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ERP Systems Essay

1.Explain the conditions or circumstances that would lead a company to use the IWM features available within SAP ERP. What capabilities does IWM add to the features available within the Sales and Distribution, Materials Management, and Production Planning and Execution areas of SAP ERP?

The conditions and circumstances that would lead a company to use the IWM features available within SAP ERP are due to increased cost pressure, higher customer expectations, shorter cycles of innovation and high differentiation of consumer goods within the same industry. Additionally, customers are demanding more efficient ways of delivery. IWM features are able to improve timeliness and flexibility of deliveries. IWM has the capabilities to support increasingly complex supply chains.

There are many capabilities provided within the Sales and Distribution, Materials Management, and Production Planning and Execution areas. Some capabilities include the ability to track orders and inventory in real time, display inventory value, control the movement of goods internally between plants, initiate the transfer of goods, and creating sales orders pertaining to materials management and warehouse management. Additionally, running bin status reports of goods in the warehouse, purchasing/selling goods internally by STOs and controlling the fulfillment process.

2.What is the purpose of using a “stock transport order”? Why would a “stock transport order” be used rather than an ordinary “stock transfer,” or a combination of “sales order” (sending plant) and “purchase order” (receiving plant)?

The purpose of a stock transport order (STO) is to request materials from another plant within the same company code instead of procuring the material from a normal vendor. Hence, one plant is purchasing materials from another plant that sells the materials. Additionally, the IWM process is triggered by the STO from the manufacturing facility to a warehouse managed storage location. STOs are more complex in nature and can be performed with deliveries, without deliveries, and with deliveries and billing. A STO would be used instead of a “purchase order.” This is due to the plant purchasing goods from the other plant as a transport under the same company code.

A purchase order is purchasing goods/materials from a normal vendor, not a plant within the same company code. The same reasoning applies to the sales order. The sending plant is sending goods/materials to their customers, not a plant within the same company code. As for a stock transfer, they are used to transfer materials within a company from one location to another. Movements include within one plant, between plants, and etc…Stock transfers are a simple way of moving goods, not internal purchasing/selling of goods like STOs.


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