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Slide 1
The Procurement Process Chapter 4 1 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 2
Learning Objectives 1. Describe the major organizational levels
associated with the procurement process. 2. Discuss the four basic
categories of master data that are utilized during the procurement
process. 3. Explain the key concepts associated with the
procurement process 4. Identify the key steps in the procurement
process and the data, documents, and information. 2 Magal and Word
| Integrated Business Processes with ERP Systems | 2011
Slide 3
Learning Objectives (Continued) 5. Effectively use SAP ERP to
execute the key steps in the procurement process 6. Utilize SAP ERP
to extract meaningful information about the procurement process 3
Magal and Word | Integrated Business Processes with ERP Systems |
2011
Slide 4
A Basic Procurement Process Magal and Word | Integrated
Business Processes with ERP Systems | 2011 4
Slide 5
Outline Organizational data Master data Key concepts Process
Reporting 5 Magal and Word | Integrated Business Processes with ERP
Systems | 2011
Slide 6
Organizational Data Client Company code (CC) Plant Storage
location (S Loc) Purchasing organization (P Org) Purchasing group 6
Magal and Word | Integrated Business Processes with ERP Systems |
2011
Slide 7
Plant Many definitions or uses. A location That holds valuated
stock (for distribution) Where production planning is carried out
Where products and services are created That contains service or
maintenance facilities Factory, warehouse, distribution center Can
be assigned to one CC only A CC can have many plants 7 Magal and
Word | Integrated Business Processes with ERP Systems | 2011
Slide 8
Storage Location A place, within a plant, where materials are
stored Areas designated for different types of material (raw
material, work-in-process, finished goods) More sophisticated
divisions including storage bins, cabinets, trays A plant must have
at least one storage location A storage location can belong to only
one plant 8 Magal and Word | Integrated Business Processes with ERP
Systems | 2011
Slide 9
GBI Storage Locations 9 Magal and Word | Integrated Business
Processes with ERP Systems | 2011
Slide 10
Purchasing Organization Identify and select vendors Negotiate
general conditions of purchase and contracts for one or more plants
or companies. Determine pricing conditions Typically three models
for Purchasing Organization Enterprise-Level Company-Level
Plant-Level 10 Magal and Word | Integrated Business Processes with
ERP Systems | 2011
Slide 11
Enterprise-Level Purchasing Organization Also known as
cross-company code model One Purchasing Organization assigned to
all CC in a client Purchasing for all plants across all CC Highly
centralized corporate Purchasing Org 11 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 12
Enterprise-Level Purchasing Organization 12 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 13
Company-Level Purchasing Organization Also known as cross-plant
model Different Purchasing Organizations are assigned to each CC
Purchasing for all plants in one or more CC 13 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 14
Company-Level Purchasing Organization 14 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 15
Plant-Level Purchasing Organization Also known as
plant-specific model Each plant has its own Purchasing Organization
Highly decentralized 15 Magal and Word | Integrated Business
Processes with ERP Systems | 2011
Slide 16
Plant-Level Purchasing Organization 16 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 17
Reference Purchasing Organization One centralized Purchase Org
for high-level decisions across the enterprise Multiple CC-specific
and plant-specific Purchase Org 17 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 18
Purchasing Group A buyer or group of buyers responsible for
certain materials or groups of materials Can be internal to the
company or external Decide to purchase land, but use a realtor
(external purchasing group) to execute the purchase Not assigned to
or related to purchasing org 18 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 19
Master Data Material Master Vendor Master Purchasing info
record Conditions 19 Magal and Word | Integrated Business Processes
with ERP Systems | 2011
Slide 20
Material Master Data needed to execute transactions related to
materials (along with org data) Data are grouped by different user
areas (views) Data are specific to (defined for) for different
organizational levels 20 Magal and Word | Integrated Business
Processes with ERP Systems | 2011
Slide 21
Material Master Views Basic data Purchasing Accounting
Forecasting Sales Plant / Storage Work Scheduling MRP
Classification Warehouse Management 21 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 22
Material Master Views Basic data Description, unit of measure,
weight, material group Purchasing Purchasing group, GR processing
time, delivery (under / over) tolerances Accounting Currency,
valuation class (link to G/L), price control (moving price,
standard price, future price) Plant / Storage Storage requirements
(hazard, temperature, etc.) Shelf life Weight, volume 22 Magal and
Word | Integrated Business Processes with ERP Systems | 2011
Slide 23
Material Master - Views Views for other processes Forecasting
(Material Planning process) Sales (Fulfillment process) Work
Scheduling (Production process) MRP (Production process)
Classification (PLM process) Warehouse Management (WM process) 23
Magal and Word | Integrated Business Processes with ERP Systems |
2011
Slide 24
Material Master - Views Different material types have different
required views Examples: Raw material: no sales view Finished
Goods: no purchasing view Trading goods: no production related
views 24 Magal and Word | Integrated Business Processes with ERP
Systems | 2011
Slide 25
Material Master Org Levels Defines the level at which the
master data is maintained Can have different data for different
combinations of Org data Purchasing: Plant, storage location Sales:
Sales Area (Sales Org, Distribution Channel) Warehouse: Warehouse
#, storage type Example: SHRT1000 + MI00+ TG00 SHRT1000 + SD00+
TG00 SHRT1000 + US00 + Wholesale channel SHRT1000 + US00 + Internet
channel 25 Magal and Word | Integrated Business Processes with ERP
Systems | 2011
Slide 26
Demo 4-1: Review Material Master Review some of the data
included in a material master. Magal and Word | Integrated Business
Processes with ERP Systems | 2011 26
Slide 27
Vendor Master Data needed to do business with vendors Data
needed to execute transactions related to vendors (along with org
data) Data are specific to (defined for) different organizational
levels. The three segments are: Client level data (General) Company
code level data (Accounting) Purchasing organization level data
(Purchasing) 27 Magal and Word | Integrated Business Processes with
ERP Systems | 2011
Slide 28
Vendor Master Segments 28 Magal and Word | Integrated Business
Processes with ERP Systems | 2011
Slide 29
Data in the Vendor Master 29 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 30
Vendor General Data Client-level data Valid across all CC in a
client Examples Name, Address Communication (phone, fax) Search
term 30 Magal and Word | Integrated Business Processes with ERP
Systems | 2011
Slide 31
Vendor Accounting Data Company code specific data Valid for the
entire company code across purchasing areas Examples Account
information Bank information Reconciliation account Payment terms
and methods Communication (dunning) 31 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 32
Vendor Purchasing Data Separate for each Purchasing
Organization Applies to the specified Purchase Org Examples Partner
functions (vendor, invoicing party, payment recipient) InCoTerms:
defines responsibilities and costs of shipment Freight, insurance,
customs clearance, locations 32 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 33
Demo 4-2: Review Vendor Master Review some of the data included
in a vendor master. Magal and Word | Integrated Business Processes
with ERP Systems | 2011 33
Slide 34
Purchasing Info Record Relates vendors and materials. One info
record per combination of vendor and material (or material group)
General data Conditions: pricing, discounts, free goods (current
and future) Vendor data Texts (notes) 34 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 35
Purchasing Info Record Magal and Word | Integrated Business
Processes with ERP Systems | 2011 35
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Purchasing Info Record Magal and Word | Integrated Business
Processes with ERP Systems | 2011 36
Slide 37
Conditions Pricing Conditions Gross price Discounts and
surcharges Freight / shipping Obtained from Purchasing info records
Contracts and agreements Other sources 37 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 38
Demo 4-3: Review Purchasing Info Records Magal and Word |
Integrated Business Processes with ERP Systems | 2011 38 Review
data in a purchasing info record.
Slide 39
Key Concepts Item categories Account determination Stock
type/status Goods movement 39 Magal and Word | Integrated Business
Processes with ERP Systems | 2011
Slide 40
Item Categories Defines the process used to procure the item
Categories Standard Subcontracting Components provided; finished
product received Consignment Liability only when withdrawn from
stock Service Stock transfer Third party order Ship to third party;
bill to us (drop shipment) 40 Magal and Word | Integrated Business
Processes with ERP Systems | 2011
Slide 41
Demo 4-4: Review Item Categories 41 Magal and Word | Integrated
Business Processes with ERP Systems | 2011 Review various item
categories used in the purchasing process.
Slide 42
Account Determination Which GL account to assign to PO? Defined
in material master (valuation class) Account assignment categories
Used when purchasing material without material master Assets,
Production Order, Cost Center, Sales, Order, Project Automatic GL
account determination based on category 42 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 43
Purchase for Stock vs. Consumption Magal and Word | Integrated
Business Processes with ERP Systems | 2011 43
Slide 44
Stock Types / Status Based on usability of material
Unrestricted use In quality inspection Blocked stock (damaged,
unusable; wrong delivery) Stock in transit 44 Magal and Word |
Integrated Business Processes with ERP Systems | 2011
Slide 45
Goods Movement A transaction that causes a change in stock
(value or status) Categories of Goods Movement Specific Movement
types 45 Magal and Word | Integrated Business Processes with ERP
Systems | 2011
Slide 46
Structure of a Material Document Magal and Word | Integrated
Business Processes with ERP Systems | 2011 46
Slide 47
Demo 4-5: Review a Material Document Magal and Word |
Integrated Business Processes with ERP Systems | 2011 47 Review
data included in a material document.
Slide 48
Goods Movements Goods Receipt From vendor or production process
Increase in quantity and value of stock Goods Issue To sales order
or internal consumption Decrease in warehouse stock Stock Transfer
Physical movement of material between storage locations Sloc to
Sloc Plant to Plant CC to CC 48 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 49
Goods Movements Transfer Posting Results in a change in
material status In-quality inspection/ blocked/ unrestricted use
One material type to another May or may not include a change in
location (Sloc, plant) 49 Magal and Word | Integrated Business
Processes with ERP Systems | 2011
Slide 50
Demo 4-6: Review Goods Movements and Movement Types Magal and
Word | Integrated Business Processes with ERP Systems | 2011 50
Review various goods movements and movement types
Slide 51
A Detailed Procurement Process 51 Magal and Word | Integrated
Business Processes with ERP Systems | 2011
Slide 52
Process Steps Trigger Data Task details Outcomes 52 Magal and
Word | Integrated Business Processes with ERP Systems | 2011
Slide 53
GBI Story Inventory of t-shirts (SHRT1000) is low (