Supply Chain and Logistics Functions in SAP for Enterprises

March 25th, 2013 by blogadmin Leave a reply »

Supply Chain and Logistics Functions in SAP for Enterprises


SAP is the undoubtedly the number one vendor of standard business application software and the third largest software supplier in the world.  SAP delivers scalable solutions that enable its customers to further advance industry best practices.

SAP is constantly developing new products to help their customers respond to dynamic market conditions and help them maintain their competitive advantage.  The current versions of SAP are the result of the nearly forty years of development that has been driven by the needs of customers.

This article examines Supply Chain and the key elements of logistics within SAP, as well as the logistics functionality and how this can help manage the key logistics activities.

Supply Chain Management

Supply chain deals with original supply to final consumption. Supply chain management includes the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers, distributors and customers. The coordination and integration of these flows within and across companies are critical in effective supply management.

Following are the main reasons why it is very important to manage the supply chain:

  • Lower sourcing costs of finished goods and raw materials
  • Improve customer service
  • Dramatically lower inventory levels and reduce working capital
  • Leverage all resources to bring substantial benefits to a company

Logistics Function in SAP

There are many components to the logistics functions in SAP. The components include the following SAP areas:

  • Materials Management (MM) – the materials management component is the foundation for the logistics functions of a company. The component includes purchasing functionality, inventory movements, accounts payable and the material master file, which contains the information on all materials and services used at a company.
  • Sales and Distribution (SD) – the sales and distribution component incorporates the processes from customer order to the delivery of the product to the customer. The component includes the sales functions, pricing, picking, packing and shipping.
  • Quality Management (QM) – the quality management component is used to ensure and improve on the quality of your company’s products. The functions of this component include the planning and execution of quality inspections of purchased and finished products.
  • Plant Maintenance (PM) – the plant maintenance component is used to maintain the equipment that is used in the production of your company’s finished products. The component focuses on the planning and execution of preventive maintenance on equipment and tools used in the production process.
  • Production Planning (PP) – the production planning component manages a company’s production process. The functions of this component include capacity planning of a company’s production, master production scheduling (MPS), material requirements planning (MRP) and the shop floor functions of producing a company’s finished products.
  • Customer Service (CS) – the customer service component manages a company’s service that it provides to customers for repairs and warranties. Items can be sent back for repair or visits made by staff to customer facilities. If a company makes finished products that are sold with warranties, then the SAP customer service component will help a company to service and repair those items with maximum efficiency.
  • Warehouse Management (WM) – the warehouse management component helps companies to accurately manage inventory and maximise storage capacity. This component can reduce time it takes to place and remove items from the warehouse by suggesting the most efficient location to store a material and the most efficient way to place and remove that material from the warehouse.
  • Additional Functionality – There is additional functionality in SAP that integrates with the Logistics area, such as Transportation Management, Batch Management, Handling Unit Management, Logistics Information System (LIS), Variant Configuration, Engineering Change Management, Project Systems (PS) and Environmental, Health, and Safety (EHS). All of these units can be important in the Logistics area, depending what a company needs.

Concluding Comments

This article describes the key elements in SAP that deals with logistics within SAP. A brief description is provided for each element to provide an overview of logistics functionality in SAP.


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