GOAL OF BUSINESS PROCESS WORKSHOP

1. GOAL OF BUSINESS PROCESS WORKSHOP • Identify all of the business processes, at a high-level • Define the type of data (in a high-level) that will be maintained in the processes.

2. Definition of Business Processes AGENDA • High Level Business Process Overview • Business Process • Project System • Production Planning • Financial Accounting • Controlling • Asset Management/Investment Management • Materials Management • Sales and Distribution • Human Resources • Define the Business Processes and data in SAP based on the Chico Creek Brewery’s Organizational Structure • Document the Company’s SAP Business Processes

3. Project System - Business Processes • Creating a project • Developing a project • Executing a project • Analyzing a project • Closing a project

4. Project System - Components • Project Definition – Stores master data for the entire project, including overall start and end dates, project owner, project number, and description. • Work Breakdown Structure (WBS) – The hierarchy that the WBS elements are organized into. Breaks down processes into the smallest components or tasks. • WBS elements – The building blocks of the project. They represent different phases or parts of the project. Each WBS element is a cost object. All project costs are posted to WBS elements. • Network (optional) – The activities are linked together to create the network in the form of a PERT chart. SAP can determine the critical path from this.

5. Project System - Features • Cost Planning (via the WBS) • Date Planning and Scheduling • Link to Purchasing (Purchases made show up immediately as project costs) • On-line Reporting • Financial Control • Graphic Displays (Network, WBS, Gantt Charts)

6. PP-Continuous Process • Continuous Process Scenario overview: • manages the planning, execution, and control activities for our process-oriented manufacturing of beer. • 4 Basic Steps that encompass our brewing process……..

7. Step 1 of Continuous Process • Begins with the Sales and Operation Planning • forecasting tool, ie. used to helps decide specific number of batches of each type of beer that should be made • Long-term production plan and Master Schedule are produced using SOP information

8. Step 2 of Continuous Process • The master flow is computed using the MRP and capacity leveling. • Capacity leveling: is determined in step 1 and balances the master schedule and plant capacity • Material Requirements are passed to the procurement process

9. Step 3 - Continuous Process • The process order is created and manages the actual production of the beer • process order transforms materials and processes used with the master recipe into actual information that is needed to brew the batches of beer • contains master recipe data and workflow instruction • master recipe: description of materials needed in one production run (grain, purified water, hops, fermented sugar, barley malt)

10. Step 4 - Continuous Process • Actual production which is the completed scenario flow • Material is received, the resources are used, and the process order is completed and closed out • resources: production personnel needed for production (maintenance workers, forklift drivers, line workers, warehouse personnel)

11. Vendor Processing Consolidation Customer Processing External Accounting Special Purpose Ledgers Processing OTA Vendor Processing General Ledger Processing Credit Subsidiaries Head Office Process

12. General Ledger Processing • Generates closing reports as required by law • Structure: • company code (CO) • business area (not applicable for the CCBC) • chart of accounts (each module will give input)

13. General Ledger Processing • Integrated with: • procurement (MM) • assets accounting (AM/IM) • controlling (CO)

14. Vendor Invoice Processing • Connects Purchasing to Accounting • Master Record consists of 3 parts • general data (addr, telephone, etc.) • company code data (payment terms, methods) • purchasing organization data (p.o., quotes) • most of this information comes from MM and is posted to G/L

15. Vendor Invoice Processing • Posted to one of two accounts: • current assets account • fixed assets account (will go to AM) • also posted to G/L

16. Customer Processing • Mgmt of transactions for standard customers • Credit Management (Sales) • closely linked to CO & cash forecasting

17. Customer Processing • Customer Master Record consists of 3 parts: • general data (addr, telephone, etc) • company code (form of payment, due dates) • sales data (shipping, invoicing, etc. • this info is mostly from the sales team • all the transactions are posted to the G/L

18. Customer Processing • Dunning procedures remind customer that the payment is overdue • Info needed from SD: • level (# of days overdue) • text (strength of language) • vendor dunning • optional interest & charges • print-out of payment (due deadline)

19. Functional Areas - CO Chico Creek Brewing Company • Conventional cost center accounting typically structures costs by using the company’s • organizational structure and areas of responsibility (e.g. functions). • This shows where costs accrue in the company, but it does not specify what • resources were used how. Company Personnel R & D Marketing Production

20. Process-Oriented Structure Functional Areas: Business Processes: Order Process Product develop. Customer service FI Accounting Personnel R & D Marketing Production • SAP uses a process-oriented view that considers costs on the basis of process organization • across functions. Costs are debited to a business process based on its resource usage. • The business planning and controlling scenarios in R/3 provide conventional • cost center accounting capabilities but supplement these by allocating cost center • costs to business processes.

21. Business Scenarios - CO Chico Creek Brewing Company 1. Cost Object Controlling 2. Profitability Analysis Business Planning and Controlling CO Module 4. OH Cost Management 3. Profit Center Accounting

22. 1. Cost Object Controlling • Cost object controlling is a part of product cost accounting • that focuses on the economical creation of a product (called • cost object). • It supplies key information for planning and • monitoring of product costs. • Product cost controlling attributes the costs incurred in a • company to its output units. (products, orders)

23. 2. Profitability Analysis • Profitability analysis carries out a profit analysis. Costs are • compared to revenues. This is the last step in the settlement process. • Profitability analysis takes an external viewpoint using actual data, • by looking at market segments. • We propose that CCBC’s profitability segments are based on • product line. (Type of beer, pub, merchandise) • Other options could be customers, activity, organization, • geographical area, etc.

24. 3. Profit Center Accounting • The goal here is to have a structure according to profit responsibility. • Profit centers can be seen as investment centers. • Shows operating results from a management standpoint. • It is a statistical package, pulling data from different modules. • Data is primarily transferred from FI, SD, AM, and MM. • Profit centers can be structured according to products, markets, • or functions. We have chosen products.

25. 3. Profit Center Accounting, cont’d FI: Transfer of primary costs and revenues from customer invoice processing SD: Transfer of revenues and sales deductions (freight, discounts) as well as reserves (e.g. from rebate agreements) via invoice transfer. MM: Transfer of all costs from goods movements (consumption postings, materials receipt, invoice receipt, price changes/revaluation, inventory differences) AM: Availability of all profit-related data from the creation, utilization, and sale of capital goods

26. 3. Profit Center Accounting, cont’d

27. 4. Overhead Cost Management Overhead cost management plans, allocates, controls, and monitors indirect costs. All indirect costs are charged to the cost centers where they were incurred or to the jobs that led to their occurrence.

28. Fixed Asset Processing Budgeting Leased Asset Processing CAPITAL ASSET MANAGEMENT Cash Management Planned Plant Maintenance Project- related plant maintenance Plant Maintenance due to damage

29. Asset master record maintenance: Create Change Retire Settle AuC Post Capitalization Transfer Posting Write-Up Creation/Transfer of Reserves Reports Inventory Year-End Closing Fixed Asset Processing

30. AM - Depreciation • Planned depreciation is calculated automatically • Can be recalculated or changed manually • Calculated in multiple depreciation areas (parallel valuation technique) • Depreciation values are transferred as planned and actual costs are allocated to cost centers (CO) • Depreciation simulation and forecasting available for individual asset or group of assets.

31. Asset Master Record Data • Elements of an Asset Master Record • Historical cost • Salvage value • Life • Insurance information • Cost center

32. INVESTMENT MANAGEMENT SCENARIO Budget Approval Roll-Up Corporate Planning Budget Distribution Project Planning Measures Program Structure Reporting Settlement & Capitalization

33. IM - AuC to Asset Create AuC -Automatically created when investment profile is entered and order is released Settlement -Settles to AuC Capital Order (greater than 30 days) AuC Depreciation forecast and simulation interest calculation. ASSET

34. Treasury - TR • Cash Management (TR-CM) • Handle all cash related transactions and reporting activities. • Distinguishes between actual money and payments in transit • Integrated with G/L, A/R, and A/P systems and sales and procurement. • Funds Management (TR-FM)

35. TR-CM G/L Recurring Entries A/R A/P • The basic elements needed for managing cash: • Where is our cash? • What will we receive? • What will we pay? • What other predictable transactions will occur?

36. Funds Management (Budgeting) • Functions: • Prepare budget • Monitor budget by tracking the achievement to targets in each of the budgets divisions • To perform these functions the following must be estimated: • Cash requirements for operations • Cash requirements for CI projects • Planned cash receipts

37. Materials Management Processing Stock Material • Materials Requirement Planning • Reservation processing • reserve material • plan goods issue • Single item MRP • Entire MRP • Effects SD, QM, PP, FI

38. Materials ManagementProcessing Stock Material • Requisition Processing to Stock Material • Requirement for material --> Purchase Requisition • Source of supply • Without a source of supply • Input Examples • Material • Purchasing Information • Purchasing Outline Agreement • Vendor • Effects SD, PP, QM

39. Materials Management • Processing Stock Material • Processing of RFQ Issued to Vendor • - Communicates material/service requirements to • potential suppliers • - Input Examples • • Material • • Purchasing Information • • Vendor • • Supply Source • • Time • • Effects SD, QM, PP, CO

40. Materials Management Processing Stock Material Vendor Quotation Processing - Occurs after vendors respond to quotation request - After Vendor information is submitted into system, price comparison is possible - A rejection notice is transferred if quotation is unselected

41. Materials Management Processing Stock Material Purchase Order Processing for Stock Material - Vendor quotation processing and vendor RFQ processing trigger this step - Input Examples Purchase Requisition Material Internal Order Customer Order Cost Center - A Purchase Order includes detailed data such as: type of material, quantity, delivery date and price

42. Materials Management Processing Stock Material Processing Goods Receipt - Begins with the arrival of materials and shipping notification - Material is checked and storage is determined - If order is accepted we adjust purchase order dates and select a valuation type -Effects FI, PP

43. Sales and Distribution Business Process Workflow Scenario: Standard Order Handling

44. Master Data for SD • Master Data • Business Partners • Customer • Vendor (Internal i.e. MM) • Beer for tap room, souvenirs • Employee in Company (salesperson) • Product Proposal • Grouping of items to make available for sale (I.e. By a pallet of Pale Ale) • If customer frequently purchases from a product proposal, this information can be assigned in Customer’s Master Data

45. Master Data continued • Product • Price • Documents (for shipping, billing, sales) • Sales support • Organizational Structure (shipping points, sales areas,etc.)

46. Pat’s Bar in Calgary • Pat calls CCBC to inquire about products • Wants to buy two kegs of Pale Ale and one keg of Hefeweisen to be delivered weekly. • Sales Representative gets Pat’s company name, address, etc. to store in sales support master data. Also determines the distribution channel for his company for correct quotation. • Accesses inquiry processing to determine correct prices, a quotation process document is created and sent. • Pat agrees to the quotation. Next, standard order processing occurs with reference to the quotation.

47. Billing Process • Product is determined to be in-stock • A credit check occurs and passes resulting in Pat’s order being released • Delivery processing occurs in which is it determined that the delivery is relevant for billing and for shipping. • Billing • Process determines that the purchase is not relevant for arebate • Billing document is sent • Export papers are created and sent • Billing document is not released for billing because: • Order confirmation is necessary to release billing document

48. Shipping Process • Transportation planning occurs • Shipment route is determined (stored in Master Data for future reference) • From Chico Center to Chico train depot via truck • From Chico to Calgary via rail • From Calgary train depot to Calgary distribution center via truck • From distribution center to customer (Pat’s Bar is within 100 mile radius) • Transportation processing occurs • Shipping notification is generated and sent to customer

49. Delivery of Goods • Quality is checked (by PP, referenced by SD) • Order is sent to MM • Goods issue is posted • Truck is loaded from plant site and sent • Upon delivery to Pat’s Bar, it is determined that one keg of Pale Ale is damaged. • Pat signs invoice for acceptance of the one keg of Pale Ale and one keg of Hefeweisen. • To accommodate for damaged goods, CCBC will: • a) Offer to send Pat’s Bar a keg through a rush order with no extra cost. Delivery will be rushed • b) Offer to give Pat’s Bar a credit. • Signed invoice is given to FI for processing

50. Packaging Returns • Empty kegs picked up from Pat’s Bar upon next delivery • Returnable packing pick-up process occurs • Shipping papers are created • Empty kegs loaded onto trailers • Trailers loaded onto train to be sent back to Chico center • MM processes goods receipt • Goods receipt is posted