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MIS 171 Exam 2
Materials Management 1 - 18 (18) Production Planning 19 - 38 (20) Ch. 6 Business Process Transformation 39 - 54 (16) Financial Accounting (FI) 55 - 56 (2) Controlling 57 - 68 (12)
Terms in this set (68)
Independent environment in the system
Smallest org unit for which you can maintain a legal set of books
Operating area or branch within a company
Organizational unit allowing differentiation between the various stocks of a material in a plant
-- The buying activity for a plant takes place at the purchasing organization
-- Organization unit responsible for procuring services and materials
-- Negotiates conditions of the purchase with the vendors
-- Key that represents the buyer or group of buyers who are responsible for certain purchasing activities
-- Channel of communication for vendors
vendor master data
-- Contains all the necessary information needed to business with an external supplier
-- Used and maintained primarily by the Purchasing and Accounting Departments
-- Every vendor MUST have a master record
- Contains all the information a company needs to manage about a material
-- Stored in functional segments called Views
-- U`sed by most components within the SAP system
framework for purchase order
Contains the relationship between a vendor and a material
Internal Document instructing the purchasing department to request a specific good or service for a specified time
-- Can be created directly (manually) or indirectly (automatic)
There are a variety of ways that a purchasing department can process a requisition to determine the appropriate Source of Supply:
Internal Sourcing Requirements
Record that specifies the allowed means for procuring a material for a certain plant within a given time period.
-- If the list contains a sole source the system will assign the vendor to the requisition.
-- If several options exist the system will display a list of vendors for you to choose from.
-- If no source has been established the system will revert to search information records and outline agreements.
RFQ (Request for Quotation)
Invitation to a vendor by a Purchasing Organization to submit a bid for the supply of materials or services
Quotation from vendor
Legally binding offer, should decide to do business with the vendor, containing price's and conditions for the materials specified in the RFQ for a predefined period of time
Helps purchasing evaluate vendors for sourcing while also enabling the company to monitor vendor relationships through performance scores and criteria you put in place: Price, Quality, Delivery
Formal request to a vendor for a specific material or service under the stated conditions
Goods movement in which we accept goods into our system; Acceptance of the confirmed quantity of output from the production order into stock.
- Effects of the Goods Receipt
-- Updates stock quantity
-- Updates stock value
-- Price stored for future valuation changes
-- Production order is updated
Three documents are created
1. Material document
2. Accounting document
3. Controlling document
Reference against a Purchase Order to verify their content, prices, and arithmetic.
-- Applies the liability from the Goods Receipt of our Purchase Order to a Vendor
-- Upon verification the:
-- Purchase Order is updated
-- Material Master is Updated (MAP)
-- Accounting Document is created
-- Payment process is initiated within Financial Accounting
Bill of Materials (BOM)
List of components that make up a product or assembly
-- Plan the production of materials (products)
-- Used as a template for production orders and run schedules
-- Used as a basis for product costing.
-- Series of sequential steps (operations) that must be carried out to produce a given product
Location within a plant where value-added work (operations or activities) are performed
-- People or Groups of People
-- Machines or Groups of Machines
-- Assembly Lines
Aggregate planning that group together materials or other product groups (Product Families)
-- Foundation of a reliable SOP
-- Accurate forecasts are essential in the manufacturing sector
-- Overstocked & understocked warehouses result in the same thing: a loss in profits.
-- Forecasts are ALWAYS WRONG
SOP (Sales and Operations Planning)
-- Flexible forecasting and planning tool
Usually consists of three steps:
-- Sales Plan
-- Production Plan
-- Rough Cut Capacity Plan
Planned at an aggregate level in time buckets
-- Link between Strategic Planning (SOP) & Detailed -Planning (MPS/MRP)
-- AKA Demand Program, it is generated from our independent requirements - PIR and CIR
Represent the business procedures for
-- The planning of production quantities
master production scheduling (MPS)
Allows a company to distinguish planning methods between materials that have a strong influence on profit or use critical resources and those that do not
material requirement planning (MRP)
System calculates the net requirements while considering available warehouse stock and scheduled receipts from purchasing and production
5 Logical Steps
-- Net Requirements Calculation
-- Lot Size Calculation
-- Procurement Type
-- BOM Explosion
Planned Order (planning)
A request created in the planning run for a material in the future (converts to either a production or purchase order)
Production Order (execution)
A request or instruction internally to produce a specific product at a specific time
Purchase Order (execution)
A request or instruction to a vendor for a material or service at a specific time
Calculates the production dates and capacity requirements for all operations within an order
Two release processes
-- Entire order and all operations are released for processing, order is given a REL status
-- Individual operations within an order are released
-- Order is given a PREL status
-- Not until the last operation is released does the order obtains a REL status
Automatic check to determine whether the component, production resource tools, or capacities in an order are available
Shop Floor Documents
Printed upon release of the Production Order. Examples:
-- Operation-based Lists
-- Component-based Lists
-- PRT Lists
-- Multi-Purpose Lists
When a production order is created it references a BOM to determine the necessary components to produce the material
Monitor and track the progression of an order through its production cycle
Consists of settling the actual costs incurred in the order to one or more receiver cost objects
What are Business Processes?
AKA business method is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers.
A set of work activities with preferred order, an identifiable beginnings and, inputs, and clearly defined outputs that add value to the customers.
Work across functions to create competitive compatibilities
How Are Business Processes Different Than Business Functions?
Business processes are designed to be operated by one or more business functional units.
What is a Value Chain?
Value is determined by the perspective of the customer
What is Value Analysis?
Measure the business process prior to any business process improvement. It is also used after the business process has been improved. Based on the before and after measurements, the effect of the improvements can be determined.
Before improvement can be made, the process must be analyzed. Understanding the process flow and collecting the elapsed time and cost for each activity in the process flow, provides a good basis on which to identify improvements.
The value of each activity is determined based on the customer requirements.
Those activities that add no value to the output of the process and/or no value for the customer are considered for elimination.
What is Process Re-Engineering?
Analysis and design of workflows and processes within an organization;
Fundamental re-thinking and radical re-design, made to an organization's existing resources. It is more than just business improvement;
Approach for redesigning the way work is done to better support the organization's mission and reduce costs.
Starts with a high-level assessment of the organization's mission, strategic goals, and customer needs.
What is Business Process Management (BPM)?
Systematic planning, analysis, altering, and design of business processes
Which are the core Business Process Re‐engineering Principles?
1. Organize around outcomes, not tasks.
2. Have those who use the output of the process perform the process.
3. Put the decision point where the work is performed, and build control into the process.
4. Link parallel activities instead of integrating their results.
5. Capture information once at the source.
Business Processes or Information Systems? Which Comes First?
Start with business processes and work towards information systems so that business processes and information systems are aligned with the organization's strategy.
Why is Change Management so Important?
Structured approach to shifting/transitioning individuals, teams, and organizations from a current state to a desired future state. It is an organizational process aimed at helping employees to accept and embrace changes in their current business environment.
Critical part of any project that leads, manages and enables people to accept new processes, technologies, systems, structures and values.
How Do We Model Business Processes?
Provide a way to describe a business process so that all participants can understand the process
Advantages of process models
-- Graphical representations are usually easier to understand than written descriptions
-- Provide a good starting point for analyzing a process
-- Participants can design and implement improvements
-- Document the business process
-- Easier to train employees to support the business process
Govern the operation of a system. Typical management processes include "Corporate Governance" and "Strategic Management"
constitute the core business and create the primary value stream. Typical operational processes are Purchasing, Manufacturing, Advertising and Marketing, and Sales
support the core processes i.e. Accounting, Recruitment, Call center, Technical support
Activities specific to a functional area of operation
Value for which the customer is willing to pay
Value that helps the company run its business
Designed to collect the transactional data that provides a foundation for preparing the standard portfolio of reports.
Contains a listing of the transactions effecting each account in the Chart of Accounts and the respective account balance
(Managerial accounting) designed to collect transactional data that provides a foundation for preparing internal reports that support decision-making within the enterprise i.e.
-- Cost center performance
-- Profit center performance
-- Budgets analyses
Controlling organizational structure
-- Represents the legal and/or organizational views of an enterprise
-- Forms a framework that supports the activities of a business in the manner desired by management
-- Permits the accurate and organized collection of business information
-- Supports the development and presentation of relevant information in order to enable and support business decisions
a self-contained organizational element for which the management, including oversite, reporting, and analysis, for revenues and costs can be performed
Responsible for cost containment, not responsible for revenue generation
Temporary cost center responsible for cost containment, not responsible for revenue generation
It is used to plan, collect, and monitor the costs associated with a distinct short-term event, activity, or project
A one-to-one linkage (mapping) between General Ledger revenue accounts and CO revenue elements is established to permit the transfer of FI revenue information to CO.
Revenue account = revenue element - just different words depending on whether FI object or CO object.
A one-to-one linkage (mapping) between General Ledger expense accounts and CO cost elements is established to permit the transfer of FI expense information to CO.
Primary Cost Element
Originate in the General Ledger within FI and are automatically transferred to CO when an FI transaction is recorded in the General Ledger
Secondary Cost Element
Used exclusively in CO for allocations and settlements between and amongst cost centers
Statistical Key Figures
- Provide the foundation for accurate and effective cost allocations between cost objects
- Utilized to support internal cost allocations involving allocations, assessments, and distributions
number of employees
minutes of computer usage
-- Method for periodically allocating primary cost elements
-- Primary cost elements maintain their identities in both the sending and receiving objects
-- Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.
-- A method of allocating both primary and secondary cost elements
-- Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element.
-- Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.
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