Chemical Industry SAP | Delivering the Best SAP for Chemicals

Everything you need to know about SAP in Chemical Industry

The Chemical Industry, being a versatile sector in the world, goes through incessant development. Innovative software solutions are necessary for Chemical Industries to keep up with the huge and dynamic competition. It also to integrate business processes effectively. SAP comes to the rescue in such a situation, proving to be the best and most powerful solution for Chemical Industries. With the help of the SAP system, Chemical Industries can effectively handle every aspect of their business. And, migrating to SAP Software is the best option to meet the challenges of the Chemical Industry.

Let us have a look at the way SAP benefits the Chemical Industries:

Order to cash

The Make to Stock & Order process of Chemical Industry is as follows:

Once the yearly/quarterly or time period-based blanket agreement/contract from the customer is received, the Purchase Order is created as a Blanket agreement or Sales order in SAP, as per which FG is produced continuously in a periodic order. This is then followed by Accounts Receivable Invoices and Incoming payments (Major Reports include Customer receivable, Cash flow, and Sales analysis).

Procure to pay 

Using the MRP function, by the start of the month, we plan for procurement for the month and the purchase request is auto-created. Goods receipt is created against the Purchase Request by the stores, and as per the Accounts, the Payable invoice and Outgoing payment are done (Major Reports include Vendor payables, Cash flow, and Purchase analysis).

Sales order for Chemical Industries

SO is created from the blanket agreement or once PO is raised or once the quotation is confirmed by the customers of Chemical Industries. Using DMS, the soft copy of the PO is also attached. Also, the payment terms and delivery date are fixed. And then, we do send the order acknowledgment from SAP by email.

Sales Quote in SAP

Once the Sales Quotation from the customers is confirmed by SAP, it is converted to an order and the quote gets closed.

MRP

The MRP is used for Production planning and the procurement of required raw materials, considering the stock and for opening PO (Purchase request for RM is auto-created as per the Order/Demand). This is also a critical aspect of the Plan to produce.

Purchase Request in SAP

PR is auto-created by Material Requirements Planning, and even the PR is created manually department-wise as per the requirement of office equipment, consumables, etc. against which the PO is generated.

Purchase Order in SAP for Chemical Industries

On basis of the Purchase request, PO is created by approval procedure.  For items having default supplier, PO is automatically created by MRP, by fetching unit cost from the pricelist set.

GRPO in SAP

On basis of the PO, when the vendor delivers the item, the Goods receipt against PO is posted which debits the inventory (Stock adds in the warehouse – WMS).

Supplier Payment for Chemical Industries with SAP

Based on GRPO, a supplier invoice is added against which the outgoing payment is done.

Production in Chemical Industries with SAP

As per the BOM, considering the demand and stock by MRP, production orders are auto-created. RM is issued route stage-wise, and once all the stages are completed, the receipt from production is done, where the Finished goods come to inventory (Product Costing is a critical aspect of SAP).

Invoice with SAP for Chemical Industries

Account Payable invoice is created and the payment entries are posted (Open document system gives proper control).

This is how SAP Software benefits the Chemical Industry and increases its overall efficiency. Also, the overall operations of Chemical Industries can be greatly improved.

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