Purchasing Concepts and Organization in SAP - Essay Example

Introduction A number of ‘transaction-intensive’ procedures worldwide are completed for instance, production, human resources and economics. Enterprise systems have begun it as “back-office” a system that contains capability to integrate and automates business process. Recently, the concept of Enterprise systems has deeply extended due to availability of huge range of additional processes. (Mayerhofer) For example, Performance management. Planning and analysis Supply chain management. Customer relationship management. Product development. Advanced analytics Furthermore, due to the development of enterprise systems and its functionalities, all the market analyst and correspondents join together to give new names for enterprise systems. The names that are suggested mainly are “enterprise commerce management” or “ERP II” (Fingar, Kumar and Sharma). 2 Purchasing Concepts and Organization in SAP The purchasing process in SAP starts with the warehouse sub process. If we take an example of Reynolds Corporation the process of purchase requisition is created and moves forward to another sub process called as purchasing. The purchasing sub process establishes and transmits the purchase order. The purchase order is than received by the warehouse sub process of Reynolds Corporation that initiates the function called as material receivables. Moreover, after this function, the purchasing process enters in the accounting function of Reynolds Corporation. Likewise, the accounting function received the invoice and sends the payment (Stewart 2005). Reynolds Corporation position to gather the profit from information flows that are present inside and outside the firms. This can be done by integrating bonus procedures along with a main financial system. On the contrary, some of the organizations are deploying enterprise systems functionalities as no company ever reported to completely finish implementing enterprise systems procedures (Becker et al. ). A number of organizations had successfully implemented the back-office procedures for the departments of supply chain and human resource as their financial systems are working perfectly. In fact, some of the organizations are busy in creating core back end processes while many organizations are working on the escalation of enterprise systems into front-end processes. For Reynolds Corporation, the below mentioned values must be operational: Integrate enterprise systems is combined and synchronized along with the organizations significant data and procedures. This is done to utilize the system to connect with the procedures related to the organization and customers. Optimize best enterprise systems software’s are normalizing to give high performance and compete with the organizations significant procedures and strategies. The term “Informate” is used when the information is transformed into work in any organization. The transformation of data as mentioned in enterprise systems is done by information that is rich in context and information that allow analysis of business and facilitates decision-makers to numerous work forces. If we are talking about enterprise systems, many organizations do not implement it to its optimal level. Likewise, by constructing the rare technical components of Reynolds Corporation, it can only provide a limited value. Relatively, the research highlights the significant advantages not only for Reynolds Corporation that is in process of processing the raw components and entitles itself for the ownership to meet the distinctive vision of the organization. After placing the preconditions of cost and time, the prediction of the model that demonstrates the perceived value from enterprise systems for Reynolds Corporation emphasis on three main features that are mentioned below: 2.1 Integrate On the value scheme of integration, enterprise systems were originally formed. An enterprise system certainly recommends the assurance of incorporation through centralizing information that is operational in a habitation from where it will be communal to all the core practical systems and regulating business procedure purposes. This process mainly used to reduce cost and speed up the connections and advances decision-making. Financial institutions from various business units can be combined effortlessly. The customer’s information can be collected by any of the employer present in organization from one place. Spectacular enhancements in operational effectiveness can be achieved with the help of integrating procedures along with customers, seller and business associates in an organization. Recent studies reveal that the inter-organizational business procedures carry out a large impact in today’s business world. One more study reveals that around 30percent of organizations had accomplished restricted information exchange with the mainstream customers or sellers. The qualitative surveys states that a number of complicated users had started to deal with inter-organizational information and procedures related to enterprise systems. However, it will still take several years to implement enterprise systems successfully and completely. 2.2 Optimize Optimization is a process that supports crucial value of realization of enterprise systems and the business procedures. In the year 1990, the process of reengineering of business organizations had a large impact on the implementation. In order to normalize the core business procedures the enterprise systems software’s are reengineered. In many other organizations the systems are cautiously configured to get themselves associated with business, organization and its procedures. This can be done simultaneously to streamline their main objectives and information. 2.3 Informate According to the latest survey, the Organizations wish to get an enhanced decision making tools other than any enterprise systems. Moreover, in order to accomplish their goal regarding correct, reliable, inclusive, concurrent information, the senior managers are in search of most effective tool. They are looking for translucent and smooth real-time decision-making capacity. For this purpose, senior managers can run their businesses perfectly worldwide. Front-line Workforces can illustrate enterprise systems data. This will help them to enhance their performance and analytic capabilities, boost their right for decision making, and advance communications with customers regarding sale, purchase, product maturity, customer service, and planned or supply chain planning. In order to understand their objectives, the organizations are required to informate. In order to obtain informed decisions we need to create a tough analytic potential that is used to produce data. For this purpose data access tools and technologies are used. In fact, many organizations requires a lot of time to implement these changes. This because people around are trained to this famous quotation “live with the system”. Therefore enhancing any procedures related to managerial information also require huge revolutionary procedure. To get the business support, it is the responsibility of Managers and other skilled workers to must study about the data and its availability. A number of organizations are contributing in a qualitative survey. The reviews are about the huge achievements, accomplishment of goals in order to generate better data. Unfortunately, the organizations are still trying to learn of utilizing the data to the occupied possibility. This is briefly defined by an executive, “One challenge has been going from a lot of transactional data to good business information. Slowly but surely, people are doing their jobs in different ways. About six months after implementation, people start to understand what they can do with the data” (Bendoly and Jacobs). The procedure was relatively slow along with enterprise systems data. This is due to the slow performance of the majority enterprise systems vendors as they are busy in making high-quality investigation tools for the customers. It is also not surprising for the organizations that around 28 percent had accomplished their task successfully. The task was to enter into their robust analytic capacity and readiness systems data. The new enterprise systems functionality must be applied if the organizations are looking for an improved decision-making capacity for instance a performance depth function tool is used in order to get that managerial information that is missed by their organization. If the objective score card application is used for example, it is used by the Texas Education Agency and they are capable to trail performance monthly with the help of this tool. Moreover, with the help of enterprise systems the organizations have the capabilities to handle the information requests of an agency promptly and provide new dimensions to investigate management information to produce close look over the operations. 3 Discussion Enterprise system based on SAP incorporates powerful and complex information systems and it is also the world’s most popular. Likewise, there are two type of architectures i.e. client server oriented and service oriented. The client server architecture has three payers, the presentation layer, application layer and data layer. The presentation layer incorporates client systems, the application layer incorporates application servers providing services to the end users and the data layer that incorporates database interconnected with the application server. Moreover, the service oriented architecture incorporates web services and composite applications. The web services are utilizes to relay functionality of the enterprise systems. Moreover, the standard interface provides the outputs and inputs. Whereas, the composite application incorporates multiple web connections through web services and also construct new proficiencies without having any modification on the primary applications. A SAP module incorporates the purchasing along with other modules for instance, Sales and Distribution, Financial Accounting, and Controlling. The postings are made in reference to the commitments made against Purchasing to Controlling. After receiving the goods that are ordered the posting are shifted towards cost centers. Moreover, SAP post on the Accounting document and then to Financial Accounting after the goods are received in a significant account of General Ledger. The Procurement Proposals are created in order to meet the requirements of purchasing as proposed by the Sales and Distribution department during MRP. The main elements of the Purchasing Module were represented in this article and can be seen in the flow diagram. In fact, all the data related to the purchasing is negotiated during the whole procedure. In this diagram amalgamation of the three procedures are illustrated: MRP Inventory Management Invoice Verification. A procurement proposal is created by the MRP. This begins the Purchasing procedure and starts producing goods for the stock. A financial posting was prepared in consent to an account task after the goods are received for nonstop consumption for the assigned purchase order line (POL). Furthermore, if these goods are purchased for the stocking purpose then the posting is prepared for the Inventory General Ledger account. The outline contracts and purchase order are used for the procedure of Procurement. The SAP delineates the outline contracts as, “contract or scheduling agreement against which release orders are placed as quantities are purchased” (Khan). The Outline Contracts are enclosed with the Purchasing Booklets unit. Basically, the process regarding Procurement proposals can be started with the help of MRP. Moreover, it can also be triggered by the Consumption Based Planning (CBP) or through the direct requirement or Purchase Order (PO) (Solutions). In order to complete the purchasing procedure following are the elements must be covered: Different types of documents related to purchasing. With the help of Quantities, Sourcing and Automation the purchasing procedure can be optimized. Different circumstances must be reviewed before making any purchasing Release purchasing strategy is used. 3.1 Purchasing Master Data Following are the three master data are used for purchasing: Material Master Vendor Master Information Record 3.2 Purchasing View The crucial data is managed by the purchasing view. For example the purchasing view contains all the information that is related to the purchasing group and the procuring goods. 4 Conclusion The introduction provides a comprehensive overview of enterprise system semantics. Likewise, Reynolds Corporation is selected for enterprise system processes and functionalities. Secondly, SAP purchasing process is discussed in detail. Moreover, its implementation in an organization is also divided in to further sub processes such as integration, optimization and informate. Thirdly, a major discussion on SAP architecture such as client server oriented and service oriented, different layers of SAP associated with these architectures, SAP Sales and Distribution, SAP Financial Accounting, and SAP Controlling processes are discussed in detail. Work Cited Becker, J., W. Uhr, O. Vering, et al. , 'Retail Information Systems Based on SAP Products', Anonymous Translator, Springer, 2001). Bendoly, E., and F. R. Jacobs. , 'Strategic ERP Extension and Use', Anonymous Translator, Stanford Business Books, 2005). Fingar, P., H. Kumar, and T. Sharma. , 'Enterprise E-Commerce: The Software Component Breakthrough for Business-to-Business Commerce', Anonymous Translator, Meghan-Kiffer Press, 2000). Khan, A. , 'SAP and BW Data Warehousing: How to Plan and Implement', Anonymous Translator, iUniverse, 2005). Mayerhofer, R. , 'Introduction to SAP Business One', Anonymous Translator, Galileo Press, 2007). Stewart, J. , 'SAP SRM Advanced EBP Cookbook', Anonymous Translator, Equity Press, 2005). Solutions, I. K. L. , 'SAPA® MM Questions and Answers', Anonymous Translator, Jones & Bartlett Learning, 2010). References . Read More