SAP has integrated SAP APO’s Production Planning and Detail Scheduling (PPDS aka PP/DS) and Global ATP (GATP) into the SAP S/4HANA Core.
Introduction of Global Trade Services
The foreign trade functionalities which were present in SAP ECC are replaced by the Global Trade Services (GTS) in SAP S/4HANA. Some of the advanced features in GTS are –
· Sanctioned Party List Screening (SPL)
· Automatic Embargo Checking. This procedure which was manual in SAP ECC.
· Automated and Simplified License Checks. This procedure was manual and quite complex in SAP ECC.
· Automated import and export declarations
Material Ledger is Mandatory
In SAP ECC, the material ledger (ML) was optional. However, not many companies implemented the material ledger in SAP ECC due to considerations surrounding performance, effort, and aggregate tables. In SAP S/4HANA, it is mandatory to activate the material ledger. But the adoption of the material ledger has been smooth in SAP S/4HANA. This is because the considerations which were prevalent in SAP ECC are now alleviated thanks to the simplified data models in SAP S/4HANA and the Universal Journal, the ACDOCA. The benefits of using the Material Ledger in SAP S/4HANA are –
1. Multi-Currency Valuations
One innovative feature of the material ledger in SAP S/4HANA is that it evaluates the inventory in multiple currencies. In SAP ECC, the inventory is evaluated using a single currency. The Material Ledger in SAP S/4HANA allows evaluations in two additional currencies.
The material ledger enables three different valuation options for a corporate group operating in multiple countries. These are Legal, Group, and Profit Centre. In general, legal valuations are stored in the local currency while the group and profit centre valuations are stored in the group currency. Parallel valuations help with transfer pricing for the internal sales between legal entities or profit centres within the group for worldwide supply chain. If a product is assembled in one country with parts which are produced or procured from units of the same group operating in different countries, the final cost price could become very high due to the internal profits in cross-company sales. Multi-Valuations will help to reduce the final cost price by eliminating the internal profits from cross-company sales in MNCs.
3. Actual Costing
Inventory and Material movements are usually valuated at the standard price which is constant over a period of time or moving average price which gets dynamically adjusted / calculated based on every goods receipt or invoice receipt. Each method has its own merits and demerits. This is where actual costing in SAP S/4HANA makes a huge difference. Actual costing combines the advantages of using standard price with the advantages of using moving average price. The Material Ledger captures all price variations such as purchase price variations & production variances and allows revaluation of the ending inventories at period end as optional period end activity to release it as standard price for the next period.
4. Introduction of SAP Revenue Accounting and Reporting
SAP ECC’s SD revenue accounting is no more. SAP Revenue Accounting and Reporting takes its place instead in SAP S/4HANA. This is primarily due to the new accounting standard which was released jointly by the Financial Accounting Standards Boards (FASB) and the International Standards Boards (IASB). The new guideline is also present in the IFRS released in 2014. SAP ECC’s SD revenue recognition works by the Generally Accepted Accounting Principles (US-GAAP), the International Accounting Standards (IAS), and the Financial Reporting Standards (FRS). It provides the three options to recognize revenue. 1. Revenue recognition based on events such as Goods Issue, Proof of Delivery, etc. 2. Revenue Recognition over a period of time. 3. Standard Revenue Recognition based on billing. The new standard introduces the five step model. The five steps are as given below. 1. Identify the contract. 2. Separate Performance Obligations 3. Determine Transaction Price 4. Allocate Transaction Price 5. Recognize Revenue SAP Revenue Accounting and Reporting is a part of SAP S/4HANA and it accommodates the changes in IFRS 15 and also meets the requirements of parallel accounting and cost recognition.
5. Settlement Management Replaces SD Rebate Processing
In SAP ECC, rebates are handled by SD rebate processing. In SAP S/4HANA, rebates are handles by Settlement Management through Condition Contracts.
In SAP ECC, the message determination was based on NAST table. Business Rule Framework Plus (BRF+) replaces this in SAP S/4HANA. The target architecture is now based on Adobe Document Server and Adobe Forms only.
Introduction of Extended Warehouse Management
The Extended Warehouse Management Module in SAP S/4HANA replaces the Warehouse Management Module in SAP ECC. The EWM Modules can be natively integrated in SAP S/4HANA or adopted as a decentralized sidecar deployment.
Some of the key benefits of using EWM over WM are
1. Complex warehouse processing through process oriented storage control (POSC).
2. Improved and easily customizable RF functionality
3. Value added services like kitting, enhanced wave & replenishment processes
4. Labour Management
The above parameters cover most of the key differences between SAP ECC and SAP S/4HANA. But do these differences result in business benefits?
Stay tuned for more insights on Iteanz’s Blog
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