Spectrum Products BRD - Ver 1.0

SAP Implementation Project*
This is a golden opportunity for those who want to become an SAP consultant.
ZettaMine Labs Pvt Ltd, Hyderabad will help for your Career Transformation to SAP. ZettaMine
has strategic tie-ups with leading IT MNC companies for SAP Projects execution for our SAP
consultants. Now, you read on for details.
SAP is a 26.5 Billion USD company. SAP has been in the market for around 46 years. As per
Forbes Global, in the world’s Top 2000 companies, about 92% are SAP customers.
(https://www.sap.com/corporate/en/company.html). About 80% of Fortune 500 companies
use SAP applications as per Google search.
SAP has introduced S/4 HANA in 2015. This is a high performance ERP system.
Worldwide there are around 65,000 SAP installations across various industrial verticals like
Pharmaceuticals, Chemical and Paints, Foods, Automobile, Consumer Durables, FMCG,
Industrial Products, Oil & Gas, Healthcare, Retail, Banking, Insurance, Airlines, Aerospace,
Railways, Gems & Jewellery, Media, Mining etc. Currently these companies are using SAP ECC
6.0 version. SAP has announced that they may not support the ECC version beyond 2025 and
has recommended that all existing SAP systems to be migrated to or re-implemented in S/4
HANA. This has resulted in a huge demand for SAP consultants.
However, the IT companies do look for good expertise in SAP from prospective consultants and
mere training alone generally does not meet this need of IT companies. We have come across
many people who are trained in SAP, attended many interviews but still not getting a job offer in
SAP. This is mainly because, SAP is an integrated ERP system and manages many business
functions / transactions concurrently in real-time business applications involving a spectrum of
departments like Finance, Costing, Sales, Logistics, Purchase, Production, Quality,
Maintenance etc. Hence mere training in one of the SAP modules alone does not give enough
knowledge and content to become a SAP consultant generally.
This document is for use only by SAP Associate consultants of ZettaMine Hyderabad for a SAP
Implementation project*. Business Requirements Document (BRD) ver 1.0
ZettaMine Labs Pvt Ltd, Plot 63 / A, Road No 13, Film Nagar, Jubilee Hills, Hyderabad 500036.
Phones: 6302404814 / 6302404817 / 6302404871. Email: careers@zettamine.com
www.zettamine.com
ZettaMine Labs Pvt Ltd, Hyderabad has designed and come out with a unique “Career
Transformation Program” in SAP. Our SAP associates undergo Up-skilling on 3 SAP projects to
become a good, professional SAP consultant. (This methodology was evolved in consultation
with our client companies working on real-time SAP projects for international clients).
❖ SAP Implementation Project* (end-to-end)
❖ SAP Support Project*
❖ SAP S/4 HANA Migration Project*
* These simulated projects are carried out in a 3 system SAP landscape.
These SAP projects will be mentored directly under the guidance of senior and well-experienced
SAP Subject Matter Experts (SMEs) who have international SAP Projects expertise and worked
in MNCs. These experts are with ZettaMine on full time basis.
www.zettamine.com
The SAP Implementation project will cover the following business processes:
➢ Order To Cash (O2C)
➢ Procure To Pay (P2P)
➢ Make To Warehouse (M2W)
➢ Record To Report (R2R)
Above business scenarios involve SAP Cross Functional Teams (CFT) comprising SD, MM,
PP, FICO, PS and ABAP consultants. At ZettaMine, this CFT team works full time to get a deep
understanding of the various aspects of the business processes and transactions from a realistic
and holistic perspective to gain a good command in business systems and in SAP in their
respective modules.
For the Implementation project, ASAP methodology will be used. The major activities during
the project execution are as below:
➢ Implementation Project Processes (End-to-End):
• Hand over from presales
• Scope understanding
• Kick off
• Project Charter
• Business Requirements Document (BRD)
• Business Blue Print (BBP)
• Fit-gap analysis
• WRICEFP
• Functional Specifications (FS) documents
• Technical Specifications (TS) documents
• Configurations
• Test Scenarios
• Unit Testing
• Integration Testing
www.zettamine.com
• User Acceptance Testing (UAT)
• Data Migration
• Cut over
• Go-Live and
• Hyper care
• Customer Interactions and Sign offs
The SAP Implementation project will encompass:

➢ Multiple Company Codes
➢ Multiple Credit Control Areas
➢ Multiple Controlling Areas
➢ Multiple Sales Organisations
➢ Multiple Plants spread worldwide
➢ Multiple Purchasing Organisations
➢ Multiple Currencies for Global operations
➢ GST compliance for India specific transactions
Solution Manager (SOLMAN) will be used for these projects. Mainly Solman will be used for
the following during the execution of SAP projects.
➢ Project documentation – Creation, Review, Approval
➢ As a Ticketing tool – To resolve from beginning to end, the issues / errors arise during
the project.
➢ As a Testing tool – For Unit testing, Integration testing and User Acceptance testing.
www.zettamine.com
The attached documents give the Scope and contents for SAP implementation project for a
virtual FMCG company with international business coverage. This involves Process and
Discrete industry requirements.
➢ Annexure A – Introduction to “Spectrum Products Inc”.
➢ Annexure B – Sales and Logistics requirements
➢ Annexure C – Purchasing requirements
➢ Annexure D – Manufacturing requirements
➢ Annexure E – Finance requirements
➢ Annexure F – Costing requirements
➢ Annexure G – Project Systems requirements – awaited from Spectrum Products.
The end-to-end SAP Implementation project done under the guidance of SAP
experts in ZettaMine, help the consultants to gain rich experience and learnings
from an integrated SAP modules perspective and they are better equipped to work
on SAP projects worldwide.
www.zettamine.com
Annexure A
SPECTRUM PRODUCTS Inc

Spectrum Products Inc was established in 1959 in Germany. Its annual sales is 47.96 billion
Euros in 2018.
• Spectrum Products is market leader in FMCG products globally.
• Spectrum company also manufactures state-of-the-art, high cost Packaging
Equipments.
• Spectrum company is also into International Trading.
Spectrum Products has decided to go for SAP for their global operations totally. Their
existing legacy systems will be sunset after SAP project is started.
Global sales is focused and independent in following major geographies.
• Americas (20% of sales)
• Europe including UK (35% of sales)
• India (15% of sales)
• Asia Pacific (20% of sales)
• Rest of the World (ROW) (10% of sales)
Currencies:
• Americas -- USD
• Europe including UK – EUR
• India – INR
• Asia Pacific – SGD (Singapore Dollars)
• Rest of the World (ROW) – AED (UAE Dirham)
Spectrum Products Inc. is having their Manufacturing Plants in following countries.

➢ Germany (3 locations)
➢ Spain
➢ Mexico
➢ Brazil
www.zettamine.com
➢ Argentina
➢ India (4 locations)
➢ Bangladesh (2 locations)
➢ China (7 locations)
➢ Australia
➢ South Africa (3 locations)
➢ Canada
Spectrum Products Inc. is having their R&D Plants in following countries.

➢ Switzerland (2 locations)
➢ India
➢ USA
Products range of Spectrum Group:

FMCG Products:
➢ Processed Foods - such as breakfast cereal.
➢ Beverages - Packaged beverages such as fruit juice and bottled water.
➢ Dry Goods - include things such as coffee, tea, sugar sachets
➢ Cosmetics - such as hairstyling products, Perfumes.
➢ Toiletries - such as toothpaste, Soaps, Shampoos.
www.zettamine.com
➢ Cleaning Products – such as Washing powder, floor cleaner
➢ Frozen Foods - such as meat, ice cream, dairy products, baked goods that require a
temperature-controlled supply chain.
➢ Office Supplies - Consumable office supplies such as paper, pens, file
folders, Post-it notes, toner or ink cartridges
Most of the above products are manufactured by Spectrum Group of companies. However the
management is also focusing on buying lead market brand products from other companies to
increase the market share of Spectrum. These are called Trading products. Spectrum may
directly supply these items from vendors to customers to minimize logistics expenses and lead
times.
Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG)
are products that are sold quickly and at a relatively low cost.
The following are the main characteristics of our FMCG products:

From the market perspective
• High volumes
• Low contribution margins
• Extensive distribution networks
• High inventory turnover
• High Marketing expenses
From the consumer perspective
• Frequent purchases
• Low engagement (little or no effort to choose the item)
• Relatively Low prices compared to Consumer Durables like TV, Refrigerators, Microwave
Owen etc
• Rapid consumption
Packaging is critical for FMCGs. To become successful in the highly dynamic and innovative
FMCG segment, a company not only has to be acquainted with the consumer, brands, and
www.zettamine.com
logistics, but also, it has to have a sound understanding of packaging and product promotion.
The packaging has to be both hygienic and customer-attracting. Logistics and distribution
systems often require secondary and tertiary packaging to maximize efficiency. Unit or primary
packaging protects products and extends shelf life while providing product information to
consumers.
The profit margin on FMCG products can be relatively small, but they are generally sold in large
quantities; thus, the cumulative profit on such products can be substantial.
Product group-wise profitability is needed on a monthly basis with trend analysis.
Following Annexures pertain to Business Requirements Document (BRD) from Spectrum

Products. These are not Business Blueprint documents.
➢ Annexure B – Sales and Logistics requirements
➢ Annexure C – Purchasing requirements
➢ Annexure D – Manufacturing requirements
➢ Annexure E – Finance requirements
➢ Annexure F – Costing requirements
➢ Annexure G – Project Systems requirements
www.zettamine.com
Annexure B
Sales and Logistics Requirements

(Business Requirement Document – BRD)
1. Requirements / Expectations
The expectation of this document is to explain the processes for carrying out Sales and Logistics
operations of Spectrum Products Inc across the globe.
Spectrum Products management expects the following in SAP:
• Processes adhering to the best industry practices especially in FMCG.

• Also take into consideration Spectrum Products’s finer process variations
• Multi-tier Reporting considerations.
• Automate the transactions to the extent possible. However in some cases, manual override
features will be needed.
• End-to-end traceability of Sales and Logistics processes
• Pricing is very critical since we operate at Global level. Confidentiality of Pricing to be ensured.
• Effective control mechanisms so that some products may not be sold to some regions or
customers or as decided by management.
For the SAP project, we will assign experienced people who will explain the business scenarios and
requirements. However if clarifications are still needed for decision making and also for final review and
approval of Sales & Logistics processes the following Business Process Owners may be contacted:
Region Name Designation Location Mobile / eMail

Corporate Prabhu Guru MD (Sales & Berlin +49 2233445577
Strategy)) prabhu@spectrum.com
Americas Mike Williams Executive Dallas +1 469 468 3399
Director (Sales) sales.usa@spectrum.com
Europe Eric Rogers Executive London +44 2332676799
Director (Sales) sales.europe@spectrum.com
India Mahesh Babu Executive Goa +91 1234598765
Director (Sales) sales.india@spectrum.com
Asia Pacific Tom Peters Executive Singapore +65 32487912
Director (Sales) sales.ap@spectrum.com
Rest of the Elizabeth Mary Executive Dubai +971 8248769
World Director (Sales) sales.row@spectrum.com
(ROW)
www.zettamine.com
1.1. Scope of the document
This Business Requirement document (BRD) underlines the processes and activities carried
out in Spectrum Products Sales & Logistics department so that products ordered by customers
are delivered to them by the right date, at right price and ensuring all regulatory compliance
requirements are met.
This document may not cover any production and quality processes in depth specifically,
however the touch points if exists within the process shall be mentioned.
Sales Returns is also covered in this document.
1.2. Products range of Spectrum Products

Refer to Annexure – A.
1.3. The products distribution is controlled thru

• Direct sales from Factory
• Distributors
• Bulk buyers like Walmart, Amazon, Army, WHO etc
1.4. Business aspects

C&F Agents handle primarily sales requirements of Distributors. The company sends materials
from manufacturing locations to C&F and also from one C&F to another C&F for urgent
requirements or for near-expiry / non-moving stocks. The weekly demands determine these
deliveries generally but sometimes there would be urgent requirements from Distributors which
are to be completed within 24 hours.
1.5. Packaging Equipments

• Packaging Equipments should not be sold in ROW region due to long lead time for RFQ
finalization, price impacts, low margins, more competitors and also sometimes unethical
trade practices.
• Some Packaging Equipments are not manufactured by Spectrum Products.
• AMC for Packaging equipments will be thru authorized agents only.
1.6. Credit management and Credit Limits

• Americas – 1 Million USD
• Europe including UK – 1 Million EUR
• India – 50 Million INR
www.zettamine.com
• Asia Pacific – 1 Million SGD
• Rest of the World (ROW) – 3 Million AED (UAE Dirhams)
Overall credit limit – 5 Million USD
There are some high risk customers. We require tight credit check processing for them.
Australia and New Zealand are emerging markets for Spectrum Products. To penetrate into
this highly competitive and high profit regions, the discounts during order processing, may be
allowed as a special case, even if the respective customers in those regions have exceeded
credit limits. Basically in this region, the sales order may be blocked under credit limit
exceeding but the discounts applicable if any have to be made available to customers.
2. Process Flow
2.1. Master Data.

Our team, will demonstrate the process of creating following master data in the current ERP
system
• Customer master
• Material master
• Price master
We mandatorily require a separate master data maintenance team who will control the entire
requirements from Price management perspective. Only authorized persons are allowed to
operate in this area. We need complete traceability of who creates, who changes the values and
when was done etc both from control, traceability perspectives and also mainly from statutory
audit requirements. We also use multiple sales prices for same product for various customer
segments, Deductions, Shipping amounts, duties & levies as applicable at law of land, product
manufacturing amount, approximate profit estimates during order processing etc.
We want to be globally BEST and hence if there are other master data structures available in
SAP the same may be made use of to automate day to day transactions. However we strongly
expect “KISS” methodology. (Keep It Simple & Smart !!!).
We need a feature to create or change master data for thousands of objects effectively. However
the data accuracy must be 100%.
In cases wherein there is a confusion on the correct material code that needs to be processed
then a liaison among the sales team, master data team, manufacturing plant and quality team is
www.zettamine.com
envisaged. They shall provide the applicable material code to the person processing the sales
order.
Important: In Material master / Sales Org 1 TAB, Condition button to be removed. (This is as
per email received from SAP AG in Feb 2019 to MD(Sales & Strategy).
2.2. Sales processing

Following are required:
➢ Sales inquiry from customers – This information has to be captured in the new SAP
system. Order may or may not come. Generally 7% of sales inquiries get converted into
quotations or directly into sales orders.
➢ Quotations to customers – Order may or may not come. Generally 40% of sales
quotations get converted into sales orders. Open and valid quotations need continuous
follow ups by sales team to convert to confirmed sales orders.
➢ Sales orders
➢ Sample orders
➢ Return orders
➢ Trading orders
➢ Long term Agreements with and without delivery details
➢ Provisional Stock at Customer locations for immediate consumption
➢ Other sales document categories to address the business requirements stated in this
document.
In cases where the customer and material are known there would be no challenge to begin
creating the sales document.
In case of new customer requirement, the user would need to coordinate with Master Data
Management team to get the Customer Master created to begin processing the sales document.
In case of new material requirement, the user would need to coordinate with Master Data
Management team to get the Material Master created to begin processing the sales document.
In case of Pricing requirements or discrepancies or errors, the user would need to coordinate
with Pricing Master Data Management team to get the price master records to be created or
updated.
Mandatory details to be maintained in the sales order document.
www.zettamine.com
• Customer and Mobile number
• Goods recipient and Mobile number
• PO Number
• PO Date
• Incoterms
• Payment terms
• Material
• Quantity
• Currency
• Price
• Manufacturing Plant
• Delivery schedule
➢ Customer’s expected delivery dates and quantities as per PO
➢ Proposed delivery dates and quantities (can this be automated in SAP?)
• Mode of shipment
• Delivery hierarchy
• Automatic prices and taxes, and manual prices, other pricing elements
• Partners for the orders (Forwarding Agents, Commission Agents etc) if applicable
• Reason for rejecting entire or partial items.
• Packing
• Total Pricing with detailed breakups
Multiple mode of shipment may be maintained in the same order item-wise.

The customer need not necessarily know from which manufacturing unit the respective item is
likely to be delivered unless the customer insists on a product from a specific plant from a specific
country even if that involves higher cost and additional delivery timelines.
There must be a provision to process materials from different plants in the same sales order.
In the current legacy system, the US Dollar is maintained with 3 decimals. We prefer to
continue the same, since price masters have been maintained in that way in the existing ERP
system.
Some times when there is shortage of materials, we cancel the existing orders so that we can
divert those materials to urgent and more critical orders. But however sometimes we loose track
of the deleted orders and this has been a major cause of customer dissatisfaction. We need a
better process for this type of scenarios.
www.zettamine.com
The sales order shall be subjected to the credit policy of the company and follow the required
release procedures.
Attaching soft copies of documents like Customer PO to sales order may be needed for orders
of value > 10 million USD.
To meet the customer’s requirements, we need a solution to process for manufactured and as
well trading materials in the same sales document. Whether single material code or two material
codes or different materials codes for different vendors to be demonstrated for the same product.
The sales order details like material, quantity, delivery dates, plants involved etc must be
automatically communicated to production and / or purchase departments to eliminate human
delays and inadvertent manual typo errors. Since ours is a globally distributed company, the
information communication must be internally set by the system, to address different timelines
at which the people work across countries. There must be a provision to monitor the demand Vs
Supply in the new SAP system.
On receiving of duplicate Purchase Order from customer, system should give a warning
message to the order processing executive.
System should not allow to process cancelled or closed orders.
If any item for any customer is restricted (as defined in customer item master) for particular
period, it should not allow to sell the same to said customer.
A few Bulk buyers with presence across multiple countries / metro cities place a consolidated
longterm requirement (may be for 2 years) for large material quantities and negotiate special
price. But the exact period and quantity of their requirement is known generally a month before
only. Spectrum Products top management insists on processing this potential customer
requirements as a strategic OTC scenario since this may help in accelerating their sales
revenues and as well to attract customers from competitors. United Nations(UN) have shown
interest to this type of OTC process when they want to buy huge quantities to supply for under
developed countries thru Red Cross society.
Discount groupings: If multiple discounts are active during order processing, then only one
discount having maximum discount value to be made applicable. Else the Product profitability
gets impacted.
To promote sales, if customer buys material “X”, then if he also orders material “Y” then “Y” gets
special 40% discount.
www.zettamine.com
For Near-Expiry products:
This is a challenging area because if the products are not sold to customers and consumed
within a very limited period prior to the Expiry date of the product, then the total product quantity
has to be scrapped and this results in a considerable loss to Spectrum Products, more so
especially if the product has been exported and we can’t divert to another region at short notice.
Reimport may incur huge transportation cost and does not worth it at all. Consulting team to
propose a viable mechanism.
High order values:
If the order net value is more than 100 K USD, then the order needs one higher level of review
and approval. Possibilities to be explored without SAP’s Workflow feature.
2.3. Letter Of Credit Processing in Sales Order

Letter of Credit (LC) is a basic tool in the hands of exporter to ensure the payment of the goods
exported, for high value orders say > 5 million USD. LC is a payment undertaking given by a
bank (issuing bank) on behalf of a buyer (applicant) to pay a seller (beneficiary) for a given
amount of money on presentation of specified documents representing the supply of goods
within specified time limits. LC details to be captured in sales documents and to be printed in
Sales and Billing documents. For payments using LC, credit check may not be processed since
the risk is mitigated thru the participating banks.
2.4. Delivery Processing at Warehouse

Once the stock is received at the warehouse a delivery order is created with reference to the
sales order.
Sometimes there may be a discrepancy between the stock shown in system for a delivery Vs
the actual stock available physically in the warehouse. In case of shortages and if it is likely to
take a longer time to replenish, then there must be a provision to process the delivery even with
lesser quantities. This is to avoid “Truck waiting” type scenarios in Logistics.
As the goods are removed from the plant the stock in the warehouse to be reduced automatically.
This is an audit requirement and also helps during insurance claims. Some proof of document
for this stock reduction is the need of the hour in the new SAP model.
Over delivery tolerance shall be maintained for delivery. This tolerance is maintained at a
predefined percentage level say 1% only if the Order unit of measure is “TABs”.
www.zettamine.com
Proof of Delivery (POD) is needed for some customers.
2.5. Transportation process
The company spends around 14% of total turnover towards logistic transportation to dispatch
materials across the world. Even a mere 1% saving in this freight amounts results in a big way
in our profits in dollar terms.
Once the deliveries are chosen and decided for dispatch a transportation document to be
created.
The deliveries can be combined for transportation using the selection criteria based on shipping
point, Route, Forwarding agent and many more. Only the deliveries with the same route can be
selected in a single transportation document. Details like different planning / check in / loading
timings are to be captured to identify bottlenecks. The forwarding agent shall be attached to the
transportation document.
All the other freight cost elements are to be captured in the transportation document.
Details of data loggers placed in “Refri” containers to be updated by user in SAP to get a report
from SAP on such details.
2.6. Billing
Commercial Invoice to be created after stock qty per delivery is reduced in system. There must
be a provision to change Payment terms if needed.
There is a requirement that the customer liability is created only after the Airway Bills (AWB) /
Bill Of Lading document is received.
A Proforma invoice is needed for exports. Also in some domestic order processing, customer
requests for Proforma invoice, for making some internal payment reservations / pre-approvals
in their system. Care to be taken to doubly ensure that the Proforma does not impact in any way
either the Accounts Receivables or Credit balances or in simple terms, NO accounting impacts.
There must be a provision to print duplicate or multiple Proforma invoices.
2.7. Commission Payables

This process describes commission to be paid to the agents. The commission payable is as per
agreed terms. Commission may be percentage-wise and / or flat commission per piece.
www.zettamine.com
Commission may be payable for domestic / overseas agents. The sales order shall have the
commission agent as a business partner and the value to be paid may be computed by the
system.
Commission Invoice/debit note is received from Agent by Marketing department. Marketing
Department will prepare necessary commission documents and forward those documents to
accounts department. Accounts department will submit to the Bank for remittance of commission
to Agent.
A report to find out the commission calculated invoice-wise shall be created and the person
processing this payment can validate the value against this report.
Over price commission is payable to customer. This is applicable when the order sourced by
the commission agent from his prospective customer is more than the list price. (Then order
price – list price is paid in full to commission agent. In addition he gets % of net price as agreed
in terms of agreement).
Management is of the strong opinion that sometimes the commission payment process within
the company costs more than the commission payable itself. For instance, from a commission
agent, assuming that 200 sales orders were completely processed upto billing level, then to
compute the commission payable, it is done manually at present – the Commission payable
may be 2800 $, but the company people’s time and resources utilized for this commission
computation is 3450 $ since this is a manual computing exercise now. Spectrum Products
management is looking for a more elegant and effective mechanism. There is a ready-made
software available in the market called “CommDollars”. Can SAP interface to this?. Else any
other proven solutions from the Consultants.
www.zettamine.com
2.8. Sales Returns

Depending on the scenario, there are multiple variations of sales returns. These returns can be
due to quality issues or goods damaged during transit. If customer complaint is lodged with
marketing team, they inform QC team about the complaint.
QC team manages the complaint and after discussions with customer, decides if the complaint
is valid or not. If the complaint is deemed invalid, no further action is required.
1) Claims with product returns: Customer informs Marketing team about goods returns.
Marketing team informs Logistics about the goods being returned. Goods are returned from
customer and are received by warehouse / plant. Based on usage decision made initially by
Quality team, the goods are either destroyed or re-processed. A credit note is processed to settle
claim with customer.
2) Claims without product returns: For cases where re-importing the goods is not feasible,
customers are informed to destroy the goods. Once the goods are destroyed, a destruction
certificate is sent to Spectrum Products. After verification of the certificate, two credit notes are
created:
a. Credit Note for the Returned products in reference to original invoiced amount
b. Credit note for destruction charges (if applicable)
2.9. Sales Return with Replacement

Standard Sales process to follow with a special Order type called Replacement Sales Order.
The only exception is that this order may have a value, but the receivables from customer is NIL,
being free replacements against Sales returns.
Important: Whenever Sales schemes are announced to improve sales, Spectrum Products
either gives special promotional discounts and/or give free goods. Sales returns NOT allowed
for this scenario. An effective control mechanism is needed in place, to ensure this.
3. Reports
3.1. Reporting requirements.

➢ Sales Pipeline Report
➢ Open Order Report
➢ Blocked sales orders
www.zettamine.com
➢ Stock report ( Product-wise/ Plant-wise)
➢ Pending invoices
➢ Sales reporting under 5 levels of Reporting (2+3+3+4+6 sub levels)
➢ Near Expiry products report
➢ A few sales reports as needed by Finance department
www.zettamine.com
Annexure C
Purchasing Requirements
• For manufacturing and R&D plants, refer to Annexure-A.
Every plant globally has following storage spaces as below
• Raw Material Stores

• Semi-finished Stores
• Finished Materials Stores
• Finished Materials Stores (with Cold Storage facility)
• Quality Inspection
• Returns Stores
• Scrap Stores
➢ Procurement for Germany plants being done by a central purchasing department located in corporate
office in Germany.
➢ Finalising the Contracts for Global procurements (for any plant located globally) will also be done by the
purchasing department located in corporate office Germany.
•
• In India they manufacture at Hyderabad, Goa, Silvasa and Coimbatore.
➢ Procurements for Indian plants done by a purchasing department located in Indian head
office
Procurement Processes:
The requirements will be originated from each user department.
Mainly for the requirements for ingredients for any product coming from Planning Department.
www.zettamine.com
Outsourcing is carried out for some products by providing the ingredients to the external supplier.
Procurement happens between Indian Plants for some semi-finished products
Procurement happens between Germany Plants for some semi-finished products
Also for some materials Procurement happens between Germany and Indian Plants
For external purchase orders an approval process is being followed globally as below:
For plants in India:
1. If total net order value of the Purchase Order is below Rs 1 lakh – No approval needed.
2. If total net order value of the Purchase Order is between Rs 1 lakh to Rs 25 lakh - Purchase Clerk and
Purchase Manager has to approve.
3. If the total value is between Rs 25 lakh to Rs 50 lakh - Purchase Clerk , Purchase Manger and Finance
Manager to be approved.
4. If the total value is between Rs 50 lakh to Rs 1 Crore - Purchase Clerk , Purchase Manger and Finance
Manager, and Finance Dy G M to be approved.
5. If the Total order value is greater than Rs 1 Crore then Purchase Clerk, Purchase Manger, Finance
Manager, Finance Dy.GM and Director to be approved.
For plants in Germany:
1. If total net order value of the Purchase Order is below 10K Euro – No approval needed.
2. If total net order value of the Purchase Order is between 10K Euro to 50K Euro - Purchase Clerk and
Purchase Manager has to approve.
3. If the total value is between 50K Euro to 100K Euro - Purchase Clerk , Purchase Manger and Finance
Manager to be approved.
4. If the total value is between 100K Euro to 1 Million Euro - Purchase Clerk , Purchase Manger and Finance
Manager, and Finance Dy G M to be approved.
5. If the Total order value is greater than 1 Million Euro then Purchase Clerk, Purchase Manger, Finance
Manager, Finance Dy.GM and Director to be approved.
After releasing the Purchase order, the output to be transmitted to the Supplier
If any change done in the order quantity , then the changes to be tracked and it should be subject to release as
per above approval process.
After the release again new output to be issued to supplier with this change.
www.zettamine.com
The output for changes, should also have an indicator “U” with 16 size Bold beside of line item, for a quick
reference to Supplier.
The logistics needs of the plants in India and Germany are fulfilled by 3rd party logistics provider, hence One
copy of output only with quantity, delivery date and delivery address and supplier details to be sent to Logistics
provider as a hard copy.
A particular external supplier use to offer the below discounts on raw a material used for one of the products,
If procurement happens between
- 5 Kg to 10 Kg -- Discount is 1% on quoted price

- 11 Kg to 20 Kg Discount 2 %
- Greater than 20Kg discount is 3%.
In case of procurements happening between Hyderabad Plants and Silvasa plant , the delivery charges to be
captured and applied on receiving side.
Indian plants procure some of raw materials from China suppliers.
Procurement of the consumable goods is carried out through purchase orders without any item master in the
purchase order and also with some limit of value and within a year.
In the next year a new set of such Purchase order will be issued to the suppliers.
For some of the semi-finished materials long term agreements we done and whenever those materials needed
separate purchase orders were issued against the agreements.
Business has provided some space in Silvasa plant to few external suppliers to keep their stocks, so that on
need basis the usage will be done for those materials and settled to the used quantity.
Some materials the procurement happens through imports and also indigenously.
Power, Water are directly consumed from external sources.
Inventory:
The incoming materials which are subject to inspection will be inspected in a separate area and after inspection
only moved to respective stores with respective batch number.
All material movements are associated with batch number.
While material movements users will enter the serial numbers mainly for equipments.
www.zettamine.com
Once in a month the materials which are expired based on SLED will be moved to a separate storage location
called SCRAP and from there these materials will be scraped. One report is required to show the stock of items
expiring in the next 1 month, 1 quarter.
Physical inventory will be carried out once in a year in all the plants but the plant in Jeedimetla the physical
inventory in a periodic way 3 to 4 times in an year.
Invoicing:
For all the suppliers after receiving the hard copy of invoice the process of payment will start but few suppliers
business settle down to the used quantity and sends the copy of the settlement.
All payments are thoroughly subject to 3 way matching.
Also a restriction on a supplier – they can only invoice one time in a day.
Services:
Internal civil works, house keeping done thru external services
www.zettamine.com
Annexure D
Manufacturing Requirements
• For manufacturing and R&D plants, refer to Annexure-A.
• In India they manufacture at Hyderabad, Goa, Silvasa and Coimbatore.
• Weekly final planning and Monthly planning are used.
• Some Products made in India are export oriented , those products are not sold in India
or in Asia.
• There are few products required by WHO which are manufactured based on the WHO
required specifications.
• The WHO requirement is taken care at Hyderabad unit.
• Cosmetics are planned for three months production and Fresh foods happen on weekly
basis.
• All the plants in India are running 24*7 and 365 days.
• Plants at Germany are two shifts and 5 day week.
• They have similar manufacturing lines which can be used for multiple products, based
on the load they will plan and execute through one line or multiple lines.
• One of the Plants is equipped with MES, all the Production process is executed through
MES. With new ERP in place they want data should flow from MES to SAP after
completion of production on every day.
• Other than packing materials all raw materials , semi-finished and finished products are
batch managed . All the incoming raw materials are batch managed and are consumed
based on the SLED.
• Finished products are delivered based on SLED.
• Any customer complaint comes they have very good documentation , they can track the
raw materials used in the batch manufacturing along with its batch number and supplier.
www.zettamine.com
• In Coimbatore plant one of the manufacturing lines is specific to Packaged Goods and it
continuously pack only one product through it. This unit is not compatible for any other
product.
• Sometimes due to machine issues there is quality rejections due to which there is a
necessity of repacking of the finished product .
• Common raw materials are procured based on the previous consumptions and some
other Raw materials are procured based on the bulk requirement.
200 MW Thermal Power plant :

• Though all the units are having dedicated power lines , Hyderabad unit is having power
problem recently they have installed 200 MW Thermal power plant which is running by
external agency under the supervision on Spectrum Products team.
• This Thermal power plant uses indigenous and imported coal . They mix both to get
required calorific value which is the responsibility of lab people.
• Lab tells the production how much quantity of indigenous and imported coal to be taken
for pulverising.
• Pulverised coal is stocked in highly insulated conical silos.
• The silos are fully equipped with temperature controls to avoid any temperature rise in
the silos.
• As the power plant is outsourced for running , there is strict control on per unit cost.
• They monitor the productivity and cost of production at each and every stage : Coal
production, steam generation, Power generation.
• Weekly reports are generated to monitor the power plant productivity.
• Due to any reason if the manufacturing plant is under shut down, power is diverted to
power grid.
• Billing to the grid is done through the meter provided reading provided by Grid.
Packaging Equipments:
• Not only the products, equally if not more important in FMCG are the type and quality of
Packaging. Hence Spectrum management one year back acquired a Packaging
equipments unit in Spain.
• Some of the Packaging equipments are manufactured based on the customer orders,
few are available off the shelf.
www.zettamine.com
• Some of the Packaging equipments are totally out sourced under their strict quality
control department super vision, raw materials required are being supplied by the
Company.
• Some of the components that get into off the shelf products are having planned 2%
extra to take care of operational and assembly scrap.
• All the Packaging equipments are serial number managed and are having warranty.
• In all the units they have excellent product cost tracking mechanism using excel sheets.
www.zettamine.com
Annexure E
Finance Requirements
1. Key Policies/Operational Decisions or Logic within the Process
1. All Invoice processes will be executed based on PO – Purchase Orders generated from different user
requirements. The Invoices will be received from the Vendor and as per the PO agreed terms, the invoice
will be booked in SAP. Any difference between the PO and Invoice will be settled through Debit note or
Credit note generation.
2. All the Vendor Invoices will be paid in two methods – Full Payment and Partial Payment
2. General Ledger - Business Expectations / Aspirations:

a. The entire GL accounts are to be re-designed in order to handle the statutory financial statements,
consolidation and MIS reporting, at different levels including Global
b. Financial Statements should be separate for following:
- Operational
- Corporate.
c. Automation of cash flow statement is required from the system. Cash flow statement currently is being
prepared outside the system
d. MIS related entries to be captured in the system in parallel to the legal entries, where such MIS entries
should not affect the legal reporting in anyway
e. The GL accounts should be as per the US GAAP and IND AS (India Accounting Standards)
f. For GST the reporting in trial balance to be made available for each state separately in different state wise
GL Accounts
g. The expense accounts/advance accounts for salaries related expenses should be unique (i.e. Basic, PF
Overtime etc.) the breakup of such in terms of categories like Executive, Workmen, Casuals, Apprentices,
should be made available without the GL Accounts
h. Multiple investments, loans and other advances are currently shown as separate GL Accounts in the
existing system, which need to be grouped and individual accounts of investments and loans should be
considered as sub ledger
i. Mobile phone expenses booking should be based on individual phone no., here there should not be a
separate GL for each phone no.
j. For travelling currently, the postings are through the manual finance invoice postings, it is expected that
these should be routed through proper work order, service confirmation and invoice route only
k. The prepaid expenses posting should be done automatically
l. Material GL – Presently we are having a series of GL Codes and arriving at Material Cost. The present
method does not facilitate analysis of data as to movement of FG/WIP which is required to understand
the variance in stock and the value impact of the same, movement of COGS/COGM.
www.zettamine.com
m. Design of GL accounts should be done so that it should support all the Statutory reporting of Companies
Act, IFRS reporting and MIS reporting.
n. System to be designed such that, all locations of the Organizations should be at same systematic format
in terms of Process and reporting
o. Separate Profitability Statements need to be generated for
a. Direct sales from Factory
b. Distributors
c. eSales
p. Since HR-Payroll module implementation is in Phase-2, we have to post the salaries through Finance
module only bifurcating into 2 ways.
a. Direct and Indirect
b. Categories like Executive, Workmen, Casuals, Apprentices, are addressed.
q. Multiple Investments and Loans to be considered a sub-ledger which will be grouped and represented in
Financial Statements
r. Employee specific phone numbers can be booked under Employee ledger only. We should be able to
search for employees based on their phone No. Organizational Specific phone numbers can be booked
directly (NOT under employee ledger)
3. Accounts Payable - Business Expectations / Aspirations:

1) Current System process is ok, only the freight booking is happening with PO currency whereas the freight
is paid in Local currency
2) If the material codes are same, then the bifurcation of GL for import and local should be automatically
determined
3) There should be 2-step posting for all the documents, which ensure dual check process before posting.
4) The bill amount should not exceed the amount of Service PO, even though there are multiple Vendor bills
5) GL Accounts limits should be fixed for posting of invoice through finance. Amount should be fixed for each
user id in terms of the designation, for posting the invoice without PO in finance
6) For rent the entry should be through automatic process
7) The freight payable process of Freight clearing account and bill passing should be there
8) System should have various options of tolerance limits during Invoice booking so that certain Invoice
verification differences can be posted within the tolerance limits.
9) Currently various Debits and Credit Note posting (i.e. Retention etc.) is part of manual process and same
need to be automated through system
10) While booking the Stock transfers, system should post the financial entry to Stock in Transit account and
same should get knocked off while receiving the stock at the receiving plant.
Vendor Payments and Clearing Process
1) Training for Automatic payment process to be given to the users
2) Payment advice to be based on user and date and not with document which is done presently
3) Validation to be entered for printing the cheque only one time for a payment advice
4) For all the Vendors if advance payment exists then system should give an information message
www.zettamine.com
5) Good Receipts and Invoices Clearing process should be executed automatically using a field for reference
information
Direct and Indirect Taxation process

1) Service tax for which the credit to be taken should be identified based on the appropriate tax codes of
service tax.
2) Service tax paid against common input services to be captured separately
3) Tax code wise input tax report required, for state wise reporting as well
4) We can book the invoice as soon as the invoice is received in the plant and it will be with payment block
5) Tax code wise purchase report required.
Other Important Accounts Payable Process
1) The retention money should be shown separately in Vendor balance and it should not be part of regular
outstanding.
2) Insurance policies to be linked with Assets
3) The policy details with premium amount and due date and policy expiry date should be available in
system.
4) For outward freight, the process should be mapped with the stock transfer and the freight posting should
be based on freight clearing and automatic. Accounting of shortage to be captured in the freight outward
system
5) Financial documents like Letter of Credits should be captured in system for information purpose.
6) The power purchase accounting through system should give us the detail of source wise purchase of
power. Service PO may be used for Capturing Power Cost.
7) The same process can be continued for booking of provisions as the provision need to be computed and
derived based on the bills and other supporting
TDS provisioning process to be set with respective Vendor and deduction of TDS should be made with
individual PAN no.
8) As a part of Internal control one level should be for Finance team for the release of the purchase order.
An abstract of PO released at the end of each day may be sent as information to key persons concerned.
9) All the employees to be considered as Vendors and the loans and advances to be considered through the
finance module
Reporting Requirements
1) Vendor ageing report based on due date/Posting Date / Document date wise at Business Segment level
and Legal entity level.
2) Import Purchase and Domestic Purchase Register
3) Vendor Balance confirmation
4) Open and cleared item report
5) Cheque printing
6) Payment advice
www.zettamine.com
7) Employee open and cleared item report
Vendor bill passing process
1) Imported raw material purchase
Currently the invoices are directly posted
There is no dual check for posting of invoices
The inventory account for import and domestic material should be different, here the material code is
single.
2) Indigenous raw material purchase.

There is no dual check for posting of invoices
3) Service / Work purchase orders

Currently there is no limit for this as it can be booked any amount.
4) Without purchase order for misc. purchases

This type of invoices currently being booked which has really no control over anything
Example of expenses:
Audit fees, Donations, Subscription, Training Program, rent etc.
There is no dual check for posting of DN or CN
5) Project stock and its Goods receipt

There is no project stock in system, even though it is physically there but the same information of project
stock is not available in system
The GRN process of PO is not being followed for receipt of capital goods, at the time of passing the Vendor
bill Finance entry is passed for debiting the CWIP and crediting to Vendor
6) Freight payable accounting for outward freight

Currently the freight payable for outward freight is accounted for manually
7) Stock Transfer
Currently stock is transferred between the factories and there is no financial impact in the system.
Process Inputs
1. Good Receipt Document
2. Customs Invoice
3. Raw Material Invoice
www.zettamine.com
4. Freight Invoice
5. Vendor Invoice for services
6. Sub-Contracting Invoice
7. Vendor Invoice
4. Accounts Receivable - Business Expectations / Aspirations:

Customer Invoice Passing for Sales Process
1) The sales pricing and history (Cost sheet) should be maintained in the SAP system
2) All the price revision calculation and debit note/credit note calculation should be done by system without
any manual involvement.
3) Based on the calculation of the debit and credit amount to the Customer, the invoices should be posted
in system automatically
4) For the Export sales the recognition of revenue should be based on the bill of lading date and this should
be done in system automatically without manual intervention
5) It should be routed through Sales order process
Indirect Taxation for Sales Process
1) Tax code wise report required
2) Tax codes should be maintained in Finance as well to capture the taxes automatically
Other Important Accounts Receivable Process

1) Foreign currency calculation should be done automatically through the system.
2) The commission calculation processes (C&F and Export agency) needs to be automated
3) Provision to be made in the sales process to capture the bill of lading date, so that this date can be utilized
for Customer ageing report
4) Discounts should be made available in SO/DN/CN.
5) Freight and Insurance Accounting should be captured in system
6) Credit limit check required
7) Related party Customers to be separately created with separate account group, or inside the master we
need to identify with some indicator as related party Customer
Reporting Requirements
1) Monthly GSM (General Sales Meeting)
a. Overdue report,
b. Outstanding Report,
c. Billed not yet shipped report
d. Collection target for the next months
e. Actual target for the current months against achievement
2) FOB value of Exports
3) Country wise, Customer wise sales details
4) C&F Commission country wise report
www.zettamine.com
5) Sales report
6) Customer ageing report
5. Cash & Bank Accounting - Business Expectations / Aspirations:

Cash and Bank Accounting Process
1) The cash payment process should be as under:
Accounts person should verify the payment request and enter them
That entries should be available for the cashier to see and make the payments and at that time only the
cashier should post the documents in the system
2) When transferring the cash from bank or from bank to cash the amount should not exceed the policy
amount of cash transit insurance. Second check required is single amount also should not exceed to some
specified amount, the single cash payment check should be controlled through the Bank standing
instructions. The limit is different for different locations
3) The cheque no. should be proposed by system automatically.
4) Currently all the RTGS are through manual instructions and it needs to be routed through the auto e
transfer processes.
5) E-receipts to be configured in system for bank receipts
6) Here the expectation is to process the entire bank receipts at corporate office level based on the inputs
from BANK through some e file and get all the payments posted in SAP and after that intimation can be
sent to all regarding the receipts of payments
7) The incoming cheques should be entered at the time of receipts of cheques from Customer in a different
control account
Once it is clear then the balance from that control account should be shifted to the normal Customer
balance.
8) Working Capital Interest calculation should be computed through system

9) Term Loan need to be addressed through system
10) BRS should be done through system and there should not be any manual entry to update the main account
balances.
11) Here we should check whether all the PO and SO are covered in Hedging or not, the rolled over of the
cover with respect to PO and SO and the balance of cover also w.r.t. the PO and SO
12) Create separate control account for each bank
Create Customer code for each of the mutual funds, FDs in respective bank. All the transaction of dr. and
cr. to be entered in the respective Customers
13) Validation to restrict maximum amount: As per Income Tax Act we need to do Cash Transactions up to
Rs.20000 for each account
www.zettamine.com
14) if Posting date is past date, means system should only allow the current date (system date) to post the
transactions
Reporting Requirement:
1) Cash Voucher
6. Fixed Asset Accounting - Business Expectations / Aspirations:

Fixed Assets Process
1) The process of sale of assets should stop depreciation on scrapped assets and at the same time it should
be reflected in books with remaining WDV value, for tracking purpose, later on when it is to be sold then
process of sale of assets with revenue and Customer to be followed.
2) Transfer of assets should reflect in system with proper trail as from where it got transferred
The assets transfer is allowed only within a legal entity. If it is going out of the legal entity, it can be either
sale or through returnable gate pass.
3) Tax depreciation should be automatic

4) The physical verification needs to be done and asset id to be fixed on each of the assets for better control.
5) Asset Impairment process need to be calculated from System.
6) The owner of the asset should be there and following should be mandatory,
a. Employee code (If asset is computer and laptops etc.)
b. ROI (Return on investment) / Non ROI
c. Departments
d. Locations
e. Factories
f. Responsible Person
Reporting Requirement:
a. Asset Balance report
b. Asset Master Data report
c. Asset History sheet
d. Depreciation report as per companies act and Income Tax
7. Month End and Year End Closing Activities - Business Expectations / Aspirations:
1) Expecting most of the closing activities to be automatic
2) Even for manual activities, expecting the ready reports which automatically calculate the amounts to
be posted
3) Ability to get real-time financial statements at any time during the month – not necessarily at the
end of the month
Annexure F
Costing Requirements
www.zettamine.com
1. Overall Expectations:
a. Though all the units are having dedicated power lines , Hyderabad unit is having power problem
recently they have installed 200 MW power plant which is running by external agency under the
supervision on Spectrum Products team.
b. In all the units they have excellent product cost tracking mechanism using excel sheets. SAP is
expected to give more detailed and more accurate analysis and reporting
c. Product group-wise profitability is needed on a monthly basis with trend analysis.
d. Cosmetics and OTC items have huge profit margins in Americas and Europe. Detailed reporting is
needed for comparative analysis
e. Full-fledged financial statements are needed by Business Segments
2. Cost Control:
General
- Complete (100%) absorption of conversion cost into product cost
- Identification of cost which should not be considered for valuation of inventory
- Conversion cost reports with monthly cost data and year to date cost data
Department wise planning is required for comp. with actual, The department planning required are
Activity dependent planning for the departments where Activities are there (this planning is at Department + GL
and Activity) and
Activity independent planning where there is no Activity is there (this planning is a Departments + GL)
Plan allocation of cost to be there for allocation of the cost for Activity price calculation
Plan Activity price calculation
Department actual posting required to identify the following type of cost in different departments:
- Inventory valuation relevant cost
- Direct
- Indirect
- Inventory valuation not relevant cost
www.zettamine.com
Utility Costing:
The process of steam and power costing should be done in SAP system and to get the costing of power and
steam respectively
Following departments should be created for utilities costing:
For Power:
1. ELECTRICITY BOARD Department
Here the booking of ELECTRICITY BOARD cost will be there and also the units purchased will be captured,
2. Genset wise departments
Here the cost of power generation will be there and also the units generated will be captured
3. Total Power department:
Here the total cost of ELECTRICITY BOARD and Genset will be transferred and the total units generated from
ELECTRICITY BOARD and Genset also captured here as total units
All the allocation of power units should be done from the Total power cost centers
For Steam;
1. Boiler wise departments:
Here the cost of steam generation will be there and also the KG of steam generated will be captured
2. Total Steam departments:
Here the total cost of all boiler will be transferred, and the total KG generated from boiler also captured here as
total units,
All the allocation of steam units should be done from the Total steam cost centers,
Machine Costing:
The departments to be created at individual machine level to collect the following cost:
Depreciation (Fixed): Can be booked through fixed assets depreciation
Insurance (Fixed): Can be allocated based on machine capital cost
Interest (Fixed): Can be allocated based on machine capital cost
Maintenance (Variable) : Can be booked for each machine when the maint. expenses being incurred, it is
feasible to book
www.zettamine.com
Consumable (Variable): Can be booked in individual departments or it can be booked at common department
process wise and then it will be allocated to individual machines,
Activity price calculation:

The total cost which get booked at machine level need to be compiled at process level (for example Production
Line-1 has 100 machines so here the cost from all the 100 machines) for the purpose of Activity price calculation
Labour Cost:
The cost of Labour is captured process wise and the components of Labour are: Skilled + Unskilled + Supervisor,
(Set of GL for the above group)
Process by the total no. of Labour hours consumed is also there so the labour hour cost is computed by dividing
the total cost with total labour hours,
Setup hour costing:

The total setup hour cost need to be divided between Setup labour hours and machine hours
Setup labour hours

For set of machines there are separate set of skilled labour who only performed the set-up of process and
machines, in order to capture this setup labour cost
Setup machine hours:

This cost is basically the opportunity cost of the machine hours lost during the setup process hence there is not
need to calculate the setup machine cost, already we have the machine hour cost so that no. of hours will be
booked in the respective production orders as setup machine hours with the Activity of machine cost
Idle time costing:

For every process the production departments will have the planned hours and actual hours confirmed by the
production process,
The idle hours or Minutes to be derived for each process and department and then it need to be allocated from
the production departments to a separate Idle time internal order process by process
Overhead costing:
Stores overhead
Manufacturing overhead
Admin overhead
www.zettamine.com
The overhead should be based on per KG of of the production
R&D Costing :
The R&D department is divided into Design, Process and Testing Team,
The objective/task of R&D Dept. is as under;
- New product development
- New process implementation
- Monitoring of current process
For R&D we can have 3 departments such as New product , New Process, and Monitoring
and 3 Activities based on the R&D Team such as Design, Process and Testing
For new product development : As and when we get the request from customer for the new product
development , we can book the actual time of each team by way of allocation of hours from New product
development departments with respective Activity as per the actual hours worked
For new process implementation: The new process implementation is for the existing production facilities so the
cost of such should be borne by the department of that process, so to do that the actual hours can be allocated
from departments of New Process Implementation with required Activities
For monitoring : The monitoring activity of R&D is common for all the processes; hence the time invested for
monitoring will be allocated to the Overhead departments of respective plants, for the Monitoring cost centers
of R&D
Month end and year end closing

- Before the start of new fiscal year, the entire planning exercise to be carried out for all departments,
which includes the upload of plan data, allocation of plan cost and plan activity price calculations.
- At the end of every month i.e. post completion of the account closing by the finance and other team
the month end closing activity need to be carried out to absorb the conversion and overhead cost to
cost of production, this month end activity includes, Allocation of cost and Activity price calculations,
- If the costing team has identified that there are some incorrect postings being done in any of the
departments, then that will also act as a trigger for the reposting of the cost in the correct
departments
www.zettamine.com
Other costs
• Statistically capturing of the cost for different heads and different locations
• R&D to capture the New Product Development Expenses
CAPEX
• All the CAPEX expenses should be captured
• Budgeting control through the system – if budget exceeds, system should stop it
3. Product Costing
New Products
These new product costing should be done through SAP System. Here we should have all the features of
calculation and SAP data as well to compute the new product pricing
Detail of the process wise and product i.e. SFG And FG costing structures is needed
Through system it should be done as and when it is required:
- For all the RM there will be a fixed rate maintained in a separate field
- Separate costing will be there for taking the cost from that separate field and latest available BOM
- On executing the costing run we get the changed cost if there is any change in the BOM of any product,
Variance Reporting
The variance report should be available in following breakup:
- Price variance
- Quantity variance
- Usage variance
The rework cost should be identified and expensed out for that finished materials, which should be captured for
reporting purpose
Scrapping of materials should be accounted for from the system
This reconciliation report should also be required at process level as well
Process
1. On creation of the production order the plan cost should be computed and stored in system
2. On production confirmation, the cost of RM and Conversion cost should be booked in the GL and Costing
www.zettamine.com
3. On Goods receipts of the SFG and FG from production, the accounting entries w.r.t. the inventory value
should be updated in GL and Costing
4. On completion of the production order, system should trigger the variance calculation and posting of the
variances in GL and Costing
4. Inventory Valuation
Raw Material- Moving average price Valued at Weighted average cost method.
Local Cost for this purpose includes Purchase price of
Raw Material net of discounts, Freight and Non-
Vatable Tax
Raw Material- Moving average price Valued at Weighted average cost method.
Imp Cost for this purpose includes Purchase price of
Raw Material, Freight and Non-Vatable Tax.
Foreign Currency rate is based on custom
department notification.
Work in Valuation is at standard cost Valued at Weighted average cost method.

Progress however the valuation principle is Cost for this purpose includes Standard
same as in the current practice BOM@Opening weighted average rate of Raw
Materials at the beginning of the month in the
respective factories plus standard conversion cost
up to each process.
www.zettamine.com
Finished Goods Valuation is at standard cost Valued at Weighted average cost method.
however the valuation principle is Cost for this purpose includes Standard
same as in the current practice BOM@Opening weighted average rate of Raw
Materials at the beginning of the month in the
respective plants plus standard conversion cost
Finished Goods valuation:

As per the auditor recommendation the FG
material which are old in stock should not be
revaluated with the latest standard price and the
old valuation price should be maintained
Trading goods Moving average price Valued at Weighted average cost method.
Cost for this purpose includes Purchase price of
Vatable Tax
Spares and Moving average price Valued at Weighted average cost method.
Consumables Cost for this purpose includes Purchase price of
Vatable Tax
5. Profitability Reporting and Analysis

Sub Area Requirement / Expectation Current AS IS
www.zettamine.com
Contribution Marginal costing contribution Contribution
Reporting reporting is required: reporting is currently
Sales: done outside the
Less: Variable cost system
Contribution
Less: Other cost
Gross Profit:
Detail Contribution statement as
currently being prepared is
attached for reference purpose,
however a more detailed
version of contribution reporting
is expected from SAP
Finalization of The reporting structure should

structure for include items such as Products,
contribution plants, Division, Distribution
reporting channel, Profit centre.
Allocation of This allocation should be done Currently not

discounts and at product level; this we should applicable
freight do to allocate the marketing and
other unallocated expenses to
for profit calculation
- Extensive checking of the contribution reports after weekly sales and invoices will make the report more
accurate.
- Once the other month end activities are completed then we need to allocate the marketing related
expenses
- Multi-dimensional profitability reporting is needed
www.zettamine.com
- Detailed contribution margin reporting is possible as we can break the total cost in the various
components of cost
- Splitting of the total MAP cost is required i.e. let’s say 265/- to be split into RM Cost, Conversion Cost and
OH cost
Format for the reconciliation for profit would be as under;
Particulars Location-1 Location-2 Total
Budget Actual Budget Actual Budget Actual
Revenue
Product Group – Customer

Group Combination - 1







Other Income*
Total Revenue
Variable Cost
Raw Material
Sub-contracting charges
www.zettamine.com
Consumables
Spares
Power
Fuel
Freight out
Rates & Taxes
Commission & Discount
Warranty
C&F commission
Interest-WC
Total - Variable
Contribution
Fixed Cost
Salary-all category**
Advertisement
Sales promotion
Travel-Domestic
Admin Expenses
Total - Fixed Cost (1)
EBITDA
Depreciation
Interest-TL
OTHERS
OPC
Total - Fixed Cost (2)
www.zettamine.com
EBT
www.zettamine.com
Annexure G
Project Systems Requirements

// Details awaited from Spectrum Products Inc.
www.zettamine.com

Spectrum Products BRD - Ver 1.0

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Spectrum Products BRD - Ver 1.0

Enviado por

Direitos autorais:

Formatos disponíveis

SAP Implementation Project*

SAP Implementation Project*

The SAP Implementation project will encompass:

SPECTRUM PRODUCTS Inc

Spectrum Products Inc. is having their Manufacturing Plants in following countries.

Spectrum Products Inc. is having their R&D Plants in following countries.

Products range of Spectrum Group:

The following are the main characteristics of our FMCG products:

From the consumer perspective

Product group-wise profitability is needed on a monthly basis with trend analysis.

Following Annexures pertain to Business Requirements Document (BRD) from Spectrum

Sales and Logistics Requirements

• Processes adhering to the best industry practices especially in FMCG.

Region Name Designation Location Mobile / eMail

1.2. Products range of Spectrum Products

1.3. The products distribution is controlled thru

1.4. Business aspects

1.5. Packaging Equipments

1.6. Credit management and Credit Limits

2.1. Master Data.

2.2. Sales processing

Mandatory details to be maintained in the sales order document.

Multiple mode of shipment may be maintained in the same order item-wise.

2.3. Letter Of Credit Processing in Sales Order

2.4. Delivery Processing at Warehouse

2.5. Transportation process

2.7. Commission Payables

2.8. Sales Returns

2.9. Sales Return with Replacement

3.1. Reporting requirements.

• Raw Material Stores

Procurement happens between Indian Plants for some semi-finished products

Procurement happens between Germany Plants for some semi-finished products

For plants in India:

For plants in Germany:

If procurement happens between

- 5 Kg to 10 Kg -- Discount is 1% on quoted price

Indian plants procure some of raw materials from China suppliers.

Power, Water are directly consumed from external sources.

All material movements are associated with batch number.

All payments are thoroughly subject to 3 way matching.

200 MW Thermal Power plant :

2. General Ledger - Business Expectations / Aspirations:

3. Accounts Payable - Business Expectations / Aspirations:

Direct and Indirect Taxation process

There is no dual check for posting of invoices

2) Indigenous raw material purchase.

3) Service / Work purchase orders

4) Without purchase order for misc. purchases

Audit fees, Donations, Subscription, Training Program, rent etc.

There is no dual check for posting of DN or CN

5) Project stock and its Goods receipt

6) Freight payable accounting for outward freight

4. Accounts Receivable - Business Expectations / Aspirations:

Other Important Accounts Receivable Process

5. Cash & Bank Accounting - Business Expectations / Aspirations:

8) Working Capital Interest calculation should be computed through system

6. Fixed Asset Accounting - Business Expectations / Aspirations:

3) Tax depreciation should be automatic

- Identification of cost which should not be considered for valuation of inventory

Plan Activity price calculation

- Inventory valuation relevant cost

- Inventory valuation not relevant cost

Following departments should be created for utilities costing: