SAP R/3 Implementation Guide

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Chapter 3: SAP Target Markets

To address this problem, SAP has created Industry Business Units (IBU). These units take the best business practices of SAP and marry them with industry-specific problems.

Understanding Industry Solutions

The simplest way to understand the approach SAP has chosen for dealing with industryspecific issues is to examine each industry separately. Once each industry segment has been examined, a company wanting to implement R/3 should contact SAP and begin detailed discussions about what SAP R/3 can do to meet its specific needs. In this way, advantages are gained through SAP's knowledge of the system's capabilities and industry-specific studies. The industry solutions are developed between SAP and current customers within that industry.

The Automotive Industry

The automotive industry is in a unique position, with its high visibility in the consumer marketplace, as well as the ever-increasing demands from customers for a high-quality, low-cost product, utilizing the latest technologies. In order to support the automotive industry, SAP provides a customer-pulled supply chain and a worldwideinfrastructure for the networked value chain, which links tier 1 system suppliers, tier 2 component suppliers, order entry management and after-market parts suppliers, as well as wholesalers. Additional functionality includes flow manufacturing, KANBAN calculation, sequence planning, line planning, backflushing, enhanced evaluated receipt settlement, supplier shipping scheduling, Material Information Systems (MAIS)-Pickup Sheet, and Global Available-to-Promise capability.

The Insurance Industry

The SAP insurance solution enables the integration necessary to make consistent data available across the organization, from general accounting, claims processors, and agents, to corporate managers. The Management Accounting component allows insurance companies to perform sales and profitability analyses, as well as product costing and calculation of cost variances. The Treasury component integrates processing of all business transactions, from their origins at the trading stage, through back-office processing, to their representation in Financial Accounting. The Cash Management component provides the data required to make short- and long-term cash management and long-term financial budgeting decisions. Up-to-the-minute liquidity and currency and risk-position data ensure optimal responsiveness to conditions in the money and capital markets.

The Public Sector Industry

Like the private sector, public organizations must optimally manage resources, workers, vendors, and customers. These organizations are now looking to improve efficiency and return on assets and are consequently turning to the private sector for ideas. They are now trying to utilize the same technology to get the same benefits as the private sector, which is exactly where SAP's public sector industry solution comes in. Budgeting and real-time analysis of the budget-to-actuals is the first tool SAP offers. SAP procurement helps attain substantial savings by utilizing automatic day-to-day purchasing decisions for request-for-quotation (RFQ) announcements, supplier selection (using predetermined selection criteria), purchase orders, and EDI transactions. Online financial information, including treasury and controlling information, integrates to the Purchasing and Materials Management modules. However, the greatest strides can be found in the HR module. The government has thousands of employees, while many other non-profit organizations have lots of volunteers. The HR module offers employee self-service (ESS) solutions, outsourcing ability, compensation management, benefits administration, human resources reporting, training, and event management.

The Telecommunications Industry

The telecommunications industry is rapidly changing as companies are regularly combining and splitting apart In addition, there are many markets, such as regular phone service, wireless service, cable service, and Internet service. With deregulation looming, each of these players may enter into one or more of these additional markets. Therefore, these firms need tools that will help them understand profitability of both customers and products in an increasingly competitive marketplace. 'Me SAP telecommunication industry solution provides several tools to enable these firms to better change and compete in the evolving environment. When companies begin forging into new industries, SAP will allow the planning, tracking, and analyzing of new network programs. Pricing and costing of new products and determining profitability of customers are also components of the industry solution. Some of these solutions may come via Activity Based Costing. Optimization of human resources, inventory management warehouse management, procurement and cash management will further support these changes.

The Aerospace and Defense Industry

The A&D industry template offers solutions mainly to A&D manufacturers, government contractors, and MRO firms. At a high level, the primary intent of the module is to cut down on cycle times and project costs in the industry while providing better tools to help plan, monitor, and report on these projects. Often these firms provide a combination of traditional manufacturing and government-oriented engineering projects, and need systems that support both. Gone are the days of the multi-year "never-ending" government project. Firms today must give the best product at the lowest price. These firms must plan well and operate efficiently. In order to achieve these goals, SAP's A&D module offers a number of specific functional solutions. The first are the integrated program management tools, which help manage a host of contracts and delivery schedules throughout the life cycle of a program. The second piece of the solution is integrated product and process support, which offers integrated product data management (PDM), multistage bill-of-materials (BOM) reporting (as-designed, as-planned, as-built, and as-maintained), component-supplier management integration, and customization capabilities for engineering change orders (ECOs) and complex manufacturing.

The Banking Industry

The SAP banking solution supports management accounting needs with single transaction/ single position costing, including interest terms contribution, trading contribution, opportunity contribution, commissions and fees, overhead and operating costs, and imputed costs. Additionally, the SAP solution supports profitability analysis through market results, own-account trading results, productivity results, risk results, bank profit center accounting, transformation results, and net interest income. SAP Banking includes a Risk Management component for management of market risk. The Market Risk component includes concepts for quantifying these risks, including value at risk (%AR) and net present value (NPV), instruments to control interest rates, currency and other price risks, and value-at-risk/money-at-risk. SAP Banking Treasury and Cash Management components support banks with integrated processing of all business transactions from their origins, through processing, to financial reporting.

The Chemicals Industry

Most large chemical companies are global, have customers that are also vendors, and produce large amounts of co-product or derivative materials. Environmental concerns, including the production of by-products, also greatly affect the industry. All of these concerns are addressed in the SAP chemical industry solution. The Business Engineer allows companies to configure based on current best practices in the chemical industry. Most chemicals are transported in bulk on barges, ships, trucks, or by rail. The chemical industry solutions allow for the transport of these materials in ways needed by the chemical industry. Often, during the production process of a batch of material, certain actions must be taken at specific points in the process. Process Instruction (PI) sheets facilitate this activity. Another hot topic in the industry is the plant-centric view of a company, which SAP also includes in the Chemical Release. Finally, SAP includes a number of forms that assist on the environmental side of the house. They include "right to know" forms as well as Material Safety Data Sheets (MSDSs).

The Consumer Products Industry

The consumer products industry is one of the most highly impacted areas when it comes to changing business trends. It must be able to stay flexible in order to meet the demands of emerging and changing markets, while retaining/growing market share. Dynamic market conditions demand that businesses be able to quickly improve existing products and introduce new ones. Costs must be minimized and profits maximized right along the supply chain, from procurement to sales. The supply chain becomes the focal point in the quest to stay competitive in the long run. Functionality provided by SAP R/3 Release 4.0 to support the consumer products industry includes promotion planning, free goods management, freight calculation and settlement, letter of credit, payment and credit card handling, distribution resource planning, consumer products industry process modeling, and integration into supply chain management....

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