Standard Business Processes in SAP

MM

Prepared By
Subhrajyoti Bhattacharjee
PMP, Certified SAP EAM/PM, Certified ITIL V3
SAP EAM/PTP/PS Systems Analyst
Perth, Australia.
E-mail: subhrajyoti.b@gmail.com

Contents
1.

STOCK PURCHASE NON ERS VENDORS................................................................3

2.

STOCK PURCHASE ERS VENDOR........................................................................17

3.

DIRECT CHARGE PURCHASE NON STOCK ITEM...............................................23

4.

DIRECT CHARGE PURCHASE SERVICE...............................................................28

5.

STOCK TRANSPORT BETWEEN PLANTS................................................................36

6.

CONSIGNMENT PURCHASE...................................................................................48

7.

RECURRING PAYMENTS USING INVOICING PLAN.................................................55

8.

MISCELLANEOUS PURCHASING............................................................................59

9.

INVENTORY MANAGEMENT..................................................................................63

1.Stock Purchase Non ERS Vendors

Scenario brief: In this scenario, material stock relevant for MRP
Planning are planned and procured. Depending on MRP Type, Lot
sizing procedure, Availability Check and other parameters as set in
material master and MRP configuration, a daily MRP batch job
determines within the defined planning horizon, which are the
parts that have fallen below reorder point (based on Requirements
vs. Planned receipts). An entry is made against the material in MRP
Planning File, and Planned Order/Purchase requisition is generated
(as per MRP parameters).
Purchase requisitions are automatically converted to Purchase
Orders, against which Goods receipt to relevant Plant/Storage
Location is performed. Finally vendor invoice is created, blocked
invoices, if any, are cleared by relevant authority and Vendor
payments are executed.
Pre-requisites:
Material master with all relevant field details including MRP and
Purchasing data fields. Refer document PTP_Current State
Document_PTP Master Data_v0 for details on relevant fields in
material master.
Source assignment records should exist for the material for auto
PO creation from PR. This would include Outline agreement
(Contract)/Source List/Purchasing Info records.
Configurations and master data associated with all process objects
including Purchase requisition, Purchase Order, Goods Receipt,
Invoice Receipt, Material movements and Accounts postings should
be complete and valid.

Process Flow in SAP:

Step 1. Requirements for usage of stock material are generated in
the system for the material. Requirements can be generated
through manually created reservations or Reservations
automatically generated through planned requirement for stock
material in transactions such as Maintenance Order component
planning.

Manually created reservations

Transaction code: MB21

Enter Base Date (Date on which material consumption/movement) is

expected, Movement Type (where the material would be consumed),
Plant (Plant issuing or receiving the material)

The relevant movement types for manual creation consumption

requirement of the material at ABC would include 201 Consumption
for Cost centre, 221 Consumption for Project.
In main screen, select Consumption object based on Movement type
(for example. Cost Centre), Material ID, Quantity and save the
reservation

Auto created reservations Maintenance Order Planning

Transaction code: IW31 (Create Order)/ IW32 (Change Order)
In Maintenance Order > Component planning, whenever a stock
material is planned as a requirement, a Reservation for the same is
created inside the maintenance order. The time of creation of the
reservation may be on Save or during Release of maintenance order
based on configuration setup or in Order.

Check in Gen. Data tab where Reservation No. for the item will be
displayed.

Step 2. Create PR via MRP Run

Transaction code: MD01 (MRP Run for a Plant), MD03 (Single-item,
Single-Level), MDBT (Batch mode - Daily batch run, automated)
Auto Batch is set for Daily run at ABC.
MD03 (Single-item, Single-Level)

Step 3. Create Automatic Purchase Order

Transaction code: ME59 (Automatic creation of Purchase Order from
Requisitions)

Enter selection parameters such as Plant, Material ID, Purchase

Requisition No. etc. and execute the transaction

Purchase Order created can be searched in PO List Report

transactions like ME2L (By Vendor), ME2M (By Material), ME2K
(General) and so on.

Step 4. Receive Stock

Transaction code: MIGO_GR
Transaction MIGO is mostly used for Goods Receipt but as per
Executable actions configured on MIGO transaction, A01 Goods has
not been set. It is set in transaction MIGO_GR

Material document posted can be displayed in Transaction MB03.

On Goods receipt for Stock material, the following Accounting entries
are posted, if material has Moving Average Pricing set:
Stock A/c Dr
GR/IR A/c Cr
In case of Material with Standard pricing, and in case Purchase price
is different from Material standard price,

Stock A/c Dr
Price Difference A/c Dr
GR/IR A/c Cr
Cancellation of the Goods receipt movement can be done through
transaction MBST

Note: As per print output setting and Printer assignment setting for
output condition type in configuration transaction OMJ3, at ABC, GR

of stock items against a Plant/Storage Location would generate a GR

Note being printed to the respective Printer mapped in OMJ3.

Step 5. Create Vendor Invoice

Transaction code: MIRO
In case of PO being marked for GR-Based IV (PO -> Item details ->
Invoice tab), Invoice can be created against Goods receipt postings
only, whereas if it is marked as Invoice receipt, Invoice can be created
against the Purchase Order as a whole.
Basic Data Section:
Invoicing date, Posting date, Reference, Reference Document
category (Ex. Purchase Order/Bill of Lading/Delivery Note etc.) and
Reference Document No are entered.
Tick on Calculate Tax option to calculate Tax if any. Enter the Net
amount in the Amount field, till the Balance is 0.00

Payment section:
Payment terms, Payment method, Payment Block, Overall discount (if
any) can be set in this section

Other sections of the Invoice which can be maintained include

Details section (for Unplanned Delivery Cost, Planning Level XA:
Blocked for payment etc), Tax, Amount Split (to split total amount as
per payment terms), Contacts, Note (for maintaining a detailed note
on Invoice)
Simulate and Save the invoice document. As by default Invoice
documents may be marked for Payment block, it gets blocked for
further clearance.

Step 6. Release Blocked Invoice

Transaction code: MRBR
Enter selection details in initial screen and execute the report.

Select Invoice and click on the Green Flag to release the Invoice, and
save to release.

On Invoice Posting, the following Accounting entries are posted:

GR/IR A/c Dr
Tax Account Dr (if taxes are applicable)
Vendor reconciliation A/c Cr
Step 7. Execute Payment Run
Transaction code: F110
Payment run is executed by the Accounts payable department. A
brief of the transaction is provided below.
In initial screen, Run date and Identification is entered for the
payment proposal.
Under the Parameter tab, enter Company code, Payment method (as
relevant), Next payment date, Vendor Accounts (if specific vendors
are to be paid), Exchange rate type (in case of payment in Foreign
currency)

In Free selection section, Field Name (for example Invoice

Document No or a List of them) can be specifically selected or
excluded

In Additional Log section, Log types and Vendor/Customer account

range can be maintained

In Printout/Data Medium section, relevant Program variants can be

set

On Save, parameters for Payment Program run for Payment Run date
is saved.
The Next steps are to Schedule the proposal and Execute the
Payment Run in the initial screen of the Transaction

The Next steps are to Schedule the proposal.

On entering Start Date/Time, etc. and clicking on Green Tick, it will

give a message Proposal has been released

The payment run will be executed by the system as per scheduled

Date/Time
Post Payment, the following Accounting entries are posted:
Vendor Reconciliation A/c Cr
Bank A/c Dr

2.Stock Purchase ERS Vendor

Scenario brief: ERS or Evaluated Receipt Settlement is applicable
for Vendors which are marked for Auto ERS settlement in Vendor
master > Purchasing Data -> Control Data section.
In this scenario, post Goods receipt, Auto ERS Invoices are created,
which are then subject to Payment run. This scenario generally
applies for regular/periodic purchases from established vendors.

Pre-requisites:
Vendor Master should be setup with checkbox for Auto ERS
settlement and GR Based IV. Details of Vendor master setting is
elaborated in document PTP_Current State Document_PTP Master
Data_v0.
In the Purchasing Info record, for the Vendor Material
Purchasing Organization combination, No ERS checkbox should not
be set. Details of Purchasing Info record setting is elaborated in
document PTP_Current State Document_PTP Master Data_v0
Configurations and master data associated with all process objects
including Purchase requisition, Purchase Order, Goods Receipt,
Invoice Receipt, Material movements and Accounts postings should
be complete and valid.
Process Flow in SAP:
Step 1. Purchase requisition for the material is generated based
on automated MRP run as detailed in previous section of this
document

Step 2. Purchase requisition is Source assigned and converted to

Purchase Order
Transaction code: ME57
This Transaction is subject to the fact that the Material does not have
already have a source assigned to it, say through a Fixed vendor or
single Purchase Info record within the current validity period etc. In
such cases transaction ME59 as detailed in previous section can be
used.
Enter relevant details in the selection screen like Purchase
Requisition No (if known), Purchasing Group, Material ID, Material
Group etc. as relevant and execute the transaction

Select the displayed Purchase requisition and click on Assign

automatically or assign manually. In case of multiple available
sources, users would have to choose from the available sources.
Save once after assigning the Source.

Next stage is to process assignment and convert the Purchase

requisition to a Purchase Order. Select the Purchase requisition line
and click on Assignments tab

Select the Assignment line and click on tab Process Assignment.

The system automatically proposes the Purchase Order Type,

Purchase Order Date, Purchasing Group, Purchasing Organization.
Click to continue, Edit and save the Purchase Order.
Ensure that ERS , GR Based IV and Invoice Receipt indicators are
ticked in Purchase Order -> Item -> Invoice section. Inv. Receipt
should be unchecked. Also, under Delivery tab, Goods Receipt
indicator should be ticked.

Message Output set for Order can be checked by clicking on

Messages tab

Generated messages can be displayed in ME9F Transaction

Step 3. Goods receipt is carried out against the Purchase Order

as detailed in previous process section of this document
Step 4. Creation of ERS Invoice

Transaction code: MRRL

Enter selection
recommended to
actual run. In the
it can be directly
vendor is known.

parameters in initial screen. It is usually

first run it in a Test run mode and then perform an
field Doc. Selection, if Purchase Order No. is known
on Purchase Order, else it can be set on Vendor, if

There is also a checkbox for Settle Goods Item + Planned Delivery

cost, which must be checked for settling Item and Planned Delivery
costs (if any). Remove Test run check for actual run.

A List output screen with FI document no. (ERS Invoice) generated

would come up, if the transaction has not been run in Test mode.

Step 5. Vendor Payment would be performed using similar

procedure as documented in first process section.

3.Direct Charge Purchase Non stock item

Scenario brief: Direct Charge purchase refer to manually created
Purchase requisitions created for consumption of Non stock items
directly to an account assignment object such as K- Cost centre, PProject, F- Maintenance Order etc.
Manual creation of Purchase requisitions can take place directly in
MM module, through Purchase requisition creation transactions or in
certain cases automatically in other modules in relevant transaction.
For example when a Non stock item is planned directly inside a
Maintenance Order (under component section), system can be set to
automatically generate a Purchase requisition for the non-stock item
with account assignment F. So when Goods will be received, the
goods and relevant costs will directly be posted to the maintenance
order.
Non stock Purchase requisitions with Account assignment are usually
subject to a Release procedure which is defined as per
characteristics values of Class PR_RELEASE in system. Details of
Release Strategies and their defining characteristics values can be
checked for above class and class type 032 in transaction code
CL24N

Pre-requisites:
Configurations, master data and inter-module integration
associated with all process objects including Purchase requisition,
Purchase Order, Goods Receipt, Invoice Receipt, Material
movements and Accounts postings should be complete and valid.
Process Flow in SAP:
Step 1. Purchase requisitions are manually created with Account
assignments or created automatically through Non stock
component planning in Maintenance Order
ME51N Manual PR Creation
All details are entered including Material ID (if known)/Text (if no
material ID is known), Material Group (as relevant), Purchasing
Group (For Direct Purchase), Quantity, Unit, Delivery Date, Plant
(receiving plant) etc. and Purchase requisition is saved.
Also Item details pertaining to Account assignment, Valuation, and
other mandatory fields should be filled. System will automatically
point out to required fields that are missing entries.

IW31/IW32 Create/Change Maintenance Order

In the Component section of the Maintenance Order, the details of

the Non-stock components are entered

System will prompt user for entering mandatory details pertaining to

Material Group, Purchasing Group under the Purchasing Data tab
against the Line item. Other optional fields like Vendor, Planned
Delivery Time etc. as relevant can also be entered.

Based on setting on component line, system can be triggered to

generate a Purchase requisition for the Non stock item either After
Order release or Immediately or Never.
Details of Purchase Requisition, linked to the Maintenance Order can
be directly found inside Maintenance Order -> Purchasing Data
section.

Step 2. Purchase requisition is released by relevant authority

based on Release code identified by system based on Purchase
requisition value etc., and corresponding approving limits of
approver
Transaction code: ME54

The Purchase Requisition is released and saved.

Step 3. Assignment of Source and Processing of assignment to
create Purchase Order from Purchase requisition.
Transaction: ME57
Process is same as detailed in previous process sections in this
document.
Step 4. Goods receipt against the Purchase Order

Process is same as detailed in previous process sections in this

document.
Step 5. Invoice Receipt
Process is same as detailed in previous process sections in this
document.
Step 6. Vendor Payment
Process is same as detailed in previous process sections in this
document.

4.Direct Charge Purchase Service

Scenario brief: Service Procurement is a major procurement activity
at ABC. Services procured may be segregated under several
categories including Contract Labour hire, Fleet Equipment hire,
Consulting services, Project Based services and Miscellaneous
services among others. Further, services are categorized from EH&S
perspective as Onsite services, Offsite services etc. to ensure that
vendors comply as per Health and Safety norms. Ongoing CMIP
Project aims at building up an SAP based process to perform Health
& Safety related capabilities of vendors prior to assigning them work
that would require due compliance.
For details of Service master maintenance and categories of
services, refer to the document PTP_Current State Document_PTP
Master Data_v0
Service entry sheets are filled up by external Service vendors in an
application called ICAPS which is a Portal based application built for
that purpose and accessible to authorized vendors. ICAPS
functionalities have not been detailed in this document owing to
controlled and limited access to the application.
Pre-requisites:

 Configurations, Service master data and inter-module integration

associated with all process objects including Purchase requisition,
Purchase Order, Service Entry, Invoice Receipt, Material
movements and Accounts postings should be complete and valid.
Process Flow in SAP:
Step 1. Creation of Service Purchase Requisition.
Transaction: ME51N (Manual Creation of Purchase Requisition)/ IW31
(Maintenance Order Creation with External Services)/ IW32
(Maintenance Order Change with External Services)
ME51N (Manual Creation of Purchase Requisition)
Service Purchase requisitions can be directly created in this
transaction. Services are procured to an appropriate Account
assignment category (such as K Cost Centre, P Project, F Order
etc.). Item category for Service procurement should be set as D in
Purchase requisition line item.
The Material Group, and Purchasing Groups should be correctly
assigned and other relevant details like Quantity, Unit, Plant etc.
should be filled up

Service item details like Service No, Quantity, Unit, Gross price
should be correctly filled.

Account assignment details and other required details ,if any, should
be filled up. Check and save Purchase requisition.
IW31/IW32 (Service Purchase Requisition from Maintenance Order)
Service planning can be done inside a Maintenance order. Services
are External Service operations defined in maintenance order using
an appropriate Control Key. While selecting the Control key in the
Operation from dropdown list, users should ensure that Service
checkbox is ticked for that control key thus classifying it as a service
Services are planned under Operations tab of Maintenance order

All essential details including Material Group, Purchase Group,

Operation Quantity etc. should be filled in popup that comes up

Service details are to be maintained under the External tab at the

bottom of the Operation tab

Based on configuration setting on Maintenance Order type for field

Operation Res/Preq creation, Service PR may be created on Save or
on release or Never for the maintenance Order type.
Purchase requisition pertaining to services created from Maintenance
Order can be checked in MM Purchase Requisition List Reports (For
example. ME5A transaction, with Account assignment category set
as F) or directly inside Maintenance Order under Operation -> Act.
Data tab

Step 2. Approval of Purchase Requisition by authorized person.

As detailed in previous process section of this document.
Step 3. Source Assignment and Conversion to Purchase Order.
As detailed in previous process section of this document.
Step 4. Service Entry sheet created against Purchase Order, and
performed Service quantity accepted for posting
Transaction: ML81N (In SAP)/ Service entries done through ICAPS not
in scope of this document. Separate documents may exist on the
same in ABC Portal.
The Purchase Order No is entered by clicking on Other Purchase
Order tab. Then click on Create entry sheet icon and enter values of
Short Text, Document Date, Posting Date and Reference

Click on Service selection tab

If Adopt Full Quantity is not ticked, system will propose for service
entry Net pending hours (Planned hours Already entered hours),
and if it is ticked, system adopts full quantity as planned. It is better
to be left unchecked.
In next screen select the service line and click on tab Services (Adopt
Services)

The system automatically adapts the service line into the Service
entry sheet under Accept Data tab

Users should now update the Actual Quantity of service that has
been performed, to be accepted for posting.

To accept and Post the service entry, click on Green Flag on Task bar
and save the Service entry sheet.

Step 5. Invoice created for services performed and accepted

As detailed in previous process section of this document
Step 6. Vendor payments
As detailed in previous process section of this document

5.Stock Transport between Plants

Scenario brief: This scenario refers to internal procurement of

Stocks, between Plants where one plant would be a supplier or
vendor plant and the other would be a receiver or customer plant.
In this process the customer plant would raise a STO Purchase
Order for delivery of goods against the supplying plant. The
supplying plant would in turn create a sales order against the
requirement with recipient plants Customer ID.
The process would follow a 1-step procedure, if set in STO
configuration setting between a pair of plants and PO Type or 2
step stock Transfer with supplying plant issuing out the stock from
its Unrestricted use stock, stock transferred to Stock in Transit and
receiving plant finally receiving from Stock in transit to
Unrestricted use stock. In one step procedure as soon as stocks are
issued out of supplying plant, it would get posted to stock in
receiving plant.
In ABC process perspective there is no integration setup of PTP (SAP
MM) with SAP QM module. Ideally, as per SAP best practice
guidelines, on receipt of Goods at receiving plant, there should be
check on Quality parameters of the goods delivered and only on
passing the parameters is the stock declared as Unrestricted. For ex.
In case of Finished product of Mining, Grade check with factors such
as Metal content, Moisture content etc. should ideally be checked
and recorded system. In such a scenario, stocks would get posted to
Quality Inspection stock, generating inspection Lots against which
Result Recording and Usage decision is recorded, based on which the
stock gets transferred to Blocked stock o5r Unrestricted use stock.
Pre-requisites:
A Vendor master should exist and be assigned against the
supplying plant and a Customer master should exist and have
been assigned in MM STO configuration against the receiving
plant.
The material master should be active in both plants and should
have at least a Purchasing view in receiving plant and a Sales view
in supplying plant
For delivery relevant STO, all necessary delivery relevant
configuration settings should have been done on MM side

 Configurations, master data and inter-module integration

associated with all process objects including STO Purchase Order,
Outbound Delivery/Goods issue, Inbound delivery/Goods receipt,
Sales billing (if relevant), Invoice verification (if sales billing is
relevant), Material movements and Accounts postings should be
complete and valid.

Process Flow in SAP:

Step 1. Creation of STO Purchase Order (Type UB)
Transaction: ME21N
Enter Header details including Supplying Plant, Purchase
Organization, Company Code, Purchasing Group etc. as relevant
Enter Item details including Material ID, PO Quantity, Delivery Date,
Recipient Plant, Storage Location, Item Pricing Condition details,
Confirmation control key with Delivery details (under Confirmations
to be set to Inbound delivery if relevant to same)

Check and save the Stock Transport Order

Step 2. Creation of Sales Order at Supplying Plant
Transaction: VA01
A Standard Order OR is raised in SD against the supplying Plant

Enter relevant Header Level information like Sold to party (for

recipient plant), Ship to party (for recipient plant), Purchase Order
No. etc.

Enter relevant Item level details including Material ID, Quantity,

mandatory Pricing conditions, Terms of payment, Incoterms etc.

Check document for completeness and save the document

Step 3. Creating an Outbound Delivery for Sales Order

Transaction: VL10
In the Sales Orders tab of the Transaction, enter the Sales Order No.
and execute. The Delivery date and CalcRuleDefltDlvCrDt fields for
selecting the Sales documents relevant for delivery should be
correctly chosen.

Select the relevant Delivery item line and click on Create in

Background

Step 4. Goods Issue against Outbound Delivery

Transaction: VL02N (Change Outbound Delivery)
Document Type: NL

Enter actual picked quantity, generate output docs (as relevant)

Confirm and save

Post Goods issue

Goods Issue tab.

against outbound delivery by clicking on Post

Note If Goods issue is simple inventory movement (without

Outbound delivery), Goods are issued through standard MIGO
transaction

The entire document flow for Purchase Order -> Replenishment

Delivery -> Picking request -> Transfer to Stock in Transit and so on
can be viewed within the Document flow section of delivery

On posting Goods issue, movement type 641 is executed which

results in
Stock in Transit at receiving plant Dr
Inventory at supplying plant Cr
If there are Freight charges included, accounting document would
show following entries:
Inventory Transfer A/c Dr
Freight/Custom Clearing A/c Cr
This can be checked in Material movement document in transaction
MB03

Also in MB5T transaction report, Stock in Transit can be checked

Step 5. Create Inbound delivery at Receiving plant

Transaction: VL31N (Create Inbound Delivery w.r.t PO)
Enter Vendor and PO Number and proceed

Partner Function LF should have been set under Goto > Header
Partners
Save the Inbound delivery
Step 6. Post Goods receipt
Transaction: VL32N

Check under Item overview; enter Actual GR date, update Delivery

Quantity and Receiving plant and click on Post Goods Issue

The resulting goods movement results in transfer posting of stock:

Stock in Transit Cr
Unrestricted (UR) Stock at receiving plant Dr
Check against Stock in receiving plant in MMBE/MB52 transactions.
The UR stock value would go up.

Step 7. Sales order billing/Release to Accounting (Only applicable in

case of Intercompany billing provided that there is a business
process for same)
Transaction: VF01/VF02
Above scenario executed between Plants under same company code.
Hence no subsequent billing (at supply side) or invoice receipt (at
recipient side) is applicable. Invoice receipt, where applicable, would
follow a similar process as documented under previous process
scenarios of this document.

6.Consignment Purchase
Scenario brief: Consignment process is based on the VMI (Vendor
Managed Inventory) concept of procurement. Vendor has physical
and financial control of the stock which is stored at customer
premises unless customer withdraws complete or part of stock from
the designated vendor consignment stock for personal usage. This
would create a liability on the customer which is to be paid/settled to
vendor.
Purchasing Info records and Contracts for Consignment items are
maintained which is the basis of source assignment while conversion
of a Purchase requisition to a Purchase Order. On delivery of a
Consignment item, Goods receipt would result in stocks being stored
in Vendor Consignment stock segment. On requirement of stock,
Goods issue from consignment stock to account assignment object
(such as requesting Cost Centre, Project etc.) is executed using the
relevant movement type. Auto invoice for consignment stock usage
is created which is further subject to Payment run.
Pre-requisites:
Configurations, master data and inter-module integration
associated with all process objects including Material movements
and Accounts postings should be complete and valid.

Process Flow in SAP:

Step 1. Consignment Purchasing
Consignment Contract creation.

Info

record

creation

&

Details of above are provided in the document PTP_Current State

Document_PTP Master Data_v0
Step 2. Purchase requisition created for consignment item
Transaction: ME51N
Enter relevant Item level details, such as Item Category (= K for
Consignment), Material ID, Quantity, Recipient Plant, Delivery Date
etc. as relevant and save the Purchase requisition.

Step 3. Purchase requisition is released by designated authority

As detailed in previous process sections.
Step 4. Purchase requisition is Source assigned and converted to
Purchase Order
As detailed in previous process sections. Purchase order would be a
price suppressed purchase order.

Step 5. Goods are received against the Purchase order

Transaction: MIGO_GR
Goods receipt is executed via movement type 101 K. On receipt of
Consignment goods, a special segment of stock Consignment stock
against the Vendor gets posted. Material document does not have an
associated Accounting document.

In MMBE Report, the stock received of Consignment material at

recipient Plant/Storage Location would be displayed under Vendor
Consignment stock.

Step 5. Goods issue for consumption from Vendor Consignment

stock
Transaction: MB11/MB1A/MIGO_GI
Goods from Consignment stock can be issued out for consumption to
Cost Centre (movement type 201 K), Projects (movement type 221
K) and so on. To reverse movements, movement types are 202 K
(Consignment consumption for Cost centre reversal), 222 K
(Consignment consumption for Project reversal) and so on.

While posting from Consignment stock, Vendor entry is mandatory,

so that system knows as to consume from consignment stock of
which vendor.
Apart from Vendor, consumption object (such as Cost centre),
Material No, Quantity, Batch (if applicable) are to be entered

During Consumption, associated with Material Document

Accounting,
Controlling
and
Consolidation
documents

are
(if

Consolidation active). The accounting document would result in

following entries:
Consignment stock Clearing A/c Cr
Stock consumption A/c Dr
In MMBE report, the consignment stock would be reduced by the
amount consumed.

Step 6. Auto settlement of liabilities created on consumption of

consignment stock
Transaction: MRKO
In the initial screen enter Company code, Vendor, Plant, Material,
Consignment (ticked), Document Date, Withdrawals not settled
(ticked), etc. as relevant
Initially run the report with Processing option set to Display

For settlement of items, execute with processing option set as Settle

in the initial selection screen

An Invoice document would be generated in the settlement run.

The accounting entries that are generated are:

Vendor reconciliation A/c Cr
Consignment stock clearing A/c Dr
GST/Input Tax credit a/c Dr
Step 7. Vendor payments
As detailed in previous process section of this document

7.Recurring payments using Invoicing Plan

Scenario brief: Certain procurements are done on a regular basis and
would involve payment on a periodic basis, say at the end of each
month. Such payments can be planned using an Invoicing plan set in
the Purchase order. Purchase order created is a Framework Purchase
Order. In such cases, there is no Goods receipt performed. On a
periodic basis, Invoices would be generated through auto settlement
report in Logistics Invoice Verification.

Pre-requisites:
Vendor should have been set up for auto ERS settlement

 Invoicing Plan details should be set in Purchase Order (Framework

PO)
Configurations, master data and inter-module integration
associated with all process objects including Material movements
and Accounts postings should be complete and valid.
Process Flow in SAP:
Step 1. Creation of Framework Purchase Order
Transaction: ME21N
Choose Order type FO and enter other details at Header and Item
level of Purchase Order
Header details would include Vendor Data, Organizational Data such
as Purchasing Org., Purchasing Group, Company Code, Validity Start
date, Validity End date, etc.
Item details would include Account assignment key (K- Cost centre,
P-Projects etc.), Material ID/Short text, Quantity, Unit, Price per unit,
Material Group, Plant, etc.
A crucial section to be filled in is the Item details Invoice section,
where only Invoice receipt and ERS are to be ticked and Invoice Plan
details are to be filled, with planned invoice dates. Invoice amount
would be equal to the price of the item against which Invoicing plan
has been set.
Click on Invoicing plan tab and Invoicing Plan type is to be selected
from dropdown

In Delivery section of Item details either Goods receipt should be

unchecked or it can be set to GR Non-valuated

Step 2. Carry out Automatic settlement (Invoicing Plan)

Transaction: MRIS
In the Initial screen enter the details known such as Company code,
Plant, Vendor, Purchasing Document etc. Initially execute it in Test
run mode

On removing the Test run checkbox in initial screen, Invoice

document would have been generated.

Step 3. Execute Vendor Payment

As detailed in previous process sections

8.Miscellaneous Purchasing
Scenario brief: There are 4 primary scenarios in miscellaneous
purchasing, namely:
Direct charge purchase , GST input taxed (P3), cannot be
recovered from ATO
Direct charge purchase, Service multiple tax code (taxable
and non-taxable)
Direct charge purchase, Service multiple account assignment
Pre-requisites:
Configurations, master data and inter-module integration
associated with all process objects including Material
movements and Accounts postings should be complete and
valid.

Process Flow in SAP:

Direct charge purchase , GST input taxed (P3), cannot be recovered

from ATO
Purchase Order is created through a Purchase requisition or directly.
The process is similar to process scenarios as described earlier.
However, in the purchase order line item, the tax code should be
selected as P3.

The difference lies in Input tax not being recoverable from ATO.
Direct charge purchase, Service multiple tax code (taxable and
non-taxable)
In this scenario, multiple tax codes are used across service activities,
of which some may be liable to input tax and some may not be.

The Tax codes are then specifically set for each service activity line
of the Purchase order, in the Item details -> Invoice section.

During Invoice verification, the postings will differ for line item
subject to Tax and item not subject to Tax
Item with Tax will have following accounting entries
GR/IR A/c Dr, Tax A/c Dr
Vendor A/c Cr
Item with no Tax will have following accounting entries

GR/IR A/c Dr
Vendor A/c Cr
Direct charge purchase, Service multiple account assignment
Multiple account assignments could refer to each line of Purchase
order being assigned to different account assignment objects (such
as K- Cost centre, P- Projects, etc.) or Same item line charges
distributed to multiple account assignment objects such as different
Cost centres, WBS elements etc.
In SAP Terminology, its the latter which is referenced to as multiple
account assignment. A pre-requisite to same would be multiple
account assignment should be activated in the Purchase order and
distribution rule to the various accounts must be set within the
Account assignment section of Purchase Order.

During Goods receipt, the consumption posting to the designated

consumption objects would be split in the percentage/amount as set
within the Purchase order

9.Inventory Management
Scenario brief: As Goods receipt of Stock/non stock items has been
detailed in the previous process sections, Goods issue is the other

important aspect of Inventory Management. Goods issues are in

general carried out against Reservations generated for Stock items
planned within Maintenance Orders in ABC process perspective.
There could be direct Goods issues to Cost centre/WBS Elements in
certain cases.
There could be Goods issues of Finished Goods against Sales Order
which are usually through Outbound Delivery and not direct. This has
been detailed in one of the previous scenarios (Stock Transport
between Plants) in this document.
Goods issues has again been segregated into Normal hour goods
issues (using MIGO/MIGO_GR), After Hour Goods issues (using
ZMIGO_WO)
Pre-requisites:
All configurations and settings pertaining to Goods movement,
Account determination for movement types, Posting periods
etc. should have been done.
There should be adequate stock at source storage location to
post goods issue (may not be a requisite in case of Negative
stock scenario at ABC such as Goods issue against Sales order
of Finished products)

Process Flow in SAP:

Normal hour Goods issue
Transactions: MIGO/MIGO_GI/MB11
Movement types: 201 (Goods issue to Cost Centre), 221 (Goods issue
to WBS elements), 261 (Goods issue to Maintenance Orders)

Business Transaction (Goods issue), Account Assignment object no.

(Order etc.), relevant Movement type should first be entered.

For Goods issue, Item Quantity should be checked, supplying

Plant/Storage Location should be checked, Item OK should be ticked,
and prior to posting, the Check tab should be clicked to see if
everything is OK. If there are any errors, system will issue an error
traffic light against the item and its details can be checked by
clicking on it.
On posting of Goods issue,
Stock A/c Cr
Consumption A/c Dr
After hour Goods issue
After hour Goods issues at ABC refers to a custom transaction
ZMIGO_WO, which has been developed for Goods issues of spare
parts and inventory for Maintenance Orders/Order Reservations
primarily. However, as per functionalities available in the transaction,
it may also be used for Transfer postings etc.
It is assigned to specific user roles that are designated to carry out
after hour Goods issue.

The functionalities of the transaction are otherwise same as per

other Goods movement transaction.