How SAP replicates business process. What is business process?

Every organization either provides services or sells product. In order to achieve this organization has to perform certain interrelated activities. This sequence of activities is called business process. Initiation of one activity may depend upon completion of previous activity or multiple activities may be performed in parallel.

Every organization has various departments (Human Resource, production, material, sales & distribution, finance etc.) Each department performs certain set of activities/ task. (

Business performs various activities by making use of SAP for processing data & sharing information. Data & information generated at each activity is captured and well documented. SAP basically helps in keeping track of all the activities performed and streamlining activities to be performed by sharing up to date information.



Let’s take examples to understand the meaning of business process how SAP contributes in enabling the business process.

Company selling product to its wholesale customers

Company receives order for products from wholesale customer. Products is loaded on ship/truck and handed over to transporter for delivery. Company bills the customer and customer pays against the bill. Company has to pay transporter for service.

Now customer returns some of the goods due to quality issues. Quality check is performed on returned goods to decide if goods are to be scraped or rework is needed before adding it to inventory.

Business process is a well-defined set of activities to be performed to handle a particular business scenario.

Now how do we replicate above process in SAP. Below diagram explains how SAP can help in handling above business scenario.

business process 1

When company receives order from customer a sales order is created in SAP SD module.

Goods are handed over to transporter and status of delivery is tracked throughout, a delivery document is created in SAP SD. Delivery document is used to track picking, packing and finally goods issue. Once goods are moved out of company, documents are posted in SAP MM which ensures that inventory is adjusted and financial impact is also recorded in SAP FI.

When company bills customer a billing document is generated in SAP SD. Since company expects money from customer for sale hence revenue is booked. Customer invoice is posted in SAP which books revenue and account receivable against the customer. This accounting entry is posted in SAP FI.

When customer pays à customer payment is recorded against customer invoice. Payment document is recorded in SAP FI which clears account receivable and adjusts amount in bank account.

Now if customer returns some of the goods a credit memo is issued to customer with reference to sales order to adjust financials. Credit memo is created in SAP SD. Credit memo post financial document to adjust financials in SAP FI. Goods returned back are issued to quality check and decision is taken either to scrap or rework. In case goods are taken back to inventory, a document is posted in SAP MM to update inventory.

Company has to pay transporter for services. Since company has purchased transport service from transport vendor. Hence a service purchase order is created in SAP MM which has details of service agreement. When transport vendor produces bills to company, company is expected to pay hence a document is posted in SAP FI which shows accounts payable against the vendor.

When company pays the vendor, vendor payment is recorded against vendor invoice. . Payment document is recorded in SAP FI which clears account payable and adjusts amount in bank account.

Hence SAP is enabling the business process by recording and sharing data & information generated at each step. SAP is helping all departments (sales, material & finance) to coordinate and produce desired effect.




Lets take another example to understand concept of business process

E commerce business e.g. Paytm

Paytm business process

Above diagram depicts activities which are to be performed in sales process by Paytm. Since activities might require coordination between various departments hence organisation may deploy ERP (SAP). Data generated at each activity has to be recorded and information has to be shared between various departments.

It might happen that along with SAP few more software are being used in organization. Hence interface (data sharing) between SAP and other software might be required.