Business Modules of SAP

The latest version of ERP system by SAP and other companies allow all business
areas to access to the same database, eliminating/reducing redundant data and
communication lacks. Perhaps most importantly the system allows data to be
entered once and then used throughout the organization.

In information systems errors most frequently occur where humans interact with the
system, ERP system ensure data is entered only once where they are most likely to
be accurate. Ex:-With access to real time stock data a sales person taking an order
can confirm the availability of the desired material.

When the sales person enters the sales order into the system, the order data are
immediately available to production, so manufacturing can update production plans
and material management can plan the order delivery.

In the sales order, data are entered correctly by the sales person then the SCM
personnel are working with the same correct data. The same sales data are
available to accounting for preparing invoices.

Business modules of SAP & their functions:

1. Sales and distribution (S & D): This module records sales orders and schedule
deliveries. Information about the customer, pricing, how and where to ship products
and how the customer is to be charged is maintained and accessed from this
module.

2. Materials Management (MM): this module manages the acquisition of raw

materials from suppliers (purchasing) and the subsequent handling of raw materials
inventory from storage to work-in-progress goods to shipping of finished goods to
the customer.

3. Production planning (PP): This module maintains production information, here

the production is planned and scheduled and actual production activities are
recorded.

4. Quality Management (QM): It plans and records quality control activities such as
product inspections and material certifications.

5. Plant Maintenance (PM): The module manages planning for preventing

maintenance of plant machinery and managing maintenance resources so
equipment breakdown are minimized.

6. Asset Management (AM): This module helps the company to manage fixed asset
purchases (plant & machinery) and related depreciation.

7. Human Resources (HR): This module facilitates employee recruiting, hiring and
training. This module also includes payroll and benefits.
8. FI module (Financial accounting module): The module records transactions in the
general ledger accounts. It is used to generate statements for external reporting
processes.

9. CO module (Control module): CO is used for internal management purpose. Here

the company’s manufacturing costs are assigned to product and to various cost
centers so that profitability of the company’s activities can be analyzed. The CO
module supports managerial decision making.

10. PS module: It supports R&D (planning for and control of R&D)

11. WF module: This is used in order to have a proper flow of all functional areas.

To summarize, ERP integrates business functional areas with one another. Before
ERP, each functional area operated independently using its own information system
and ways of recording transcations.

ERP software also makes management reporting and decision making faster and
more uniform throughout the organization. In addition ERP promotes thinking about
corporate goals as opposed to thinking only about the goals of a single department
or functional areas.