MM- MATERIAL MANAGEMENT FLOW

MATERIAL REQUREMENT PLANING (MD11)

PURCHASE REQUESITION - (ME51) ME65 RFQ QUOTATION (ME47)

PURCHASE ORDER (ME21)

GOODS RECIEPT (MIGO)

MATERIAL DOCUMENT (MB51)

INVOICE VERIFICATION (MIRO)

PHISICAL INVENTRY DOCUMENT INVENTRY COUNTING CYCLE COUNTING CLEAR DIFFERENCES

MATERIAL VALUATION (MR21)

Request for quotation (RFQ) Transmits a requirement defined in a requisition for a material or service to potential vendors. Quotation Contains a vendor's prices and conditions and is the basis for vendor selection. Purchase order (PO) The buying entitys request or instruction to a vendor (external supplier) to supply certain materials or render/perform certain services/works, formalizing a purchase transaction. Contract In the SAP Purchasing component, a type of "outline agreement", or longer-term buying arrangement. The contract is a binding commitment to procure a certain material or service from a vendor over a certain period of time. Scheduling agreement Another type of "outline agreement", or longer-term buying arrangement. Scheduling agreements provide for the creation of delivery schedules specifying purchase quantities, delivery dates, and possibly also precise times of delivery over a predefined period. The structure of an enterprise is represented in the SAP R/3 System by the following organizational levels: Client A grouping or combination of legal, organizational, business and/or administrative units with a common purpose. Example: a corporate group. Company code This level represents an independent accounting unit within a client. Each company code has its own balance sheet and its own profit and loss statement. Example: a subsidiary company, member of a corporate group. Plant Operational unit within a company code. Example: production facility, branch office.

Purchasing organization An organizational unit responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions. Purchasing group The purchasing organization is further subdivided into purchasing groups (buyer groups), which are responsible for day-to-day buying activities. A purchasing group can also act for several purchasing organizations.

PURCHASE REQUISITION
A purchase requisition is a request or instruction to Purchasing to procure a certain quantity of a material or a service so that it is available at a certain point in time.

Creation: TCODE: ME51N Fields: Acct assignment category, Material, Quantity, Delivery Date, Plant, Purchase Group, Cost Center Account assignment category. Specifies whether accounting for an item is to be effected

Releasing Purchase Requisition TCODE: ME54. ME53

Fields : PR NO , Release Code Release via Workflow TCODE: SBWP, ME54

Vendor Evaluation

The main criteria available in the standard system are:

Price Quality Delivery General service/support These four main criteria serve as a basis for evaluating vendors from whom you procure materials.

External service provision

TCODE: ME65, ME62 Fields: List of vendors.

PROCESSING RFQS AND QUOTATIONS Before creating an RFQ, you should consider the following:

Vendors: Do you have a list of suitable vendors for the RFQ? The vendor numbers must be available. Deadlines: What are the important deadlines for bidding, if any (for example, the deadline for submission of quotations)? Number assignment: If your company uses external number assignment, then you need an RFQ number that falls within the valid number range. Collective number: We recommend that you assign the RFQ a collective number. You enter this number once, and the system copies it for each RFQ you create within a competitive bidding process. The collective number enables you to track all RFQs for a given competitive bidding process. The number can be alphanumeric and up to 10 characters long. You enter it in the header data of the RFQ.

Converting PR to RFQ TCODE: ME57, ME41 Fields: Purchase group, Scope of list, Plant, Sort indicator Quotation Deadline, Collective no

Display RFQ TCODE: ME4S

Fields: Collective no, Scope of list, plant Scope of List: Determines which information is to be displayed.

Entering quotations TCODE: ME47 Fields: RFQ no, Material, net price, tax code for diff vendor and 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). Comparing Quotations TCODE: ME49 Fields: Purchase Org, Collective no One time Vendor TCODE: ME21N, ME53N

Lowest Price from Vendor master. Unsuccessful bidders are rejected. TCODE: ME49, ME57

Fields: Purchase Org, Collective no Purchase group , plant. PURCHASE ORDER assign automatically

Creating a Purchase Order TCODE: ME58, ME21N Fields: purchase group, purchase org, vendor, plant

Creating shipping Notification TCODE: VL31N, ME23N Fields: vendor, Delivery Date d Scheduling Agreement Display TCODE: ME33L, ME03 (Source List) Fields: Agreement no Material , Plant Source list: 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.

Schedule Delivery TCODE: ME38 Fields: Agreement no. Display Stock List TCODE: MD04 Fields: Material, Plant. CONSIGNMENT STOCK Display info records: TCODE: ME13 Fields: vendor, material, Purchase org, Plant, consignment Creating Consignment Contract In consignment processing, the vendor provides materials and stores them on your premises. The vendor remains the legal owner of the material until you withdraw materials from the consignment stores. TCODE: ME31K Fields: vendor, agreement type, Purchase org, purchase group, item category, plant, storage location, Material, Target qty Source list administration TCODE: ME01

Fields: Material, Plant, valid from, valid to, vendor, Purchase org Agreement no, item , fix

Pipeline Handling A pipeline material is a material that enters the production process directly from a pipeline (for example, oil), from a pipe (for example, mains water), or via a cable (for example, electricity), and can be consumed Display material TCODE: MM03 Fields: Material, Plant Display Pipe line Info records TCODE: ME13 Fields: Vendor, Material, purchase org , category Pipeline Cross Company Purchasing Central Outline agreement If purchasing is set up on a cross-company-code basis, the customer works with a central purchasing organization that is responsible for worldwide outline purchase agreements and the negotiation of the relevant terms and conditions. This means that the purchasing organization is active for Plant, info

more than one enterprise and, in organizational terms, is not linked to one specific company code or particular plants. TCODE: ME31K Fields: Vendor, Agreement type, Agreement date, purchase org, Purchase group, plant Validity start, Validity end Material, Target quantity

Quota agreement A quota arrangement divides the total requirement of a material over a period among certain sources of supply by assigning a quota to each source. Display TCODE: MEQ3 Assign and Process Purchase Requisition TCODE: ME57 Outline Agreement/Quantity Contract In this process, you create an outline agreement for a specified target quantity. You then maintain the source list for the vendor and material. Create:

TCODE: ME31K Net Price is added

Converting PR into PO TCODE: ME58 Fields: Purchasing group, Purchasing org, vendor, Scope of list Order Type , Display contract TCODE: ME33K

Subcontract In subcontracting, the vendor (subcontractor) is provided with input materials (components) by the buying entity, which are then used to manufacture the end product. This involves the following steps Create: TCODE: ME21N Stock Level and transfer posting

TCODE: ME20 Fields: vendor, plant

Rebate Processing Rebate processing deals with rebate arrangements that will be affected by long-term customer-vendor relationships. Display vendor master TCODE: MK03 Fields: vendor, Purchase org, purchasing data Create Rebate arrangement TCODE: MEB1 Fields : Arrangement type, Purchase org, Condition granter, currency, External desc, Validity period start, end. Interim Settlement: The customer performs a settlement at predefined times. The settlement can be created as an interim settlement or as a final settlement. Creating an interim Settlement:

TCODE: MEB4 Fields: Rebate arrangement no, condition Settlement date, purchasing group, billing date. granter,

GOODS RECEIPT FOR THE PURCHASE ORDER You use this component to post the receipt of goods from an external vendor or from production. A goods receipt leads to an increase in warehouse stock.

TCODE: MIGO Fields: Purchase order, Document date, Posting date, storage location ENTERING INVOICE TCODE: MIRO, MRBR Switch company code

Fields: company code, document date, posting date, tax amount, PO/ Scheduling agreement Invoice release Company code, invoice document

Total Valuated Stock Sum of all valuated stocks of a material. It consists of all the stocks your company owns. Unrestricted-Use Stock Company's own stock that is physically located in the warehouse, valuated, and not subject to any kind of usage restrictions. Quality Inspection Stock Company's own stock that is in quality inspection. Stock in quality inspection is valuated but does not count as unrestricted-use stock. Blocked Stock Company's own stock that should not be used. It is not for unrestricted-use in Inventory Management. Restricted-Use Stock Valuated stock of a material managed in batches held by a company (and belonging to that company), usage of which is subject to certain restrictions. This category of stock is only used when batch status management is active. Blocked Stock Returns

Stock that was returned by the customer and conditionally accepted. It is not valuated and does not count as unrestricted-use stock. Stock in Transfer Quantity that was already withdrawn from stock at the issuing location (plant, storage location) during a two-step stock transfer but that has not yet arrived at the receiving location (plant, storage location). Stock in transfer is managed in the valuated stock of the receiving location, but it does not yet count as unrestricted-use stock. Stock in Transit Stock in transfer that is created for a stock transfer via a stock transport order.

INVENTORY MANAGEMENT This component deals with the following tasks:

Management of material stocks on a quantity and value basis Planning, Entry, and Documentation of all Goods Movements Carrying out the Physical Inventory

Cross company code stock transfer 1. One step Stock transfer the goods are issued and received in a single transaction; 2. Two step stock transfer you enter the goods issue and then the goods receipt. One step Stock transfer

TCODE: MB1B Fields: Movement type, plant, storage location Receiving plant, Receive Storage location, material, qty Display material for one step Transfer posting TCODE: MB03 Fields: Material Document no, Mat doc year, Two step stock transfer Issue TCODE: MB1B Fields: Movement type, plant, storage location Receiving plant, material, qty Two step stock transfer Receipt TCODE: MB1B Fields: Movement type, plant, Storage Location Material, qty Cross-company-code transfer using PO Checking the current stock of a material in the supplying plant TCODE: MMBE Fields: Delivery plant: material, plant, storage location

Receiving plant: Material, plant, storage location

Checking the stock/Requirement list The creation of the purchase order has a direct effect on the quantity of the material regarded as available in the receiving plant as per the planned delivery date (plus a GR processing time of 3 days). The transaction is thus immediately MRP-relevant in this plant.

TCODE: MD04 Fields: Material, plant Stock Situation in receiving plant after Goods issue TCODE: MMBE, MB52, MB5T Fields: Material, plant, storage location In warehouse stock Material, plant, storage location In stock in transit Material, receiving plant Stock situation after goods receipt TCODE: MB52 Fields: Material, plant, storage location

Stock Transport Orders Performing a stock transfer using a stock transport order with the one-step procedure means that the goods receipt posting in the receiving plant takes place at the same time as the goods issue posting in the supplying plant. In this case, the goods issue must be performed using an SD delivery. There is no longer any transit stock, the material is posted to the unrestricted-use stock in the receiving plant immediately Creating a Stock Transport Order TCODE: ME21N

Delivery to receiving Plant using one step procedure TCODE: VL10B, Shipping point/receiving point, Delivery creation date from, Delivery date to ME22N, VL02N, LT03

Delivery document number , warehouse number, plant, Delivery, Background Adopt picking quantity Creating a subcontract order TCODE: ME21

Checking and subcontractor

sending

materials

provided

to

he

TCODE: ME2O, VL06O, VL03N Fields: vendor, plant, Shipping and Transportation Outbound Delivery and Logs Outbound Delivery Monitor. Shipping point, planned goods , delivery date, material Subsequent functions Create transfer order. Lists

Select item, adopt picking quantity PHYSICAL INVENTORY Every company must perform a physical inventory of its warehouse stocks at least once every fiscal year in order to balance its stocks. Several different procedures can be used to do this. Physical inventory can be carried out in the system for a companys own stock and for special stock. Display Stock levels TCODE: MMBE Fields: Material, plant. Create Physical Inventory Document TCODE: MI01

Fields: Document date, planned count date, plant, storage location, Posting block, Freeze book inventory, batches w del. Flag Material Attempting a Goods Receipt Now you can attempt to carry out a goods movement (in this case, a goods receipt). However, you will notice that this is not possible because goods movements are blocked whilst a physical inventory document is created.

TCODE: MB1C Fields: document date, Movement type , plant, storage location, material, quantity Entering Inventory count Results At this point it is assumed that you have closed the physical inventory and wish to enter the count results. TCODE: MI04 Quantity field Posting Differences
Posting differences after the count has been posted A physical inventory document has already been created, and the count has already been posted. You only have to post the inventory differences.

TCODE: MI07

The system displays the difference quantity (the actual number of items) and the difference amount Select the material, then choose Physical Inventory History. The counted quantity, the book quantity and the difference quantity are displayed in the lower part of the screen. Displaying the Account Document TCODE: MB03 Fields: material doc, Mat doc year, Periodic and Continuous Physical Inventory

Creating Physical inventory documents TCODE: MI31 Fields: material, plant, storage location, planned count date, unrestricted-use, quality inspection, incl inventoried materials TCODE: MI22 Fields: material, phy inventory doc Blocking a material for posting TCODE: MI02 Fields: Phy inventory doc, Fiscal year Printing physical Inventory Document

TCODE: MI21, SP01 Fields: physical inventory location, planned count date document, plant, storage

Freezing book Inventory Balances

If you have not completed your inventory count, you can freeze the book inventory balance in the physical inventory document. This is to prevent the book inventory balance, which is relevant for physical inventory, from being changed by any movements. These could otherwise lead to incorrect inventory differences.

TCODE: MI02 Fields: Phys. Inventory doc Entering the Physical Inventory Count TCODE: MI04, MI03 Fields: Phy. Inventory doc

Creating a list of Differences TCODE: MI20 Fields: Material, Plant, Storage Location, Batch, Phy inv doc to, threshold value Changing the physical inventory count TCODE: MI05 Fields: Phys inv doc, Fiscal year Initiating a Recount TCODE: MI11

Phys inventory doc, Fiscal year Posting Inventory Differences Each physical inventory item must be posted so that the system recognizes the physical inventory as closed. This applies to items with and without stock differences. To perform the adjustment posting, all physical inventory items must have the status Counted. TCODE: MI37 Fields: Phy inv doc to, plant, storage location Lowest value Principle Determining lowest value : market prices TCODE: MRN0 Fields: Company code, Material number(from) , (to), valuation area Determining the lowest market prices TCODE: MRN8 Fields: Company code, Material no(from), material(to), valuation area Determining Lowest value : Range of coverage TCODE: MRN1 Fields: company code, mat no(from), mat no(to), valuation area , upper limit, lower limit Displaying the material master

TCODE: MM03 Determining lowest value: Movement rate TCODE: MRN2 Fields: Company code, Material no(from), Material no(to), valuation area, from material master data, consumption, Period under review from to, Lower limit, Upper limit. Balance sheet Val. For each accnt: Display and Compare result The Balance Sheet Values per Account is essentially used to present results from balance sheet valuation. Normally, the user uses several procedures for balance sheet valuation that can build on each other, or can run in parallel. TCODE: MRN9 Fields: Company code, Mat no(from), mat no(to), valuation area INVENTORY SAMPLING Create Inventory Sampling TCODE: MIS1 Fields: Count date, area, text, inv sampling Profile Allocating stock management levels TCODE: MIS2 Fields: Inventory sampling, Year, plant, storage location, Material type, Stock type Printing Physical Inventory Documents

TCODE: MI21, SP01 Fields: Physical inv doc, plant, storage location Entering Physical Inventory count TCODE: MI04 Fields: Phy inv doc Changing Physical Inventory Count TCODE: MI05 Fields: Phy inv doc, fiscal year

Posting Differences: TCODE: MI37 Fields: phy inv doc, plant, storage location Updating the inventory sampling TCODE: MIS2 Fields: Inventory sampling, year

TABLES USED IN MATERIAL MANAGEMENT

EINA EINE

Purchasing Info Record- General Data Purchasing Info Record- Purchasing Organization Data

MAKT Material Descriptions MARA General Material Data MARC Plant Data for Material MARD Storage Location Data for Material MAST Material to BOM Link MBEW Material Valuation MKPF Header- Material Document MSEG Document Segment- Material MVER Material Consumption MVKE Sales Data for materials RKPF Document Header- Reservation T023 T024 T156 Mat. groups Purchasing Groups Movement Type

T157H Help Texts for Movement Types

Purchasing Tables
A501 Plant/Material

EBAN Purchase Requisition EBKN Purchase Requisition Account Assignment EKAB Release Documentation EKBE History per Purchasing Document EKET Scheduling Agreement Schedule Lines EKKN Account Assignment in Purchasing Document EKKO Purchasing Document Header EKPO Purchasing Document Item IKPF Header- Physical Inventory Document ISEG Physical Inventory Document Items LFA1 Vendor Master (General section) LFB1 Vendor Master (Company Code) NRIV Number range intervals RESB Reservation/dependent requirements T161T Texts for Purchasing Document Types

MATERIAL MANAGEMENT Organization Structure Overview of MM MM Components

Components of MM 1. Consumption Based Planning 2. Purchasing 3. Vendor Evaluation 4. External Service Management 5. Inventory Management 6. Invoice Verification 7. Warehouse Management 1. Consumption Based Planning Future Requirements are calculated from Past Consumption Values It is assumed that requirements are either constant or linear. A Safety Stock buffers irregularities in Consumption Planning Methods (MRP) 1. Reorder point Planning 2. Forecast-Based Planning 3. Time Phased Material Planning 2. PURCHASING RFQs / QUOTATIONS Conditions Outline Agreements Messages Source of Supply 3. Vendor Evaluation The vendor evaluation functionality supports you in optimizing the procurement process. It facilitates the process of source selection and the ongoing surveillance of existing supply relationships. 4. External Service Management Procurement Cycle for Externally Performed Services. (Bid Invitation, Award of Contract, Acceptance). Integration in MM (Purchase)

5. INVENTORY MANAGEMENT Goods Movement Special Inventory MGT Futures Pipeline Handling Consignment Subcontracting Physical Inventory

GOODS MOVEMENT FUNCTIONS Goods Receipt Reservation

Goods Issue Stock Transfer / Transfer Posting Evaluations

SPECIAL INVENTORY MANAGEMENT FEATURES Split Valuation Non-Valuated Materials Returnable Transport Packaging Negative Stocks

PIPELINE HANDLING Pipeline material is material that flows directly into the production process from a pipe (e.g. oil, water) or another kind of line (e.g. electricity). For the material type "PIPE", pipeline handling is mandatory, i.e. goods withdrawals for these materials can only be booked from the pipeline. Price of Pipeline Materials Enter Pipeline Movements Settle Pipeline Liabilities

CONSIGNMENT The vendor provides goods that are stored in consignment stores. The vendor remains owner of the material until you withdraw materials from the consignment stores. The vendor is informed of material withdrawals on a regular basis. The quantity withdrawn is invoiced at certain time intervals. Price Data for Consignment Material Procurement of Consignment Material Consignment Stock Movements Settlement of Consignment Liabilities.

SUBCONTRACTING You order the end product from a vendor, and specify in the purchase order which components you will send the vendor to manufacture the end product. You issue the components to the vendor, and create a goods receipt for the product manufactured by the vendor. At the same time, the consumption of the components is posted. The vendor's invoice is entered with reference to the purchase order. A subsequent adjustment for excess consumption or under-consumption of the components can also be made at the same time. Subcontracting Overview of SC SC in Purchasing SC in Inventory Management SC in Invoice Verification Sch. Agreement and Delivery Sch.

PHYSICAL INVENTORY The Physical Inventory Process Inventory Process flow Functions for carrying out a Physical Inventory Posting Inventory Differences Cycle Counting Inventory Sampling Process 6. INVOICE VERIFICATION The main task of the invoice verification component is to: Complete the procedure of materials procurement by posting the vendor invoice. Pass on information concerning payment of the invoice to Financial Accounting. Invoices that do not originate in materials procurement can also be processed. 7. WAREHOUSE MANAGEMENT The Warehouse Management system is embedded in the total SAP system as well as in the material flow of the entire organization. In the Warehouse Management system, each quantity of stock is managed at the level of the individual storage bins.

1. MATERIALS PLANNING

CONTENTS Materials Planning Overview Master Data Consumption Based Planning

MATERIALS PLANNING To determine which material is required, the quantity required and when it is required. Monitor stocks and Automatically generate order proposals for the Purchasing Dept.

MRP Calculates net requirement Calculates lot Size Scheduling Creates purchase order Proposals Creates Exception Messages

MRP AREA
The MRP area represents an organizational unit for which material requirements planning is carried out independently. Basically, there are three types of MRP area: Plant MRP Area MRP AREAS FOR Storage Location MRP Areas for Subcontractors

MRP TYPES VB - Manual Reorder Point Planning VM - Automatic Reorder Point Planning VV - Forecast Based Planning VR - Time- Phased Planning

MRP Procedures 1. Reorder Point Planning 2. Forecast-Based Planning 3. Time Phased Material Planning 4. MRP

Consumption Based Planning Future requirements are calculated from past consumption values It is assumed that the requirements are either linear or constant Irregularities in consumption are buffered by safety stock Especially useful for Materials procured Externally Trading Goods C Materials (ABC)

Operating Supplies Always required in large quantities

Planning Methods (MRP) 1. Reorder point Procedure 2. Forecast-Based Planning 3. Time Phased Material Planning

REORDER POINT PROCEDURE Procurement is triggered when the sum of plant stock and firmed receipts falls below the reorder point. Reorder point should cover the average material requirements expected during the replenishment lead time. Safety stock exists to cover both excess material consumption within the replenishment lead time and any additional requirements that may occur due to delivery delays For defining the reorder point: Safety stock Average consumption Replenishment lead time For defining the safety stock: Past consumption values (historical data) or future requirements Vendor/production delivery timelines Service level to be achieved Forecast error, that is, the deviation from the expected requirements Manual Reorder Point Planning In manual reorder point planning, you define both the reorder level and the safety stock level manually in the appropriate material master. Automatic Reorder Point Planning In automatic reorder point planning, both the reorder level and the safety stock level are determined by the integrated forecasting program. Process Flow The continuous monitoring of available warehouse stock within reorder point planning is carried out in Inventory Management. The system then calculates the net requirements The system then calculates the procurement quantity according to the lot-sizing procedure defined in the material master. The system then schedules the procurement proposal

FORECAST-BASED PLANNING Forecast-based planning is also based on material consumption. Like reorder point planning, forecast-based planning operates using historical values and forecast values and future requirements are determined via the integrated forecasting program.

You can specify the period pattern for the forecast (daily, weekly, monthly or per accounting period) and the number of periods to be included in the forecast individually for each material. Reducing Forecast Requirements Reducing forecast requirements by consumption If consumption is higher than the forecast requirements in the current month, then the system also reduces future forecast requirements. Reducing current forecast requirements by consumption If consumption is higher than the forecast requirements in the current month, then the system does not reduce future forecast requirements. Average reduction of the forecast requirements The reduction of the forecast requirements is based on average daily consumption. A constant consumption flow applies if consumption values vary very little from a stable mean value. With a trend model, consumption values fall or rise constantly over a long period of time with only occasional deviations. If periodically recurring peak or low values, which differ significantly from a stable mean value, are observed, it is a case of a seasonal consumption flow. A seasonal trend consumption model is characterized by a continual increase or decrease of the mean value.

TIME PHASED PLANNING If a vendor always delivers a material on a particular day of the week, it makes sense to plan this material according to the same cycle, in which it is delivered. Materials that are planned using the time-phased planning technique are provided with an MRP date in the planning file. This date is set when creating a material master and is re-set after each planning run. It represents the date on which the material is to be planned again and is calculated on the basis of the planning cycle entered in the material master Historical data is also used in the material forecast to estimate future requirements. However, in this procedure, the planning run is only carried out according to predefined intervals Prerequisites In the material master: You have entered an MRP type for time-phased planning and the planning cycle in the form of a planning calendar (MRP 1 view). You have defined a planned delivery time (MRP 2 view). You have entered lot-for-lot order quantity as the MRP lot size (MRP 1 view). Process Flow 1. When you start the planning run, the system uses the MRP date recorded in the planning file to check which materials are actually to be planned. The planning date is calculated using the planning cycle. 2. The system calculates requirements. It also then determines a time interval. This time interval must take into account that the material has to cover all requirements up to the next MRP date including the delivery time. 3. In the net requirements calculation, the system reduces the requirements calculated in the interval by stock and firmed receipts. The remaining quantity is equal to the shortage quantity. 4. If you use the lot-for-lot, the system creates a procurement proposal for the amount of the shortage quantity. If you have selected another lot-sizing procedure, the quantity in the order proposal depends on the lot-sizing procedure Using the range of coverage profile, you can determine a safety stock level based on current requirements. This safety stock level is calculated using the average daily requirements quantity

you can define a delivery cycle in addition to the planning cycle. In so doing, you define the days on which the vendor delivers the goods. You can combine time-phased planning with reorder point planning

MASTER DATA: Planning Calendar Planning calendars define flexible period lengths for material requirements planning at plant level. Can create Planning calendars with / without calculation. (Weekly / monthly etc.,) Can change Planning Calendars.

Quota Arrangements During the planning run, the system determines the sources of supply according to the quota file and assigns the procurement proposals to the sources of supply. For every procurement proposal with a quota arrangement, the system updates the quota file, so that the quota arrangement is always based on the current situation. Two procedures are available: Allocation quota arrangement: Every lot is assigned to a source of supply Splitting quota arrangement: A lot is split among various sources of supply

Other Methods in Quota Arrangement Lot Size and Rounding Profile in Quota Arrangement. Minimum Lot Size Maximum Lot Size "Only Once" Indicator Rounding Profile Priority and Maximum Release Quantity per Period. Priority Using the priority function, you can define the sequence of sources of supply Maximum Release Quantity The maximum release quantity defines the maximum available capacity of a source of Supply to monitor capacities Lot-Size Calculation Minimum lot size (minimum procurement quantity per lot) Maximum lot size (maximum procurement quantity per lot) Rounding value (quantity rounded up) Three groups of lot-sizing procedures: Static lot-sizing procedures Period lot-sizing procedures Optimum lot-sizing procedures

Static LOT-SIZING Using the quantity Specifications entered in the master. Lot-for-Lot order quantity Fixed Lot size Replenish to Maximum stock level

Period Lot-Sizing Procedures The system groups several requirements within a time interval together to form a lot. Daily/Weekly/Monthly/PL Calander/Felx. Period

Optimum Lot-Sizing Procedures Group shortages together in such a way that costs are minimized. These costs include lot size independent costs (setup or order costs) and storage costs. Creating Planning Calendars with Calculation Rule Choose the calculation rule you require: Weeks (weekdays)(period start on Monday and Wednesday) Months (weekdays)(Period start on every second Wednesday of the month Months (workdays)(Period start on every fifth workday of the month) Planning Process: The business processes and the technical system processes involved in consumption-based planning: Process Flow: 1. The system checks the planning file entries 2. The system carries out a net requirements calculation for every material. 3. Then the system carries out the lot-sizing calculation 4. The system carries out scheduling to calculate the start and finish dates of the procurement proposals 5. The system determines the type of procurement proposals. 6. The system recognizes critical situations which the planner has to processes manually in the planning results. For this purpose, the system creates exception messages and carries out a rescheduling check 7. It also calculates the actual days supply and the receipt days supply Checking the Planning File The planning run and the scope of the planning run (which materials are planned in which planning run) are controlled by the planning file. The planning file contains a list of all materials relevant to the planning run. As soon as a material master record is created with MRP data and a valid MRP type, this material is then automatically included in the planning file. Individual Customer Planning File Entries The system checks whether an individual customer planning file entry exists for a material that is to be planned. If this is the case, only the planned orders that belong to the changed sales order are re-exploded. This also applies for the subordinate components. After the planning run has been carried out, the individual customer planning file entries are deleted. Planning Run Type The planning run type determines which materials are to be planned: Regenerative planning (NEUPL) The system plans all the materials that are contained in the planning file Net change planning (NETCH) or Net change planning in the planning horizon (NETPL) The system only plans materials that have undergone a change relevant to MRP since the last planning run Planning Mode The planning mode controls how the system is to deal with procurement proposals (planned orders, purchase requisitions, scheduling agreement lines) from the last planning run, which are not yet firmed, in the next planning run. Planning Mode 1

Planning mode 1 is if you have only set the planning file entries (net change planning indicator and net change planning horizon indicator) in the planning file for a material Planning Mode 2 Planning mode 2 is if a material has planning file entries and the Re-explode BOM indicator is also set in the planning file. Planning Mode 3 Planning mode 3 is if a material has planning file entries and the Reset order proposals indicator is also set in the planning file. No Planning File Entry The following types of changes do not cause a planning file entry: o Customizing, such as changes in purchasing department processing time in the plant parameters o MRP-relevant changes to the routing, such as change in the standard time

Calculating Low-Level Codes Materials may appear in several products and in several production levels of a product. The low-level code represents the lowest level of usage of a material within all product structures. It determines the sequence in which the materials are planned. The system plans materials with the low-level code 0 first and then those with 1 and so on. The lower the low-level code is, the higher the number assigned to the level. Check the Consistency of the Planning File Since the entries in the planning file are permanent, you must check their MRP relevancy regularly. If, for example, a plant is subsequently excluded from material requirements planning, its materials will still be included in the planning file. The same applies for materials that are subsequently flagged with the MRP type No MRP and are thus excluded from MRP. In such cases, you should delete the entries in the planning file. Net Requirements Calculation The net requirements calculation is carried out in MRP in the planning run after the planning file check and at plant level. The system checks whether it is possible to cover requirements with the plant stock and fixed receipts already planned. In the case of a shortage the system creates a procurement proposal Available warehouse stock = Plant Stock + open order qty (POs , firmed Planned orders , firmed PRs). Net Requirements Calculation for Forecast-Based Planning The basis of forecast-based planning is the forecast of the total requirements. The system only considers the forecast requirement quantities as issues. Other issue elements, such as, customer requirements, planned independent requirements, or reservations are only displayed and are not included in the net requirements calculation. The system checks every forecast requirement to determine whether it is covered by available warehouse stock and/or receipts (purchase orders, firmed procurement proposals). Available warehouse stock = Plant Stock - Safety Stock + Receipts (POs + firmed POs) - requirement quantity. Scheduling Scheduling is carried out in MRP after the system has calculated the quantity to be procured in the lot-size calculation. As the materials planned using consumption-based planing are externally procure, the following description is of scheduling for external procurement. Scheduling determines the order start and the order finish dates of the procurement elements. You must define the processing time for purchasing in workdays either in Customizing for MRP, in the plant parameters or in the workstep, external procurement. You must define the planned delivery time of the material in calendar days in the material master record (MRP 2 view). You must define the goods receipt processing time in workdays in the material master record (MRP 2 view

Backward Scheduling for External Procurement For materials that are planned according to the MRP and forecast-based planning procedures, the requirement dates in the future are known. The materials must be available by these dates. The release date for the purchasing department is calculated during scheduling, that is, the date by which the materials must be ordered so that they are available for the requirements date. Forward Scheduling for External Procurement For materials planned according to the reorder point procedure, the material shortage date is the date that the shortage was detected by the planning run. If the stock level should fall below the reorder level, then procurement must be arranged immediately. Materials that are planned using MRP or forecast-based planning are switched to forward scheduling if the start date calculated in backward scheduling was in the past. Determining the Procurement Proposal Procurement proposals are used to procure the shortage quantity. Procurement proposals are internal planning elements that can be changed, rescheduled or deleted at any time: purchase requisition and planned order. In contrast, delivery schedule lines are fixed elements, which must be followed, and are only part of the procurement proposals in a broader sense. Creation of Exception Messages Exception messages depend on the transaction being carried out and are meant to inform you of an important or critical event (for example, start date lies in the past, safety stock has been exceeded). By means of the exception messages, you can easily sort out any materials that you need to reprocess manually. Special search and selection functions are available for this in the evaluations for MRP. During the planning run, the system recognizes exceptional situations where you usually have to manually reprocess the planning result and it records these situations as exception messages. The system displays the exception messages in the evaluations for MRP. Exception messages refer to an individual MRP element. If several exception messages occur for one MRP element, the most important ones are stored. Rescheduling Check An important group of the exception messages mentioned above are the rescheduling proposals. In the net requirements calculation, the system checks whether warehouse stock or firmed receipts are available in sufficient quantity to cover requirements. If a material shortage exists, the system usually creates a new procurement proposal. The rescheduling check is used to change the dates of already existing firmed receipts not planned on the same day as the requirement to suit the requirement date. For this purpose, the system displays the appropriate exception messages with rescheduling proposals for these firmed receipts to be processed by the MRP controller.

2. PURCHASE Process Flow The typical procurement cycle for a service or material consists of the following phases: 1. Determination of Requirements 2. Source Determination 3. Vendor Selection and Comparison of Quotations 4. Purchase Order Processing 5. Purchase Order Follow-Up 6. Goods Receiving and Inventory Management 7. Invoice Verification Organizational Levels The structure of an enterprise is represented in the SAP R/3 System by the following organizational levels: Client A grouping or combination of legal, organizational, business and/or administrative units with a common purpose. Example: a corporate group. Company code This level represents an independent accounting unit within a client. Each company code has its own balance sheet and its own profit and loss statement. Example: a subsidiary company, member of a corporate group. Plant Operational unit within a company code. Example: production facility, branch office. Purchasing organization An organizational unit responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions. Purchasing group The purchasing organization is further subdivided into purchasing groups (buyer groups), which are responsible for day-to-day buying activities. A purchasing group can also act for several purchasing organizations. Purchasing Document A purchasing document is an instrument used by Purchasing to procure materials or services. Request for quotation (RFQ) Transmits a requirement defined in a requisition for a material or service to potential vendors. Quotation Contains a vendor's prices and conditions and is the basis for vendor selection. Purchase order (PO) The buying entitys request or instruction to a vendor (external supplier) to supply certain materials or render/perform certain services/works, formalizing a purchase transaction. Contract In the SAP Purchasing component, a type of "outline agreement", or longer-term buying arrangement. The contract is a binding commitment to procure a certain material or service from a vendor over a certain period of time. Scheduling agreement Another type of "outline agreement", or longer-term buying arrangement. Scheduling agreements provide for the creation of delivery schedules specifying purchase quantities, delivery dates, and possibly also precise times of delivery over a predefined period.

Maser Records from the Purchasing View

Material Master Data Vendor Master Data Purchasing Master Data, such as the following: Purchasing Info Record Source List Quota Arrangement

Purchase Requisitions Requisitions can be created either directly or indirectly. "Directly" means that someone from the requesting department enters a purchase requisition manually. The person creating the requisition determines what and how much to order, and the delivery date. "Indirectly" means that the purchase requisition is initiated via another SAP component. Requisitions can be created indirectly in the following ways: Via materials planning and control Via networks (from the R/3 component PS Project System) Via maintenance orders (from the R/3 components PM Plant Maintenance and Service Management Via production orders (from the component PP Production Planning and Control). Request for Quotation A request for quotation (RFQ) is an invitation extended to a vendor by a purchasing organization to submit a quotation (bid) for the supply of materials or performance of services. Structure An RFQ consists of the RFQ header and the items. RFQ header Contains general information on the RFQ, such as the vendors address Items Contain the total quantities and delivery dates for the materials or services specified in the RFQ.

Purchase Order 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. Structure A purchase order (PO) consists of a document header and a number of items. The following procurement types exist: Standard Subcontracting Consignment Stock transfer External service

Conditions Conditions can apply at various levels: To the entire purchase order

At item level, to the material to be supplied or to the set of service specifications in the case of services At service line level for individual services (tasks or activities)

Account Assignment Costs can be apportioned among various Controlling objects via the account assignment. Vendor Confirmations Vendors can issue confirmations to the relevant purchasing organization indicating their compliance or noncompliance with scheduled delivery dates. PO History The transactions following on from a purchase order are documented in the PO history on an item-specific basis. Partner Roles Instead of the vendor as the order recipient, other business partners can appear in various partner roles (e.g. goods supplier or invoicing party). Plant In the purchase order, each item is destined for a certain plant. Each plant belongs to a company code, to which the vendors (creditors) invoice is directed. Texts You can enter text in a purchase order directly or change texts that are suggested by the system. There are two kinds of text: Header text: applies to the entire document Item text: applies only to the relevant item Item category Standard Consignment Characteristics Goods and invoices can be received Material number necessary No account assignments Material kept in stock GR necessary Invoice receipt not necessary Goods can be received Invoice receipt necessary Material number necessary GR necessary No invoice receipt Account assignment necessary GR and IR can take place Account assignment not necessary GR not necessary IR necessary Document type FO necessary

Subcontracting Stock transfer

Third-party Limit

Outline Purchase Agreements with Vendors To enter into longer-term purchasing arrangements with vendors regarding the supply of materials or the performance of services. Outline agreements can be subject to a release (approval or clearance) procedure such agreements are subdivided into: Contracts o Centrally agreed contracts

o Distributed contracts Scheduling agreements o Scheduling agreement referencing a centrally agreed contract Contracts can take the following forms: Quantity contracts Value contracts Scheduling Agreement A form of outline purchase agreement under which materials are procured on predetermined dates within a certain time period. 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 Consignment Stock transfer Purchasing Info Record Serves as a source of information for Purchasing. The purchasing info record contains information on a specific material and a vendor supplying the material You can create a purchasing info record as follows: Manually You create an info record for a purchasing organization or for a plant. Automatically You set the Info update indicator when maintaining a quotation, a purchase order, or an outline agreement. Ordering data is recorded/updated automatically in an info record. Optimized Purchasing You can also speed up procurement activities in the following ways: The materials planning system generates delivery schedule lines against existing scheduling agreements automatically, i.e. without any intervention by Purchasing. User departments create purchase orders directly (delegated Purchasing). Reporting in Purchasing Which purchase orders were issued to a certain vendor during a given period For how many purchase orders goods have already been received Whether a vendor delivered ordered materials in full or only in part Which vendors did or did not adhere to their delivery dates Whether goods received from vendors conform to requirements and invoices submitted are correct The average value of purchase orders issued by a given purchasing organization or purchasing group Conditions and Price Determination This component enables you to store pricing stipulations agreed with the vendor (such as applicable discounts or surcharges, or stipulations regarding the payment of freight costs) in the system. You can enter these conditions in quotations, outline purchase agreements, and info records. There are three kinds of price in Purchasing: Gross price Price without taking any possible discounts and surcharges into account. Net price Price taking any applicable discounts and surcharges into account. Effective price Net price after deduction of cash discount, with allowance for any miscellaneous provisions, delivery costs, and non-deductible taxes. Some Selected Conditions The following types of condition: Taxes Planned Delivery Costs

Foreign Currency Different Currency Price Variance Weight- or Volume-Dependent Conditions Conditions that are Dependent on the Order Unit Daily Ruling Prices for Precious Metals Estimated Price Vendor Confirmations In Purchasing, the term Confirmation is an umbrella term for various kinds of information provided by a vendor to a customer with regard to ordered goods. Possible types of confirmation include the following: Order acknowledgments Loading or transport confirmations Shipping notifications 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 Version Management 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. The Version Management facility enables you to generate and manage versions of purchase requisitions and external purchasing documents such as POs. A version groups together the change documents generated in the course of subsequent processing of the relevant document

Master Record Required for Purchasing

Material Master. Vendor Master.

Transaction Code : MM01. Table : MARA Transaction Code : MK01. Table : LFA1 , LFB1 Transaction Code : ME01. Table : EORD

Source List. (possible sources of supply for a material )

TRANSACTION CODES PRICE COMPARISON Transaction Code : ME49 PURCHASE REQUISTION It is a Request or instruction for Purchasing / procuring a certain quantity of a material Transaction Code Create : ME51N Change : ME52N Display : ME53N Table : EKKO , EKPO

REQUEST FOR QUOTATION It is an invitation to the vendor to specify his terms and conditions for providing the materials in RFQ. Transaction Codes : Create: ME41 Change: ME42 Display: ME43. Table : EKKO , EKPO Vendor Evaluation Transaction Codes :

Maintain: ME61 Change: ME62

PURCHASE ORDER The formal and final approval of a purchasing transaction with the vendor. Identifies the vendor, material, quantity of material, price, delivery date and terms of delivery, terms of payment. Transaction Codes :

Create: ME21 Change: ME22 Display: ME23.

Scheduling Agreements Transaction Codes :

Create : ME31L Change: ME32L Display : ME33L

SOURCE LIST Transaction Codes : INFO RECORD. Transaction Codes : ME11, ME12, ME13 EINA Vendor , Material , Plant. ME01 , ME02, ME03. EORD Material , Plant, Order Unit

3. Vendor Evaluation
The Vendor Evaluation component supports you in optimizing your procurement processes in the case of both materials and services Vendor Evaluation is completely integrated into the MM Purchasing component within Materials Management. This means that information such as delivery dates, prices, and quantities can be taken from purchase orders.

Vendor Evaluation also uses data from the Quality Management component, such as the results of incoming inspections or quality audits. Vendor Evaluation accesses basic Materials Management data, Inventory Management data (such as goods receipts), and data from the Logistics Information System (LIS). The LIS data is stored in the information structure S013. The standard SAP System offers you a scoring range from 1 to 100 points, which is used to measure the performance of your vendors on the basis of five main criteria. You can determine and compare the performance of your vendors by reference to their overall scores. The main criteria available in the standard system are: Price Quality Delivery General service/support These four main criteria serve as a basis for evaluating vendors from whom you procure materials. External service provision This main criterion serves as a basis for evaluating those vendors you employ as external service providers. You can also define other or further main criteria, as required. You can assign different weights to the individual criteria. The vendors overall score is computed taking into account the weighted scores awarded for each of the main criteria. The Vendor Evaluation System ensures that evaluation of vendors is objective, since all vendors are assessed according to uniform criteria and the scores are computed automatically. There are three types of sub criterion: Manual You enter the score into the system yourself before carrying out an evaluation. Semi-automatic You enter scores for quality and timeliness of delivery or performance at info record level (for a material) or in the service entry sheet (for an externally performed service). Fully automatic You do not enter any data yourself. The system calculates the scores for automatic sub criteria on the basis of data from other areas of the enterprise outside the Vendor Evaluation system Weighting of Scores The scores a vendor is awarded for main criteria can be weighted differently to reflect differences in the significance of the criteria. Suppose a vendor receives 80 points for the criterion "Price" and 80 points for the criterion "Service". Since the price of the material is more important to you than the service the vendor provides, you assign the criterion "Price" a weighting factor of 3 and the criterion "Service" a factor of 1. The 80 points for Price are then worth three times more than the 80 points for Service when the overall score is calculated. There are two possible types of weighting key in the standard system: Key 01 Key 02 Key 01 permits the equal weighting of all criteria. Key 02 enables you to evaluate vendors supplying small parts, for example. The weighting factors under this key are distributed as follows: Price 5 Quality 3 Delivery 2 Gen. service/support 1 External service provision 2 Elements of Vendor Evaluation Overall Score Main Criterion Sub criterion Scoring Range Weighting of Scores

Determining Scores Determining the Overall Score Determining Scores for Main Criteria Determining Scores for Sub criteria Changing Scores Manually Prerequisites for Vendor Evaluation You can start the vendor evaluation process if the following questions have been clarified: Have you maintained the system settings? Do you have the required authorizations? Which vendor do you want to evaluate? (vendor key) Which purchasing organization is to evaluate the vendor? (Purchasing organization key.) Is this the first time the vendor has been evaluated? If not, when was the last evaluation? It is possible to display graphics for the following sub criteria: Sub criterion Main criterion Price level Price history Goods receipt Quality audit Complaints/rejection level On-time delivery performance Quantity reliability Compliance with shipping instructions Adherence to confirmation date Analyzing Vendor Evaluation Data The following reports and analyses are available: Comparison of evaluations Ranking list of vendors Evaluation per material/group of materials Vendors without an evaluation Vendors not evaluated since a certain date Standard analysis Comparison of Evaluations This report differs from others in that it provides a detailed picture of one specific vendor, without any other vendors being involved. In this report the overall score calculated from deliveries of all the vendor's materials is compared to the overall score the vendor would receive if only one specific material formed the basis of the evaluation. With this report, you can determine how a vendor performs with regard to one of your most important materials Creating a Ranking List of Vendors This report generates a list of vendors in descending order according to overall score. You can see which vendors received the best scores in the group, which have average scores, and which have below-average scores. Carrying Out an Evaluation per Material/Mat. Group This report also generates a ranking list of vendors in descending order according to overall scores. Price

Quality

Unlike the previous ranking list of vendors, it is based on a certain material or material group. This allows you to determine which vendors received a good, average, or poor score for a particularly important material. Displaying Vendors Without an Evaluation This report offers you the following options: You can list all vendors who have not yet been evaluated. You can list the vendors who have not yet been evaluated with respect to certain criteria. This will also provide you with an overview of those vendors who have no overall evaluation covering all main criteria, but only individual evaluations for certain main criteria. Running a Standard Analysis You can perform standard analyses with key figures (scores) from Vendor Evaluation. The Standard analysis function is integrated in the Logistics Information System (LIS), but it can also be invoked from the Purchasing menu. Standard Analysis and LIS The data determined in Vendor Evaluation is written to a special statistics file (information structure S013) within the LIS and from there utilized for analysis purposes. The data (or key figures) are the scores for the following criteria: Quantity reliability On-time delivery performance Adherence to confirmation date Inbound delivery (currently not updated) Compliance with shipping instructions Quality audit (currently not updated) Quality of external service provision Timeliness of external service provision Further Analysis Options (PURCHIS, Evaln. Sheet) You can obtain further information that is useful in the appraisal of the vendors who supply you with materials from the vendor evaluation sheet and by making use of the standard analyses within the Purchasing Information System (PURCHIS).

4. External Services Management (MM-SRV)

MM External Services Management (MM SRV) is an application component within the Materials Management (MM) module. It supports the complete cycle of bid invitation, award/order placement phase, and acceptance of services, as well as the invoice verification process. MM External Services Management provides a basic process for the procurement of externally performed services. 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. PM maintenance plan or maintenance order; PS network; MM purchase requisition, RFQ, contract, purchase order, or service entry sheet). o Service specifications can include items representing materials in addition to those representing services or activities. o When creating voluminous sets of service specifications, you need not laboriously enter each individual service manually. Instead, you can make use of the referencing technique and the selection function to copy quickly and simply from existing master data and documents. MM External Services Management offers two basic ways of specifying services: o As planned services with description, quantity, and price. By "planned services" we mean services whose nature and scope is known to you at the start of a procurement project or transaction. o As unplanned services with the setting of a value limit only. By unplanned services, we mean services that cannot be specified in detail because their precise nature and scope are not initially known, or services which - for various reasons - you do not wish to plan. Unplanned services therefore have no descriptions. You can analyze data already available in the system in order to find suitable sources of supply for certain services. You can also carry out a bid invitation process and evaluate the bids submitted in response using the price comparison list function. You can then award a contract to (or place an order with) the desired vendor. During the phase of service performance (execution of work), various lists and totals displays enable you to retain an up-to-date overview of your service specifications, the progress of the work, and the costs being incurred. You can record the performance of services or work in service entry sheets. You can indicate your acceptance of the work set out in the entry sheets in various ways. Following acceptance, the vendors invoice can be verified and released for payment. As an alternative to this basic process, various accelerated and simplified processes are made available to you for use if desired in connection with specific procurement transactions. Integration The following graphic demonstrates the degree of integration of MM External Services Management:

The interaction of the R/3 modules MM, PS and PM, CO and FI saves time and effort and reduces the frequency of errors. This is because data need be entered once only, after which it is available for all follow-on activities within a business process. An example of the integration of MM and CO is purchase order commitments. The expected value of unplanned services is forwarded to CO from within MM so that a commitment figure can and monitored. This be established enables the relevant budget for procurement measures to be prepared in good time. Service Master Record Contains the description of a service 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 You use this function if you wish to store frequently procured services centrally as master records and use them on a cross-application basis. Terms of payment (prices, discounts, surcharges etc.) for external services, valid over a longer timeframe. Standard service catalogs (SSCs) are stored centrally as master records. They are a source of standardized service descriptions that help to eliminate data redundancy. In contrast to the Service Master Record, an SSC contains standard texts that only yield complete and unique service descriptions when put together in various combinations. The use of SSCs can be advantageous in facilitating problem-free communication between contractual parties (e.g. between ordering entity and supplier). Collection of services, the associated descriptions, plus pricing and quantity data. A set of model service specifications serves as a template for creating further specifications. Model service specifications count as master records within External Services Management Master Records from the ESM View The component MM-SRV External Services Management (ESM) provides the following types of master record:

Service Master Record Master Conditions for Services Standard Service Catalog (SSC) Model Service Specifications

These master records can be used in the following components: Purchasing (MM -PUR) Project System (PS) Plant Maintenance (PM) Customer Service (CS) Service Master Record Contains the description of a service. 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 Master Conditions for Services Terms of payment (prices, discounts, surcharges etc.) for external services, valid over a longer timeframe. The system applies these conditions for price determination purposes in purchasing documents. You can enter further conditions in the purchasing document itself Standard Service Catalog (SSC) General standardized catalog of text modules for the description of services. Standard service catalogs (SSCs) are stored centrally as master records. They are a source of standardized service descriptions that help to eliminate data redundancy. In contrast to the Service Master Record, an SSC contains standard texts that only yield complete and unique service descriptions when put together in various combinations. The use of SSCs can be advantageous in facilitating problem-free communication between contractual parties (e.g. between ordering entity and supplier).

Model Service Specifications Collection of services, the associated descriptions, plus pricing and quantity data. A set of model service specifications serves as a template for creating further specifications. Model service specifications count as master records within External Services Management. You may wish to use the specifications for a certain group of services as a template if you are likely to have to procure all or some of these services repeatedly in the future. Procurement of Services: Processes In addition to their own workforce, many firms now employ external service providers to do work of various kinds. This may be due to a number of reasons: for example, their own staff may lack either the capacity or the qualifications to perform certain tasks. This section describes the business processes available within the application component MM External Services Management for the efficient procurement of externally performed services: The basic process with all worksteps Accelerated and simplified processes You can specify yourself the cases in which the basic process with all steps is to be used and the cases in which it makes sense to omit certain steps in order to save time. Procurement of Services: Basic Process Accelerated and Simplified Processes Procurement via Maintenance Plans (PM Plant Maintenance) Getting the Service Provider to Enter Services Actually Performed

Procurement via Invoicing Plans (Rental, Leasing, Part-Payments) Procurement Using Blanket Orders (for Low-Value Items) The procurement of services may involve the following steps: Determination and recording of requirements Determination of possible sources Bid invitation procedure Entry of data from quotations submitted by bidders Comparison of quotations Award phase (order placement) Monitoring of purchase orders Entry of services actually performed Acceptance of services performed Verification of invoices for services

Determination and recording of requirements The user department can either prepare a purchase requisition itself, or request Purchasing to do so. In each case, the requisition is the trigger for procurement activities in MM Purchasing. In the case of large-scale projects involving the use of the SAP application component PS Project System, purchase requisitions with precise performance dates are created from networks. These requisitions are transmitted to the MM Purchasing component automatically. Service specifications from existing standard networks can be utilized to simplify the creation of such networks At the time a need is established, a document is created in the system as the basis for the procurement process. This can be a purchase requisition or an external purchasing document such as a request for quotation (RFQ) or a purchase order. The document can contain a set of service specifications with details of the necessary service or group of services. Determination of possible sources MM External Services Management offers you an instrument for analyzing this data, enabling you to establish whether suitable potential bidders exist for the requested services and whether longer-term business relationships have already been set up with certain service providers in the form of contracts. Information in various forms is available to the system in the process of determining potential sources for a requested service 1. Vendor service conditions The system first checks whether master conditions whose validity period covers the delivery date shown in the purchase requisition exist for the service. If master conditions exist for one or more vendors, the system suggests these vendors as sources of supply. The prices and conditions of the relevant master condition are then suggested when you create a PO with reference to the assigned requisition. 2. Contracts If contracts that either contain the material group or the service shown in the purchase requisition exist in the system, the system suggests these contracts as sources of supply. If a purchase requisition has been assigned to a contract, the system can generate release orders (calloffs) against it. Bid invitation procedure

If a bid invitation process is to be initiated for services, an RFQ must be created. In doing so, you can simplify and speed up the data entry process by referencing the preceding document, the purchase requisition. You can assign the RFQ to any number of different potential bidders. The system creates a separate RFQ for each bidder, each with a unique number. The RFQs are then transmitted to the bidders. Entry of data from quotations submitted by bidders When quotations (bids) are received from bidders, the latters prices and conditions are entered in the RFQs that already exist in the system. The status of the RFQs is then changed: the RFQs in fact become quotations. Comparison of quotations Award phase (order placement) Monitoring of purchase orders Entry of services actually performed The services actually performed (work actually done) by a service provider are recorded in a Service Entry Sheet with reference to the purchase order. You can enter both planned and unplanned services: Planned services Can be adopted directly in the service entry sheet Unplanned services Are not precisely described, quantified, or priced until the work actually done is entered. The system checks whether unplanned services are within the limit set in the purchase order. Acceptance of services performed After services that have been performed for your firm have been recorded in the service entry sheet, one or more responsible persons (depending on the system settings) must check that the work is satisfactory and formally accept the services. The accepted entry sheet constitutes the basis for the process of Invoice Verification for Services. The account assignment objects are charged at the time of acceptance. When the service entry sheet is accepted, a logistics document (material document) is generated. Verification of invoices for services In PO-based invoice verification, items are settled with reference to the purchase order. Settlement can be carried out with respect to all items, irrespective of whether or not deliveries have yet been received. In GR-based invoice verification (that is, in connection with services, the entry of invoices for services with reference to the service entry sheet) you can effect settlement with regard to each entry sheet relating to a purchase order separately. In the PO history, each invoice item can be assigned to precisely one service entry sheet. In Evaluated Receipt Settlement (ERS), settlement is effected with regard to the services that have been performed directly, without an invoice, on the basis of information from the purchase order and the accepted service entry sheet. The vendor obtain s a log of the settlement run for checking purposes. In service-based invoice verification, you check the invoices on the basis of the individual services in the purchase order (PO-based invoice verification) or the service entry sheet (GR-based invoice verification). Accelerated and Simplified Processes The processes described here are available as an alternative to the basic process. They provide you with the option of speeding up service procurement by reducing the number of steps to be carried out in the SAP System to a minimum

Global Percentage" Bidding The "global percentage" bidding procedure is used in the procurement of external services. The aim of this approach is to considerably simplify the maintenance of service specifications. Since the service descriptions in the quotations submitted by the various bidders do not usually vary, the buyer states the prices of the services in advance, and the bidders merely indicate a percentage addition to or deduction from these prices in their quotations, Purchasing is faced with a minimal maintenance effort even if a large number of individual RFQs are issued Procurement via Maintenance Plans For services that have to be performed on a periodic basis (e.g. regular gardening and grass-cutting work, daily or weekly cleaning of offices, or the half-yearly servicing of company cars) you can record the service specifications in a maintenance order (application component PM Plant Maintenance) that references a maintenance (servicing) plan you can shorten this basic process as follows: You dispense with the maintenance order and enter the specifications directly in the maintenance plan. You do without the purchase requisition. To accelerate the procurement process, you create a purchase order with an extended validity period for the desired vendor, which you can repeatedly reference when periodically recording the services performed by the vendor. You omit the service entry process

Direct Conv. of Maint. Requisns. into Entry Sheets This process enables you to quickly close purchase requisitions for maintenance work (from the PM Plant Maintenance area). Purchasing staff need not concern themselves with assigning sources and processing such requisitions. Instead, the system can convert them directly into service entry sheets, the step involving conversion into a purchase order being omitted. This is often makes particular sense in connection with maintenance and repair work. In the case of production stoppages due to mechanical breakdowns, for example, repairs often have to be carried out extremely quickly with no time to involve Purchasing. Getting the Provider to Enter Services Performed You can agree with the vendor (service provider) that you will not record the actual performance of services yourself, but adopt information made available by the provider in this connection. SAP provides an interface for the transfer of external data for this purpose Invoicing Plans (Rental, Leasing, Part-Payments) An invoicing plan comprises a list of scheduled dates on which invoices relating to PO items covering materials or services are to be entered in the system and subsequently paid. The invoicing plan facilitates the largely automated creation and payment of invoices for both recurrent procurement transactions (e.g. rental or leasing) and transactions that are to be invoiced in stages (e.g. following the completion of individual phases of a construction project). The following two invoicing plan types are available: Periodic invoicing plan Partial invoicing plan Procurement Using Blanket Orders (Low-Value Items) The use of blanket purchase orders enables you to procure a variety of consumable materials or services from a vendor up to a predefined value limit. Most companies have recurring requirements for minor items (such as office supplies, screws, small parts,

cleaning work or other routine services) during the course of the year. Issuing a series of individual (discrete) orders of low value (perhaps with voluminous specifications) for such items, and then recording in detail the work done or goods delivered against the order, is frequently considered uneconomical. Blanket purchase orders enable you to procure low-value items quickly, easily, and efficiently Planned and Unplanned Services: Options . The following is a list of some of your options: You can work only with planned services in the purchase order - and not specify any limits for unplanned services. At the time the performance of the services is recorded, only the precise services, quantities and prices set out in the specifications may be entered. You can work with planned services and additionally set a value limit to cover unforeseen circumstances. This allows other services to be performed in addition to those specified in detail. You can work exclusively with unplanned services You can work exclusively with unplanned services but restrict the nature of the latter by referencing contracts. Use of Value Limits (for Unplanned Services) If you wish to make provision in the PO for services that are not precisely definable during the planning phase of a procurement project, set a money limit instead of entering a service description. This limit, which represents a budget for unplanned services, must not be exceeded. The service can be specified later - perhaps at the time of actual performance. In the window for maintaining value limits, you can set a variety of limits: Overall limit only Overall limit and limit on services covered by contract item(s) Overall limit, limit on services covered by contract item(s), and other limit Overall limit and other limit Overall limit on services from model specifications or standard service catalog Expected value

5. Inventory Management and Physical Inventory

Contents Purpose Managing Stocks by Quantity / Value Special Stocks Document Concept Goods Movement Goods Receipts Goods Issue Availability Check Stocks Types Stock Transfer Stock transfer procedures Reservation Physical Inventory Batch Handling: Batch Determination Stock Determination Print Functions MATERIAL Master Stocks in the Material Master Record Allowing Negative Stocks Unit of measure Inventory valuation Purpose Management of material stocks on a quantity and value basis Entry, and Documentation of all Goods Movements Carrying out the Physical Inventory Managing Stocks by Quantity You can obtain an overview of the current stock situation of any given material at any time. This, for example, applies to stocks that: Are located in the warehouse Have already been ordered, but have not yet been received Are located in the warehouse, but have already been reserved for production or a customer Are in quality inspection. Managing Stocks By Value The stocks are managed not only on a quantity basis but also by value. The system automatically updates the following data each time there is a goods movement: Quantity and value for Inventory Management Account assignment for cost accounting G/L accounts for financial accounting via automatic account assignment

The valuation area is the organizational level at which a material's stock value is managed. The valuation area can be plant level or company code level. Special Stocks

Special stocks are stocks that are managed separately as a result of their not belonging to your company or being stored at a particular location. Special stocks and special procurement types are divided into the following areas: Consignment Subcontracting Stock transfer using stock transport order Third-party processing Returnable transport packaging Pipeline handling Sales order stock Project stock Consignment In consignment processing, the vendor provides materials and stores them on your premises. The vendor remains the legal owner of the material until you withdraw materials from the consignment stores. Only then does the vendor require payment. Consignment stocks are not valuated. When the material is withdrawn it is valuated at the price of the respective vendor Subcontracting In subcontract order processing, the vendor receives materials (components) with which it produces the end product. You order the end product using a subcontract order. The components that the vendor needs to manufacture the end product are specified in the purchase order. In Inventory Management, the components are posted to the stock of material provided to vendor. The components are then supplied to the vendor. The vendor performs its service and delivers the ordered material (the end product). The consumption of the components is posted. Stock transfer using stock transport order Enable you to transfer materials from one plant to another Third-party processing In third-party processing, you place a purchase order with a vendor to deliver goods or perform a service for a third party for example, customer. This means that your company does not deliver the material. You forward the order to an external vendor instead, who then sends the material directly to the customer and invoices you. Pipeline handling A pipeline material is a material that flows directly into the production process from a pipeline (for example, oil from a pipe , tap water, electricity). Transaction resulting in a change in stock. Document Concept Even in a computer-supported inventory management system, the accepted accounting principle of no posting without a document applies. According to the document principle, a document must be generated and stored in the system for every transaction/event that causes a change in stock. When posting a goods movement in the SAP System, the following documents are created: 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 When you enter a goods movement, you start the following chain of events in the system: 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 stock quantities of the material are updated. The stock values in the material master record are updated, as are the stock and consumption accounts You can no longer change a document once it has been posted. If you made a typing error when entering a goods movement, you must reverse the movement with a so-called reversal document. Goods Movement 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. 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. Stock transfer A stock transfer is the removal of material from one storage location and its transfer to another storage location. Stock transfers can occur either within the same plant or between two plants. Transfer posting A transfer posting is a general term for stock transfers and changes in stock type or stock category of a material. It is irrelevant whether the posting occurs in conjunction with a physical movement or not. Examples of transfer postings are: Transfer postings from material to material Release from quality inspection stock Transfer of consignment material into company's own stock Goods Receipts You can enter the following types of goods receipts this way: initial entry of stock balances Using this goods movement, you can transfer book inventory balances from an existing system to the R/3 System when you first implement the Inventory Management component. external goods receipts without a purchase order If your company does not use the MM Purchasing component, you enter an external receipt as a miscellaneous goods receipt. You can plan such a movement with a reservation. internal goods receipts without a production order If your company does not use the PP Production Orders component, you enter a receipt from production as a miscellaneous (other) goods receipt. You can plan such a movement with a reservation. goods receipts of by-products Goods receipts of by-products can also be entered as miscellaneous goods receipts (see Receipt of ByProducts). deliveries free of charge If you receive a delivery from a vendor free of charge for which no purchase order was placed, you must enter the receipt of the goods as a miscellaneous (other) goods receipt. returns from the customer Even without a returns delivery, you can post returns from a customer into blocked stock returns. Goods Issue Companies usually distinguish between various types of goods issues, each of which is handled in the R/3 System as follows:

Stock Scheduled for Delivery Withdrawal, picking, and shipping of goods to customers are carried out in the Sales & Distribution (SD) component and are dealt with in detail in the document SD Shipping Guide. They are not dealt with in this section.

The Inventory Management system provides two movement types for posting goods issues to customers if your company does not use the SD module. These are the movement types "Consumption to sales order" and "Consumption to sales". Material Withdrawals for Production Orders Inventory Management provides for the staging of components for production. You enter withdrawals for production as goods issues with reference to the production orders for which the components are required. Other Types of Internal Staging of Material Materials can be withdrawn not only for production but also for other purposes (for example, for cost center, CO order, maintenance order, or asset). Return Deliveries to Vendors Return deliveries to vendors are entered with the function Material document function Goods receipt For purchase order.

Return delivery or with the

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. This section explains the following goods issues: Material withdrawals for production orders Other types of internal staging of material Scrapping/sampling Availability Check There are two types of availability check: Availability check for the various stock types in Inventory Management Check for the available stocks in Materials Planning (MRP) Availability check of the stock types is carried out automatically and cannot be manually set in the system. Nonavailability results in an error message. The available stocks check in MRP is activated in the material master record and can be configured in Customizing for MRP ( Return Delivery If you want to return delivered goods to the vendor for some reason (for example, due to poor quality or because they are damaged), you can use this function to return the goods, even if you have already posted the goods receipt. If the vendor sends you a substitute delivery after you have returned goods, you can reference the return delivery when you post the goods receipt Stocks Types Unrestricted-use stock Quality inspection stock Blocked stock Goods receipt blocked stock Stock Transfer In a company, goods movements do not only occur in the form of goods receipts and goods issues. Depending on the organization of the company (for example, decentralized storage) and its sales policy, internal stock transfers might also be necessary. Stock transfers can occur at three different levels: Stock transfer from company code to company code Stock transfer from plant to plant From storage location to storage location (in the plant

Stock Transfer Procedures There are three different procedures for carrying out a stock transfer: Stock transfer via stock transfer posting using one-step procedure Stock transfer via stock transfer posting using two-step procedure Stock transfer using stock transport order Reservation With this component, you make a request to the warehouse to keep materials ready for withdrawal at a later date and for a certain purpose. This simplifies and accelerates the goods receipt process. A reservation for goods issue can be requested by various departments for various account assignment objects The purpose of a reservation is to ensure that a material will be available when it is needed. It also serves to simplify and accelerate the goods issue process and prepare the tasks at the point of goods issue. It is also important that reservations are taken into account by Material Requirements Planning (MRP), which means that required materials are procured in time if they are out of stock. When a reservation is entered, the following events occur in the system: The system creates a reservation document, which serves as proof of the request. In the material master record, total stock and unrestricted-use stock of the material remain unchanged. Reserved stock is increased by the reserved quantity. In MRP, available stock is reduced by the reserved quantity. This is visible in the current stock/requirements list. The reservation causes an entry to be made in the requirements planning file. Constraints You cannot change the account assignment data (for example, cost center or order). If the account assignment is incorrect, you must delete the reservation and enter a new reservation. You cannot change the material number or the plant for an item. If either of these entries is incorrect, you must delete the item and enter a new item. Physical Inventory This component allows you to carry out a physical inventory of your companys warehouse stocks for balance sheet purposes. Various procedures can be implemented for this. Physical inventory can be carried out both for a companys own stock and for special stock a physical inventory can be carried out for the following stock types: Unrestricted-use stock in the warehouse Quality inspection stock Blocked stock The R/3 System supports the following physical inventory procedures: Periodic inventory Continuous inventory Cycle counting Inventory sampling Constraints The posting of physical inventory differences is subject to certain time constraints: The posting period is automatically set during counting. Therefore, the inventory difference must be posted to the same period or - if postings to the previous period are allowed - in the following period. The fiscal year is set by specifying a planned count date when creating a physical inventory document. All subsequent postings to this document must take place in this fiscal year and/or in the first period of the following fiscal year, if postings to the previous period are allowed. The process of physical inventory can be divided into three phases: 1. Physical Inventory Preparation Create a physical inventory document. Blocking Materials for Posting

 Print and distribute the physical inventory document. 2. Physical Inventory Count Counting stocks Entering the result of the count on the physical inventory document printout 3. Physical Inventory Analysis Entering the result of the count into the system Initiating a recount, if necessary Posting inventory differences If you have not completed your inventory count, you can freeze the book inventory balance in the physical inventory document. This is to prevent the book inventory balance, which is relevant for physical inventory, from being changed by any movements. These could otherwise lead to incorrect inventory differences. When entering inventory counts with reference to a physical inventory document which contains many items with a stock balance of zero, it is possible to set "zero count" automatically for all items not counted. This is possible for the following transactions/events: Entering the physical inventory count (MI04) Entering the physical inventory count without reference to a document (MI09) Entering the count and posting differences in one step (MI08) Creating a physical inventory document, entering the count, and posting differences in one step (MI10) Changing the physical inventory count (MI05) Batch Handling: The structure of the material master record allows you to manage stocks of a material by value at plant level or company-code level and by quantity down to storage-location level. Under certain conditions, you may need to make further subdivisions for a material and manage batches. You can define number assignment for batches at various levels: Uniquely at client level for a material Uniquely at material level Uniquely at plant level For every batch, there are two types of data: General data on the batch Stock data, which is managed separately for every storage location in which the batch is located Both the master batch and the stock data for the batch are created automatically during the first goods receipt. Thus, you do not need to create this data manually. However, if you want to define specific data for a batch, such as the shelf life expiration date, you have to manually maintain the batch data. The following stocks are managed separately at batch level: Unrestricted-use stock Restricted-use stock Quality inspection stock Blocked stock Stock in transfer Blocked stock returns The R/3 System allows you to classify batches. For example, you can use the batch classification functionality to store specific batch data (such as active substance content, weight, or technical data) not contained in the batch master record. Classification of batches is mandatory if you want to use the batch determination feature. Characteristics are criteria according to which you can search for batches. These characteristics are defined when creating a class. There are two different types of characteristic: User-defined characteristics These are characteristics which are not defined as fields in the batch master record. Fields in the batch master record Data that is stored in the batch master record can also be defined as characteristics of a class.

Batch Determination: When entering the goods issue of a material handled in batches, you can enter * in the Batch field in order to initiate automatic batch determination. The system then uses a specific search strategy to find batches with certain characteristic values (such as status, shelf life, etc.) and suggests these batches in a list. The system suggests how to distribute the given quantity to the batches found. You can accept the systems proposal for the goods movement or you can distribute the quantity manually. STOCK DETERMINATION: Stock determination enables you to implement various strategies to withdraw material for goods issues and stock transfers When planning your materials requirements, it is not always important that you define the stocks and storage locations from which the materials are later to be withdrawn. Automatic stock determination takes care of this decision for you, thus preventing you from defining these parameters too early and restricting your business processes unnecessarily. You can use stock determination for the following stocks: unrestricted-use stock vendor consignment stock (K) pipeline material (P) sales order stock (E) project stock (Q) The R/3 System can carry out stock determination in two ways: automatically in the background via online processing during the stock determination process In a stock determination strategy, you therefore define, which stocks can be used for the transaction/event type unrestricted-use stock vendor consignment stock pipeline material sales order stock Project stock from where stocks should be withdrawn (storage location) whether stock determination should be processed online or in the background which preferences should be taken into consideration (sort criteria) which priority these preferences should have when used with other strategies (batch determination, storage type search) whether the valuation type should be taken into account for materials with split valuation Using a user-defined program (user exit), you can also differentiate between the following attributes: vendor (who is the preferred vendor for this material?) valuation type (for material with split valuation) Print Functions A physical goods movement generally requires a document in printed form to serve the following functions for the following areas: as a transfer document (goods receipt slip, goods issue slip) for the warehouse, as a label for identification of the material (pallet slip), and as a goods issue slip for goods issue. Versions There are three printout versions available for printing a goods receipt slip or goods issue slip: Version 1: Individual slip In this version, one GR/GI slip is printed per material document item.

Version 2: Individual slip with inspection text In this version, one slip is also printed per material document item. In addition, the printout includes any quality inspection text if contained in the material master record. Version 3: Collective slip In this version, a collective slip is printed containing all of the items of the material document.

MATERIAL Master The material master is required, for the following functions: In Purchasing for ordering In Inventory Management for goods movement postings and physical inventory In Invoice Verification for posting invoices In Sales and Distribution for sales order processing In Production Planning and Control for material requirements planning, scheduling, and work scheduling The material master has a hierarchical structure resembling the organizational structure of a company. Some material data is valid at all organizational levels, while other data is valid only at certain levels. The organizational units are as follows: Client / Company code / Plant / Storage location / Purchasing organization Sales organization / Warehouse number /Storage type The industry material master contains the following user departments: Accounting / Basic data / Classification / Costing / Forecasting / MRP Production resources/tools / Purchasing / Quality management / Sales Stocks, plant and storage location / Storage / Warehouse management Work scheduling Material Numbers For every material that your company uses, you must create a material master record in the material master. This record is uniquely identified by a material number. External number assignment Internal number assignment The standard R/3 System contains the following industry sectors. The ID used to identify the industry sector internally appears in parentheses. Plant engineering and construction (A) Chemical industry (C) Mechanical engineering (M) Pharmaceuticals (P) The other sectors are for retail Materials with the same basic attributes are grouped together and assigned to a material type. This allows you to manage different materials in a uniform manner in accordance with your company's requirements. When you create a material master record, the material type you choose determines: Whether the material is intended for a specific purpose, for example, as a configurable material or process material Whether the material number can be assigned internally or externally The number range from which the material number is taken Which screens appear and in what sequence Which departmental data you may enter What procurement type the material has; that is, whether it is manufactured in-house or procured externally, or both Together with the plant, the material type determines the material's inventory management requirement; that is:

Whether changes in quantity are updated in the material master record Whether changes in value are also updated in the stock accounts in financial accounting

Stocks in the Material Master Record In Inventory Management, it is not only important to know what quantity of a material is in a certain storage location or a certain plant, but also what quantities of the material are in what types of stock. Total Valuated Stock Unrestricted-Use Stock Restricted-Use Stock Blocked Stock Quality Inspection Stock Stock in transfer Stock in transit Allowing Negative Stock If the first movement of a material is an outward movement, in Customizing for Inventory Management, you can activate the automatic creation of storage location data at goods issue for plant and movement type. Once the goods receipts have been posted, the book inventory balance must correspond to the physical stock, that is, the book inventory balance must no longer be negative UNIT OF MEASURE Base unit of measure This is the unit of measure in which the stocks of a material are managed. The system converts all quantities entered in other units to the base unit of measure. Alternative units of measure Individual departments may have their own units of measure. For example, Purchasing may use a different unit than Sales or Warehouse Management (WM). All units of measure other than the base unit of measure are referred to as alternative units of measure. Inventory Valuation The R/3 System allows you to valuate stocks of a material either together or separately, that is, according to different valuation criteria. Split valuation is necessary if, for example: Stock from in-house production has a different valuation price than externally procured stock. Stock obtained from one manufacturer is valuated at a different price than stock obtained from another manufacturer. Different batch stocks of a material have different valuation prices. The way the stocks of a material are valuated depends on how you define the following: Valuation category This defines whether the stocks are valuated jointly or separately. If stocks are to be managed separately, it also specifies the criteria used to valuate the stocks, that is, whether they are valuated by origin, inhouse production/external procurement, or individual batches. Valuation type This is a further subdivision of the valuation category

6. Invoice Verification
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. Invoice Verification has the following features: It completes the material procurement process, which started with the purchase requisition and resulted in a goods receipt. It allows invoices that do not originate in materials procurement (such as services, expenses, course costs) to be processed.

It allows credit memos to be processed, either as invoice reversals or return deliveries

An invoice can be processed in Logistics Invoice Verification in various ways: Invoice Verification Online You receive an invoice and enter the information contained in it in the system, comparing the data (such as quantities and values) suggested by the system with that in the invoice and making any necessary corrections. You then post the invoice. In the SAP System, a distinction is made between the following types of invoices: o 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. o Invoices with goods receipt reference Each goods receipt is settled separately. o Invoices without purchase order reference Invoices can be posted directly to G/L accounts or material accounts. Parking You receive an invoice, enter the data in the system, and save the invoice document. The system does not make any postings. You can change this parked document. When you have finished changing the document, you can post the parked document. Invoice Verification in the Background You receive an invoice, only enter the total amount of the invoice and match the invoice up with another system document. The system then checks the invoice in the background. If no errors occur, the system also posts the invoice in the background. If errors do occur, the system saves the invoice and you then have to process it in a separate step. Automatic Settlement o Evaluated Receipt Settlement (ERS) Here, you do not receive any invoices from your vendors, but post them yourself based on information contained in purchase orders and goods receipts. o Consignment and pipeline settlement You are not expecting a vendor invoice, instead you settle posted withdrawals yourself and send the vendor a statement of the settlement. o Invoicing plan You do not wait for the vendor invoice for goods supplied or services performed every time. Instead you create invoices based on the dates scheduled in the purchase order and these trigger the payment to the vendor. o Revaluation You determine difference values based on retroactively valid price changes and create the associated settlement documents. You send these documents to the vendor.

Invoices Received via EDI The invoice information is transmitted to the SAP System using electronic data interchange and the system tries to post the invoice automatically. If errors occur, you have to process the invoice manually. All the functions in conventional Invoice Verification are available in Logistics Invoice Verification. If required, you can use conventional Invoice Verification and Logistics Invoice Verification alongside each other. The following functions are available only in Logistics Invoice Verification: Work list that you can show or hide PO structure that you can show or hide Unlimited multiple allocation Manual invoice reduction

Total-based invoice reduction Invoice verification in the background Verification of invoices with installment conditions Posting across company codes Control of document parking using workflow

The important data for Invoice Verification is: Master data Transaction data Master Data Master data is permanent data on objects, for example materials, in the SAP System. Every object is given a unique number by which it can be identified in the system. Material Data Material data is information on the materials bought by or produced in the company. This includes the material number, material name, units of measure, stock data, overdelivery and underdelivery tolerances, reminder keys, price control data, and prices. Different departments in Materials Management maintain material data. Vendor Data Vendor data provides information on the suppliers that a company deals with. Vendor data includes the address, bank data, possibly also the name of the bank head office, the currency of the vendor, as well as the terms of payment and terms of delivery. The Purchasing department and Accounting department maintain vendor data. Accounting Data Accounting data is used to define G/L accounts. It includes the account name, the account type, the currency in which the account is managed, information as to whether an account may be posted to directly, and which financial budget it is allocated to. The accounting data is maintained in Financial Accounting. Transaction Data Transaction data records transactions in the SAP System. Whenever you post a purchase order, scheduling agreement, goods receipt, or invoice, the system automatically creates a document. The document data of a transaction depends on the application area that the transaction belongs to. Every document receives a document number by which it can be uniquely identified. Purchasing Document A purchasing document contains information such as the vendor number, the purchase order date, the terms of delivery, the material number, and the order quantity. Material Document A material document is created when a goods receipt is posted. It includes the posting date, the quantity delivered, and perhaps also the delivery note number and the purchase order number that the goods receipt refers to. It documents the quantity-based changes. 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 the individual postings with the account number, posting key, and the amount. It documents the value-based changes.

PO Structure Display Allocation to Purchase Order PO History Display Item With purchase-order-based For each purchase order item invoice verification Subnodes Total goods receipts Total invoices Total down payments

 With goods-receipt-based For each goods receipt invoice verification For each delivery note

Total parked invoice documents Total delivery costs for goods receipts Total delivery costs for invoices Delivery note: You can display goods receipts, invoice receipts, and subsequent debits/credits entered for each delivery note. Total down payments Total parked invoice documents Total delivery costs for goods receipts Total delivery costs for invoices Entry sheet: You can display acceptance and invoices entered for each entry sheet. Total down payments Total parked invoice documents Service: You can display invoices and subsequent debits/credits entered for each service. Total down payments Total parked invoice documents Service entry sheet: You can display invoices and subsequent debits/credits entered for each service. Total down payments Total parked invoice documents

For a PO for external services For each entry sheet with goods-receipt-based invoice verification For a PO for external services For each service with service-based invoice verification for which no goods receipt has been defined For a PO for external services For each service entry sheet with service-based and goodsreceipt-based invoice verification

You can increase the width of the PO structure screen area. You can see the following information for the business transactions:

Worklist In the worklist, the system displays invoice documents that you have already processed using the applications Enter Invoice or Park Invoice, but which have not yet been posted. The documents are displayed under the following nodes: Held documents Parked documents Documents complete for posting Invoice Verification Online This process is the classic method used to verify invoices: 1. You enter the data from the vendor invoice in the system. 2. As you do this, you compare the data with the suggested quantities and values for each item. 3. If differences occur, you make any necessary corrections. 4. You then post the invoice. Entering a vendor invoice involves: 1. Choosing the Transaction 2. Entering Document Header Data 3. Allocating Invoices 4. Processing Invoice Items Choosing the Transaction Here you choose the transaction for the invoice that you want to enter: Invoice You have received a vendor invoice. The vendor invoices you for the goods that you have ordered from that company. Credit memo The vendor has invoiced you too much for the last delivery, for example, less than the agreed quantity was delivered and that at the agreed total price, or you have returned part of a delivery to the vendor due to quality problems. Subsequent debit You have already received an invoice from your vendor for all the goods received. Subsequently, freight costs are to be taken into account, however, the invoice quantity remains the same. Subsequent credit You have already received a credit memo from your vendor for all the goods received. Subsequently, freight costs are to be credited to your company, however, the credit memo quantity remains the same. Entering Document Header Data When you enter a vendor invoice, you must enter the following document header data: Document date Posting date Gross invoice amount Allocating Invoices When you enter an invoice, it is important that you match up or "allocate" the invoice to an order transaction so that: The system proposes the default data from the purchase order and the purchase order history The system can update the purchase order history when you post the invoice The more precisely you match up the invoice, the simpler it is to process the invoice items in Logistics Invoice Verification. If you match up the invoice too vaguely, you may have to exclude invoice items from the invoice. If you discover that invoice items are missing from the item list, you can make a further allocation and add invoice items Entering Invoices with Purchase Order Reference

1.

Allocate the invoice. Choose from: Purchase order/scheduling agreement Delivery note Bill of lading Service entry sheet Vendor Transportation service agent

Goods-Receipt-Based Invoice Verification If goods-receipt-based Invoice Verification is active for a particular order item, each invoice item can then be matched up uniquely with the goods receipt item. It makes sense to work with goods-receipt-based Invoice Verification when you expect a delivery to be made and posted in several parts. Direct Posting In Logistics Invoice Verification, you can also post invoices that do not refer to a purchase order or a delivery. A typical example of this is a bill for expenses You must specify which accounts the amounts are to be posted to. The SAP System provides the following options: Posting to a G/L account Posting to a material account You can also combine these options by generating the relevant posting lines one after the other, or by generating lines with reference to a purchase order. Vendor Data The vendor data is displayed in the Logistics Invoice Verification applications to make it easier to initiate contact with the vendor, or to perform checks on the vendor Invoices from One-Time Vendors One-time vendors are vendors that supply your company only once or very rarely. It does not make sense to create master records for these vendors in the system since access to this data is no longer or rarely needed after the original transaction. Therefore, collective accounts are set up for one-time vendors. These accounts are also referred to as one-time accounts. Since these accounts are used for more than one vendor, the master records do not contain any vendor-specific data. Therefore, data such as address, salesperson, bank details, and so on, must be entered in Purchasing or Invoice Verification. Invoices with Different Payee An invoice has a different payee if the invoice payment is not to be credited to the invoicing party specified in the purchase order. In the SAP System, this procedure is controlled in two ways: The different payee is already taken into account when the invoice is posted. The invoice is posted to the vendor account for the different invoicing party. The payment program then accesses this account. A vendor master record must have been maintained for the different invoicing party. The different payee is only taken into account when the payment program runs. The invoice is posted to the account of the vendor with whom the purchase order was placed. The payment program then makes the posting from this vendor to the bank account of the different payee. In this case, you do not have to create a vendor master record for the different payee. Invoice Items Header Data for the Invoice Items Once you have allocated the invoice, you can change the header data for the invoice items displayed, including: Name and address of the invoicing party (tab page Details)

The gross invoice amount entered (tab page Basic data) The tax information entered (invoice items)

More Details on the Invoice Items Display of the number of items proposed and selected Display of the difference between the net total plus tax and the gross invoice amount Display of the vendor data Display of the PO structure Processing Invoice Items You compare the invoice items that the system proposes with the items delivered and presented in the vendor invoice. You can change the display variant while you are processing the invoice items. If there are differences between the quantity or amount the system expects to be invoiced and the actual quantity or amount in the invoice, you can enter and post these differences When quantity changes occur, you can perform automatic correction of an item amount using the user parameter RBB. You can use automatic amount correction in the applications Enter Invoice and Park Invoice, for example, if you often create partial invoices The balance specifies whether the gross invoice amount is equal to the total of the invoice items, the tax amounts, and the unplanned delivery costs. The check for duplication of invoice entry aims to avoid invoices being accidentally created and paid twice. When entering an invoice, the system first checks whether the Logistics Invoice Verification invoice documents have already been created. Only invoices with errors or those entered for invoice verification in the background are checked. The system then checks whether any FI documents have already been created by Logistics Invoice Verification, and which of the documents fulfill the relevant criteria. Only invoices are checked. When you enter credit memos or subsequent debits or credits, the system does not check for duplicate invoices in Logistics. When you create a duplicate invoice, the system displays a warning or error message, depending on your settings in Customizing. Document Parking You can park invoices or credit memos. This means that you enter the invoice data or credit memo data in the system and save it in a document, but the system does not post this invoice initially. You can change a parked document as often as you wish, for example, by adding or correcting data. The changes are logged. When you have finished changing the document, you can post the parked document. Only when you post an invoice or credit memo, does the system carry out the normal account movements and make the necessary updates. Invoice Verification in the Background This process is suitable for the following transactions: Posting invoices with mass amounts of data for which no item check is required Posting invoices referring to transactions not yet entered in the system Invoice Overview You use this function to generate a list of invoices, for example, to check which documents were posted in the background or which were not posted and therefore have to be processed manually. You can use numerous selection criteria to narrow down the list of invoices selected, including: Document number Fiscal year

 Processor Invoicing party Posting and document date Invoice Status The list of invoice documents contains various information, including: If the invoice was posted When it was last verified If the invoice contains items with unclarified errors or vendor errors If the invoice is scheduled for background verification If there is an error log for the invoices Account Determination When you post an invoice, the system updates various accounts in Financial Accounting. It determines automatically which amounts have to be posted to which accounts. Account assignment is based partly on your entries when you enter an invoice, partly on information stored in the system and partly on the system settings Your entries provide the following information: Which vendor account must be posted to? Which amounts must be posted? The material master record provides the following information: Which valuation class does the material belong to? Which type of price control is required for the material? Which account must be posted to for the material? Is the stock available smaller than the quantity invoiced? Posted documents provide the following information: What is the purchase order price? Has a goods receipt been posted for the purchase order? The system settings provide the following information: Is the invoice posted as a net or a gross amount? Which G/L accounts must be posted to? Purchase Account Management Some countries require companies to manage purchase accounts. This account documents the value that externally procured materials are posted at Postings at Receipt Value Customizing is configured so that the posting to the purchase account is based on the receipt value and separate accounting documents are created for the purchase account postings Postings at Stock Value Customizing is configured so that the posting to the purchase account is based on the stock value and separate accounting documents are created for the purchase account postings Posting Taxes Which taxes are to be paid and how they are to be posted in the system depends on the tax regulations defined by law in the country of the company concerned. The postings made are controlled by the tax code. A distinction is made between the following: Deductible taxes Non-deductible taxes Cash Discount Percentage discount on the purchase price that you are guaranteed under the terms of payment if you pay the invoiced amount within a certain period. This function uses the document type to control how cash discount is to be cleared.

The standard system contains two document types: Gross Posting (RE) The cash discount amount is not taken into consideration when the invoice is entered. Only when payment is made, is the cash discount amount posted to a revenue account. Net Posting (RN) The cash discount amount is credited directly to the account that the costs are posted to when you enter the invoice. For example, if you are posting an amount to a cost center, only the invoice amount minus the cash discount amount is posted to the cost center. Invoice with Variances An invoice is said to contain variances if a quantity or value in at least one item is invoiced at a different value to the value that the system proposes. If you accept a variance in an invoice item and overwrite the proposed value, the system checks if the variance is within the tolerance limits defined in Customizing. If it is outside the limits, a warning message is displayed but you can still post the invoice. If an upper tolerance limit is exceeded, the invoice is posted but blocked for payment. You have to release the invoice for payment in a separate step. There are four different types of variance: Price Variance Quantity variance Quantity and price variance Order price and Quantity Variance Blocking Invoices When an invoice is blocked, Financial Accounting cannot pay the invoice. Invoices can be blocked either automatically or manually. When you enter an invoice, the system suggests the values that it expects an invoice to contain as a result of the purchase order or goods receipt. If the invoice item differs from the default values, you must determine the reason for the variance by contacting the purchasing or goods receiving department or the vendor. An invoice can be blocked for payment due to one of the following reasons: Variance in an Invoice Item Amount of an Invoice Item Stochastic Block Manual Block Invoice Release Before you can pay a blocked invoice, you must release it in a separate step. You do so by canceling the blocking indicator that was set when the invoice was posted. Since the total invoice amount is to be paid and not individual invoice items, the blocking indicator is set in the vendor line of the accounting document. As a result, all the items in an invoice can only be released at the same time. To specify when exactly an invoice is to be paid, you agree terms of payments with the vendor. These terms of payment contain the baseline date from which your cash discount period applies. If an invoice was blocked for payment for a long time, your cash discount deadline could expire. If you release this invoice, you can select the field Move cash discount date on the initial screen of the invoice release transaction and retain the agreed cash discount Delivery Costs Delivery costs are costs that are invoiced for a delivery over and above the value of the delivery itself. This includes freight charges, customs duty, or other costs. In the SAP System, there are the following types of delivery costs: Planned Delivery Costs

Planned delivery costs are entered in the purchase order on an item basis. Provisions are set up for the relevant costs at goods receipt. The delivery costs planned in the purchase order are referenced when the invoice is entered. The provisions are cleared. The values proposed for the items come from the purchase order history. Planned delivery costs are entered in the material valuation at goods receipt. In the case of a purchase order with account assignment, you debit the account assignment object. Unplanned Delivery Costs Unplanned delivery costs are only entered when the invoice is entered. No provision is made at goods receipt. When you enter unplanned delivery costs, the system does not check if planned delivery costs were entered in the purchase order. When you enter the invoice, you can enter both planned and unplanned delivery costs. Subsequent Debits/Credits A subsequent debit/credit exists when an additional invoice or credit memo is received for a transaction that has already been invoiced. When you post an invoice or a credit memo as a subsequent debit/credit, you should note the following: The system records every subsequent debit/credit in the purchase order history. By posting a subsequent debit/credit, the system updates the ordering transaction on a value basis but not on a quantity basis. The quantity invoiced therefore does not change, but the total value invoiced does. The maximum quantity you can subsequently debit or credit is the quantity that has already been invoiced. It is not possible to post a subsequent debit before an invoice. The system does not check the quantity delivered. A subsequent debit/credit cannot be blocked due to quantity variance. Posting Total-Based Differences You can use this process to post invoices containing variances. For example, the vendor invoices you for more than agreed in the purchase order. In Invoice Verification, the system determines a difference between the net total of the invoice items and the invoice amount less taxes and unplanned delivery costs, when the invoice is posted. When invoices contain small differences, it can often be too time-consuming and therefore costly to find out the reason for the difference. Instead, the system can post the invoice with the difference if the difference is within pre-defined tolerance limits. This would be done for Invoice Verification where there is no item check, in the background or online Invoices for Purchase Orders with Acct Assignment When a purchase order is created, you can enter an account assignment for each order item. This is, for example, necessary when: You order a material which is not subject to inventory management and which consequently goes straight to consumption You order a service As a rule, you cannot tell from an invoice if it refers to a purchase order with account assignment. You can only tell if a purchase order with account assignment is concerned by looking at the column Acct (Account assignment) on the item list in Logistics Invoice Verification Entering Invoices in Foreign Currency An invoice in foreign currency exists if the currency in the invoice is different from the local currency defined for your company code. The buyer enters the currency that is used when placing a purchase order with a foreign vendor in the purchase order itself. Usually you receive an invoice in the currency specified in the purchase order, but you can also enter the invoice in a different currency. Before you can enter an invoice in foreign currency, the following settings must be made in your system: The currency that you enter the invoice in must be defined in the system.

An exchange rate between the foreign currency entered and your local currency must be stored in the system. You can define different exchange rates for different periods.

Foreign Currency Translation When you enter an invoice in foreign currency, the system automatically translates the foreign currency amounts to local currency The system calculates the exchange rate as follows: If the buyer entered a fixed exchange rate in the purchase order, the system uses this rate to translate the amounts to local currency. If an exchange rate was entered in Invoice Verification, the system uses this rate to translate the amounts to local currency. If an exchange rate was entered in neither the purchase order nor Invoice Verification, the system uses the exchange rate pre-defined in Customizing for Financial Accounting that is valid for the posting date Parallel Currencies With purchase orders in foreign currency, the postings at goods receipt and invoice receipt are updated both in the order currency and in local currency. The posting amounts in each currency are determined from the PO history independently of each other. You can also use the Product Cost Controlling (CO-PC) component in your company to manage stocks of materials in several currencies in parallel. This allows you to valuate stocks in parallel currencies based on the actual exchange rates of the transactions causing the change in stock value. Evaluated Receipt Settlement Procedure for settling goods receipts automatically. When you use Evaluated Receipt Settlement (ERS), you have an agreement with the vendor that they do not create an invoice for an ordering transaction. Instead, the system posts the invoice document automatically on the basis of the data in the purchase order and goods receipts. This eliminates invoice variances You can settle goods receipts directly without receiving an invoice from the vendor. The system can generate the corresponding invoices and post them. A vendor invoice is no longer required. You can automatically send the settlement documents created to the vendors ERS has the following advantages: Purchasing transactions are closed more quickly. Communication errors are avoided. There are no price and quantity variances in Invoice Verification Consignment and Pipeline Settlement Consignment material is stored at your company premises but belongs to a vendor. The vendor supplies these goods so that they are available to you at any time, but does not initially invoice you for the goods. Only when you have withdrawn stock does payment become due for the quantities used. Pipeline material flows directly into the production process. This could be from a pipeline, for example, oil, from a pipe, for example, water, or from a cable, for example, electricity. Payment is due after each withdrawal. The use of consignment and pipeline settlement reduces the cost of stockholding in the company by: Reducing the flow of paper and administration work Minimizing transport costs by using collective transports And, for a modest capital tie-up, increased security of supply is guaranteed with minimal inventory levels and short lead times. You do not expect an invoice from the vendor for goods withdrawals from consignment stocks or a pipeline. Instead you settle posted withdrawals and return deliveries yourself and send the vendor a statement of the

settlement. You can perform this settlement periodically in the background. The following documents can be involved: Invoices Credit memos Consignment settlement is connected to message determination. As a result, you can define a form in Customizing. A message record is created during each settlement. This message record completes the form. Depending on the system settings, you can send this form to the vendor immediately on posting or at a later time. Revaluation You use this function within Logistics Invoice Verification to determine the difference values on the basis of price changes that are retroactively valid and to create settlement documents for them. You can send the revaluation settlement documents to the vendors as Messages. The optimum business situation includes the following factors: Constant supply relationships In which deliveries are made at regular intervals for the same purchase order items or scheduling agreement items. Simple conditions For example, if difference amounts are only a result of price changes. Vendors for whom you use Evaluated Receipt Settlement (ERS).

Settlement of Amounts Due Under Invoicing Plans An invoicing plan enables you to schedule invoice creation over a series of future due dates independently of individual procurement transactions and the actual receipt of goods or services. You can inform the vendor when the invoice documents are created. For more information, refer to Messages in Logistics Invoice Verification.

Messages in Logistics Invoice Verification In Logistics Invoice Verification, you can also generate messages when posting an invoice. You can send messages either internally, to colleagues, or externally, to vendors. You can send these messages in the following ways: Online with the next selection run Using the function Output Message Immediately on updating the invoice As a background job by specifying a time Credit Memo The term credit memo always refers to a credit memo from the vendor. Therefore, posting a credit memo always leads to a debit posting on the vendor account. As in the case of invoices, credit memos refer to purchase orders or goods receipts. They are used to correct the purchase order history if the quantity invoiced was too high, for example, if an invoice was too high or if part of the quantity was returned. When you post a credit memo, the total quantity in the purchase order history is reduced by the credit memo quantity Reversals Invoice documents in Invoice Verification are either invoices or credit memos. These documents can be cancelled. There are two different cases: If an invoice is cancelled, the system automatically creates a credit memo. If a credit memo is cancelled, the system automatically creates an invoice.

The system takes the amount and quantity for the credit memo or invoice from the invoice or credit memo to be cancelled, thus avoiding any differences between the invoice and the credit memo or the credit memo and the invoice. Returns In Purchasing, order items can be flagged as returns items. The system expects a credit memo for a returns item. Credit memos can be settled up against an invoice or issued separately. You can also enter an invoice for a returns item. This would be necessary, for example, if a returns delivery were cancelled or a returns credit memo were too high. Invoices Received via EDI (MM-IV) Information can be transferred between different companies using EDI. This enables a vendor to transfer invoice information electronically instead of in the form of a printed paper invoice. This has the following advantages: Fast data transfer Prevention of input errors when manually entering invoices An IDoc is generated for each invoice. The system posts an invoice using the data in this IDoc . To do this, the invoice must be consistent and must not cause any error messages in the system. Archiving Invoice Documents In Logistics Invoice Verification, you can archive invoice documents. The central archiving tool from SAP is used for this. For more information about Archiving, see component BC Archiving Application Data, Archiving in Invoice Verification (MM-IV). In the standard system, archiving object MM_REBEL is defined for invoice documents In Invoice Verification, you can store inbound and outbound documents in external storage systems using SAP ArchiveLink. The scanned documents are stored in an external storage system and linked to the relevant R/3 documents. You can display the stored documents from the display of the R/3 documents GR/IR Clearing Account Maintenance Quantity differences between goods receipt and invoice receipt for a purchase order result in a balance on the GR/IR clearing account. If the quantity invoiced is larger than the quantity received, the system then expects further goods receipts for this purchase order to clear the balance. If the quantity received is larger than the quantity invoiced, the system then expects further invoices for this purchase order to clear the balance. You can also clear differences for delivery costs. If no more goods or invoices are to be received, you must clear the balance manually.

This can be done in different ways: You can return the extra goods to the vendor. You can cancel the invoice and post a corrected invoice or a credit memo for the surplus posted quantity. You can clear the GR/IR clearing account manually. The offsetting entry to clear the GR/IR account is the same as the posting made when you enter an invoice for a purchase order. Material with Moving Average Price (MAP) Material with Standard Price Purchase Orders Assigned to an Account