Enterprise Resource Planning System Assignment -3

Name – Swati Mishra

Reg. No. – 23-1231
Specialization - Marketing
Batch – 2020-2022
Institute – Balaji Institute of Management and Human Resource Development
Semester – 1st semester
Subject Name – Enterprise Resource Planning System
Assignment No. – 3
Submission Date – 13-Jan-2021
Total no. of pages Written – 12 pages

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Question 1- Explain with diagram integration of different modules in ERP.
Answer –
Basic Modules of ERP System – ESDS
Enterprise Resource Planning System (ERP), just by considering name we can simply define
ERP as System or software that used to manage all the resources of the whole enterprise.
Right from employee payments to a single screw coming into the enterprise, everything can
be managed & tracked by using ERP Systems. ERP is a cross-functional software that
supports all the business processes within the organization.
In an organization, ERP helps to manage business processes of various departments &
functions through the centralized application. We can make all the major decisions by
screening the information provided by ERP.
There are many vendors in the market which are providing traditional ERP
solutions or Cloud-based ERP solutions. Though implementation platforms or technologies
are different, there are common & basic modules of ERP which can be found in any ERP
System. Depending on organizations need required components are integrated & customized
ERP system is formed. All the below-mentioned modules can be found in an ERP system:
Human Resource
Inventory
Sales & Marketing
Purchase
Finance & Accounting
Customer Relationship Management (CRM)
Engineering/ Production
Supply Chain Management (SCM)

HR

CRM INVENTORY

erp

FINANCE &
ACCOUNTANCY / SALES
SCM

PURCHASE /
ENGINEERING
AND
PRODUCTION

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Each component mentioned above is specialized to handle the defined business processes of
the organization. Let us go through the introduction of the various modules.
Human Resource Module (HR):
Human Resource module helps to HR team for efficient management of human resources.
HR module helps to manage employee information, track employee records like performance
reviews, designations, job descriptions, skill matrix, time & attendance tracking. One of the
important submodules in the HR module is Payroll System which helps to manage salaries,
payment reports etc. It can also include Travel Expenses & Reimbursement tracking.
Employee Training tracking can also be managed by ERP.
Inventory Module:
Inventory module can be used to track the stock of items. Items can be identified by unique
serial numbers. Using that unique numbers inventory system can keep track of item and trace
its current location in the organization.
e.g. you have purchased 100 hard disks, so using inventory system you can track how many
hard disks are installed, where they are installed, how many hard disks are remaining etc.
Inventory module includes functionalities like inventory control, master units, stock
utilization reporting etc.

There may be an integration of the inventory module with the purchase module of ERP.
Sales Module:
Typical sales process includes processes like Sales queries & inquiry analysis & handling,
quotation drafting, accepting sales orders, drafting sales invoices with proper taxation,
dispatch/Shipment of material or service, tracking pending sales order. All these sales
transactions are managed by the sales module of ERP. CRM module can take the help of the
Sales module for future opportunity creation & lead generation.
 Purchase Module:
As the name indicates, purchase modules take care of all the processes that are part of the
procurement of items or raw materials that are required for the organization.  Purchase
module consists of functionalities like supplier/vendor listing, supplier & item linking,
sending quotation request to vendors, receiving & recording quotations, analysis of
quotations, preparing purchase orders, tracking the purchase items, preparing GRNs(Good
Receipt Notes) & updating stocks & various reports. Purchase module is integrated with
Inventory module &  Engineering/production module for updating of stocks.
Finance & Accounting module:
Whole inflow & outflow of money/capital is managed by the finance module. This module
keeps track of all account-related transactions like expenditures, Balance sheet, account
ledgers, budgeting, bank statements, payment receipts, tax management etc. Financial

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reporting is an easy task for this module of ERP. Any Financial data that is required for
running the business is available on one click in Finance module.
Customer Relationship Management (CRM) module:
CRM department is helping to boost the sales performance through better customer service &
establishing a healthy relationship with customers. All the stored details of the customer are
available in the CRM module.
CRM module helps to manage & track detailed information of the customer like
communication history, calls, meetings, details of purchases made by the customer, contract
duration etc. CRM module can be integrated with the Sales module to enhance sales
opportunities.
Engineering / Production module:
Production module is a great help for the manufacturing industry for delivering the product.
This module consists of functionalities like production planning, machine scheduling, raw
material usage, (Bill of material)preparation, track daily production progress production
forecasting & actual production reporting.
Supply Chain Management (SCM):
SCM module manages the flow of product items from manufacturer to consumer & consumer
to manufacturer.
Common roles involved are a manufacturer, Super Stockiest, Stockiest, distributors, retailers
etc. SCM involves demand & supply management, sales returns & replacing process,
shipping & transportation tracking etc.
Today many SMBs face challenges in their process automation. ERP is a great help for such
organizations. ERP can efficiently streamline the business operations of the organization.
Above introduction of modules can help you to choose & customize the ERP modules
depending on your organization’s requirements.

Question 2- Sales is another important part of the business. How effectively the sales
process can be implemented using ERP system. How organization can leverage benefits
through ERP.
Answer –
Improve Sales with ERP Software
For many, ERP systems are tools for eliminating waste, managing inventory,
controlling manufacturing processes and other back-office functions. While these features are
crucial for optimizing operations, many businesses fail to realize that their ERP systems also
have the power to boost sales and marketing practices.
The most innovative companies are taking a different approach to digital configuration,
mapping ERP systems to become more business savvy. Enterprises are just starting to use

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ERP systems strategically to improve sales and marketing strategies. We'll explain how
businesses can take advantage of ERP functions to improve front-office activities. 
Using ERP Data to Improve Sales and Marketing
Modern ERP software is a primary data source for sales and marketing strategies (primarily
pricing and customer service). But many still do not use the software with front-office
practices in mind, and purchases made from inbound channels are driving little profit. Instead
of waiting for demand to happen, many trailblazing companies are asking how their ERP
system can create new business opportunities.
Here’s an example of how this might work: A manufacturer surveys the system, finding that
purchase orders were placed by a returning customer every three months for the last year. It’s
nearing the time again when the manufacturer should assume this order will be placed, along
with many others, and plan changes for scheduling and capacity. However, the current
customer has yet to place an order.
With access to this data, sales will have already docketed order history and seized the
opportunity. Marketers will know when and how to reach out to returning customers. More
importantly, it decreases the event of a buyer making a purchase elsewhere. Sales then has
the chance to structure attractive pricing to teeter the buyer’s decision in favor of the
manufacturer. This is just one simple way ERP software can improve sales.

How to Make It Happen

Unfortunately, many enterprises have yet to structure a plan to enable front offices to
leverage ERP data. Perhaps sales and marketing users don’t have access to ERP data
remotely, or are subjected to work with a limited data capacity on a current legacy system.
Some firms see these hurdles as justifiable, but they can be easily avoided to boost sales and
marketing performance. Even when front offices have access to ERP data, sales executives
tend to focus the scope of their strategy on market share, but the real proof is internal. Sales
leaders should look to ERP account history and improve relationships between the firm and
those customers who contribute to the vast majority of sales.
In order to improve market share, it’s a much more logical use of data to streamline account
history, demand analytics, seasonal trend and non-conformance to marketing. Positioning,
distribution, pricing and PR are then thoughtfully structured for market capture. ERP data can
price and position products to new segments, and others structured to speak to the needs of
current customers. Also, the integration between marketing and ERP links forecasts to
production. Operation managers can then better forecast scheduling and capacity potential.
Pricing Strategies
ERP data variances can be used to gauge market elasticity and prompt sales teams to create
price floors. This process provides sales people more room to vary pricing for unique
customer situations. By the same token, this strategy allows the company to push higher
prices, while staying competitive. The added benefit provides sales with room for a healthy
negotiation. This pricing policy improves the ability of sales teams to speak to the current
needs of the customer, which reflects the mission of the enterprise overall.

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ERP data suggests new pricing on a case by case basis. For a modern enterprise with these
ERP configurations in mind, revenue can significantly increase. This pushes enterprises to
improve vendor-client relationships and product accessibility, adding a competitive
advantage. The perceived value can then be used to increase pricing and improve cost
margins.
Another avid pricing strategy, becoming more apparent in modern business, is the use of ERP
data to expedite same-day shipping and procurement. Remote users should have access to
inventory, shipping information and certs of compliance to react to sudden changes in the
marketplace. Adding this type of capability allows sales to place orders in real time.
Accessibility to account data prompts an environment for suggestive selling of new products,
services and warranties. ERP can also move price contracts through the approval process in
real time for same-day signing. 
Wrap Up
So how do businesses leverage such ample functionality? The most solid solution is
an integration between CRM and ERP. When ERP is integrated with CRM, marketing and
sales can easily collaborate on the structure of nurturing campaigns, automate re-ordering and
perform other crucial processes more efficiently. Sales and marketing teams can easily access
accurate ERP data to create effective strategies and possess more control over less accounts,
empowering them to bring in more business.
These advantages are made possible through Datix's Unity, our integration solution that
connects Epicor ERP with Salesforce, Microsoft Dynamics 365 or other platforms for a more
efficient, transparent enterprise. Besides being a certified Epicor partner, Datix is also a
certified partner with both Microsoft Dynamics 365 and Salesforce, making us the premier
enterprise software experts for businesses that want to boost their sales. 

Question 3- Business decision makers have begun to see the advantage to automating
their Order-to-Cash processes. Explain Order to Cash process with diagram.
Answer -
cash
sales order credit order fulfilment invoicing collection
management

Sales Sales Credit Deliver Invoice Follow up Apply

product agreement evolution product/ to on cash
service custome payment
r
Customer Sales Handle
Credit
quote contract Receive invoice
limit
payment
dispute

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SAP OTC Process Flow
SAP OTC is a process involved customer sales order creation and satisfying customer
requirements via delivery.
Prerequisites are customer master record is set up, sales area (sales organization, divisions
and distribution channels) was set up already.
Generally, steps are as follows:
Customer Inquiry
Quotation for customer inquiry
Sales Order creation
Post Goods issue (PGI)
Delivery
Billing- Bill sent to customer
Receipt of money- Customer Payment
The First two steps that are inquiry and quotation may or may not happen. A new customer
may inquire and ask for quotation but an old customer may not inquire. Moreover, if you
have contracted agreement to sell products at a certain price than customer will directly order
without quotation.
Now, let's see what is the impact on the accounting entries for this cycle steps. Each step has
it's own different configuration these steps used in business [Link] I mentioned earlier,
this process involves many different organizational levels. Most important organizational
levels in this process is Company code, sales organizations, distribution channels, divisions
and plants.

Sales and distribution cycle

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 sales order

payment availability
process check

outbound
billing
delivery

transport
good issue
action

picking

Order-to-Cash Configuration
This is an imported integration in SAP landscape. Here are the configuration steps in details.
Its configuration happened in transaction code OBYC.
Inquiry : A customer inquire about the product price and service. This is a very starting point
of OTC process. This process does not have any effect on general ledger accounts and do not
have any accounting entries. Once a customer creates inquiry, an inquiry number is
generated. Inquiry is created by transaction code VA11.
Quotation: Quotation is a price quote given to the customer. A quotation follows inquiry
steps. A quotation can be created via inquiry or without inquiry reference number. A
quotation is created by transaction code VA21.
Sales: According to some SAP experts, Sales order is actually the first step of OTC process.
After inquiry and quotation, once it's gets created. Sales order can be created with reference
of quotation or without reference. It does not make any accounting book entry and it does not
make any change in General Ledger accounts. It is just a commitment to deliver goods to the
customer. SO can be created with transaction code VA01.
Post Goods Issue: Post goods issue is the steps where goods are being picked by warehouse,
packed and shipped to the customer's given shipping address as per the sales order. We have
accounting entries as inventory is being credited against the cost of goods sales (COGS)
debited. General ledger accounts associated with the cost of goods sales and inventory is
affected respectively.

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Delivery: Delivery follows post goods issue (PGI).Delivery is the actual fulfillment of goods
to the customer shipping address. At delivery stage, we have accounting entries in the books.
At this stage, we debit revenue account and credit customer account. Transaction code for
delivery is VL01n.
Billing: At billing stage, we send the bill to customer for the goods delivered. We have
accounting entries at this stage where we debit customer and credit cash account. Transaction
code for billing in SAP is VF01.

Question 4- How do SAP Ariba help an organization? What is SAP SCM?

Answer –
SAP Ariba is a cloud-based innovative solution that allows suppliers and buyers to connect
and do business on a single platform. It improves over all vendor management system of an
organization by providing less costly ways of procurement and making business simple.
Ariba acts as supply chain, procurement service to do business globally. SAP Ariba digitally
transforms your supply chain, procurement and contract management process.
In today’s world, there is a need to control your supply chain and to collaborate with your
suppliers in an efficient way. To enable healthy supply chain, you need to have suppliers
with visibility to every part of procurement process so that they can maintain an efficient
supply chain and help organizations to grow their and own business.
The cloud based innovative solution was first developed in 1996 by a company named Ariba
and was later acquired by SAP in 2012 with a total acquisition cost of 4.3 billion USD with
each share cost $45. Thus, the name SAP Ariba. At the onset, Ariba was a B2B company to
do procurement over Internet and was the first one to introduce IPO in 1999.

Key Features of SAP Ariba

In this section, we will learn about the key features of SAP Ariba.
 SAP Ariba is a B2B solution that allows you to connect to the world’s largest
network of vendors and suppliers and enhance business collaboration with the right
business partners.
 SAP Ariba allows organizations to connect with the right suppliers with deep
visibility to your inside vendor and procurement management processes giving way
to error free business transactions.
 With SAP Ariba, you can directly connect Ariba network with millions of suppliers
meeting your business needs and managing supply chain.
 SAP Ariba network removes overall complexity in procurement process and
suppliers and buyers can manage all key terms of vendor management on a single
network.
 With acquisition of SAP, Ariba can easily integrate with different SAP ERP solutions
like SAP ECC and S/4 HANA with easy to configure workflows to automate
different processes in complete procurement cycle.
 You can easily integrate master and transactional data from different ERP solution to
Ariba processes.

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 ARBIA NETWORK

 CONTRACT
BUYER MANAGEMENT
SUPPLIERS
 BUY AND SELL
 BILL AND COLLECT
 REQUEST AND FILL
 REQUEST AND BUY

DIRECT VENDOR AND MERCHANDISER

INDIRECT VENDOR AND MERCHANDISER

LABOR AND SERVICES

SAP Supply Chain Management is one of the key modules in SAP ERP and controls
Production Planning, business forecasting and demand planning.
The key features of SAP SCM are −
 It helps the organization to manage their supply chain process in a dynamic
environment.
 SAP SCM process helps suppliers, customers, manufacturers, business partners and
retailers connect with each other to manage supply chain process effectively and
efficiently.
 It helps organizations to accelerate and optimize end-to-end procure-to-pay process.
 SCM products from SAP allows an organization to integrate their processes and
enforce contract compliance for supply-side and supplier-side requirements
throughout using supply chain processes in distributed environment.
 SAP SCM is a complete software to cover the key processes- Supply Chain
networking, supply chain planning and coordination, and supply chain execution.
 It includes different planning applications related to Advanced Planning and
Optimization APO, and for the integration with other SAP execution applications.
 The primary applications are SAP General Areas, SAP Supply Network
Collaboration SNC, SAP Extended Warehouse Management EWM, Advanced
Planning and Optimization (APO), Forecasting and Replenishment FRE and SAP
Transportation Management TM.
 In the image shown below, you can see SAP Supply Chain Management and its
integration with other R/3 modules to manage supply chain process.

CUSTOMER
supply chain strategy supply
chain
SUPPLIER
SUPPLY CHAIN
WAREHOUSE MANAGEMENT
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STORE
planning
asset
procuerement
management management
logistic management
information

management

Question 5- What are the effects of Post Goods Issue and Billing?

Answer –

What is PGI Means?

PGI Concept: PGI stands for Post Good Issue. PGI is done when the delivery is complete and
the goods are issued to the customer. In other words when the physical stocks are delivered
from the storage location PGI is done to reduce that delivered stock from the present stock.
Example:
Suppose a customer demands 100 qty of some material. At first you will check whether you
have the stock of that material or not. When you see in the system you will have a stock of
110. So now you can deliver the 100 qty from the stock.
Next when a new customer comes in and requests for the 50 qty of the same material. Again
you will check the system. Well, now the system should show you the stock as 10.
The upadate in the stock from 110 to 10 is done through PGI. We do PGI to update the stock
so that if you have delivered some stock that delivered stock should be removed from the
present stock.
How To do the PGI?
Go to [Link] VL02N --> Enter the delivery number --> Click the Post Goods Issue button on
top right hand side.
PGI Creates an accounting entry:
Change of Inventory A/c Dr   
To Inventory Account
PGI has following effects in SAP:
1. Billing Due list is updated.

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2. Inventory quantity / valuation is updated; material planning is updated.
3. LIS is updated
4. Updated the Document flow in Sales Documents.
How to Reverse a PGI?
Yes, you can reverse a PGI. By T. code VL09 you can reverse the entire quantity but partial
quantity reversal is not possible. In other words, you can't reverse the PGI for one item/partial
qty in delivery document.
To do the Reversal PGI Steps are following:
1. Go to [Link] VL09
2. Then go to VL02N delete the picking quantity.
3. Then delete the particular item. Once done you can again click post goods issue or you can
reverse the entire delivery & then delete the delivery & then create fresh delivery.

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