extreme short lead time requires a ‘make-to-stock’ attitude, resulting in building stock in anticipation of a sale.
When a finished product does not need to be available instantly, then it could be acceptable to implement a ‘assemble-to-order’ process. In this case the manufacturing of sufficient semi finished products prior to a customer sale is important.
When the product is so specific that it requires the customers input before manufacturing can start, then a ‘make-to-order’ approach is the only sensible option available.
Of course it is also possible to outsource all the manufacturing, leaving the appropriate manufacturing decision up to your supplier. But be sure you make solid contractual agreements regarding quality of the product and service provided.

Regarding storage and transportation strategies, the basic question is whether to outsource these activities. Normally the company needs to focus on its strengths and that is normally in the area of research and development, manufacturing and sales. So it is obvious that many companies do not want to become an expert regarding storage and transportation.
However, when the decision is made to do these tasks ‘in-house’ then it obviously requires the need for specific capabilities. For example, when you decide to take control over the storage of your products then you would need to control and execute warehouse management processes such as picking, packing and loading.

When demonstrating a very basic Supply Chain Management prototype via the model company called Sir Juke, the following decisions were made:

• No forecasting
  
• Manufacturing is outsourced
  
• Storage and transportation is outsourced

In the early days SAP functionality was grouped into modules which could be implemented separately.
The most important module was – and still is – Finance (FI) as you need it to set up a ‘company’ before you can use any functionality offered by the system. The main objective of the FI module is to allow the company to perform tasks linked to external financial reporting. When there is a need for internal reporting, then the Controlling module (CO) needs to be added. In essence FI and CO must be seen as the core of any SAP system.

SAP is an “Enterprise Resource Planning system”, offering the opportunity to integrate all data collected by all departments by using one single database. This has many benefits as there is no duplicated data in several independent systems that need attention.
Also linking the entire business into one pool of data trigger synergy. It makes reporting easier and more reliable. Also it makes it more effective to trace the information, goods and money flows throughout the company. In addition, you can link your customers and vendors to the system and take advantage of the efficiency when dealing with external partners.

Additional modules were introduced, such as Sales and Distribution (SD), Materials Management (MM) and Production Planning and Control (PP). Each module have specific subsets of functionality like sales (SD-SLS), billing (SD-BIL), consumption based planning (MM-CBP), purchasing (MM-PUR) and inventory management (MM-IM).

Throughout the years it became rare that a company would only purchase individual modules. Therefore SAP changed its vision to walk away from the modular approach and instead focus on integration. Now all the modules mentioned earlier are part of the SAP ECC Central Component and offered as one single product. This also resulted in an integrated approach regarding development of new functionality. Terms like “Logistics Execution” were introduced which focuses on inbound and outbound goods flow, directly linked with business processes shared with the traditional SD and MM modules.

Still SAP customers are referring to the traditional modules as it provides a quick and high level conceptual idea of the skill set required when in need of external consult. But it is important to understand that in future it will become more difficult to keep this simplified approach towards labeling the SAP functionality available. Therefore it would make more sense to focus on grouping processes (such as Order to Cash, Procure to Pay, Register to Report) used within a specific industry (such as Oil, Retail, Pharmaceutical, Food and Chemical industries).

SAP ECC functionality in scope for Sir Juke prototype

When demonstrating a very basic Supply Chain Management prototype, the following decisions were made:

• No forecasting
  
• Manufacturing is outsourced
  
• Storage and transportation is outsourced

So in terms of the traditional SAP modules, the focus will be on the integration between the traditional modules SD and MM.

Here a list of grouped sets of functionality that will be part of the basic Supply Chain Management demonstration for the model company called Sir Juke:

• Consumption based planning (MM-CBP)
• Purchasing (MM-PUR)
• Inventory management (MM-IM)
• Invoice verification (MM-IV)
• Sales (SD-SLS)
  
• Customer billing (SD-BIL)
• Inbound and outbound shipments (LE-SHP)

Regarding purchasing, both regular purchase orders as subcontracting purchase orders are taken into account. With regard to the subcontracting, these purchase order created within the MM module can trigger outbound shipments which are commonly associated with SD module related transactions. This is a perfect example why ‘Logistics Execution’ cannot be solely associated to either SD or MM.

Also it is inevitable that there is integration with FI, but that is kept to a bare minimum to allow financial postings triggered by goods movements, customer payments and vendor payments.

Three types of data that need to be considered when building the prototype system:

1. Configuration data; Necessary to build the company structure as well as controlling the process flows and company specific codes required for process execution and reporting purposes.
2. Master data; Used to assign default values when you want to avoid repetitive data entry during process execution. It requires configuration data to be maintained first.
   
3. Transactional data; The recording of actual data linked to process execution. It requires both configuration and master data to be available.

In order to compile a list of configuration data necessary for Sir Juke model company, we need to review the scope the basic Supply Chain Management demonstration:

• No forecasting
• Manufacturing is outsourced
• Storage and transportation is outsourced

These restrictions result in the need to examine following sets of SAP ECC functionality:

• Consumption based planning (MM-CBP)
• Purchasing (MM-PUR)
• Inventory management (MM-IM)
• Invoice verification (MM-IV)
• Sales (SD-SLS)
• Customer billing (SD-BIL)
• Inbound and outbound shipments (LE-SHP)

Configuration data

Regarding the configuration data, the standard system only needs to be tweaked in certain places such as the company structure and company specific codes for reporting purposes.

As the demonstration is focused on the integration between the traditional SD and MM modules, only the bare minimum of the required company structure is set-up. There is only one company, sales organisation, purchase organisation and plant maintained for Sir Juke per country. Several storage locations are defined within a plant to trace the process from raw material to finished goods.

Regarding the reporting requirements, these are minor enhancements to the existing codes and not worthwhile to discuss in this article.

Master data

We distinguish several types of materials: raw materials, packaging materials, semi-finished goods and finished goods.

The raw materials and packaging materials are purchased from a regular vendor. As the decision is made to outsource manufacturing, the semi finished and finished products are purchased from a subcontracting vendor.

We use the ‘assemble-to-order’ manufacturing strategy, and therefore multi-level Bills of Material need to be defined to determine which components are required to manufacture semi-finished goods and finished goods.

The next step is to link which materials are procured from which vendor. That will allow the automatic assignment of the ‘source of supply’ when executing the consumption based planning by means of exploding the available Bills of Material. It requires the definition of source lists and purchase info records. The purchase info records will include the purchase price details.

In order to receive goods in stock, some require the recording of batches prior to goods receipt.

You need customers when you want to sell the finished products. When you want to supply the subcontracting vendors with the required components by means of Logistics Execution functionality, these vendors also need to be created as customers. Also the plant needs to be made available as a customer when you want use Logistics Execution to transfer stock.

When customers are always ordering the same products, then maintaining an item proposal speeds up the order entry process.

Finally, sales prices need to be maintained in order to be able to sell the finished goods to customers.

Transactional data

When focusing on transactional data, the base documents are the sales order and purchase order. The information maintained in these documents will determine the process that needs to be followed.

Within a sales order document the sales document type, item category and schedule line category will provide the details of the type of process that needs to be followed. This could be for example a standard sales, customer return or credit note.

Within a purchase order document the purchase document type and item category are important to understand the process required. This could be for example a standard purchase, subcontracting or stock transfer.

The strategy of the Sir Juke prototype is to take full advantage of the configuration and master data to ensure that only a minimum of manual transactional data entry is required.

The most important hurdles are:

• Definition
• Scope
• Execution

Definition

Many customers and consultants struggle to offer a clear definition for regression testing. Of course you can open a dictionary and read whatever is states. But a common sense consultant can also observe the various forms of testing and their purpose.

Imagine a customer has implemented a three tier landscape with a development, quality assurance and production system. Then the obvious form of testing available would be unit testing, user acceptance testing and regression testing. Unit testing would be done in a development environment and focuses on verifying all possible positive and negative results with regard to a specific change or bug fix requested. When the code behaves as expected then it can be moved into the quality assurance system for user acceptance testing for official approval from the requesting business users. Now the aim is to verify whether system integrity remains in tact by taking into account prerequisite and subsequent tasks. After receiving the acceptance from the requesting business representatives the production system needs to be assured that all important processes implemented for all users will not be compromised. So regression testing will cover system stability.

So how do you test system stability? Here is when many people have different opinions. This can lead to long discussions which frustrates strategic decision making.
For example, some say that interfacing should be included but that means that external parties need to get involved. This proves difficult to implement as you lose control over the lead time of the regression test.
Others may be very persuasive that some sort of negative testing must be included. But that is just a signal that there is doubt in the quality of unit testing or user acceptance testing.

Ideally the common sense consultant can persuade the customer that regression testing aims to verify system stability by simulating core business processes whilst expecting no errors will occur upon execution.

Scope

So if consensus is reached on the definition of regression testing, the next obstacle would be regarding the scope.

Imagine a customer is a global manufacturer and all the users have access to a single system to support their business processes. So activities related to production planning, financial accounting, warehouse management, payroll and customer service all are linked in a complex set of interrelated procedures. This makes the estimation of cause and effect within a single system difficult to anticipate. When your aim is to ensure system stability, then where do you start?

Obviously this triggers another heated debate.
For example, accountants state that most transactions within the system have a financial consequence. A wide variety of data is required to simulate a reliable month end closing procedure. That starts a avalanche of wishes from all the areas of functionality. Quickly you lose an overview what needs to be included and excluded in the regression test.

So it would be better to have a specific identified origin for all processes in scope for regression testing. That gives the common sense consultant to persuade the customer to focus on potentially most vital event that can be registered in the system, which is the payment receipt of a customer invoice. So when you use all forms of customer billing as the core for regression testing, then all derived processes can be identified via a ’cause and effect’ diagram.

Ideally the common sense consultant can persuade the customer the scope for regression testing should limit on identifying which 20% of the customer would generate 80% of the turnover.

Execution

So if consensus is reached on the definition and scope of regression testing, the last major debate will be about the execution of the regression test. This discussion relates to answering the question ‘who’ and ‘how’.

Agreement can be reached quickly that the business itself would be responsible for regression testing. So then key users would then get the task to execute the regression test. But some may also argue this can also be delegated. This offers the opportunity that the support organisation can control the assurance that the system remains stable.

In parallel the choice of preferred tool for automated regression testing could initiate many disagreements. Should you select the expensive comprehensive suite of functionality or opt for the relatively cheap but restrictive alternative?

The common sense consultant knows from experience that often only a fraction of offered functionality is used. This is especially the case when there are no appointed team members who will receive in depth training on using the selected tool. So it may be better to focus on documenting the regression test scripts. This has an immediate impact on the quality of manual regression testing before any tool has been selected and implemented to automate this laborious task.

Ideally the common sense consultant can persuade the customer that tool independent documentation of the regression tests is a meaningful investment so that the execution does not become tool dependent.

Mary was closely watched by her management while she was working at the order desk. On a daily basis she had to deal with the consequences of working with an unreliable but highly sophisticated stand alone replenishment, stock control and distribution systems. There was a unreliable complex structure of interfaces to keep all individual systems up to date.
Customers did suffer with uncertainty whether the ordered good will be delivered on time and in full. Therefore it was decided to allow loyal customers to receive an invoice only after the receipt of the delivery was confirmed, also referred to as proof of delivery. Mary did spend a lot of her time to expedite these loyal customers for their delivery receipt confirmations.

Mary’s dedication to her job did pay out. She got offered a significant promotion as the Order to Cash key user for the SAP ECC implementation. Immediately she took the opportunity to make her mark as her reputation allowed to have a huge influence on the system design.
She continuously emphasised that SAP is a highly integrated and very efficient computer system. Therefore it must be able to inform customers in advance when a specific quantity of goods will be delivered. This would make the need for a proof of delivery construction for customers obsolete. Billing could be initiated on the day that the goods have left the distribution centre. This increased efficiency did impress the steering committee.

So Mary thought she offered the perfect solution for a problem. But she had failed to realise that a superior business solution can also be perceived as a loss of service. This resulted in a flood of complaints from loyal customers at the customer service department from all over the country.

Poor Mary, if only she’d talked to Isard Haasakker, the Common Sense Implementor™. Because he emphasises that each solution will always create new problems.
It is important to understand which solution potentially cause which problems.
The management needs to be willing to be responsible for the identified problems associated for a solution. This triggers discussions and consultations. When this process is also documented, then it prevents that persuasive convincing indivduals have too much influence on the decision making process.

Even now people are wondering what happened to Garry. Maybe he had difficulties understanding how pricing works within the SAP ECC system. Others thought it could have been the sheer pressure of delivering a comprehensive solution against a tight deadline. Some agrue he did not like the fact that everything had to be documented, whereas the company relied purely on his judgement in the past.
Or was it Simone Perks’  fault? She recently graduated and was offered the job to assist Garry a few weeks after the project kicked off. Her positive ‘can do’ attitude was a huge contrast against Garry’s collaboration with the consultants who were configuring the system.

It became almost a daily occurrance that Garry came into the project office to announce that another very specific pricing arrangement needed to be included into the design. Upon itself not a problem, but these new business requirements were never accompanied with background information and also required more in depth knowledge of the SAP to solve. Some within the project started to believe that Garry was trying to seek the Achilles’ heel in order to force the project to fail.

Such a contrast to Simone. She was always eager to find out how exceptional exceptions could still be solved within SAP. The consultants gladly provided Simone with all the insights in pricing configuration. Soon Simone was able to make her own assessments on how to solve the puzzles that Garry offered time and again. In a matter of months Simone was seen as the most knowledgable key user within the organisation. Even Garry eventually had to admit that the tables have turned.

If he only had the opportunity to talk to Isard Haasakker, the Common Sense Implementor™. Then Garry would have realised that a SAP implementation does not only enforce change within the IT department. Also Isard would have guided him to embrace the fact that knowledge acquired today will be obsolete within a few years. You always have to be willing to explore new avenues to extend your wisdom. Purely relying on status will eventually make you redundant.

Before you consider the potential complications regarding printing pricing data on document, you need to take a closer look at the currency and pricing procedure configuration.

Document currency versus reporting currency

Multiple currencies may be at play on the billing document, especially when you operate within the European Union.
When your business resides in the United Kingdom, then you need to report to the tax authorithy in Pound Sterling. But when you sell to customers on continental Europe, then you may decide to invoice them in Euros. So the document currency differs from your reporting currency. You then may decide to print the VAT amount in both document and reporting currency. If so, then you also need to display the used exchange rate details.

Currency and decimal notation

The majority of currencies will have two decimals. That is the reason why the internal storage of pricing data also uses two decimals, also for those currencies that deviate from that default. So when you look in the SAP database you always see the pricing data two decimals, even for values in Indonesian Rupiah that have no decimals or Tunisian Dinar that uses three decimals.
Even though your European business might not deal with the (for them) more exotic countries such as Indonesia and Tunesia, you can prepare your output in case you might want to invoice in currencies that do not use the default two decimal notation. Of course SAP has a solution for this by offering a function module called CURRENCY_AMOUNT_SAP_TO_DISPLAY that converts the internal format (the value in the database based on an assumed two decimal notiation) into an external format (the value based on the actual currency decimal notation).

For reference:
The definition of the alternative decimal notation can be viewed via the configuration transaction oy04. Alternatively, you can also view them directly in the table tcurx.

Pricing procedure

Not all information available in the pricing procedure may be of interest when printing documents. Therefore a print indicator is available within the pricing procedure to allow a print program to only retrieve the relevant pricing data for output.
When the print indicator is correctly maintained within the pricing procedure, then the SAP standard function modules RV_PRICE_PRINT_ITEM and RV_PRICE_PRINT_ITEM_BUFFER should be used to collect pricing data for the output of sales documents.

For reference:
Read also the OSS note 216150 for more details.