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Chapter 5 E R P Modules Alexis Leon

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Sonali Chauhan
Sonali Chauhan

The document provides an overview of common ERP modules like finance, plant maintenance, quality management, and materials management. It describes the objectives and key functions of each module. For example, it states that the finance module handles accounting, controlling costs, treasury management, and enterprise reporting. It also provides detailed descriptions of sub-modules and processes within each ERP module.

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Chapter 5 ERP Modules By Sonali Chauhan UDIT, TYBSc. IT 7/3/2010 1 Objective: ERP Modules • Introduction • Finance • Plant Maintenance • Quality Management • Materials Management 7/3/2010 2 • ERP Packages contains many modules • Features vary with ERP packages • Most common modules in ERP are: – Finance – Manufacturing & Production Planning – Sales and Distribution – Plant maintenance – Quality Management – Materials Management etc 7/3/2010 3 1
FINANCE : Introduction • Concept of Information technologies means providing: – Right information – Right time – Right people – Can make critical difference to the organization • Financial data provides key information 7/3/2010 4 The finance module of most ERP system will have the following sub-system – Financial Accounting • (General Ledger, Accounts Receivables/ Payable, Fixed Assets Accounting, Legal consolidation) – Investment Management • (Investment planning, Budgeting, controlling, Depreciation, Forecast Simulation Calculation) 7/3/2010 5 Cont... – Controlling • (Overhead cost controlling, Activity based costing Product cost Accounting Profitability analysis) – Treasury • (Cash Management, Treasury Management, Market Risk Management, Funds Management) – Enterprise Controlling • (Executive Information System (EIS), Business Planning and Budgeting, Profit centre Accounting) 7/3/2010 6 2
Financial Accounting... • Objective : – Integration of financial information essential for strategic decision-making – Centrally track financial accounting data within international framework 7/3/2010 7 Financial Accounting... General Ledger : • Essential for financial accounting and decision making • Serves as a central pool of financial data and in accounting area, Origin of a transaction can be traced, • Supports all the functional needs in financial accounting. 7/3/2010 8 Financial Accounting... Typical General Ledger contains i.e. summary information of other components: – Purchasing (Quantity and value) – Sales (order and bill) – Vendor (Payable) – Customer (Receivables) – Fixed assets – Employees (salary and wages) 7/3/2010 9 3
Financial Accounting... Accounts Receivables/ Payable: • These subsystems are integrated with all other subsystems where financial data originates: both with General Ledger ,Sales and Distribution, Material Management. • Transaction performed automatically 7/3/2010 10 Financial Accounting... • Accounts Receivable and Payable functions include: – Internet integration – Document management – Important support for EDI processing – Enterprise-wide credit management – payment automation 7/3/2010 11 Financial Accounting... Asset Accounting: • Serves as a sub ledger to the General Ledger • Manages company’s fix assets and provides detail info abt assets related transaction. • Integration with plant management • Management of leased assets and lease under construction 7/3/2010 12 4
Financial Accounting... Legal Consolidation: • serves as a tool to make a consolidated financial statement with operational data • Legal consolidation is closely integrated with Financial Accounting system • permit direct data transfer from individual statement into consolidated report 7/3/2010 13 Financial Accounting... • Ease the workload and reduces data entry error • Allows multiple view of ur consolidation data. • Generate reports about legal entries and segments of ur business. 7/3/2010 14 Controlling... FINANCE • Introduction – Gathers functions for Internal cost accounting – Versatile information system • Generate reports 7/3/2010 15 5
Controlling... FINANCE Overhead Cost Controlling: • Focus on monitoring n allocation of overhead Cost Centre Accounting: • Analyses where overhead occurs Overhead Orders: • Collects and analysis cost based on individual internal measures • Monitors and automatically check budgets assign to each measures 7/3/2010 16 Controlling... FINANCE Activity Based Costing: • Goals of the entire enterprise should come before the goals of individual activity Product Cost Controlling: • determine cost of product or services • Use to determines the lowest price limit 7/3/2010 17 Controlling... FINANCE Cost Object Controlling: • Helps to monitor manufacturing orders • Integration with logistics, provides actual cost of the object costs • Determine n analysis Variance betw actual manufacturing cost and plan cost Profitability analysis: • Examines the sources of returns. • Revenues are assigned according to market segment 7/3/2010 18 6
Investment management... FINANCE • Investment planning – Where to invest, what is the expected profit of each ventures. Which department to need more investment? • Budgeting – Financial layout of new or existing project – Availability and cost of finance • Controlling – The expenses, the overheads • Depreciation - Budgeted balance sheets and cost planning are always on current values. • Forecast – Speculation and forecast of market trend. Rising or declining? • Simulation Calculation: Making a mathematical model and deriving alternatives to choose from. 7/3/2010 19 Treasury Modules... FINANCE • Managing long ,short, medium payment flow • Managing Risk factor • Planning financial transaction. 7/3/2010 20 Treasury... FINANCE Cash Management: • Analysis financial transaction for given period • Manages cash inflow and outflow • Distinction is made according to time period (short medium long) • Information is available to make cash management decision and for analyzing purpose. Treasury Management: • Current liquidity, Currency, Risk position • Conditions prevailing on the money and capital market • Consider all those before taking decision • Securities and loans 7/3/2010 21 7
Treasury... FINANCE Market Risk Management: • Ensures competitiveness • Complex feed back loop: from data collection, risk management, analysis and simulation • Assessing the interest rates • Assessing the currency rates • Simulate market data – “what if” analysis Funds Management: • From budgeting to payment on one side and • From Billing to actual receiving on the other • Enables to control funds commitments and determine the budget utility. • 7/3/2010 Helps to identify budget bottleneck 22 Enterprise Controlling... FINANCE Introduction • Compromise to optimize share holder value, for growth and investment. • Modules includes : – Executive information system – Business planning and budgeting – Profit centre Accounting 7/3/2010 23 Enterprise Controlling... FINANCE Executive Information System: • Provides overview of critical parameters • Gets both internal and external data • Drill-Down reporting to evaluated data Business Planning and Budgeting: • Business targets such as Return on investment • Central investment planning, budget release and tracking Profit Centre Accounting: • Analysis profit • Possible to analysis selected balanced sheet items and use for calculation of ratio such as ROI 7/3/2010 24 8
PLANT MAINTENANCE ... • Introduction – Preventive Maintenance control – Equipment Tracking – Component Tracking – Plant Maintenance Calibration Tracking – Plant Maintenance Warranty Claims Tracking 7/3/2010 25 Plant Maintenance... Preventive Maintenance Control: • Planning • Keeping track of • Scheduling – Hours of usage Production produced • Control of facilities – Consumables (fuel) and equipment – Days in operation • Equipment lubrication – Life of each component • Component • Lower repair cost replacement • Avoiding downtime, m/c • Safety inspection breakage etc. • Monitoring • Improve m/c reliability whc leads to higher production 7/3/2010 26 Plant Maintenance... Equipment tracking: • Equipment is an asset to be used, monitored and protected • History of equipment: acquisition to write off • Operational dependencies • (special features, imported spare parts, their cost and expected life ,Guarantee period, Next service due) • Information (model and serial no) for each equipment to be made available. • Provide detail information to technical specialist. 7/3/2010 27 9
Plant Maintenance... Component Tracking: • Components are typically sub-set of large equipment. • Enable to identify chronic repair problem of component – replacement or repair • Do not wait for components to fail, replace it before that • Reduce downtime • Also include repair/exchange history and component service life. 7/3/2010 28 Plant Maintenance... Plant Maintenance Calibration Tracking : • Allows organization to leverage their investment in Plant Maintenance module by providing for tracking of equipment calibration in support of ISO 9000 requirement 7/3/2010 29 Plant Maintenance... Plant Maintenance Warranty Claim Tracking : • Administrative system designed to provide control of all items covered by manufacturer and vendor warranty • Recover imbursement to which they are entitled. • Type and length of warranty – elapsed time ,operating unit • generate Complete information regarding warranty service provider 7/3/2010 30 10
QUALITY MAINTENANCE... • Introduction – ISO Standards defines: • Functions of QM • Elements of QMS – In Production, Quality Assurance • No longer just “Inspection” and “Elimination” • But also the production process becomes the focus of attention. – Quality spreads to the entire loop: Product development – procurement of sales and distribution – (entire usage phase) 7/3/2010 31 Quality Maintenance... CAQ and CIQ: • CAQ : Computer Aided Quality Management – Isolated, cnt carry out comprehensive tasks of QMS • CIQ: Computer – Integrated Quality Management – More appropriate • Supports quality management in procurement, product verification, quality documentation, processing of the problem • Module do not direct interact wit other modules 7/3/2010 32 Quality Maintenance... The quality Management Module fulfills the following functions: • Quality Planning : – Management for basic data for quality planning and Inspection planning, Material Specification • Quality Inspection: – Trigger inspections, Inspection processing with inspection plan selection and sample calculation, – Print shop papers for sampling and inspection. – Records results and defects – Makes the usage decision and trigger follow up action 7/3/2010 33 11
Quality Maintenance... Cont... • Quality Control: – Dynamic sample determination on the basis of Quality level history. – Application of statistical process control techniques using quality control charts – Quality scores for inspection lots, – Quality notification for processing internal or external problems and initiating corrective action to correct the problems – Inspection of lot processing – QMIS (Quality Management Information System) for inspection and inspection results and quality 7/3/2010 notification 34 Quality Maintenance... CIQ (Computer – Integrated Quality Management) • Only an integrated system can support all the elements of Quality Management System according to ISO 9000. • Quality Management function influence all the function within company, affecting all the phase. • QM Module integrate with other modules to link the task on quality management. 7/3/2010 35 Quality Maintenance... • The quality Management Module is integrated with the master data and processes of the following applications... – Material Management:  Purchasing, inventory management, warehouse management, Material requirement planning – Production:  Work scheduling, shop floor control – Sales and Distribution:  Delivery, creation of quality certificates 7/3/2010 36 12
Quality Maintenance... • The Quality Management module supports the exchange of data with other application in order to: – Prevent related data from being recorded and stored redundantly. 7/3/2010 37 MATERIALS MANAGEMENT... Introduction: • The Material Management Module optimizes: – All purchasing process with work-flow driven processing functions – Enables automated supplier evaluation, – Lowers procurement and warehousing costs – Integrates invoice verification – In short decides - When to buy, What to buy and How much to buy! 7/3/2010 38 Material Management... • The main Modules of Material Management Module are: – Pre-purchasing Activities – Purchasing – Vendor Evaluation – Inventory Management – Invoice Verifications and – Material Inspection 7/3/2010 39 13
Material Management... Pre-Purchasing Activities : • Maintain service master database. • Service specification which include service wit item and item with material. • Manual entry effort is reduced • 2 ways of entering service specification – PLANNED – UNPLANNED 7/3/2010 40 Material Management... Cont... • Planned Serviced Specification: – service whose precise nature n intended scope is known at the beginning of the project – Price n quantities are both stipulated • Unplanned Serviced Specification: – Services which cannot be initially specified in detail – No description – Entered in the form of money value limit 7/3/2010 41 Pre-purchasing activities modules Requirements Calculation Requisition for Quotations Vendor Rating Quotation Evaluation Vendor Selection 7/3/2010 Contracts 42 14
Material Management... Purchasing : • Important component of Material Management. • Integrated with other modules and communicates with them for constant flow of data • Support all phase: – Material planning and control, purchasing, – goods receiving – Inventory management – Invoice management • Follows task like – Procurement of material, n service ,determine source of supply , planning n control of material, monitoring delivery n payment of vendors 7/3/2010 43 Material Management... Vendor Evaluation: • Integrated into MM • Information like delivery dates ,prices n quantity are taken from purchase order • Also used data of QM 7/3/2010 44 Material Management... • In procurement of material: – Select suppler according to existing supply relationship – Provide with proper information on prices n terms of payment and delivery – Evaluate vendors • In procurement of service: – Check reliability of vendors – Check vendors performance 7/3/2010 45 15
Material Management... Inventory Management: • Allows to manage stocks • Obtain overview of current stock • Shows all entries of stocks like – warehouse, – stock orders but not delivered, – reserved for production or for customers, • quality and quantity inspection and monitored of stock • Stocks frm vendors and from customers managed separately 7/3/2010 46 Material Management... Cont... • Stocks are managed by values and quantity basis • Prerequisite cost accounting • With every goods movement following are updated – Stock value for inventory Management – Account assignment for cost accounting – G/L account • Both quantity n values are updated automatically with the goods movement • Goods movement includes – Internal movement (goods from production,stock transfer) – External movement (goods from sales order) 7/3/2010 47 Material Management... Cont... • Inventory management includes inventory methods: – Periodic Inventory – Continuous Inventory – Inventory Sampling – Cycle Counting 7/3/2010 48 16
Material Management... Invoice Verification and Material Inspection: • Link between MM and financial management, controlling and asset accounting components • It serves the following propose: – Completes the material procurement – Allows invoice that do not originate in material procurement – Allows credit memos 7/3/2010 49 Material Management... Cont... • Donot handle payment or invoice • Information is passed on to other department • Invoice contains many information which has to be posted i.e. enter into the system. • Refers to current transaction, purchase transaction • posting invoice completes invoice verification • System now contains data necessary for invoice to be paid. • Accounting department retrieve this data for appropriated payment 7/3/2010 50 Thank you 7/3/2010 51 17

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Chapter 5 E R P Modules Alexis Leon

  • 1. Chapter 5 ERP Modules By Sonali Chauhan UDIT, TYBSc. IT 7/3/2010 1 Objective: ERP Modules • Introduction • Finance • Plant Maintenance • Quality Management • Materials Management 7/3/2010 2 • ERP Packages contains many modules • Features vary with ERP packages • Most common modules in ERP are: – Finance – Manufacturing & Production Planning – Sales and Distribution – Plant maintenance – Quality Management – Materials Management etc 7/3/2010 3 1
  • 2. FINANCE : Introduction • Concept of Information technologies means providing: – Right information – Right time – Right people – Can make critical difference to the organization • Financial data provides key information 7/3/2010 4 The finance module of most ERP system will have the following sub-system – Financial Accounting • (General Ledger, Accounts Receivables/ Payable, Fixed Assets Accounting, Legal consolidation) – Investment Management • (Investment planning, Budgeting, controlling, Depreciation, Forecast Simulation Calculation) 7/3/2010 5 Cont... – Controlling • (Overhead cost controlling, Activity based costing Product cost Accounting Profitability analysis) – Treasury • (Cash Management, Treasury Management, Market Risk Management, Funds Management) – Enterprise Controlling • (Executive Information System (EIS), Business Planning and Budgeting, Profit centre Accounting) 7/3/2010 6 2
  • 3. Financial Accounting... • Objective : – Integration of financial information essential for strategic decision-making – Centrally track financial accounting data within international framework 7/3/2010 7 Financial Accounting... General Ledger : • Essential for financial accounting and decision making • Serves as a central pool of financial data and in accounting area, Origin of a transaction can be traced, • Supports all the functional needs in financial accounting. 7/3/2010 8 Financial Accounting... Typical General Ledger contains i.e. summary information of other components: – Purchasing (Quantity and value) – Sales (order and bill) – Vendor (Payable) – Customer (Receivables) – Fixed assets – Employees (salary and wages) 7/3/2010 9 3
  • 4. Financial Accounting... Accounts Receivables/ Payable: • These subsystems are integrated with all other subsystems where financial data originates: both with General Ledger ,Sales and Distribution, Material Management. • Transaction performed automatically 7/3/2010 10 Financial Accounting... • Accounts Receivable and Payable functions include: – Internet integration – Document management – Important support for EDI processing – Enterprise-wide credit management – payment automation 7/3/2010 11 Financial Accounting... Asset Accounting: • Serves as a sub ledger to the General Ledger • Manages company’s fix assets and provides detail info abt assets related transaction. • Integration with plant management • Management of leased assets and lease under construction 7/3/2010 12 4
  • 5. Financial Accounting... Legal Consolidation: • serves as a tool to make a consolidated financial statement with operational data • Legal consolidation is closely integrated with Financial Accounting system • permit direct data transfer from individual statement into consolidated report 7/3/2010 13 Financial Accounting... • Ease the workload and reduces data entry error • Allows multiple view of ur consolidation data. • Generate reports about legal entries and segments of ur business. 7/3/2010 14 Controlling... FINANCE • Introduction – Gathers functions for Internal cost accounting – Versatile information system • Generate reports 7/3/2010 15 5
  • 6. Controlling... FINANCE Overhead Cost Controlling: • Focus on monitoring n allocation of overhead Cost Centre Accounting: • Analyses where overhead occurs Overhead Orders: • Collects and analysis cost based on individual internal measures • Monitors and automatically check budgets assign to each measures 7/3/2010 16 Controlling... FINANCE Activity Based Costing: • Goals of the entire enterprise should come before the goals of individual activity Product Cost Controlling: • determine cost of product or services • Use to determines the lowest price limit 7/3/2010 17 Controlling... FINANCE Cost Object Controlling: • Helps to monitor manufacturing orders • Integration with logistics, provides actual cost of the object costs • Determine n analysis Variance betw actual manufacturing cost and plan cost Profitability analysis: • Examines the sources of returns. • Revenues are assigned according to market segment 7/3/2010 18 6
  • 7. Investment management... FINANCE • Investment planning – Where to invest, what is the expected profit of each ventures. Which department to need more investment? • Budgeting – Financial layout of new or existing project – Availability and cost of finance • Controlling – The expenses, the overheads • Depreciation - Budgeted balance sheets and cost planning are always on current values. • Forecast – Speculation and forecast of market trend. Rising or declining? • Simulation Calculation: Making a mathematical model and deriving alternatives to choose from. 7/3/2010 19 Treasury Modules... FINANCE • Managing long ,short, medium payment flow • Managing Risk factor • Planning financial transaction. 7/3/2010 20 Treasury... FINANCE Cash Management: • Analysis financial transaction for given period • Manages cash inflow and outflow • Distinction is made according to time period (short medium long) • Information is available to make cash management decision and for analyzing purpose. Treasury Management: • Current liquidity, Currency, Risk position • Conditions prevailing on the money and capital market • Consider all those before taking decision • Securities and loans 7/3/2010 21 7
  • 8. Treasury... FINANCE Market Risk Management: • Ensures competitiveness • Complex feed back loop: from data collection, risk management, analysis and simulation • Assessing the interest rates • Assessing the currency rates • Simulate market data – “what if” analysis Funds Management: • From budgeting to payment on one side and • From Billing to actual receiving on the other • Enables to control funds commitments and determine the budget utility. • 7/3/2010 Helps to identify budget bottleneck 22 Enterprise Controlling... FINANCE Introduction • Compromise to optimize share holder value, for growth and investment. • Modules includes : – Executive information system – Business planning and budgeting – Profit centre Accounting 7/3/2010 23 Enterprise Controlling... FINANCE Executive Information System: • Provides overview of critical parameters • Gets both internal and external data • Drill-Down reporting to evaluated data Business Planning and Budgeting: • Business targets such as Return on investment • Central investment planning, budget release and tracking Profit Centre Accounting: • Analysis profit • Possible to analysis selected balanced sheet items and use for calculation of ratio such as ROI 7/3/2010 24 8
  • 9. PLANT MAINTENANCE ... • Introduction – Preventive Maintenance control – Equipment Tracking – Component Tracking – Plant Maintenance Calibration Tracking – Plant Maintenance Warranty Claims Tracking 7/3/2010 25 Plant Maintenance... Preventive Maintenance Control: • Planning • Keeping track of • Scheduling – Hours of usage Production produced • Control of facilities – Consumables (fuel) and equipment – Days in operation • Equipment lubrication – Life of each component • Component • Lower repair cost replacement • Avoiding downtime, m/c • Safety inspection breakage etc. • Monitoring • Improve m/c reliability whc leads to higher production 7/3/2010 26 Plant Maintenance... Equipment tracking: • Equipment is an asset to be used, monitored and protected • History of equipment: acquisition to write off • Operational dependencies • (special features, imported spare parts, their cost and expected life ,Guarantee period, Next service due) • Information (model and serial no) for each equipment to be made available. • Provide detail information to technical specialist. 7/3/2010 27 9
  • 10. Plant Maintenance... Component Tracking: • Components are typically sub-set of large equipment. • Enable to identify chronic repair problem of component – replacement or repair • Do not wait for components to fail, replace it before that • Reduce downtime • Also include repair/exchange history and component service life. 7/3/2010 28 Plant Maintenance... Plant Maintenance Calibration Tracking : • Allows organization to leverage their investment in Plant Maintenance module by providing for tracking of equipment calibration in support of ISO 9000 requirement 7/3/2010 29 Plant Maintenance... Plant Maintenance Warranty Claim Tracking : • Administrative system designed to provide control of all items covered by manufacturer and vendor warranty • Recover imbursement to which they are entitled. • Type and length of warranty – elapsed time ,operating unit • generate Complete information regarding warranty service provider 7/3/2010 30 10
  • 11. QUALITY MAINTENANCE... • Introduction – ISO Standards defines: • Functions of QM • Elements of QMS – In Production, Quality Assurance • No longer just “Inspection” and “Elimination” • But also the production process becomes the focus of attention. – Quality spreads to the entire loop: Product development – procurement of sales and distribution – (entire usage phase) 7/3/2010 31 Quality Maintenance... CAQ and CIQ: • CAQ : Computer Aided Quality Management – Isolated, cnt carry out comprehensive tasks of QMS • CIQ: Computer – Integrated Quality Management – More appropriate • Supports quality management in procurement, product verification, quality documentation, processing of the problem • Module do not direct interact wit other modules 7/3/2010 32 Quality Maintenance... The quality Management Module fulfills the following functions: • Quality Planning : – Management for basic data for quality planning and Inspection planning, Material Specification • Quality Inspection: – Trigger inspections, Inspection processing with inspection plan selection and sample calculation, – Print shop papers for sampling and inspection. – Records results and defects – Makes the usage decision and trigger follow up action 7/3/2010 33 11
  • 12. Quality Maintenance... Cont... • Quality Control: – Dynamic sample determination on the basis of Quality level history. – Application of statistical process control techniques using quality control charts – Quality scores for inspection lots, – Quality notification for processing internal or external problems and initiating corrective action to correct the problems – Inspection of lot processing – QMIS (Quality Management Information System) for inspection and inspection results and quality 7/3/2010 notification 34 Quality Maintenance... CIQ (Computer – Integrated Quality Management) • Only an integrated system can support all the elements of Quality Management System according to ISO 9000. • Quality Management function influence all the function within company, affecting all the phase. • QM Module integrate with other modules to link the task on quality management. 7/3/2010 35 Quality Maintenance... • The quality Management Module is integrated with the master data and processes of the following applications... – Material Management:  Purchasing, inventory management, warehouse management, Material requirement planning – Production:  Work scheduling, shop floor control – Sales and Distribution:  Delivery, creation of quality certificates 7/3/2010 36 12
  • 13. Quality Maintenance... • The Quality Management module supports the exchange of data with other application in order to: – Prevent related data from being recorded and stored redundantly. 7/3/2010 37 MATERIALS MANAGEMENT... Introduction: • The Material Management Module optimizes: – All purchasing process with work-flow driven processing functions – Enables automated supplier evaluation, – Lowers procurement and warehousing costs – Integrates invoice verification – In short decides - When to buy, What to buy and How much to buy! 7/3/2010 38 Material Management... • The main Modules of Material Management Module are: – Pre-purchasing Activities – Purchasing – Vendor Evaluation – Inventory Management – Invoice Verifications and – Material Inspection 7/3/2010 39 13
  • 14. Material Management... Pre-Purchasing Activities : • Maintain service master database. • Service specification which include service wit item and item with material. • Manual entry effort is reduced • 2 ways of entering service specification – PLANNED – UNPLANNED 7/3/2010 40 Material Management... Cont... • Planned Serviced Specification: – service whose precise nature n intended scope is known at the beginning of the project – Price n quantities are both stipulated • Unplanned Serviced Specification: – Services which cannot be initially specified in detail – No description – Entered in the form of money value limit 7/3/2010 41 Pre-purchasing activities modules Requirements Calculation Requisition for Quotations Vendor Rating Quotation Evaluation Vendor Selection 7/3/2010 Contracts 42 14
  • 15. Material Management... Purchasing : • Important component of Material Management. • Integrated with other modules and communicates with them for constant flow of data • Support all phase: – Material planning and control, purchasing, – goods receiving – Inventory management – Invoice management • Follows task like – Procurement of material, n service ,determine source of supply , planning n control of material, monitoring delivery n payment of vendors 7/3/2010 43 Material Management... Vendor Evaluation: • Integrated into MM • Information like delivery dates ,prices n quantity are taken from purchase order • Also used data of QM 7/3/2010 44 Material Management... • In procurement of material: – Select suppler according to existing supply relationship – Provide with proper information on prices n terms of payment and delivery – Evaluate vendors • In procurement of service: – Check reliability of vendors – Check vendors performance 7/3/2010 45 15
  • 16. Material Management... Inventory Management: • Allows to manage stocks • Obtain overview of current stock • Shows all entries of stocks like – warehouse, – stock orders but not delivered, – reserved for production or for customers, • quality and quantity inspection and monitored of stock • Stocks frm vendors and from customers managed separately 7/3/2010 46 Material Management... Cont... • Stocks are managed by values and quantity basis • Prerequisite cost accounting • With every goods movement following are updated – Stock value for inventory Management – Account assignment for cost accounting – G/L account • Both quantity n values are updated automatically with the goods movement • Goods movement includes – Internal movement (goods from production,stock transfer) – External movement (goods from sales order) 7/3/2010 47 Material Management... Cont... • Inventory management includes inventory methods: – Periodic Inventory – Continuous Inventory – Inventory Sampling – Cycle Counting 7/3/2010 48 16
  • 17. Material Management... Invoice Verification and Material Inspection: • Link between MM and financial management, controlling and asset accounting components • It serves the following propose: – Completes the material procurement – Allows invoice that do not originate in material procurement – Allows credit memos 7/3/2010 49 Material Management... Cont... • Donot handle payment or invoice • Information is passed on to other department • Invoice contains many information which has to be posted i.e. enter into the system. • Refers to current transaction, purchase transaction • posting invoice completes invoice verification • System now contains data necessary for invoice to be paid. • Accounting department retrieve this data for appropriated payment 7/3/2010 50 Thank you 7/3/2010 51 17