Viswakirti projects Pvt ltd -Business Blue Print for SAP MATERIALS MANAGEMENT
Sep 26, 2015
Business Process Procedures
Viswakirti projects Pvt ltd -Business Blue Print for SAP
MATERIALS MANAGEMENT
Contents
1 Purpose
2 Organizational units...................................................................................................................3
2.1 Company Code...................................................................................................................3
2.2 Plant...................................................................................................................................4
2.3 Valuation level.....................................................................................................................5
2.4 Purchasing Organization.....................................................................................................5
2.5 Purchasing Group...............................................................................................................5
2.6 Storage Location.................................................................................................................5
2.7 Organization Structure........................................................................................................6
3 Master Data Management.........................................................................................................6
3.1 Material Master.....................................................................................................................7
3.2 Vendor Master......................................................................................................................9
3.3 Purchasing Master Data......................................................................................................10
3.3.1 Purchasing Info Record..............................................................................................10
3.3.2 Source List .................................................................................................................11
3.3.3 Quota Arrangement....................................................................................................11
3.4 Service Master Record........................................................................................................12
3.5 Condition Record.................................................................................................................12
3.6 Transaction codes for Master Record..................................................................................12
4 Purchasing Document Types.....................................................................................................13
4.1 Purchase Requisition..........................................................................................................13
4.1.1 Approve requisitions based on approval limits and approval hierarchies...................15
4.2 Request for Quotation........................................................................................................16
4.2.1 Maintaining Quotation................................................................................................16
4.2.2 Comparing Quotation................................................................................................16
4.3 Rate Contract.................................................................................................................. ..17
4.4 Scheduling Agreement.......................................................................................................18
4.5 Purchase Order..................................................................................................................18
4.5.1 Approve requisitions based on approval limits and approval hierarchies.................19
4.5.2 Version Management (Amendment of PO)..............................................................19
5 Functional Scope Supported Business Processes or Scenarios in Materials Management..20
5.1 General Procurement.........................................................................................................20
Key points...............................................................................................................................21
5.2 Consumable Procurement.................................................................................................21
Key points...............................................................................................................................21
5.3 Project procurement..........................................................................................................21
5.4 Service Procurement.........................................................................................................21
Key points...............................................................................................................................22
5.5 Subcontracting...................................................................................................................22
Key points................................................................................................................................22
5.6 Release Procedure............................................................................................................23
Key points...............................................................................................................................23
5.7 Pricing Procedure..............................................................................................................23
Key points...............................................................................................................................23
5.8 Vendor Evaluation...............................................................................................................25
Key points................................................................................................................................25
5.9 Goods Receipt....................................................................................................................26
Key points................................................................................................................................26
5.10 Goods Issue......................................................................................................................29
Key points................................................................................................................................29
5.11 Stock Transfer...................................................................................................................29
Key points................................................................................................................................29
5.12 Return to Vendor..............................................................................................................30
Key points................................................................................................................................30
5.13 Stock handling : Scrap and Blocked Stock.......................................................................31
Key points...............................................................................................................................31
5.14 Physical Inventory.............................................................................................................31
Key points...............................................................................................................................31
6 Invoice Verification....................................................................................................................33
Key points...............................................................................................................................33
7 Batch Management...................................................................................................................34
Key points...............................................................................................................................34
8 Serial Number Management.....................................................................................................35
Key points...............................................................................................................................35
9 SAP Reporting.........................................................................................................................36
Business Blue Print Solution Scope
Purpose
This Solution scope provides an overview pf the processes and functions covered by SAT Infotech for Viswakirti Projects Pvt Ltd. It describe the functions and explains their business purposes.
2 Organizational Units:
2.1 Company Code :
its a legal entity and independent accounting unit in SAP. The balance sheets required by law and profit and loss statement are carried out at company code level.
2.2 Plant :
In logistics a plant is an organizational Logistics unit for dividing an enterprise according to procurement, production, maintenance & material planning. A place where materials are produced, or goods and services are provided.
The plant is an operating area or branch within a company. The plant is embedded in the organizational structure as follows:
The plant is assigned to a single company code. A company code can have several plants.
Several storage locations in which material stocks are managed can belong to a plant.
A plant can be assigned to several combinations of sales organization and distribution channel.
A plant can have several shipping points. A shipping point can be assigned to several plants.
A plant has its own material master data. (Example: one material code created for this plant can be extended to other plant.)
The plant plays an important role in the following areas:
Material valuation: When the valuation level is plant, the material prices are defined for each plant. Each plant can have its own account determination.
Inventory Management: The material stocks are managed within a plant.
MRP: Material requirements are planned for each plant. Each plant has its own MRP data. Analysis for materials planning can be made across plants.
Production Costing: In costing, valuation prices are defined only within a plant.
Example of Plant: Production facility, branch office.
2.3 Valuation Level:
You define the valuation level by specifying the level at which material stocks are valuated
You can valuate material stocks at following levels :
1)Company code
2)Plant.
2.4 Purchasing Oraganization
Organizational unit within Logistics, subdividing an enterprise according to the requirements of Purchasing. A purchasing organization procures materials and services, negotiates conditions of purchase with vendors, and bears responsibility for such transactions.
The form of procurement is specified through the assignment of purchasing organizations to company codes and plants.
2.5 Purchasing Group
The Purchasing group is organizational unit within logistics and it is
Responsible for procuring a material or a class of materials for internal units
The contact for external suppliers
You define the purchasing group during Customizing (not part of the enterprise structure). You do not assign purchasing groups directly to purchasing organizations.
You may define purchasing areas to describe in detail the fields of activity of a purchasing group.
2.6 Storage location :
A storage location is a an organizational unit that allows the differentiation of material stocks within a plant. Storage locations are always created for a plant. A storage location is the place where stock is physically kept within a plant. This field in SAP is a four-digit code.
The storage locations will have the following attributes.
There may be one or more storage locations within a plant.
A storage location has following attributes :
There may be one or more storage location within a plant
A storage location has a description and at least one address.
It is possible to store material data specific in a storage location.
Stocks are managed only on quantity basis and not on a value basis at a storage location level.
Physical Inventories are carried out at storage location level.
Organizational ElementCodeDescription
Plant0008Viswakirti Plant 1
Storage locationVSL1Main stores
SLU1Storage location UNIT 1
SLU2Storage location UNIT 2
SLU3Storage location UNIT 3
Purchasing Organization0008VKPO Purchase Organization
Purchasing Group01Projects
02 General
03Factory sales
2.7 Organization Structure :
3. Master Data Management
The following masters that are important and used in SAP:
Material master
Vendor master
Purchasing master data
Purchasing Info record
Source list
Quota arrangement
Service master record
Condition record
3.1 Material Master
The material master contains the information of a material which is procured / produced / stored and sold. It is the company's central source for retrieving material-specific data. This information is stored in individual material master records.
The material master is used by all agencies in a Logistics System. The integration of all material data in a single data base object eliminates redundant data storage. In the SAP Logistics, the data contained in the material master is required in the following:
Procurement of material in Purchasing.
Movement of goods in Inventory Management.
Invoice posting in Invoice Verification.
Processing of Sales order in Sales and Distribution.
Material requirements planning / scheduling in Production Planning and Control.
Material Valuation in the Valuation Area.
Material number is a number which uniquely identifies a material in material master record.
User can have Internally generated material number through system or can have his own externally entered number. User will be identifying material with maximum 18 digit alphanumeric code having description of 40 Characteristics.
Material typeDescriptionNumber Range
ROHRaw material100000000000-19999999999
BOTBought-out goods200000000000-29999999999
UNBWConsumables300000000000-39999999999
FERTFinished goodsXXXXXXXXXX-XXXXXXXXX
HALBSemi-finishedXXXXXXXXXX-XXXXXXXXX
DIENServiceXXXXXXXXXX-XXXXXXXXX
VERPPackagingXXXXXXXXXX-XXXXXXXXX
ZASSAssetsXXXXXXXXXX-XXXXXXXXX
Material TypeMaterial GroupMaterial Sub Group
BOTMotorsAC motors
DC motors
Gear BoxesHelical GB
Worm GB
Bevel Hel.GB
Geared Motors
CouplingsGeared couplings
Tyre couplings
Fluid couplings
Pin & Bush couplings
HRC couplings
Jaw couplings
BearingsIdler bearings
Pulley bearings
Adapter sleeve
Plummer blocksS-Series
SN-Series
SD-Series
Grease Nipples
Locating rings
Flange Mounted Brg. Unit
Conveyor belt
V-belt
Safety switchesZero speed switch
Seals
VFD
Magnetic seperator
Metal Detectors
Crushers
Vibrating screens
Vibro feeders
locating Rings
Bag filters
Pulley/shelves
Blowers
Raw materialsShafts
Pipe
Bright Rod
Flat
Angles
Channels
Beam
Square Bar
T-Angle
MS Rounds
M.S.Square
M.S.Plates
Rod
Paints
ScrapScrap
ConsumablesHardwareLock nut
Fasteners
Lock washer
Pins
3.2 Vendor master
The Vendor master contains information on vendor from whom a company procures material or services. vendor master records controls how transaction data is posted and processed for a vendor.
Vendor Account number (Vendor Code) created for a purchasing organization, is a number uniquely identifying a vendor master record, and thus a vendor. Vendor master contains mainly three types of data namely General, company code and purchasing.
General data (Relevant for both Material Management and financial accounting)
Company code data (Relevant for financial accounting only)
Purchasing organization data (Relevant for specific purchasing area only)
General data includes address for communication with vendor, contact persons ,telephone number etc
Company code data includes vendor bank details , account management and payment data.
Purchasing data includes ordering currency, Vendor schema group, person responsible and some control data which includes Automatic purchase order, ERS settlement, GR based Invoice verification, Returns agreement.
BUSINESS PARTNER: Vendor can assume different roles in its dealings with Company. Accordingly, in a procurement transaction, the vendor is first the ordering address, then the supplier of goods, then the invoicing party, and finally the payee. For this reason, several partner roles (partner functions) can be assigned to the vendor. The roles a partner function can take are :
Order receiver
Goods supplier
Invoice presenter
Payment receiver
The following account groups are used :
The following Account Groups are identified for VPPL and shall be as follows:
Account Group DescriptionNumber Range
V01Raw materials1000000 - 1999999
V02BOT2000000 - 2999999
V03Service vendors3000000 - 3999999
V04Freight vendors4000000 - 4999999
V05One time vendors5000000 - 5999999
V06General vendors6000000 - 6999999
V07Sub contractor7000000 - 7999999
V08Scrap vendors8000000 - 8999999
V09Employees9000000 - 9099999
V10Statutory vendor 9100000 9199999
3.3 Purchasing Master Data
It consists of following types:
3.3.1 Purchasing Info record (Vendor pricing information)
Info record is a source of information for procurement of a particular material from a particular vendor
Purchase info record enables the buyer to determine:
Which materials, a certain vendor has offered or supplied to date.
Which vendors can offer or supply certain material.
A purchasing info record can be valid for all plants covered by a purchasing organization or for a single plant within a purchasing organization.
Info record can be created manually or automatically during the maintenance of a quotation, a purchase order or an outline purchase agreement. Ordering data is updated automatically in info record.
Purchasing Info Record will have fallowing key data :
Info Record Number
Vendor Code
Material Code & Description
Vendor material Number
Purchasing Organization
Plant
Pricing Conditions
Validities
Tax Code
Planned Delivery Time
Order Unit and its conversation factor in SKU ( Stock Keeping Unit)
3.3.2 Source List (Register & Manage Supplier)
Source list contains a list of available sources of supply (vendors) for a material for a particular plant, indicating the periods during which the procurement from such sources possible.
The source list let you determine the vendor that is valid (effective) at a certain time and it also facilitate adherence to purchase agreements and the avoidance of errors in Purchasing where several vendors exist for a specific material. It also allows certain vendors to be blocked for any chosen period of time (e.g. in the case of delivery problems).
Before creating a Source list, you require the following information
It specifies the allowed (and disallowed) sources of a material for a certain plant within a predefined period. Each source is defined by means of a source list record.
By source list we can define a source of supply as "fixed". Such sources count as preferred sources over a certain period of time.
source list can also defines a source of supply as Blocked.
By using source list we can block external procurement of service.
You can define several validity periods.
3.3.3 Quota Arrangement
Quota Arrangement is a mechanism for determining which portion of the total requirement of a material over a period is to be procured from a certain source. If quota arrangements exist in the system, they exert an influence with regard to precisely which source (perhaps from a number of different possibilities) is assigned to a given purchase requisition.
You establish the quota arrangement for a material over a certain period by entering quotas for the various sources of supply in a quota arrangement item.
Before creating a quota arrangement, you require the following information
Material Number or the plant to which the quota arrangement applies
Procurement type of the material (that is, whether the material is manufactured in-house or procured externally)
Vendor number
Quota arrangement validity period
Quota to be assigned to each source of supply
Key Points
The quota specifies which portion of the total requirement should be procured from a given source.
If a quota arrangement exists for a material, it is taken into account in the source determination process.
3.4 Service master Record
The service master record counts as part of the master data within External Services Management and serves as a source of data for you to draw upon when creating service specifications. This enables you to save time and reduces the frequency of errors, since you need only enter the complete service descriptions in the service master record once.
A service master record contains the following principal information for the unique description of a service:
Service number
Service category
Descriptive texts (short and long text)
Base unit of measure
Material group
Valuation class
3.5 Condition Record
Condition records allow you to store and retrieve pricing data in the system. All the pricing elements of your daily business - the prices, discounts, and surcharges for freight and taxes - that you want to use for automatic pricing must be stored in the system as condition records. You can define as many condition records as you want for the different pricing elements for any validity period.
You create condition records for all the pricing elements that the system takes into account during automatic pricing. During document processing, the system transfers data from the condition records and determines the amounts for individual pricing elements (prices, discounts and surcharges)
3.6 Transaction codes for Master Record :
Procedure TcodeInputOutput
1Create Material MasterMM01Material, plant & storage locationMaterial number
2Create vendor MasterXK01Account group, company code & purchasing orgVendor number
3Create Purchasing Info recordME11Material number, vendor number, purchase organization & plantInfo record
4Create Source listME01Material and plantSource list
5Quota ArrangementMEQ1Material and PlantQuota arrangement
6Create service masterAC03Service descriptionService number
7Create Condition RecordMEK1Condition typeCondition record
4. Purchasing Document Types
In materials management the following document types are used:
PR
RFQ
contract
Scheduling Agreement
PO
4.1 Purchase Requestion (Indent)
The purchasing department works with the purchasing request, decides on whether the requirement of products can be covered from stock or needs to be procured externally considering optimization issues.
The requirements that have been created and released for procurement (for example, demands for spare parts coming from plant maintenance, demands for raw materials determined in a planning run, or requests for office supplies entered by an employee) are transferred to purchasing as purchase requisitions. A purchase requisition can be fulfilled through purchase orders or longer-term purchase agreements. Release procedures are available to control critical procurement processes.
Requisitions can be created either Manually or MRP.
Manually means the person responsible in the department enters a purchase requisition manually. The person creating the requisition determines, what to order, how much to order and the Delivery date.
MRP means that the purchase requisition is initiated via another component say through MRP.
Trigger to the Process:
Material Requirement (in the form of Purchase Requisition), which is generated either through MRP or manually, triggers the Procurement Process.
The different types of Purchase requisitions:
The following procurement types exist:
General
Spares
Project
Subcontracting
Service
FLOWCHART : Ways of Generating Indent
The Purchase Requisition processing consists of the following steps:
Creating a Purchase Requisition directly by user or indirectly by MRP.
Release Purchase Requisition by concerned user
convert into required purchase document.
Document TypeDescriptionNumber Range
NBGeneral Purchase41300000-41399999
NSSPARES51300000-41399999
NPProject81300000-81399999
SBSubcontracting61300000-61399999
ZBService71300000-71399999
FLOW CHART:
4.1.1 Approve requisitions based on approval limits and approval hierarchies
Two different procedures are available for requisitions:
With classification
With this procedure, requisitions can be released both at item level (i.e. item-by-item) and in total. The latter approach is also termed "overall release".
Without classification
With this procedure, requisitions can only be released at item level.
The two procedures are mutually exclusive (that is to say, you must decide in favor of one of them only - you cannot use both).
4.2 Request for Quotation
The request for quotation (RFQ) process starts with a request for material(s) from vendors. The RFQ process includes a price comparison for the selection of the best source. The buyer evaluates the vendor responses to determine the best source of supply. The accepted quotation is converted into a purchase order and a rejection letter is sent to the vendor(s) whose quotations were rejected.
Material-specific information including vendor pricing and lead-time from the quotation are captured within ERP master data records.
4.2.1 Maintaining Quotation
A quotation is an offer by a vendor to a purchasing organization regarding the supply of materials or performance of services subject to specified conditions. A quotation is legally binding on the vendor for a certain period. The quotation is the vendors response to a request for quotation issued by a purchasing organization.
A quotation consists of items in which the total quantity and delivery date of an offered material or service are specified.
4.2.2 Comparing Quotation
You can compare the prices from all quotations received as a result of a competitive bidding process using the price comparison list.
The comparison list ranks the quotations by item from lowest to highest price.
Features
In Purchasing, the RFQ and the quotation form a single document.
Prices and conditions quoted by vendors are entered in the original RFQ.
If you have issued an RFQ to several vendors, you can have the system of determining the most favorable quotation submitted and automatically generate letters of rejection to the unsuccessful bidders.
You can also store the prices and terms of delivery from certain quotations in an info record for future accessing.
RFQs can be subject to a release procedure.
The RFQ consists of the following steps:
Request for quotation
Vendor Quotation processing
Comparison, rejection and selection of vendors
RFQ can be followed by Source list generation / purchasing documents
Document TypeDescriptionNumber Range
ANGeneral Purchase113
ZNProjects 213
Process Flow
4.3 Rate Contract
Contracts are agreements with a vendor to supply materials or services under negotiated conditions, within a certain period. Contracts are defined as follows:
Rate contracts: An agreement between the Company and Supplier for a material with a fixed rate and a validity period.
The process to create a contract begins with the need to secure a big number of supplies as well as reducing procurement costs. The creation of a contract can start if the following issues have been clarified:
Number/amount of material or services
Validity start / validity end
Payment terms
Quantity of each contract material/service,
Price of each position in the contract
Location to where the goods/services are delivered.
A contract is signed by a purchasing manager or a buyer.
After the creation of a contract, purchase requisitions and purchase orders can be performed with relation to the contract.
The Contract procurement consists of the following steps:
Creating a basic agreement (Rate contract)
Creating a purchase requisition
Assigning requisition and creating Contract release order
Approval of contract release order
Contract monitoring
Goods receipt with excise invoice
Invoice receipt by line item
Outgoing payment
Key Points
Upon Contract release order creation with reference to a contract, the contract data is used and purchasing info records are ignored
Reduced procurement costs
Document TypeDescriptionNumber Range
ZKRate contracts312
4.4 Scheduling Agreement
Scheduling Agreement are outline purchase agreement under which materials are procured on predetermined dates within a certain time period.
Delivery of the total quantity of material specified in a scheduling agreement item is spread over a certain period in a delivery schedule, consisting of lines indicating the individual quantities with their corresponding planned delivery dates.
Scheduling agreement releases (comprising a header and the actual delivery schedule) are issued to the vendor, instructing the latter to effect deliveries of the relevant material on the dates shown.
A scheduling agreement consists of a number of items, for each of which a procurement type is defined. The following procurement types exist:
Standard
Subcontracting
Stock transfer
Document TypeDescriptionNumber Range
LPAWith release
LPWithout release
4.5 Purchase Order Processing
A purchase order is a formal request or instruction from a purchasing organization to a vendor or a plant to supply or provide a certain quantity of goods or services at or by a certain point in time. The purchase order can be used for variety of procurement purpose such as
The following procurement types exist:
Standard
Spares
Project
Subcontracting
External service
Stock transfer
When a purchase order has been created a number of checks and validations make sure that the right contract, discount, price and so on is referenced correctly. Purchase Order Processing also deals with the communication of the purchase order to the supplier.
The Purchase order processing consists of the following steps:
Creating a purchase order with reference to PR / quotation /contract /previous PO
Release Purchase order by concerned user
Follow-up and send remainders if necessary
Document TypeDescriptionNumber Range
NBGeneral purchase41300000-41399999
NSSpares51300000-41399999
NPProject81300000-81399999
SBSubcontracting61300000-61399999
ZBService71300000-71399999
FLOWCHART
4.5.1 Approve Purchase Order based on approval limits and approval hierarchies
Purchase Order are released at header level. Item-by-item release is not possible. These documents can only be released using the release procedure with classification.
Release Conditions :The release conditions determine the release strategy in accordance with which a external purchasing document is to be released.
Release Strategy : The release strategy defines the approval process for external purchasing documents. The strategy specifies the release codes necessary and the sequence in which releases have to be effected. Release strategy is assigned to purchasing document based on the release conditions
Release Code: The release code is a two-character ID allowing a person to release external purchasing document.
4.5.2 Version Management (Amendment of PO)
In the procurement function, we need to work with internal documents and legal documents like Purchase Requisition, Purchase order, Invoice etc., Here we need a process to track any changes done to these documents. Version management plays a significant role in tracking the changes in purchasing documents. Also this tracking is essential for audit requirements.
Version Management in PO groups a set of changes against version number and provides the user with an overview of the various changes that may have been made in the course of time.
In the case of procurement transactions extending over a longer period of time (for example, in the procurement of capital goods), you may need to differentiate between various versions of the purchasing document. You may also need to refer to one particular version when corresponding with the vendor.
Version Management enables you to generate and manage versions of purchase requisitions and external purchasing documents, such as purchase orders. A version groups together the change documents generated in the course of subsequent processing of the relevant document. A version thus indicates the revision level of a document (version 0 = original document, versions 1 + = revisions) and provides the user with an overview of the various changes that may have been made in the course of time.
Process Flow
Enhancement : 1)LC report details against PO
2)PO with both unit of measures
3)PO Processing against LC/Bank guarantee /advance
5. Functional Scope Supported Business Processes or Scenarios in Materials Management
5.1 General Procurement
In this procurement process a quotation comparison list enables the purchasing employee to select the best source of supply by evaluating quotations from vendors.
A purchase requisition is either generated via the Material Requirements Planning (MRP) process, or manually by a requester. A buyer validates the accuracy of the purchase requisition and converts the purchase requisition into a purchase order. The purchase order is subject to approval based on a predefined amount before being issued to a vendor.
This scenario consists of the following steps:
Display and assign purchase requisitions
Convert assigned requisitions to purchase orders or create purchase order manually
Approve purchase order
Print purchase order
Receive goods from vendor
Invoice receipt by line item
Outgoing payment
Key Points
Use of integrative data sets like purchasing info records, source lists, contracts
Automatic assignment of RFQs to purchase orders
5.2 Consumable Procurement
This scenario deals with purchase order creation activities during the procurement process. Furthermore it describes the additional process steps of a purchase order approval, goods receipt of consumables and invoice receipts by line item.
Consumable items/goods are entered without 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, there is no inventory in the system. By posting a goods receipt the value of the goods is expensed to a cost center or another cost element.
When the invoices are received from the vendor, they are entered with reference to a purchase order and item, providing a three way match of purchase order value, goods receipt value and invoice value. If there are any variances between invoice and purchase order value, the invoice is blocked and forwarded to the Buyer for approval.
This scenario consists of the following steps:
Purchase order creation for consumable goods
Approval of purchase orders for consumables
Goods receipt of consumables
Invoice receipt by line item
Key Points
Quick, one-time-purchases are possible: material consumption is directly posted, no posting into storage
5.3 Project procurement
In this procurement is decided based on project systems
A purchase requisition is created with account assignment category Q (special indicator for project) via the Material Requirements Planning (MRP) process, or manually by a requester. A buyer validates the accuracy of the purchase requisition and converts the purchase requisition into a purchase order. The purchase order is subject to approval based on a predefined amount before being issued to a vendor.
This scenario consists of the following steps:
Display and assign purchase requisitions
Account assignment category is Q(project make-to-order).
Convert assigned requisitions to purchase orders or create purchase order manually
Approve purchase order
Print purchase order
Receive goods from vendor
Invoice receipt by line item
Outgoing payment
5.4 External procurement of Services
External Services Management provides a basic process for the procurement of externally performed services.
The service entry is booked to confirm the service performed. The invoice is booked with reference to the purchase order.
This basic process comprises the following functionality:
Service master records, in which descriptions of all services that may need to be procured can be stored. In addition, a standard service catalog and model service specifications are available.
A separate set of service specifications can be created for each concrete procurement project in the desired document (e.g. MM purchase requisition, RFQ, contract, purchase order, or service entry sheet).
Service entry sheet :Service entry sheets refer to the total service specifications ordered. Service entry sheet in external services management is the same as a goods receipt posting when procuring materials.
This scenario consists of the following steps:
Creating a Service purchase order
Approve the Service Purchase order
Invoice verification
Posting Manual Outgoing payment
Key Points
Service procurement processing
Efficient processing
5.5 Subcontracting
The 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 requester. A Buyer validates the accuracy of the Purchase Requisition 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.
This scenario consists of the following steps on goods delivery:
Subcontracting purchase order creation
Subcontracting purchase order approval (if required)
Transferring of Components to Subcontractor
This scenario consists of the following steps on goods receipt:
Receiving Goods from Subcontracting PO
Invoice receipt by line item
Outgoing payment
Key Points
Automatic posting of stocks into corresponding stock types
Subcontracting info record shows added value
ENHANCEMENT :
1) Subcontracting scrap linked to scrap account (FI )
2) Justification note
3) DCR(Design concession Report) with drawing no and proper approval
5.6 Release Procedure
You use this component if you wish to set up approval procedures for purchase requisitions or other purchasing documents. Under such a procedure, if a purchase requisition or external purchasing document fulfills certain conditions it has to be approved (by the cost center manager, for instance) before it can be processed further.
This process of approving (clearing, or giving the "green light" to) a proposed item of expenditure is replicated in the SAP System by the "release procedure".
Release procedures can be defined for the following documents:
Purchase Requisition
The external purchasing documents purchase order (PO), contract, scheduling agreement, request for quotation (RFQ), and service entry sheet
Release Procedure for Purchase Requisitions
Two different procedures are available for requisitions:
With classification
With this procedure, requisitions can be released both at item level (i.e. item-by-item) and in total. The latter approach is also termed "overall release".
Without classification
With this procedure, requisitions can only be released at item level.
The two procedures are mutually exclusive (that is to say, you must decide in favor of one of them only - you cannot use both).
Release Procedure for External Purchasing Documents
External purchasing documents (i.e. purchasing documents other than requisitions) are released at header level. Item-by-item release is not possible. These documents can only be released using the release procedure with classification.
5.7 Pricing Procedure
Pricing procedure in MM module is a way to determine prices in purchasing documents. It give us functionality to assign different calculation types for different needs.Defining a pricing procedure can be done by creating an access sequence, and assigning it to condition types. Access sequence tells the system where to look for the condition values. It can search multiple condition tables based on our settings. Tables have different priority, and different key fields.Determination of the pricing procedure is practically assigning the calculation schema to a combination of vendor schema group and purchasing organization schema group. So, you need to enter the vendor schema group on vendor master, and assign schema group to purchasing organization, in order for the system to find the calculation schema to be used in the document.
Condition Technique
The condition technique is used to determine the purchase price by systematic consideration of all the relevant pricing elements. A feature of the technique is the formulation of rules and requirements. By applying conditions defined by means of the condition technique, the system arrives at a suggested price for purchase transactions.
Condition Type
Condition types represent price factors in the system. There are condition types for absolute and percentage discounts, freight costs, customs duties, or taxes, for example. Via the condition type, you specify how the price factor is calculated (e.g. percentage or absolute amount).
Access Sequence
An access sequence is a search strategy by means of which the system searches for valid records in various condition tables. It consists of one or more accesses. The sequence of accesses controls the priority of the individual condition records among each other. Through the accesses, the system is told where to look first and where to look next for a valid condition record in each case.
Calculation Schema
A calculation schema groups together all condition types that play a part in calculating the price. It sets out the order in which the condition types are taken into account in the calculation. In addition, the calculation schema specifies the following:
The subtotals
The extent to which manual processing of price determination is possible
The basis upon which the system calculates percentage discounts and surcharges
The prerequisite that have to be fulfilled so that a particular condition type to be taken into account
we define different calculation schema for example for domestic and import purchasing
The conditions types supplied include the following:
Condition typeCondition classDescription
PB00PriceGross price: Price without taking any possible discounts and surcharges into account
RB00Discount/surchargeAbsolute discount
ZB00Discount/surchargeAbsolute surcharge
FRB1Discount/surchargeAbsolute freight amount
ZOA1Discount/surchargePercentage duty amount
SKTODiscount/surchargeCash discount
NAVSTaxesNon-deductible input tax
5.8 Vendor Evaluation (Supplier Evaluation)
The Vendor Evaluation component helps you select sources of supply and facilitates the continual monitoring of existing supply relationships. It provides you with accurate information on prices, and terms of payment and delivery. By evaluating vendors, you can improve your enterprise's competitiveness.
On the basis of detailed information, and in collaboration with the relevant vendors, you can quickly identify and resolve any procurement problems that may crop up from time to time.
The results of vendor evaluation are displayed in the form of analyses. For example, you can generate ranking lists of the best vendors according to their overall scores or ranking lists for specific materials.
Changes to evaluations are recorded in logs, and you have the option of printing out evaluation sheets.
This scenario consists of the following Key points:
you can generate ranking lists of the best vendors according to their overall scores or ranking lists for specific materials.
check the reliability of the vendors from whom you procure Goods & Services
scoring range from 1 to 100 points, which is used to measure the performance of your vendors on the basis of the main criteria.
The table below lists the criterion proposed
S.NOEXISTING CRITERIASAP MAIN CRITERIASUBCRITERIATYPE
1RatePricePrice historyAutomatic
2QualityQualityGoods ReceivedAutomatic / Manual
Quality AuditAutomatic / Manual
3DeliveryDeliveryOn-time deliveryAutomatic
conformation dateAutomatic
quantity reliabilityAutomatic
Compliance with shipping instructionsAutomatic
4ServiceServiceQuality of ServiceSemi automatic
Timeliness of ServiceSemi automatic
PROCESS FLOWCHART
5.9 Goods Receipt
A goods receipt (GR) is a goods movement with which the receipt of goods from a vendor or from production is posted. A goods receipt leads to an increase in warehouse stock.
Material Document
Material document
In the Inventory Management system, when a goods movement is posted, a material
document is generated that serves as proof of the movement and as a source of
information for any applications that follow.
A material document consists of a header and at least one item. The header contains
general data about the movement (for example, its date). Each item describes one
movement.
Accounting Document
If the movement is relevant for Financial Accounting (that is, if it leads to an update of the
G/L accounts), an accounting document is created parallel to the material document.
In some cases, several accounting documents are created for a single material
document. This might be the case, for example, if you have two material document items
with different plants that belong to different company codes.
The G/L accounts involved in a goods movement are updated through an automatic
account assignment.
Reference to a Purchase Order
If a material is delivered for a purchase order, it is important for all of the departments involved
that the goods receipt entry in the system references this purchase order, for the following
reasons:
Goods receiving can check whether the delivery actually corresponds to the order.
The system can propose data from the purchase order during entry of the goods receipt
(for example, the material ordered, its quantity, and so on). This simplifies both data
entry and checking (over-deliveries and under-deliveries).
The delivery is marked in the purchase order history. This allows the Purchasing
department to monitor the purchase order history and initiate reminder procedures in the
event of a late delivery.
The vendor invoice is checked against the ordered quantity and the delivered quantity.
The goods receipt is valuated on the basis of the purchase order price or the invoice
price
A goods receipt posting has the following results:
When you post a goods receipt a material document is generated, which is used as proof of the movement and as a source of information for any other applications involved.
If the movement is relevant for Financial Accounting, one or more accounting documents
are generated. The accounting document contains the posting lines (for the corresponding accounts) that are necessary for the movement.
When you enter the goods receipt, you can print the goods receipt/issue slip, If the GR message indicator has been set in the purchase order, the orderer automatically receives a message informing him of the delivery.
If the goods are destined for the warehouse, the system increases total valuated stock
and the stock type (for example, the unrestricted-use stock) by the delivered quantity.
The stock value is updated at the same time.
If the goods are destined for consumption, only the consumption statistics are updated in
the material master record.
If the goods receipt is posted into goods receipt blocked stock The goods are recorded only in
goods receipt blocked stock of the purchase order history.
During goods receipt posting, a purchase order history record is automatically created.
This record contains data essential for Purchasing, such as: the delivered quantity, the
material document number and item, the movement type, and the posting date of the
goods receipt.
vendor evaluation data in Purchasing
Process Flow :
Movement typeSpecial indicatorDescription
101
GR for stock items & consumables
101Q (project stock)GR of Project stock
5.10 Goods Issue
A goods issue (GI) is a goods movement with which a material withdrawal or material issue, a
material consumption, or a shipment of goods to a customer is posted. A goods issue leads to a
reduction in warehouse stock.
Material Withdrawals for Production Orders
You enter withdrawals for production as goods issues with reference to the production orders for which the components are required.
Scrapping/Sampling
If a material is no longer usable, it must be scrapped. Scrapping of a material is entered in the
R/3 System as a goods issue. The withdrawal of samples must also be entered as a goods issue.
You can enter goods issue with/without reference document
when you enter a goods issue, you can reference
reservation
work order
A goods issue has the following results in the system:
Material document is created
Accounting document is created
Goods receipt/issue slip is created
Stock update
Update of G/L accounts
Consumption update
Reservation update
Order update
Movement typeSpecial stock IndicatorDescription
221
GI for stock item
221Q (Project stock)GI for project
Enhancement :
Screen shot to be developed for stock report with both size wise and dimensions wise (secondary UOM)
Material Name Weight with sizesWeight with Dimensions
5.11 Stock Transfer from project to project
The stock transfer process begins with a requirement to transfer material from one project to another project .This request, in form of a stock transfer requisition, created manually by a buyer.
There are no master data requirements beyond the material master to support the stock transfer process. The material master must be extended in both the procuring (receiving) storage location and the providing (issuing) storage location. Stock transfer purchase orders are not subject to approval like other purchase orders.
A buyer validates the accuracy of the stock transfer purchase requisition and convert it into a stock transfer purchase order.
This scenario consists of the following steps:
Creating stock transport order
Post goods issue
Receipt of transferred material in receiving Storage location.
Key Points
Supports all required documents for stock transfers .
Supports all required master data aspects like batch management and serial numbers
Monitors stock in transit
5.12 Return to Vendor
The return to vendor process begins with a requirement to return an item to a vendor. The buyer then creates a return purchase order in the system. The return purchase order is similar to a standard purchase order except for the return flag which sets up the return delivery to enable shipment of the item(s) back to the vendor.
The return purchase order 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 relieved from inventory. A credit memo is generated which relieves the liability to the vendor.
Results of the Return Delivery Posting
Creating a Material Document
For the return delivery, the system creates a material document, which you can print as a
return delivery slip Since the return delivery is valuated, the system also creates an
accounting document.
Updating Stock and G/L Accounts
In the case of a return delivery, the system reverses all stock and G/L account updates
that occurred during the goods receipt posting.
Updates in the Purchase Order
The system cancels the updates posted as a result of the goods receipt. The open
purchase order quantity is increased by the returned quantity.
This scenario consists of the following steps:
Creating return purchase order
Delivery due list for purchase orders
Picking confirmation
Goods issue
Creating Return Excise Invoice
Credit Memo
Key Points
Goods can be returned with a return reason captured in the document
All information for follow-on FI functions such as invoice reduction, rejection, and cancellation is provided
Process Flow:
Enhancement : Justification note in RETURN TO VENDOR
5.13 Stock Handling: Scrap and Blocked Stock
This scenario is triggered by the following different processes:
Rework from production
Other logistic processes and reasons
This scenario consists of the following steps:
Block material stock transfer from unrestricted to blocked
Unblock material stock transfer from blocked to unrestricted
Unblock material stock transfer from blocked to quality inspection stock
Key Points
Scrapping
Transfer posting to blocked stock
Movement typeSpecial IndicatorDescription
343Q (project stock)Transfer posting project stock from Blocked to Unrestricted
344Q (project stock)Transfer posting project stock from Unrestricted to Blocked
321Q (project stock)Transfer posting Project stock from Quality to Unrestricted
349Q (project stock)Transfer posting Project stock from Blocked to Quality Inspection
415Q (project stock)Transfer posting from Project to project
5.14 Physical Inventory / Inventory Count and Adjustment
This 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. Furthermore, materials can be blocked here for posting during the physical inventory. Once the inventory sheets are printed out, the actual physical inventory count occurs for the given materials. 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 are posted.
This scenario consists of the following steps:
Planning phase of physical Inventory
Counting phase of Physical Inventory
Monitoring of Physical Inventory activities
Physical Inventory Procedures
The SAP System supports the following physical inventory procedures:
Periodic inventory
Continuous inventory
Cycle counting
Inventory sampling
5.14.1 Periodic Physical Inventory
In a periodic inventory, all stocks of the company are physically counted on the balance sheet key date. In this case, every material must be counted. During counting, the entire warehouse must be blocked for material movements.
5.14.2 Continuous Physical Inventory
In the continuous physical inventory procedure, stocks are counted continuously during the entire fiscal year. In this case, it is important to ensure that every material is physically counted at least once during the year.
5.14.3 Cycle Counting
Cycle counting is a method of physical inventory where inventory is counted at regular intervals within a fiscal year. These intervals (or cycles) depend on the cycle counting indicator set for the materials.
The Cycle counting method of physical inventory allows fast-moving items to be counted more frequently than slow-moving items.
5.14.4 Inventory Sampling
In Inventory sampling randomly selected stocks of the company are physically counted on the balance sheet key date. If the variances between the result of the count and the book inventory balance are small enough, it is presumed that the book inventory balances for the other stocks are correct.
Enhancement: Required approval for posting inventory difference
Process Flow:
1 6. Invoice verification
Logistics Invoice Verification is a part of Materials Management (MM).It is situated at the end of the logistics supply chain that includes Purchasing, Inventory Management, and Invoice Verification.
It is in Logistics Invoice Verification that incoming invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting.
An invoice can be processed in logistics invoice verification in following ways:
1. Invoices with purchase order reference
All the items in a purchase order can be settled. With purchase-order-based Invoice Verification, all the items of a purchase order can be settled together, regardless of whether an item has been received in several partial deliveries.
2. Invoices with goods receipt reference
Each goods receipt is settled separately.
3. Invoices without purchase order reference
Invoices can be posted directly to G/L accounts or material accounts.
The important data for invoice verification is:
Master data : Master data is permanent data on objects, every is given a unique number by which it can be identified in the system.
Material data : Material data provides information on materials bought. It includes material name, material unit of measure, stock data.
Vendor data : Vendor data provides information on vendors. it includes address, bank data, name of bank head office, terms of payment & terms of delivery.
Accounting data : Accounting data is used to define G/L accounts . it includes account name, account type, account currency in which account is managed, information on whether account may be posted directly, and which financial year it is allocated to.
Transaction data : Transaction data records transactions in the system. whenever we post a purchase order, scheduling agreement, goods receipt, or invoice, the system automatically creates a document.
Purchasing data : It contains information such as vendor number, the PO date, terms of delivery, material number ,& order quantity.
Material document : Material document is created when a goods receipt is posted. it includes the posting date, quantity delivered, delivery number & PO number that the goods receipt refers to.
Accounting document : An accounting document is created when a goods receipt (unless the goods receipt is not valuated) or an invoice is posted. it contains details of individual postings with account number, posting key, and the amount.
7. Batch Management
If materials were handled in batches it might be necessary to change batch master data or to find out where a batch was used, for example, to perform a batch recall or report to government.
Batch management fulfills the requirements for managing and tracking batches or production lots across the whole production process.In various industry sectors, particularly the process industry, you have to work with homogeneous partial quantities of a material or product throughout the entire quantity and value chain. In the SAP system, a batch is the quantity or partial quantity of a particular material or product that is manufactured according to the same recipe. There are various reasons for this:
Legal requirements, for example, guidelines on good manufacturing practice (GMP), or regulations on hazardous materials.
Defect tracing, recall activities, and recourse requirement.
Usability differences and the monitoring thereof in materials planning, sales and distribution, and production.
Production or technical requirements, for example, material quantity calculations on the basis of different batch specifications.
This scenario consists of the following steps:
Maintain batch master record
Batch information cockpit
Key Points
Basic steps for setting up batch management are well documented
Examples of classes and search strategies are simple yet effective
Integration of batch management in all logistics processes
Setting up the batch-where-used-list to find out where a batch was used, for example, to perform a batch recall or government report
Detailed process steps how to maintain batch master records and how to use the batch information cockpit
8. Serial Number Management
Using serial numbers, you can track each individual material during goods movement. This building block includes the configuration settings for serial number management and shows the serial number handling on finished goods level.
The following functions are provided to support this building block:
Definition of serial number profile and serializing procedures
Equipment categories for serialization
Settings for physical inventory
Key Points
Integration of serial number management in all logistics processes
Integrated use of one serial number profile in logistics.
..........................1.1 9. SAP ERP Reporting
In SAP ERP various reports can be used to monitor and control your company processes. SAP
Material Management focuses on the following reports:
General Analysis: Purchase Orders, Contracts and Quotation.
Analysis of Purchase Order Values
Purchase Order by Material
Purchase Order by Vendor
Purchase Order by Service
Purchase Order by Document Number
Pending PR
Material Evaluation Report
Purchasing Group Analysis
Release Purchasing Documents
Assign and Process Purchase Requisitions
Stock Requirement List
SC Stock Monitoring for Vendor
Vendor Analysis
Material Document List
Display Warehouse Stocks of Material
Accounting Documents for Material
Material Documents with Reason for Movement
Batch Analysis
Availability Overview
Plant Analysis
Material Analysis
MRP report
Alerts for C forms & Vendor
List of GR/IR balances
Inventory Analysis.
Outline agreements by vendor/material
Fast & slow moving item
Reorder report
Project wise stock transfer report
ABC analysis
Payments from system
List of subcontracting challans
Stock by posting date
Purchase status
Previous Purchase rates
GAP : 1) Purchase budgeting & control is linked to FI module
2)PLA & C forms need to be developed
3)MRP With Project planning.
SHAPE
User
Department
Purchase
Requirement
ME51N
Release
Strategy
Call for
Discussion
Purchase
Department
Follow on
Documents
NO
Yes
Material analysis
Report
Classification
of Materials
Physical Inventory
Document creation
Block material for
Inventory posting
Count & record
physical Inventories
Record Inventory
Diff if any
Post inv diff
If any
Carry out Vendor evaluation (Set Criteria)
Compare Evaluation
Print Evaluation Sheet
START
Vendor Ranking List
END
Vendor Evaluation sheet
Vendor Ranking List
PO Process
Goods arrival
at stores
Goods Receipt
Tcode MIGO
Wrt PO
Material
Inspection
Is material
OK
Stock updation
in unrestricted
Invoice
Verification
PR
Source list
RFQ
Quotation
Comparison
vendor
Selection
PO
Follow on and
Remainders