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Standard Application and Products (SAP) is and Enterprises Resources Planning system that integrates the company processes e.g. logistics, procurement, quality management, finance HR and others. All these are brought to harmony and are always at an interface such that they understand each other. It provides vital solutions across the business. Of late SAP is one of the most ERP system used by many companies in the Middle East, America, Asia and Europe and it is also cascading down to Africa. Most companies are indeed enjoying the positive benefits of SAP.
SAP has many modules, the finance, sales and distribution, Production, Material Management, Human Resources etc. As these operate at an interface, they easily recognize each other in their operation. Companies like Qatar Primary Materials, Qatar gas, Qatar petroleum among others uses SAP. Materials management module provides an unbroken chain of components for production to manufacture goods on time for the customer base. The materials department is charged with releasing materials to a supply base, ensuring that the materials are delivered on time to the company using the correct carrier. It is measured by accomplishing on time delivery to the customer, on time delivery from the supply base, attaining a freight budget, inventory shrink management, and inventory accuracy. In some companies materials management is also charged with the procurement of materials by establishing and managing a supply base. The purchasing department is then responsible for the purchased price variances from the supply base.
Materials Management module looks into the handling and management of materials, it considers the inbound logistics, where it concentrates on recognition of need, through internal purchase requisitions as they are raised in SAP or services request. This is approved in SAP by the authorized manager, then it hits purchasing where the purchasing department upon such a notification will act on the requisition by sourcing from the existing suppliers in the database on the vendor master if they source from a supply outside the database that supplier should be added into the system through the supplier registration process. The procurement will raise a request for quotation in SAP which references the purchase requisition number. When quotations are received, the analysis of quotes is done and quotations are compared in SAP system. Recommendations to orders are done basing on the most economic supplier amongst other recommendations. An order is created in SAP and once approved in SAP it is released, printed and issued. A similar process applies even to service procurement. When goods are delivered they reference the purchase order number on delivery note and on invoice, these are received in SAP against order, any variation realised will be adjusted accordingly. This inventory will be allocated to specific warehouses accordingly.
Items in stock can be physically checked and a physical inventory document is created in SAP where outcome of the stock count is entered. Physical inventory is married against SAP balances and differences are posted in SAP. SAP also produces various reports, just at a click of a button. These can be reports on list of Master Materials, Vendor Masters, purchase requisition list, purchase order list, stock overview, materials documents, warehouse stocks of materials, stock on posting date amongst other desired reports.
SAP has its own benefits and shortfalls. For starters, there are long-term cost savings and reduced annual operating costs. Effective materials management plan also means a more holistic approach to managing activities and reduce processing time, wastes and improve on effectiveness and efficiency. Less paperwork also enjoyed by SAP users.
The major challenges that materials managers face is maintaining a consistent flow of materials for production, accuracy of inventory which results in production shortages, premium freight, and often inventory adjustments. The major issues that all materials managers face are incorrect bills of materials, inaccurate cycle counts, un-reported scrap, shipping errors, receiving errors, and production reporting errors. Another challenge for materials managers is to provide timely releases to the supply base. In addition sending releases via facsimile or PDF file is the worst practice and transmitting releases to the supplier based web site is the best practice as the flaw in transmitting releases via facsimile or email is that they can get lost or even interpreted incorrectly into the suppliers system resulting in a stock out. The problem with transmitting EDI releases is that not all suppliers have EDI systems capable of receiving the release information.
In conclusion, the introduction of SAP has made the Materials Manager’s work easier, improved accuracy, avoid duplication of effort. Most companies in the Middle East are using SAP and are finding it to be an answer to most of their long time challenges. SAP improves transparency due to segregation of duties including approvals. Everything will be done on SAP eg Materials Management, Accounts, distribution, sales and all other activities will be talking to each other on SAP through the use of unified codes, understandable to everybody in the system. SAP really is an answer to effective Supply Chain Management and its true that Middle East Companies and multinationals in the Middle East are concerntrating efforts to fully implement SAP while others are starting rolling out SAP and some still on using their own softwares like Oracle, sunsytem, Helios etc. SAP is a good product. I vote for it, it answers many challenges like delays in aproval, lost documents, finger-pointing on delays.
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