What is SAP ERP? Why is it Required?
The following video will explain the need for an ERP software like SAP in an enterprise
The very fundamental question for any beginners is why Enterprise Resource Planning also called ERP, is required? To answer this, let’s examine this typical business scenario.
What is SAP Why do we need ERP Beginner Tutorial
Suppose a client approaches a sales team asking for a particular product. The sales team contacts the inventory department to check the availability of the product. To their surprise, the sales team found out that the product is out of stock. So next time this doesn’t happen, they have to introduce an SAP ERP tool.
Before we actually see in detail, what ERP is and how ERP can help in your business process, we will understand how different departments are involved in the whole business process, right from the ordering of the raw material – to manufacturing goods – to delivering final products to the customer.
Here is the whole process that is followed by any business unit.
- Client contacts the sales team to check the availability of the product
- Sales team approaches the Inventory department to check for the availability of the product
- In case the product is out of stock, the sales team approaches the Production Planning Department to manufacture the product
- The production planning team checks with inventory department for availability of raw material
- If the raw material is not available with inventory, the Production Planning team buys the raw material from the Vendors
- Then Production Planning forwards the raw materials to the Shop Floor Execution for actual production
- Once ready, the Shop Floor Team sends the goods to the Sales Team
- Sales Team who in turn deliver it to the client
- The sales team updates the finance with revenue generated by the sale of the product. Production planning team update the finance with payments to be made to different vendors for raw materials.
- All departments approach the HR for any Human Resource related issue.
That is a typical business process for any manufacturing company. Some key inferences one could derive from the scenario would be.
- It has many departments or business units
- These departments or business units continuously communicate and exchange data with each other
- The success of any organization lies in effective communication, and data exchange, within these departments, as well as associated third party such as vendors, outsourcers, and customers.
What is SAP Business Suite?
Business Suite in SAP is collection of fully integrated applications such as SAP customer relationship management (CRM), SAP Enterprise Resource Planning (ERP), SAP product lifecycle management (PLM), SAP supplier relationship management (SRM), and SAP supply chain management (SCM) modules.
Most people relate SAP with its ERP offering. But SAP ERP Business suite now offers variety of products to address varied needs of an organization. Lets have a look at various SAP ERP business Suite applications.
SAP Business Suite applications
High Performance Analytic Appliance uses in-memory computing, a breakthrough technology that enables analysis of very large, non-aggregated data at unprecedented speed in local memory (vs. disk-based database) enabling complex analyses, plans and simulations on real-time data. SAP business suite on HANA also provides multi-model processing and advanced analytics.
SAP Convergent Charging
SAP Convergent Charging provides a rating and charging solution for high-volume processing in service industries. It delivers pricing design capabilities, high performance rating and convergent balance management.
Customer Relationship Management
Unlike other CRM software, the SAP Customer Relationship Management (SAP CRM) application, part of the Business Suite in SAP, not only helps you address your short-term imperatives – to reduce cost and increase your decision-making ability – but can also help your company achieve differentiated capabilities in order to compete effectively over the long term.
Enterprise Resource Planning
A sound foundation is necessary to compete and win in the global marketplace. The SAP ERP application supports the essential functions of your business processes and operations efficiently and are tailored to specific needs of your industry like SAP ERP Financials, SAP ERP Human capital management, SAP ERP Operations, SAP ERP corporate services.
SAP Environment, Health, and Safety Management
It supports environmental, occupational and product safety processes, regulatory compliance, and corporate responsibility. This is accomplished by embedding corporate policies, compliance, and environmental, health and safety capabilities with global business processes for human resources, logistics, production, and finance.
SAP Global Batch Traceability
It allows you to completely trace tracked objects, for example, a batch, across both SAP systems and non-SAP systems. In the event of a recall or withdrawal, SAP GBT ensures the timely compliance with legal reporting timelines. Furthermore, it helps you to minimize cost and corporate risk exposure. You can also analyse multiple objects, for example, batches, in one run.
SAP Product Life Cycle Management
To survive in an ever-changing global environment, creating and delivering innovative and market differentiating products and services is what distinguishes your company from the competition. The SAP Product Lifecycle Management (SAP PLM) application provides you with a 360-degree-support for all product-related processes – from the first product idea, through manufacturing to product service
SAP Supplier Life Cycle Management
SAP Supplier Lifecycle Management is a holistic approach to managing supplier relationships. It deals with the supply base to constantly determine the right mix of suppliers. It covers the lifecycle of individual suppliers? from onboarding to a continuous development.
Supply Chain Management
You face enormous pressure to reduce costs while increasing innovation and improving customer service and responsiveness. SAP Supply Chain Management (SAP SCM) enables collaboration, planning, execution, and coordination of the entire supply network, empowering you to adapt your supply chain processes to an ever-changing competitive environment.
Supplier Relationship Management
With SAP SRM you can examine and forecast purchasing behavior, shorten procurement cycles, and work with your partners in real time. This allows you to develop long-term relationships with all those suppliers that have proven themselves to be reliable partners.
Governance, Risk and Compliance
Risk is unavoidable, but it can be managed. With governance, risk, and compliance (GRC), businesses can strategically balance risk and opportunity.
Sales and operations planning
SAP Sales and Operations Planning, enables you to optimally and profitably meet long-term future demand. Typically, this process repeats every month and involves many participants including Sales, Marketing, Finance, Demand Planning, and Supply Chain Planning.
SAP Transportation Management
It supports you in all activities connected with the physical transportation of goods from one location to another.
Extended Warehouse Management
SAP Extended Warehouse Management gives you the option of mapping your entire warehouse complex in detail in the system, down to the storage bin level. Not only does this give you an overview of the total quantity of a product in the warehouse, but you can also always see exactly where a specific product is, at any time, in your warehouse complex. With EWM, you can optimize the use of various storage bins and stock movements and can combine the storage of stocks from several plants in randomly managed warehouses.
Mobile devices can also access SAP system.