Best Practices - Procure to Pay

8/13/2019 Best Practices - Procure to Pay

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• Procurement of Stock – from quotation to stock procurement (V3E)

• The purchasing process may start with a Request for Quotation by which a purchasingorganization Employee requests a quotation for the supply of material(s) from a vendor(s). TheRFQ process includes offer comparisons to select the best source. The buyer will evaluate theresponses from vendor(s) and determine the best source of supply. The agreed material cost

will be captured on the material master and form part of inventory valuation based upon areleased standard cost.

• Material specific information including vendor pricing and lead-time from the quotation arecaptured within SAP master data records namely info records and linked to transactionalrequisitions and purchase orders via an SAP look up called a source lists. Info Records andSource Lists can have one or more vendors associated with the material; however, one vendoris designated as the primary source for the material.

• A Purchase Requisition is either generated via the Material Requirements Planning process ormanually from a requestor. A Buyer will validate the accuracy of the Purchase Requisition andconvert the Purchase Requisition into a Purchase Order. The purchase order is subject toapproval based on a predefined dollar amount prior to being issued to a vendor.

• Goods are shipped from the vendor and received to the purchase order referenced on thedocument from the vendor. Inventory is received into a location based on fixed parameters

proposed from the material master that can be changed at time of transactional data capture,that is Purchase Order creation or goods receipt.

• The invoice is received from the vendor. Invoices are entered with reference to a purchaseorder and item, providing a three way match, purchase order value, goods receipt value andinvoice value. If there are any variances between invoice and purchase order value, the invoicewill be blocked and forwarded to the buyer for approval. Checks to vendors are generatedbased on the net term condition reflected on the invoice, defaulted from the vendor master.Variances due to deviations from standard price are collected in the purchasing cost center andallocated to Product Line level based on a predefined percentage as determined by thebusiness.





• Quotation for Procurement (V3A)

• The request for quotation (RFQ) process starts with a

request for material(s) from a vendor(s). The RFQ process

includes offer comparisons to select the best source. The

buyer will evaluate the responses from vendors to

determine the best source of supply. The accepted

quotation will be processed into a purchase order and areject letter is sent to the vendor(s) whose quotations were

rejected.

• Material-specific information including vendor pricing andlead-time from the quotation are captured within SAP

master data records.





Procurement - Contract (V3F)

Contracts are agreements with the vendor to supply materials or services with negotiated

conditions and within a certain period. Contracts are differentiated as follows:

•Quantity contracts: An agreement that a company will order a certain quantity of a product

during a specified period.

•Value contracts: A contract in which the purchase of goods or services up to a total value isagreed.

In source determination, contracts replace the purchasing info records and can be assigned

in the source list as the fixed source for MRP.

Procure to Stock - Contract

V3F

R e q u i s i t i o n e r

B u y e r

E v e n t

A need for

material isidentified

MRP Generated

ProcurementNeeds

Purchase

Requisition

4.2

Assign Vendor

from Contract to

Requisition

4,4

V3E

Procure to Stock

Value or Qty

Contracts Report

4.3

Monitor Value or

Qty Contracts

4.1

V8T

CreatePurchasing

Contract



Stock transfer with delivery (V3G) The stock transfer process begins with a requirement to transfer material from one plant to

another within the same company code. This request, in the form of a stock transfer

requisition, may be created in the procuring plant automatically by MRP or manually by a

buyer.

There are no master data requirements beyond the material master to support the stock

transfer process. The material master must exist in both the procuring (receiving) plant and

the providing (shipping) plant. Also, stock transfer purchase orders are not subject to

approval like other purchase orders.

A Buyer will validate the accuracy of the Stock Transfer Purchase Requisition and convert

it into a Stock Transfer Purchase Order.

A Warehouse clerk at the shipping plant monitors the materials due to be shipped and

creates deliveries as necessary. Once a delivery is created, a pick list is generated for the

materials. A Warehouse clerk gathers the materials and confirms the picked quantities.

Once the delivery is complete, the delivery quantities are issued, appropriate

documentation is generated, and the shipment is sent, ending the process for the shipping

plant.

Goods are received at the receiving plant referencing the delivery number on the shipping

documents. Inventory is received into a location based on fixed parameters proposed from

the material master which can be changed at time of transactional data capture i.e.

Purchase Order creation or goods receipt.



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nven ory oun an us menThis scenario covers the periodic process making

necessary adjustments to stock on hand after a physical

count.

The process begins with the generation of the inventory

count sheets. Once the inventory sheets are printed out,

the actual physical inventory count occurs for the givenmaterials. Next, the count is entered in the system and

then any discrepancies against the system quantities are

reviewed. The inventory may be recounted until final

counts are accepted and inventory differences areposted.















Inventory

Adjustment

Inventory count and adjustment

V3B

P l a n t

C o n t r o l l e r

W a r e h

o u s e

M a n a g e r

W

a r e h o u s e

C l e r k

E v e n t

Periodic

Physical Count

Needed

4.1

Collective Create

Physical InventoryDocument

4.2

Print Physical

InventoryDocument List

Physical Inventory

Document

4.3

Physical

Count

4.4

Enter Count

Review

Inventory Count

Different List

4.7

Post Inventory

Count Difference

End Process

4.6

Accept

Count

4.5

RecountNo

1

Yes

Yes Accept Count

No



MM Subcontracting (V3J) MM Subcontracting process involves sending raw

components to a vendor for specific manufacturing processes

and receiving the value-added finished material back into

inventory.

A Subcontract Purchase Requisition is either generated via

the Material Requirements Planning process or manually by a

requestor. A Buyer will validate the accuracy of the PurchaseRequisition and convert it into a Purchase Order. The

purchase order is subject to approval based on predefined

parameters prior to being issued to a vendor.

The consumption of sent components is recorded upon

receipt of the value-added finished material. The vendor

sends the invoice for the services provided which is paid

during the normal payment cycle.

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Consumable Purchasing (V3H) The consumable (MRO) items (goods or services) are entered with no material

number but rather a short text description as the main identifiable characteristic.

The purchase order is subject to approval based on predefined parameters prior to

being issued to a vendor.

For consumable goods, the inventory is received into a location based on

parameters defined in the purchase order material line item. The value of the

goods is expensed to a cost center.

When the invoices is received from the vendor, they are entered with reference toa purchase order and item, providing a three way match, purchase order value,

goods receipt value and invoice value. If there are any variances between invoice

and purchase order value, the invoice will be blocked and forwarded to the Buyer

for approval. Checks to vendors are generated based on the net term condition

reflected on the invoice, defaulted from the vendor master. Variances due to

deviations from standard price are collected in the purchasing cost center andallocated to Product Line level based on a predefined percentage.

Procurement for a consumable service follows the same general flow. However, as

the consumable service has no goods receipt element within the system, it is paid

based on the invoice receipt.

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e urn o en or

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e urn o en orThe return to vendor process begins with a requirement to return

an item to a vendor. The initial activity is to request a Returns

Material Authorization (RMA) from the vendor. This is a manual

step and the RMA number will be entered into a text field in thereturn PO. The Buyer will then create a Return PO in the system.

The return PO is similar to a standard PO except for the return

flag which sets up the return delivery to enable shipment of the

item(s) back to the vendor.

The Return PO confirmation goes to the Vendor and the Return

Delivery is sent to the Shipping department where the item(s) are

picked and shipped back along with a Delivery Note. When the

Shipping department creates the delivery the item(s) are relievedfrom inventory. A credit memo is generated which relieves the

liability to the vendor.















Inventory Disposition - Valuated (V3C) This scenario covers two primary goods movements: goods issue to scrap and to

a cost center.

Goods are issued to scrap when the material being manufactured is directlyidentifiable with a particular product line. The value of the scrap is reflected directly

to a product line in the profitability analysis income statement.

Goods are issued to a cost center when the material is used for non-

manufacturing purposes internally in the organization.

V3C

Inventory Disposition (Valuated)

W a r e h o u s e

M a n a g e r

A c c o u n t i n g

E v e n t

4.1.2

GI to Scrap COPA

1

Scrap Expense

Inventory

Non-Customer-

related disposition

4.1.1

V4F

Returns and

Complaints

4.2.1

GI to Cost Center

1

Scrap Expense

Inventory

I t Di iti N l t d (V3D)

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Inventory Disposition - Non-valuated (V3D) This scenario covers two primary goods movements: goods movements between

unrestricted stock and blocked stock and miscellaneous inventory movements within

the plant.

These movements do not generate any accounting documents as the goodsmovements have no financial impact.

V3D

Inventory Disposition – Non-Valuated

W a r e h o u s e C l e r k

E v e n t

4.1.2

Transfer

Unrestricted to

Blocked

4.1.1

V4F

Returns and

Complaints

4.2.1

Transfer Blocked

to Unrestricted

Miscellaneous

transfers

















Master Data

Create Vendor Master (V8B)



Maintain Vendor Evaluation

Maintain Vendor Evaluation

V7Y

P u r c h a s i n g

M a n a g e r

B u y e r

E v e n t Need to evaluate

Vendors

performance

3.2

Maintain vendor

evaluation

3.1

V3E

Procure to

stock



Creating Purchasing Information Record (V7Z)

Create Purchasing Info Record

V7Z

B u y e r

E n g i n e

e r i n g

E v e n t

Need for a new

Pur. Info Record

V8B

Create

vendor

master End process

4.1

Create purchasing

info record

V7A/V7B/V7C

Raw, Semi, Tradematerial creation

4.2

V8A

Create

source list

4.3

V7N

Create

routings



Create Source List (V8A)



Create Raw (ROH) Material (V7A)

Create Raw (ROH) Material

V7A

E n g i n e e r i n g

E v e n t Need for new raw

material

End process

3.1 - 3.9Create raw

material

3.12

V7J

Create Bill of

Materials

3.13

V7Z

Create Pur.

Info Record

3.14

V8P

Create

Engineering

Change No.

3.15

V8Q

Create Product Cost

Planning for an

individual product

3.10V7G

Maintain Matl.

Plant Extension

3.11

V7H

Maintain

Storage Loc.

Extension



Create Semi-finished (HALB) Material (V7B)

Create Semi-finished (HALB) Material

V7B


E v e n t Need for new

semi-finished

material

End process

3.1 – 3.9

Create semi-

finished material

3.12

V7J

Create Bill of

Materials

3.13

V7N

Create

Routing

3.14

V7Z

Create Pur.

Info Record

3.15

V8D

Create Sales

Price

Condition

3.16

V8G

Create Product

Group

3.10

V7G

Maintain Matl.

Plant Extension

3.11

V7H

Maintain

Storage Loc.

Extension

3.17

V8Q

Create Product

Cost Planning for

an Individual

Product



Create Trading Good (HAWA) Material (V7C)

Create Trading Good (HAWA) Material

V7C


E v e n t

Need for new

trading material

End process

3.1 – 3.9

Create trading

material

3.12

V7J

Create Bill

ofMaterials

3.13

V7Z

Create

Pur. InfoRecord

3.15

V8P

Create

EngineeringChange No.

3.16

V8Q

Create Product Cost

Planning for anIndividual Product

3.14

V8D

Create

Sales PriceCondition

3.10

V7GMaintain Matl.

Plant Extension

3.11

V7H

Maintain

Storage Loc.Extension

3.17

V8G

Create

ProductGroup



Create Finished (FERT) Material Make to Stock(V7D)

Create Finished Good (FERT) Material – Make to Stock (MTS)

V7D


E v e n t

Need for new

finished MTS

material

End process

3.1 - 3.9

Create finished MTS

material

3.12

V7J

Create Billl of

Materials

3.13

V7N

Create

Routing

3.15

V8G

Create

Product

Group

3.14

V8D

Create Sales

Price

Condition

3.10

V7G

Main\tain Matl.

Plant Extension

3.11

V7H

Maintain

Storage Loc.

Extension

3.16

V8Q

Create Product Cost

Planning for an

Individual Product



Create Configurable Material(V7E)

Create Finished Good (FERT) Configurable Material

V7E



configurable

material

End process

3.2 –

3.10Create configurable

material

3.15

V7J

Create Bill of

Materials

3.16

V7N

Create Routing

3.12

V7G

Maintain Matl.

Plant Extension

3.14

V7F

Create Finished

Goods (Fert)

Mat. Variant

3.13

V7W

Create

Configuration

Profile

3.1

V7XCreate

Variant

Classification



Create Finished Good (FERT) / Configurable Material Variant (V7F)

Create Finished Good (FERT) Configurable Material Variant

V7F



configurable

material variant

End process

3.2 – 3.10

Create

configurablematerial variant

3.14

V8D

Create Sales

Price Condition

3.13

V7K

Create BOM

Config. Link

3.11

V7G

Maintain Matl.Plant Extension

3.12

V7H

Maintain Storage

Loc. Extension

3.15

V8G

Create Product

Group

3.1

V7E

Create

Finished

Goods (Fert)Configurable

Material



Create Finished Goods (FERT) Material for Project System (V7I)

Finished Material – Project Systems

V7I



finished material

for proj. sys.

End process

3.1 – 3.9

Create finished

material for project

systems

3.10

V7VMaintain Network

Parameters for

Sales Order



Engineering Change Number Resource (V8P)



Create Product Version (V7O)

Create production version

V7O

P r o d u c t i o n P l a n n e r

E v e n t

A new production version is required for a

repetitive manufactured material for a plant

4.1

Create production

version

V7J

Create Bill of

Material

V7N

Create

Routing

4.2

V8H

Create Product

cost collector

End process



Maintain Material Plant Extension (V7G)

Material Plant Extension

V7G


E v e n t

Need to extend

material to other

plants

End process

3.17

V7J

Create Bill of

Materials

3.18

V7N

Create

Routing

3.21

V8G

Create

ProductGroup

3.20

V8D

Create Sales

PriceCondition

3.7 – 3.15

Material plant

extension

3.1 – 3.6V7A - V7B -V7C -

V7D -V7E- V7F

Material Creation

3.19

V7Z

Create Pur.

Info Record

3.16

V7H

Maintain

Storage Loc.

Extension

3.22

V8P

Engineering

ChangeNumber

3.23

V8Q

Product CostPlanning



Material Storage Location Extension (V7H)

Material Storage Location Extension

V7H


E v e n t Need to extend

material to stor.locations

End process

3.7

Storage locationextension

3.1 –

3.5V7A - V7B

V8C – V7E

V7FMaterial Creation

3.6

V7GMaintain Matl. Plant

Extension



Create New Bill of Material (V7J)

Bill of Materials

V7J


E v e n t

Need for a new Bill of

Materials

4.1 – 4.3

V7A – V7B - V7C

Raw, Semi, Trade

Material

End process

4.6

Create Bill of

Materials

4.4 – 4.5

V7D – V7E

Finished Material

4.7

V7O

Create Production

Version

4.8

V7N

Create Routing

4.9

V7K

Maintain BOM

Config. Matl. Link



Bill of Materials Configurable Material Link (V7K)

Bill of Materials –

Configurable Link

V7K


E v e n t Need to link

variant to BOM

End process

3.3

Create

configurable

variant BOM link

3.2

V7J

Create Bill of Materials

3.1

V7F

Create Finish Goods

(FERT) Matl. For

Project Systems





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