Business Process of the IS

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4.  Business Process of the IS

One of the objectives of this project is to standardise/harmonise business processes and implement a commonly accepted Group-wide ERP solution that supports the processes. Everyone has a role play and each person work will affects their colleague work. The data and input that are key in into the system may impact users who are the further down the process chain so each of the users has to make sure that don’t end up with “Garbage in” Garbage Out”. Earn Value Management help project manager to measure the project performance .It’s is systematic project management process used to find the variances in projects based on comparison of worked .performed and work planned.

Figure 7: Value Chain Model in Business Process Cycle

In project life cycle, there are four stages that a company should to follow.

1.      Project Planning in this stage of ERP implementation,  Project management includes finalizing the detailed planning process and requirements (Technology, Hardware, Software, Data, and Functionality ) which involves finalizing the project scope, schedule, resource requirements, quality and risk concerns, plus any organizational (e.g., centralization versus decentralization) issues. Project Systems (PS) integrates with Finance & Controlling (FICO) and Materials Management (MM) to allow the organization to plan, execute and account for projects. The users are Project Operations Teams, Project Managers, Project Cost Controllers, Finance Teams & Procurement Teams. This stage should produce a request for proposal (RFP) to be sent to potential vendors. When sending out the RFP (request for proposal), project planners should address an evaluative scheme for comparing and ranking vendor responses such as a weighted scoring approach. It would include factors each vendor's product are to be evaluated against and their relative weights. Generally, scoring is completed after all RFP (request for proposal) responses have been received.

Figure 8: The Interface shows the example of Project System used for Project Planning

2   Project Execution in this stage vendor has been selected and planning proceeds for swapping software previously used with the new ERP package. The most important issue in this phase is to ensure project activities are properly executed and controlled. During the execution phase, the planned solution is implemented to solve the problem specified in the project's requirements. The execution stage includes the actual implementation of the design or work plan. At this stage the actual work for installation of the pipeline will be performed at the field. The bulk of the project's work and largest capital expenditure is realized in this stage.

3.      Project Closure the final stage of the ERP implementation project-- closeout/operation and maintenance-includes carrying out the usual bug fixes, responding to enhancements that were not included in the original implementation, and preparing a final report. The report should include a critique of what went right and what went wrong over the life of the project so that lessons learned may be documented and incorporated into future projects. At this stage also shows the project completion and the process to generate billing for back charge to the client (Example Petronas, Shell etc.)

Material Management (MM)

Materials Management (MM) covers the Procurement, i.e. Procure-to-Pay, processes for materials/ services and Inventory Management processes. It usually used by the Material Coordinator personnel in the project team, Procurement, Projects &Warehouse. The Material Coordinator will place an order that requested by the Field Engineer and it’s all are based on Technical Evaluation Criteria (TEC) & Technical Specification that are using by the client. They play a critical role during the entire project. They are responsible to design “To-Be” processes and provide system requirements. Material coordinator will insert the RO (Requisition Order) and the procurement will refer based on special coding code for particular project in SAP ERP system once the RO (Requisition Order) is not have any cost impact and approved by the Project Manager. They will proceed and find the vendor/distributor to negotiate about the price and etc. Once agreed as the distributor will send the material that order to the warehouse based on the location that required. It is looking at standardising (where possible) the procure-to-pay and Inventory Management processes across the Group based on proven standard ERP delivered process.

The typical procurement cycle for a service or material consists of the following phases:

1. Determination of Requirements

Materials requirements are identified either in the user departments or via materials planning and control. (This can cover both MRP proper and the demand-based approach to inventory control. The regular checking of stock levels of materials defined by master records, use of the order-point method, and forecasting on the basis of past usage are important aspects of the latter.) You can enter purchase requisitions yourself, or they can be generated automatically by the materials planning and control system.

2. Source Determination

The Purchasing component helps you identify potential sources of supply based on past orders and existing longer-term purchase agreements. This speeds the process of creating requests for quotation (RFQs), which can be sent to vendors electronically via SAP EDI, if desired.

3. Vendor Selection and Comparison of Quotations

The system is capable of simulating pricing scenarios, allowing you to compare a number of different quotations. Rejection letters can be sent automatically.

4. Purchase Order Processing

The Purchasing system adopts information from the requisition and the quotation to help you create a purchase order. As with purchase requisitions, you can generate yourself or have the system generate them automatically. Vendor scheduling agreements and contracts (in the SAP System, types of longer-term purchase agreement) are also supported.

5. Purchase Order Follow-Up

The system checks the reminder periods you have specified and - if necessary - automatically prints reminders or expediters at the predefined intervals. It also provides you with an up-to-date status of all purchase requisitions, quotations, and purchase orders.

6. Goods Receiving and Inventory Management

Goods receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods.

7. Invoice Verification

The system supports the checking and matching of invoices. The accounts payable clerk is notified of quantity and price variances because the system has access to PO and goods receipt data. This speeds the process of auditing and clearing invoices for payment.

                                Figure 9:  The Process flow from a Procurement TEAM

Figure 10: The Process flow from a Material Management TEAM

Financial Controlling (FICO)

Refers to the Finance (FI) & Controlling (CO) modules of the ERP. It is a core module in the ERP where all financial processing transactions are captured. Finance (FI) is primarily used for external reporting purposes and Controlling (CO) helps provide operational information to Management i.e. Management Accounting. The primary users are CFOs, Financial Controllers & Finance Teams. FICO is the integration point for all modules in the ERP. The BPOs are the owners of business processes and have the final authority on proposed processes. The FICO will notify in the system about the purchasing of the material .The PIC will go through all the supporting documents and contact the requestor for inquiry. Vendor master data is shared across company codes. Vendor master data has both General and Company Codes. It has also been configured that a vendor can be linked with a vendor number. Trading Partner id is required for intercompany vendors. Certain fields such as Payment Term, Payment History and Account Statement are set as mandatory. Senior Account Executives (from Corporate Treasury) will review the requirement of creating new Bank Master Data. Once confirmed and verified, instruction is given to SKPB IT Support to create the bank master data. Vendor master data creation consists of General area and Company code area. Requesters need to fill-up the necessary form and submit them to corporate accounts. Corporate Accounts will verify the availability of the vendor in the system. Once it has been confirmed that the vendor does not exist, Corporate Accounts will create the vendor at General View and extend it to Company Code view. Once a purchase order related goods receipt, service order, or service acceptance posting is completed, an invoice is posted based on the goods receipt/service acceptance. This procedure explains the steps to post cross company postings for Payments on-behalf of the Payer’s company (marked).Intercompany payments on behalf of another company are scenarios whereby a company pays for another company. This process occurs frequently under the SKPB Group of Companies as some of the companies do not have sufficient time to liquidate funds for the payment and thus, requires another company (usually the parent company) to pay on behalf of them. Below are the overall basic steps for payment on-behalf via cross company posting. Requestor’s Account Executive will review the invoice and prepare supporting document for approval. Once approved, their Senior Account Executive will proceed with the request for payment on behalf via cross company transaction. Payer’s company code will process the request. Once approved, their Senior Account Executive will perform a cross company code posting via Manual Outgoing Payment process.

service acceptance posting is completed, an invoice is posted based on the goods receipt/service acceptance. This procedure explains the steps to post cross company postings for Payments on-behalf of the Payer’s company (marked).Intercompany payments on behalf of another company are scenarios whereby a company pays for another company. This process occurs frequently under the SKPB Group of Companies as some of the companies do not have sufficient time to liquidate funds for the payment and thus, requires another company (usually the parent company) to pay on behalf of them. Below are the overall basic steps for payment on-behalf via cross company posting. Requestor’s Account Executive will review the invoice and prepare supporting document for approval. Once approved, their Senior Account Executive will proceed with the request for payment on behalf via cross company transaction. Payer’s company code will process the request. Once approved, their Senior Account Executive will perform a cross company code posting via Manual Outgoing Payment process