In my course SAP Essential Training, I gave a short introduction to business systems. Many of you reading this may already have a good idea of how business systems work and how the parts integrate. For this issue of BizOneNess, I’d like to give you something to explain to people how all those parts of SAP BUsiness one world together, and give them the correct terms we use in the SAP Business one world.
I’ll start with my favorite food: pizza. Let’s say we are a company called Huli Pizza Company that makes pizza. I’ll put what happens at our company, Huli Pizza, inside this box.
Outside this box, we have the companies and people Huli Pizza does business with. That could be buying ingredients such as flour, yeast, and cheese. It also could be restaurant customers and corporate cafeterias who bulk buy our pizzas. All of these outside people and groups are called business partners. The business partners that bring stuff to us are called vendors, and the business partners outside the box are called customers.
Vendors bring us our equipment and ingredients for a pizza. In accounting, this is accounting payable, but SAP B1 uses the term purchasing. The primary document here is the purchase order. PO’s tell a vendor to supply the goods you need for your pizzas. When you pay their bills, you use an A/P Invoice.
Once we buy those goods, we store them in inventory. a Goods Receipt records them as inventory, which I place in the correct locations in my building. I can separate my materials physically or logically into warehouses and even mark where they are as bin locations. I have a logical warehouse for raw materials and finished goods for my pizzas and a physical warehouse of delivery trucks. I can also have bin locations that indicate what gets stored in a refrigerator, warming cabinet, or dry storage.
Every good pizza has recipes associated with it. In SAP Business One, we call those recipes a bill of materials, often shortened to BoMs. You use the bill of materials to indicate at the least all ingredients need for a pizza, and using routing, you can even list the steps for making the pizza. Sub assemblies are BoMs within BoMs. My pizza crust dough could be a subassembly and a recipe for a cheese and Huli chicken pizza, using the same crust dough.
I’ll make the BoM for one production unit, for one pizza. I use production orders to tell my cooks to make pizzas and indicate on the production order how many pizzas. The production order copies the bill of materials and scales up the ingredients to make that many pizzas. I thus can make one pizza for a restaurant customer and 50 for a cafeteria from the same BOM. You can modify a production order. You could add pineapple or add more cheese if a customer wanted.
A production order also tells me the order’s status: it can be waiting to be made, in production, or finished product. SAP Business One uses the terms planned, released, and closed to indicates these states.
As I go through these stages, SAP reflects the inventory changes, automatically removing raw materials and increasing finished goods.
I have pizzas. Customers buy our pizzas and bring money into the business in exchange for those delicious pizzas. In accounting terms, this is called accounts receivable. In SAP terms, we call it Sales. There are three documents created by SAP that are the core of this. A sales order indicates that a customer is buying a pizza. A delivery document indicates that a product is on its way to the customer. An A/R invoice is a bill to pay for the pizza.
All of this means money is moving between Huli pizza and their business partners. Sales moves money into the company, and purchasing moves money out of the company. Most often, that money is in a bank, so all tracking payments to and from the pizza company is called banking.
Of course, the point of business is to make money. That’s where accounting comes in, which in SAP Business One we call finance. Finance keeps precise detail of all the transactions we’ve been doing and generates reports that tell us the company’s financial health.
If you want an excellent survey of all the modules we’ve discussed and how they work in real life, check out my course SAP Business One Essential Training in the LinkedIn learning library. You’ll learn how to use all these components and more to get your SAP business one system optimized. I’ve also got some deeper dives into the three major SAP Business one divisions: Sales and Customer service, Finance and Banking, and finally Production and Logistics, which will be out in late spring 2021. Learn more about how to get all this to work in these courses in the LinkedIn learning library.
BizOneness 