ERP Practitioner Learning

What is difference between seller driven and buyer driven market in a buyer seller driven market; the selling price is the vital component to effect the profit whereas in a buyer driven market the manufacturing cost effects the profit most. Effect of manufacturing cost on profit reduction . Examples of automobile market a gradual shift from seller driven to buyer driven market ; wide options are available for the buyers Concept of different components of manufacturing cost with their relative proportion Reduction in manufacturing cost have the highest impact on the profit Manufacturing cost= Labour + Materials + Overheads Materials soak up a substantial portion of the capital invested Right Quality/Time/Location/Cost/Quantity Material CostUnit Price and Consumption for production Cut Costs- Reduce the cost at which materials are procured / Having an effective control on consumption A marginal decrease in manufacturing cost gives such an impact on profit a substantial increase in sales is required to achieve the same. In a competitive market, the increase in selling price becomes extremely difficult. o 5 Rs of purchasing to get the optimized result. It may not be possible to get the best of all the factors but the aim should be to get the Right combination. o Materials cost can be reduced by either reduction in unit price and/or reduction in consumption quantity example Consumption of toothpaste in household scenario o Materials Planning 1st phase of MM, before the procurement activities, strong planning for what to buy and when to buy is required

o Procurement Actual execution of the planning, purchase of material from internal / external sources o Storage effective storage of the material that has been procured o Inventory control effective control of the flow of the material to the shop floor and back to the warehouse o Variety reduction Focusing on important activities and reducing the less important variety of the material in use o Value analysis systematic approach to increase the utility of the product and / or reduce the cost o Transportation effective control of the movement of inventories o Disposal of Scrap methods of disposing the scraps generated during the course of production o Supplier partnering bringing the vendor under the common roof, building up long term relation and strategic planning with the vendor. Functions in Material ManagementI. II. III. IV. V. VI. VII. VIII. IX. Planning Procurement Storage and Warehousing Inventory Control Variety Reduction through Standardization Value Analysis External Transportation Disposal of scrap Supplier Partnering

Master Data: Material Service, Vendor, Source List, Info Record(terms and conditions, price list, etc) MM Org Structure:Company, Company Code, Plant, Purchase Organization, Purchase Group Sub Modules: Purchasing, Inventory Management, Logistics Invoice Verification, Physical Inventory

Data Upload: LSMW(Legacy System Migration Workbench)

Two methods:Batch Input Recording, Direct Input Method Batch Data Communication (programming)

Difference between LSMW and BDC LSMW is basically for standard SAP and BDC is for customized applications LSMW is preferred for data upload but BDC does not work if screen design changes Data TransferIdocs Idoc Record TypesControl Record, Data Record and Status Record Jobs Automationjobs, idoc processing, background processing after business hours PRACTICALS Steps to create purchase order for materials: I. II. III. IV. V. VI. Manually create Purchase Requisition with t-code ME51N. RFQ to different vendors with respect to Purchase Requisition. Maintain quotation for each RFQ to vendor. Price comparison for every vendor to select the best option. Reject the quotation, if any. Create the Purchase Order.