Procurement of Consumable Material - 1...................................................................

2
Consumable Material - Overview .............................................................................................. 2
Procurement of Consumable Material - 2...................................................................4
Consumable Material - Overview .............................................................................................. 4
Procurement of Consumable Material - 3...................................................................6
Account Assignments....................................................................................................................... 6
Procurement of Consumable Material - 4...................................................................8
Procurement Process for Consumption................................................................................. 8
PROCUREMENT OF CONSUMABLE MATERIAL - 1
This series of articles deal with the process of procuring consumable materials. In
doing so, we will cover new topics from each area (purchasing, inventory
management, and invoice verification).

• Purchasing: Consumable material, account assignment category, purchase

requisition, order acknowledgment.
• Inventory management: Difference between valuated and on-valuated goods
receipts, valuation of goods receipt in the case of consumable material.
• Invoice verification: Consequences of valuated/unvaluated goods receipt in
invoice verification.

In addition to a comprehensive procurement process for consumable material, an

introduction to the blanket ordering process is also included in this discussion. The
item category in purchasing documents and changing the account assignment in
invoice verification is also discussed in detail.
We will concentrate on the procurement of materials for direct consumption. It
contrasts the procurement process for stock material with that for consumable
material. It also explains what is understood by consumable material in SAP R/3.
In this scenario, procurement is triggered by an internal request - a purchase
requisition. To be sure that the required materials can be delivered on the desired
date, the vendor sends an order acknowledgment. Attention then moves to the goods
receipt and invoice verification processes, whereby the effects of a valuated against a
non-valuated goods receipt are of primary interest. In addition, you find out how you
can cover recurring requirements for low-value consumables (so-called “C” articles)
economically using SAP R/3.

Consumable Material - Overview

This section gives a brief overview of the procurement of consumable materials
(consumables) and introduces the account assignment category necessary for this
procurement process. In a company, certain materials (such as office supplies) are
procured directly for cost centers. These materials are not subject to inventory
management at the storage location. As a member of the project team, you are to
check the procurement process for consumable materials in SAP R/3.
In SAP R/3, one speaks of “consumable material” if the material is not procured for
stock. Such materials can include raw materials for production (which are processed
during the production process) or a machine that is used as an asset in the company
for several years (assignment to an asset account).
In SAP R/3 the term “consumable material” is understood to cover a material that is
subject to a procurement transaction and whose value is recorded in the cost element
or asset accounts. Consumable material is thus procured directly for an account
assignment object. Examples of consumable materials are office supplies and
computer systems or machines.
When a material is procured directly for “consumption”, no material master record is
necessary. In connection with consumable materials, you can distinguish between the
following cases:

• Consumable material without material master record

• Consumable material with material master record that is not subject to
inventory management (on either a quantity or value basis)
• Consumable material with material master record that is subject to inventory
management on a quantity, but not a value, basis
PROCUREMENT OF CONSUMABLE MATERIAL - 2
Consumable Material - Overview
In SAP R/3 the term “consumable material” is understood to cover a material that is
subject to a procurement transaction and whose value is recorded in the cost element
or asset accounts. Consumable material is thus procured directly for an account
assignment object. Examples of consumable materials are office supplies and
computer systems or machines.
When procuring a consumable material without a material master record, you must
manually enter in the document a short description, a material group, and a purchase
order unit because this data cannot be pulled from a master record.
Since the material type determines whether or not a material is subject to value-
based inventory management, the standard SAP R/3 system supplied includes the
following material types for consumable materials:

• Non-valuated material (material type UNBW):

o This type of material is managed on a quantity basis, but not on a value
basis. This makes sense for materials of low value, stocks of which
nevertheless have to be monitored (for example, operating manuals).
• Non-stock material (material type NLAG):
o Inventory management is not possible for these materials either on a
quantity or value basis. For frequently required consumables, the use of
this material type nevertheless enables you to store the information
required to create purchasing documents (such as texts and units of
measure).

Of course, you can procure stock material not only for stock (that is, to be placed in
storage), but also directly for consumption. You may purchase trading goods for a
particular customer (sales order), for instance. You can thus enter an account
assignment for each item of an external purchasing document or purchase requisition
if it is destined for direct consumption. In certain cases, however, account assignment
is mandatory. You MUST enter an account assignment for an item under the following
circumstances:

• If a material that is not subject to inventory management is ordered. It follows

that such material is posted directly to consumption (“pure” consumable
material).
• If an article for which no material master record exists is ordered
• If an external service is ordered

If a material is to be procured as a consumable, you must specify an account

assignment category and other account assignment data in the document item of the
relevant requisition or external purchasing document.
SAP MM Account Assignment Objects
Figure SAP MM Account Assignment Objects

The account assignment category determines the category of account assignment

object that is to be charged, which account assignment data you must provide, and
which accounts are debited when the goods receipt or invoice is posted.
PROCUREMENT OF CONSUMABLE MATERIAL - 3
Account Assignments

Example: account assignment object cost center (account assignment

category K)
When you make an assignment to a cost center, you must enter the G/L account
number of the consumption account and the cost center for which the material is to be
procured on the account assignment data screen. You can specify in Customizing that
the system automatically suggests the number of the G/L account to be charged.

Example: account assignment object asset (account assignment category A)

If you use account assignment category A, you must enter the asset number on the
account assignment data screen. The system automatically determines the G/L
account to be charged from the asset number. You cannot enter it manually.
Note: It is possible to define further account assignment categories or change existing
ones in Customizing. → → Account Assignment → Purchasing → Materials
Management (Customizing Maintain Account Assignment Categories)

SAP MM Purchase Orders with Account Assignment

Figure SAP MM Purchase Orders with Account Assignment

You can specify one or more account assignments for an item. If you specify a
multiple account assignment, you must also specify how the PO quantity is to be
distributed among the individual account assignment objects. Distribution can be on a
quantity or percentage basis. If you enter a multiple account assignment for an item,
the GR non-valuated indicator is automatically set for this item.
In addition, you must specify in the item how the costs are to be distributed if only
part of the ordered quantity is initially delivered and invoiced.

• The partial invoice amount can be distributed among the account assignment
items of a PO item proportionally (in accordance with the distribution ratio).
• The partial invoice amount can be distributed among the account assignment
items of a PO item on a progressive fill-up basis (step-by-step, one after the
other).

In this procedure, account assignment item 1 first receives its complete allocation,
then account assignment item 2 and so on, until the invoice value is reached. The
partial invoice indicator can also be derived automatically from the account
assignment category if a partial invoice indicator is specified in Customizing for the
account assignment category.

You cannot usually tell from an invoice whether it relates to a purchase order with
account assignment. You can only tell this from the item list in Logistics Invoice
Verification (Account Assignment column). You can display the account assignment
information and, under certain circumstances, change it. Special display variants are
available for the item list when you enter an invoice for a purchase order with account
assignment.
PROCUREMENT OF CONSUMABLE MATERIAL - 4
Procurement Process for Consumption
The following graphic contrasts the procurement process for stock material with that
for consumable material. The differences center on the “purchasing view” and the
“relevant accounts”.
Start by reviewing the procurement process for stock material and then take a
detailed look at the individual variants of consumable material procurement.

• Stock material that is procured on an account-assigned basis

• Consumption material without material master record
• Consumption material with material master record

In the “Procurement for Consumption” graphic, the procurement processes for stock
and consumption material are shown with regard to account assignment. A material
master record is necessary for stock material. You do not specify an account
assignment category in the purchase order. The account assignment data is
determined from the material master record (valuation class). The stock value is
posted to a stock account at the time of goods receipt. In consequence, the stock
value and stock quantity are updated in the material master record.

SAP MM Procurement for Consumption

Figure SAP MM Procurement for Consumption

When you procure consumable material, the material can be a special consumable
material with a master record or a material without a master record. However, you
can also procure stock material for direct consumption. In all cases, you must specify
an account assignment category and other dependent account assignment data such
as an account assignment object and G/L account (consumption account).
At the time of goods receipt and/or invoice receipt, the consumption account specified
in the purchase order is then debited with the procurement value. In addition, data for
the account assignment object is updated.
The following figure “Stock Material - Consumable Material: Comparison” lists the
most important differences between the procurement of stock material and that of
consumable material.

SAP MM Comparison of Stock Material and Consumable Material

Figure SAP MM Comparison of Stock Material and Consumable Material