Professional Documents
Culture Documents
Procurement Process
- Obtain materials or services from dealers in correct quantity, proper value at proper time
- Subdivided in 2
o Basic Procurement
o Special Procurement
Basic Procurement
Procurement Lifecycle
- Requirement and Information Gathering – knowing what to procure and how many and look for
suppliers
- Supplier Contact – look for suppliers and ask for quotation request
- Background Review – quality is checked such as installation, warranty, maintenance
- Negotiation – regarding price and availability on delivery schedule, binding of legal document
once contract signed
- Order Fulfillment – shipped, delivered and paid accordingly
- Consumtion, Maintenance, and Disposal –
- Contract Renewal – o
Requisition – electronic form to inform purchasing department of need for business purpose
GR/IR – material is received and condition and quality are verified, Invoice received from vendor
Invoice Verification/ Vendor Payment – Reconciliation of INVOICE and PO, vendor is PAID
Special Procurements
- Stocks handled differently as they are not belonging to company, kept in some particular
location
- Consignment Stock – materials in store presmises but belongs to vendor/owner of materials
- Third Party Processing –
- Pipeline Handling – company not need to store materials involved, obtainable when required
such as oil or water, electricity
- Returnable Transport Stock – goods delivered with returnable transport packaging (pallets,
containers) which would be returned to vendor
- Subcontracting – 3rd party would do processing of materials but raw materials are provided to
them
- Stock Transfer using Stock Transport Order – Goods procured and supplied witin a company,
Internal transactions
MM Organizational Levels
- Client – has own set of master data with independent table sets
o Company Code – independent accounting unit, own legal entity and profit/loss. Balance
statement
Plant – unit having a manufacturing facility, warehouse distribution center,
where company activities take place
Storage Location – where stock is physically kept
o Purchasing Organization – org unit under company responsible
for procurement activities
Purchasing Group
Defining a Company
Create Plant
- OX10
- Org unit within company where activities take place
Create Storage Location
Material Type
Material Group
Number Range
- Standard – information on standard orders includes details of vendor and material, includes
vendor price for supplying particular material
- Subcontracting – information on subcontract orders, price for assembling te raw material that is
supplied by ordering party
- Pipeline – material that is provided by vendor thru pipelines
- Consignment – material kept at orgering party premises
Source List –
Procurement Cycle
- Determination of Requirements Purchase Requisition RFQ Purchase Order Vendor
Invoice Vendor Verification
- Creating Purchase Order: ME21N
Posting Invoice
Purchase Requisition
- ME21N
Outline Agreement
Contract
- Long term outline agreement between vendor and ordering party over predefined materials or
services
- Quantity Contract: overall value is specified in terms of total quantity
- Value Contract: overall value specified in term of total amount paid
- ME31K
Scheduling Agreement
- Long term outline agreement between vendor and ordering party over predefined material or
service
- ME31L : Creating Scheduling Agreement
Quota Arragement
- OBBO
- Posting period: allows you to post and make changes to ducments only in specific time period
- TCOde: OB52
- Subcontracting vendor receives component from ordering party to help procuude product
- ME21N Category: L
Consignment PO
Inventory Management
- Procured items must be in correct place so that they can be consumed when required
- Management of stock based on value or quantity basis
- Planning, entry and keeping record of all goods movement
- Goods movement will create a document that w
- Inventory Management Deals with
o Movement Type
o Goods Receipt
o Reservation
o Goods Issue
Movement Type
Goods Receipt
- Stock needed to be blocked in advanced so it can be made available at particular point of time
- MMBE: View Reserved Quantity
- MB21: Create Reservation
Goods Issue
Invoice Verification
- Amount being provided by vendor for goods or services delivered is called INVOICE
- Before paying the vendor we need to verify the invoice
- Invoice Verification makrs ends of procurement after PO and GR
- Invoice posting updates all related documents in financial and accounting
Posting Invoice
- Done after goods are received from ventor and goods receipt is done
- Invoice is received from vendor is verified against cost, quantity, and quality
- Phase where vendor is paid from the company and reconciliation of invoice and PO is
accomplished
- MIRO
Blocked Invoice
Service Management
- Services include small matainenace task like changing lights, paintings, and housekeeping
- Services are direct consumtption than keeping inventory
- Service Procurement are Two Types:
o Planned Services – prices and quantity are known in advance, nature and scope of
service is clear
o Unplanned Services – quantity and price are not known in advance, nature and scope of
service is not clear
- Contains all details of all services can be procured from external vendor
- Contains description of service along with unit of measure
- AC03: Create Service Master Record
Valuation
- Integration of MM and FI
- Since it updates general ledger accounts in financial accounting
- Helps Determine price of material for which general ledger account needs to be posted in
financial accounting
- Materials are valuated based on different types of procurement
o Split Valuation – normally used to valuate material in same valuation area ( company,
plant)
Split Valuation
Account Determination
- Cost being paid must be posted in organization necessarily in correct general ledger account
- During procurement remembering the correct, correct G/L accounts needs to be posted but is
an impossible thing
- SAP System, configuration on account determination is done automatically
- Valuation areas can be grouped together and be assigned to one grouping code
- OMWM: Activate Valuation Grouping Code
- Valuation grouping, valuation area, and valuation grouping code are assigned to company code
- OMWD: Define Valuation Area and Valuation Grouping Code
Configuration
- Make some data screens in master data as optional or hidden or some as mandatory
- OMS9: Maintain Field Selection for Data Screens
- Allows you to maintain company codes with period along fiscal year
- OMSY: Maintain Company Codes for Material Management
- Sometimes if information is incomplete for any document, system will not allows us to save the
document
- To setup system messages in Define Attributes of System Messages
- OMT4: Define Attributes of System Messages:
T-CODES LIST
T-Code Description
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